Podcast: Redefining Attribution: How DTC Brands Thrive Post-iOS14

Episode Summary

In this episode of the Free to Grow CFO podcast, host Jon Blair dives into the intricate world of scaling DTC brands with a profit-focused mindset. Joining him is Will Holtz, VP of Strategy and Operations at Prescient AI, who also has experience as a co-founder of an aggregator. The discussion ventures into the complexities of data analytics, the impact of iOS 14 on attribution, and how the new tools and mindset in 2024 can significantly help in scaling brands. Will and Jon explore the effectiveness of marketing mix modeling, shifting from last-click attribution, and measuring the impact of top of funnel spending across e-commerce channels. They also discuss aligning KPIs with business outcomes to truly understand the efficiency of marketing efforts. The episode is loaded with insights on improving marketing efficiency, connecting ad spend to contribution margins, and leveraging data to drive better business decisions.

Meet Will Holtz

Will is the current VP of Strategy & Operations at Prescient AI, a next-gen marketing mix modeling platform to help omni-channel brands measure and optimize ad spend. Previously, Will held leadership roles in eCommerce, from running DTC at Recess and co-founding the Shopify aggregator Rightside Brands to working at the data infrastructure startup SourceMedium. He credits his current interests to a combination of his psychology undergraduate degree and his early roles in finance as an investor, where he honed his analytical skills.

Episode Links

Jon Blair - https://www.linkedin.com/in/jonathon-albert-blair/

Will Holtz - https://www.linkedin.com/in/williamholtz/

Free to Grow CFO - https://freetogrowcfo.com/

Prescient AI - https://www.prescient-ai.io/

Transcript

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00:00 Welcome to The Free to Grow CFO Podcast

00:26 Introduction to Meet Will Holtz

02:12 Today's Focus: Data Analytics and Attribution in E-commerce

03:31 Will's Entrepreneurial Journey: From Finance to CPG Startups

09:58 Challenges in Scaling DTC Brands: Supply Chain and Marketing Costs

12:07 The Aggregator Model: Lessons Learned and Strategic Shifts

15:58 The Role of Data in Business Decisions

17:50 Attribution in E-commerce: Tools and Mindset Shifts

25:27 Understanding Top of Funnel Impact

26:36 Correlation Between Meta Spend and Amazon Sales

28:03 The Importance of Omni-Channel Strategy

29:03 Marketing Mix Modeling and Channel Connection

34:51 Scaling and Budget Allocation

48:19 Final Thoughts

[00:00:00] Jon Blair: Hey, what's going on, everyone. Welcome back to another episode of the Free to Grow CFO podcast, where we dive deep into conversations with brand founders and industry experts about scaling a D2C brand with a profit focused mindset. I'm your host, Jon Blair, founder of Free to Grow CFO. We're an outsource finance firm that specializes in fractional CFO and bookkeeping services for growing D2C brands.

All right, today I'm here with my buddy Will Holtz. Uh, Will is a friend of mine that I've talked shop on a lot of different, uh, strategy conversations over the years. Off the podcast. And I'm stoked to finally have him on the podcast so that we can talk shop, um, for our listeners here today. Uh, today will serves a company called Prescient AI as VP of strategy and operations.

He's got actually a really awesome background before that, which we're going to dive into, but, um, well, thanks for joining me, man. Happy to have you. 

[00:01:01] Will Holtz: Yeah, it's good to be on this side of the, uh, the house. Yeah, 

[00:01:06] Jon Blair: for sure, for sure. For sure. Yeah. For those of you that don't know, Will's, uh, actually got his own podcast as well.

And, um, so it's always, I was on someone else's last week as well. And it's funny doing both now. I'm like. I actually feel like I'm becoming better at both by sitting on both both sides of the conversation than when I used to just sit on as like actually just being interviewed only. Do you feel the same?

[00:01:32] Will Holtz: It's a, it's actually pretty weird. I feel like I don't even listen when I'm doing the actual interviewing itself until after and I'm like, Oh yeah, that was actually interesting conversation. You're kind of just in the moment trying to facilitate a little bit, but now it's fun. It's, it's fun to do both.

[00:01:46] Jon Blair: For sure. It is weird. Cause like I try to be as present as I can while I'm hosting. You know, you gotta be thinking about keeping the flow going and, and, and, um, you know, looking for areas to like dive into like a, an interesting subtopic, but I do, um, I, you know, um, just truth be told to everyone listening, I do listen to the podcast afterwards always, and I actually learn a lot about myself and about my guests when I'm listening to them because I can be fully present.

Um, so look, what are we gonna talk about today? Today? We're going to talk about a few different things. One, Will's got an interesting background, um, uh, being an operator and an aggregator and actually found a co founder of an aggregator. We're gonna talk about that a little bit. And then really what I want to spend most of the conversation talking about.

Data analytics, but most specifically what I'm calling this new wave or this new mindset of attribution in the e com world. You know, I think a lot of people think about, you hear a lot of talk with the vast majority of brand operators of, Oh, there's pre iOS 14 and post iOS 14. And like, that's the line they draw on the sand post iOS 14.

Attribution sucks. You can't do it. Um, you know, but the reality is there's a new mindset to attribution today in 2024. There's new tech tools. Prescient AI is, is on the forefront of that. And so, um, Will's background prior to Prescient and with what he's doing now over there, positions him really well to, uh, talk about this topic at a deep level.

And so you don't want to miss what we're talking about here, this new mindset, this new wave of attribution. You need to get exposed to it today because you're going to have to leverage it if you want to keep scaling your brand with a profit focused mindset. So all that to say, um, let's dive in. Will, I want to get started though, with your story, your entrepreneurial journey, and ultimately how you ended up where you are today.

[00:03:38] Will Holtz: Yeah. I mean, in terms of my journey, it's always been, I guess, from a profit first mindset, cause I started in finance, kind of did that traditional Into private equity and the businesses I dealt with there were And we're from a helicopter leasing business to data centers to restaurants. So, you know, in that, in that sense, you have to make sure you have a good business first off, first and foremost.

And I learned, I think the most important thing to me coming out of experience was unit economics, you know, does this business make sense to actually run or not when you get to a certain scale, um, and that's kind of the concept of the unit economics. It's been really important since then. Uh, but I always wanted to be an entrepreneur and I always wanted to move over to that entrepreneurial roots.

Uh, and after I went to business school, I ended up, um, I interned one summer at a, at a CPG startup, uh, actually in the Bay area called Grove Collaborative. And this was, you know, at the time of series B company, kind of a growing, fast growing company. And I just had a great experience. I mean, I had experiences, the CEO of Steve Landsberg became kind of a mentor to me, but the, one of the first days that I was in the office, I was coming up with this big business plan, almost like a consulting plan to run, uh, This B2B business for them, they were mostly D2C side of the house.

And he said, this is all really great, but you should just, uh, kind of scrap all your plans that you have and just go door to door. And they were selling natural products, so hand soaps, for instance, like natural hand soap. He said, go door to door and figure out how to sell this product to offices. You know, so I would literally go around San Francisco knocking on people's doors.

I went to Allbirds office, I went to other people's offices and said, hey, Can I sell you this hand soap basically? Uh, and it was very humbling experience because you know, it's, you get a quick feedback, but also people like, well, what are you trying to, why are you trying to sell me this? Uh, and then to learn a lot of interesting threads.

And I think most importantly, it was about, you know, again, you have to put yourself out there, learn very quickly and iterate, uh, which I think has been very true of like this, this space that we're operating in, which is you just have to constantly learn and change, even like the attribution stuff we're going to talk about today.

Um, so that actually brought me, you know, I had a great experience. Uh, when I graduated business school, I joined another CPG company called Recess, um, another kind of CPG darling. And I think in the space initially. Uh, beverages and the like, I was about 10 people when I joined as an intern, uh, and then I ended up becoming the chief of staff, um, to the CEO, which, uh, was also a very interesting role, uh, which you could maybe talk about later.

Uh, but then I, about eight months in, uh, got asked to take over the e com business. So both the DTC business and then eventually the Amazon business. And mainly because I was analyzing, uh, The business running cohort analysis, doing spreadsheet math and saying, here's, here's opportunity in this line of the business, uh, and that was asked, uh, to actually go run it.

Uh, and that was probably my first exposure to this, um, whole crazy world, you know, that we do operate in. And I realized everyone was talking in acronyms, you know, I didn't really know what people were talking about. You know, we're working with an agency and they're telling me ROAS and this and that. I don't even know what this all means.

Um, but let me just go figure it out. Yeah. And that's when, uh, again, the spreadsheet, I think, Magic worked then with the, the platforms and worked with, you know, the, the new tools that are out there. And the first thing I noticed is that there weren't a lot of tools that were aggregating data together, you know, to make it easy for you to actually make decisions across platforms.

And so I looked for about five to six months for a tool that would actually help me do that. And I was just coming up blank and so I was meeting startups at the time. They're trying to figure it out. Um, there's one called polyops at the time. It was a Y. C. company and it turned into title, you know, and then I met sort of coming called source medium, which I became one of the first customers of.

We really liked what the business value was there, which is again, aggregating marketing data, transactional data into one place, helping you analyze it. And that's when, um, you know, long story short, I decided, Hey, this is a really interesting scalable business. If you make the right decisions with data, let me go now figure out, can I actually maybe buy a lot of these businesses together?

And so I started an aggregator with a few other brand founders in the space during the time when the Amazon FBA wave was going on in 2021, 2022. With Thrasio, and we got backed by the same investors of Thrasio to go do that in DTC. We thought DTC businesses are longer lasting than Amazon businesses for a lot of reasons.

And then long story short on that, about eight months in, decided to give investor money back because we did not think it was a scalable strategy. We just didn't really see a lot of profitable businesses out there, uh, that were able to scale, you know, in a dramatic way. And we didn't see a lot of synergies between those, you know, D2C businesses, which was our thesis coming in.

So, of course, we can dive into that a little more, um, but that did lead me to my next two companies. But I'll pause there because that was a lot, a lot to take in. But really data has been like a central part of all those decisions and how I think about, you know, the different opportunities that I've had so far the past few years.

[00:08:35] Jon Blair: Yeah, I mean, um, what an awesome background and there's like, I think one thing that really stands out to me is you, your time as an operator, right? A lot of people who, that one, one problem that I see with a lot of people who understand data analytics, best practices, You know, data warehousing, ETL, like how to build the right infrastructure.

They lack the hands on experience of being an operator. And so they're actually like very far removed from the actual operator who's the end user of the data. Right. And like, so when, when you and I first met, like that was something that. I was very impressed with of just like, here's a guy who's like seeking to like really leverage these tools and understand them, but he's an operator.

Right. And so like one, one followup question I have, and maybe there's, there's probably going to be a few here on the aggregator front. You mentioned like, um, prior to deciding to shut down the aggregator and return the investor money. You made this determination that, like, you weren't finding a lot of brands that were able to scale profitably.

What were you seeing in the economics of the brands that caused you to go, No, no, we can't, we can't scale these profitably? 

[00:09:45] Will Holtz: It's a great question. Um, and there's a few things. So, for one, also, there's a lot of opportunity in these brands. Just, just to, just to be clear. Uh, I mean, there's a lot of inefficiency in these brands.

Especially in the marketing side, uh, which we can go into. But what I did see is for one, we are coming out of COVID or kind of we were in peak COVID coming out. And what was happening was for one supply chain rates were going up dramatically container rates and everything for sure. And so back to the unit economics, the economics change of these businesses.

And the challenge with that is yes, maybe your cogs went up. But it's hard to then also change your pricing to, you know, offset that. And so a lot of these brands, you know, weren't able to raise prices that dramatically. One day to the next, your margins are kind of worse. So that's a big thing. The other thing was, um, just think of it like the marketing, um, space in general, it was getting more competitive to actually market as well in this time.

And so, you know, CPMs, other thing were going up, so acquisition was even harder. Again, your cost per acquisition goes up, economics get a little worse. That's, that's a little more difficult for you to buy a business. And then I would say the harder parts were figuring out the people side of it as well, which was in the end, like one of the core thesis I think of buying a business like this is that.

You don't have to have a lot of people to actually help manage it. Um, and when you take out the founder, for instance, that's actually really hard to do because the founder actually is doing a lot of things across the business. You don't even realize that. And so just, you have to add in more people than you actually realized to kind of own certain different domains, um, in, in the business.

And so. The people cost was even pretty high. So it was the cogs, you know, supply chain costs. It was both acquisition costs with marketing, which are two kind of the biggest line items. And then the people's the third biggest probably in this area. And those were getting all hit, you know, so totally. And the last thing about buying businesses and expectations of the owners Their value of their own business was actually really high in this period because it came off this amazing demand cycle with a lot of organic demand.

So everything looked better and they were saying, well, look at my business. What it was before you sell your business to start to kind of recede, you know, down to the baseline that there were before. But owners didn't want to think like that. They want to say, Hey, it's always going to be like this forever.

Um, so expectations were also just pretty off in general. And I said the last point, the very, very last point is why these, these models were very challenges that. The capital structure is also really difficult for a lot of these businesses where a lot of working capital, you have to basically fund inventory, fund marketing, and eventually get a return on that.

So as those times for inventory expanded because the shipping rates and container, it took six months to get a, you know, some goods or to order a lot in advance. You hold it in your warehouse. That's a big drain on your, your cash. And then all of a sudden you see people, you know, that they're funding.

These aggregators are funding with debt. And so you have to pay interest on the debt, but it's very expensive. And so all of a sudden you have a mismatch between you have to pay interest on debt today, but then you get future potentially returns tomorrow or way out there. You have a big gap in like how much you actually can fund these aggregators.

And so we're just, you know, Yep, that's why these aggregators had to raise so much money, you know, just to even get to the point they were at a certain scale, and they're still not profitable. For sure, they had to 

[00:13:07] Jon Blair: plug that gap between the return and the debt service. You know, it's interesting, I was the COO and CFO of Guardian Bikes during this time, and I was actually, You know, I had been at Guardian slash surestop either part time or full time for quite a while and I was getting the itch to go do my own thing and I was going to do it a year earlier, but, um, going into the beginning of 2021, all these dynamics you're talking about, the market, we're like, And we're hitting us as a fast growing DTC brand and an outdoor product, which was like took off even more than many other product categories and econ during COVID.

And so I actually had to stay around for a whole year just to, just to get us being the COO and CFO, the one who understood the dynamics of all those things you just talked about turns on marketing. Uh, return on marketing spend, inventory, how, how costs were going up all over the place. I mean, supplier costs beyond freight forwarding was going up left and right.

Oh, the cost of aluminum just went up. Oh, the cost of steel just went up. You know, POs that were already cut and accepted. And before they got shipped, the factory going, dude, the cost of, the cost of steel has gone up considerably since we accepted this order. Uh, we have to charge you more and we weren't expecting that, right?

And like, I mean, it was, it was insane. And you know, we were, uh, we kind of me and the, and the CEO, Brian Riley, like we, we split, um, kind of divide and conquer. I kind of ran the company as interim CEO basically for a year while he went out and equity fundraised. And I focused on getting a brand new, fresh piece of debt capital in the business to fund those daily working capital needs.

And like, we, we did a little bit of around, got that, you know, multimillion dollar line of credit in place. And then it was like, okay, now we're stable enough coming out of 2021 for me to replace myself with a CFO and, and kind of make the move, but like, it was a very crazy time, I mean, I mean, there's probably a whole podcast episode just telling the war stories, seriously.

It just 

[00:15:08] Will Holtz: goes to show, you know, you could be incredibly fast growing company, but all of a sudden you need, you need money. Right. And so that's, that's the value that you guys provide also towards it being the CFO suite and strategic CFOs. That's usually like the missing link. You know, I've seen in a lot of these companies as well is that where there's so much opportunity ones that we're trying to buy because they weren't looking strategically at how can they unlock their business.

For sure. With smarter financial decisions, with better capital structure, with more funding, because usually why these businesses were so interesting is that a lot of them are just underfunded. They don't have capital to go out and buy inventory or make marketing decisions that are more experiments or bets or even expand to a new market like Amazon.

You know, that does require a little more handholding. That's what we did. We actually found that pretty successful. Is we would actually try to, you know, bring DTC brands to Amazon. And it does take a little bit of like initial, you know, kind of working capital. It takes a little, a little, a little time, but it was actually really efficient for a lot of brands that already had like this latent demand that they were there.

And this is, this goes to attribution, by the way, you know, you have latent demand that you're pushing out there from Meta and TikTok and all these other channels. And Amazon is like a brand search, you know, kind of sure Haven. And so if you're not capturing that demand, all of a sudden, like you're just losing Money, like you're, you're, you're leaving on a table.

And so we, we look for those opportunities a lot. And we're looking for acquisitions of who's actually driving a lot of DTC, but has a really good opportunity in Amazon. Well, 

[00:16:40] Jon Blair: it's funny that you mentioned this. So I, once a month, I, I batch our podcast recordings. I was talking to, to Jeff, my partner, Jeff Lowenstein, who's a mutual friend of, of Will and I's.

And, um, actually, Will's the one who introduced me to him. We, um, We were talking about Amazon and talking about like how to expand from DTC to Amazon and that like, you know, I have several clients that I work with who have very heavy top of funnel spend and didn't have Amazon on at the beginning and when they just simply turned it on, even FBM, not even have the prime badge or anything like that, just drawing PL inventory, right?

Their blended marketing efficiency very clearly went up. And so what that told us is there's people seeing those ads that didn't, wouldn't buy on the Shopify store for some reason, not to mention that there's probably also net new customers who didn't even see the ad on, you know, top of funnel, um, it, you know, one of the top of funnel channels who are going and buying the product.

And so like, it's, it's, um, thinking about, well, segues nicely into some of the attribution stuff I want to talk about here is that like. because Prescient and Free to Grow have a couple of mutual clients. And like, I think one of the things that both of the mutual clients we have have struggled with at times is like thinking about, you know, thinking about the attribution of their two different e commerce channels, Amazon and their website.

Because in reality, top of funnel spend benefits all right that's one big hot topic on the attribution front but then there's also just this general kind of like attribution mindset like i i i kind of preface at the beginning of the episode is like you tend to find This is a generalization, but like it rings fairly true.

You either find a founder who's like attributions, dead iOS 14 screwed everything up. What can we do? Or ones who are like, they're really trying to seek, like what's the next level of sophistication here? Is it a tech product? Is that a mindset shift? Is it, what, what is it? It's a little bit, in my opinion, it's a little bit of both.

It's a mindset shift. And, and looking at what tech is available out there. But we talk about this new way of thinking through attribution, both tools and mindset. What are the, some of the things that come to mind 

[00:18:58] Will Holtz: for you? Yeah, um, obviously a very deep topic. Uh, and back to like why I'm even a Prescient, you know, and my, my journey is that I've only looked for companies that have solved problems that I've wanted to solve myself or want to solve as an operator.

It was the same thing with source media when I was there, uh, in terms of solving kind of a problem aggregating data. And I met Preston as a partner of SourceMedium because I was looking for who can activate this data, who can actually use the data we collect to actually help to make decisions. This goes back to the fundamental view of like, what is attribution?

And I think it's funny, I think attribution even is like not even the best word to think about this stuff. It's how do you measure the efficiency of what you're doing at all times? So measurement is like what I've come to understand is like, what are the measurement solutions for you? And you could measure, you know, yourself by saying, Hey, the blended returns on your business.

You said blended efficiency, that's a measurement. That's like a formula of measurement. Blended returns across channels. Another form of measurement that's become very popular pre iOS 14 was Multi touch attribution, MTA, which means, hey, what can I understand the purchase journey from me as a user across different touch points and eventually to the purchase?

And that's what's been really challenged by this iOS 14 issues because you can't really track the journey as well as you did before. And that's where, you know, like Northbeams and TripleWells, they did a really good job of creating a market around this, but have now, you know, seen the light of a different form of measurement coming around, which is, uh, marketing mixed modeling, which is.

I, I heard about marketing mixed modeling and then two years ago, and I got really interested in why I got interested in the first place is that this really comes down to like, how do you track, um, different data points and back to the point of the MTA, you track it based on clicks based on a pixel based on you put on your site, you can actually then track the user journey.

Uh, as we know, it gets more challenging with marketing mixed modeling. It's more about taking first party data and so it's just data that you've actually collected already. Let's say transactional data that lives within Shopify or Amazon, a purchase has happened in a day. That's transactional data. Then you have your marketing data, which is spend, how many impressions you get, potentially how many clicks you get as well.

And it's really, all it is, is looking for the statistical relationship between those inputs, i. e. let's say spend. And then revenue on the day. It's a statistical model saying you spent on this day and you likely then got a return and this is likely where that return came from based on the model that we've constructed.

So why I really like that concept is that it's future proof. It's something where you're always going to be collecting data from these platforms. And you don't need pixels in order to do this type of, um, math. And again, it's pretty much math in the end. And so that's where, um, coming back to the question about attribution and why it's changed, and what's different is that the, the, the fundamental problem is the same.

You want to basically understand what's my effectiveness of my, my ad dollars. But the method of data collection is different. The method of how you actually think about that analysis is different. And then what's also different about today's market mix models is they're a lot faster than they used to be.

Uh, and they used to be, this is a 1950s, 1960s technology that used to be used for billboards and radio and everything else used to be offline kind of spend. Now it's being used because data is more accessible. We could run, at least at Presha, we could run these models daily. Usually it's for other players, it's maybe weekly, monthly, quarterly.

And it's a very dynamic way to market. Um, and we could talk about it more, but top of funnel is kind of the bread and butter for this type of thing, because the relationship between top of funnel, i. e. like impressions being served and eventually to revenue is actually very strong if you can actually measure that.

And that's a big reason why I got super interested in this, is that the effectiveness of your top of funnel spend has just not been measured, I think, in an effective way up until this point. Yeah, 

[00:22:53] Jon Blair: it's super interesting. Um, man, there's a couple, there's like several different ways that we can go with this.

I think, I think first off, what are some of the mistakes when a brand comes to Prussian, right? What are some of the common kind of like mistakes that you're seeing about like how they are thinking about their attribution or the expectations of attribution at that time? 

[00:23:16] Will Holtz: Yeah, um, I would say that there's not like real mistakes.

I think it's just learning and education and, uh, in the end, like we often say that we're not the one size fits all solution. We're not the source of truth in the end. And I think that's a mistake looking for like the one size fits all solution. That's going to be what you use in entirety. And it's different situations where you should be using different tools and different methods.

But also like you should trust your own, like you're the marketer in the end, you know your business better than anyone else. You know the levers you need to pull. Also, if something looks wrong. And that's what I've seen the best marketers do, is that something intuitively looks wrong. Use it as a way to question and say, what, what can I, what else can I use to basically help me understand whether I'm wrong, potentially I should look at things differently or mm-Hmm, , something is wrong with this model or this measurement.

Or maybe the data coming in is not, you know, is, is a little funky 'cause these are, these are only good as the data coming in. You have to remember that as well. Um, I'd say the, the biggest opportunities are, I see a lot of people coming in with last click as like kind of their. They're sweet spot, um, comfort zone, which is, uh, been very challenged by the switch to GA4 for instance, where people are so used to this last click mentality and they might see high return on, you know, Brad spend.

I still see this to this very day. It's when I started at like brand, my, my agency was pushing brand spend constantly. And not all brand spend is bad, by the way, so I want to also say that some brand spend is good to keep, you know, yourself top of the listing. It can still soak up some demand, but oftentimes it's usually one of the biggest, like, most inefficient buckets, right, that you're spending in.

But it feels comfortable because your returns look high. So, the thing I see is, you know, relying on that as the sole form of measurement. Versus just one of those forms of measurement to say, yeah, my intuition tells me that Google brand search or Amazon even ads is basically soaking up credit. Where do I think the actual credit should be attributed to?

And that's where you start answering or asking questions and then start using other tools to say, well, what can actually help me measure? My top of funnel more effectively or not. Is it incrementality test, which is good? Yep. Is it something like a marketing model? Great. Is it my blend of returns? As I spend more of my meta ads, I see my blend of returns still staying pretty flat or coming down a little bit.

That's also a form of measurement because you know intuitively for some brands that are even smaller You don't need a marketing mix model to tell you that if you only have meta and Google as like your channels, let's say 

[00:25:44] Jon Blair: Yeah, so that makes me think of how I kind of set this up with the two two of the mutual clients We have like true that they both have tried to seek to understand more about The top of funnel impact the top of funnel spend impact on both their shopify store and their amazon store, right?

Because they have both And both of them have at times asked me like hey Jon It like kind of like feels like we're spending on amazon for no reason right now and that really it's all coming from our from our top of funnel like What are some ways or tips that, you know, brands can think about, like they're really driving a lot of awareness with their top of funnel spend, how to think about how Amazon versus Shopify might be ultimately contributing to the effectiveness of that top of that top of funnel spend.

[00:26:34] Will Holtz: Yeah, I mean, it's something I wanted to solve for, you know, when I was an operator and it's honestly like depression does this really well. Uh, not not selling my own book too much. But it's, like, we measure the relationship between top funnel spend off of Amazon, on Amazon. Um, which is, which has been great for a lot of operators because again, back to intuition, some people actually have run, I've seen spreadsheets from brands that I've worked with where they've run their own correlation analysis saying, as you've increased spend, I'm on, let's say meta, I'm seeing a lift and my Amazon sales as well.

So that's like a, again, a nice little gut check, but then we actually have a model that does. Statistically, you know, say that, Hey, expanded impressions, increased on meta tick tock and everything on more of you based channels. And it's actually throwing it and rise. And there were redistributing credit away from Amazon as well, though, that you actually.

Or are actually right, let's say about that scenario, but when I've seen so far across clients, mostly is that you get to a point where if you do have a channel, if you do have a funnel spend, and you do have somewhat of a brand, you're always going to get that. And one of the ways you also can look for that is you can just do like a jungle scout search as well.

Look for, we're searching for your brand, you know, on Amazon as well. Um, and that's another big, big thing you can do today. I think you're, you know, you're right for it. But yeah, I do think these mechanics models do a really good job. It's giving you some comfort around some of those numbers. 

[00:28:07] Jon Blair: Yeah, it's funny you mention that because there's a, there's another brand that I work with that has been spending really heavily on meta for a couple of years and, um, before they got Amazon, um, fired up like about at the beginning of this year, they did some, um, some search term, um, kind of like research on, uh, on Amazon.

And it was very clear that people were searching their product left and right. And they didn't have the product available on Amazon. And so they were going and buying similar devices from other brands, quite likely. And, and it, you know, the thesis was we, yeah, we've been spending on meta for a couple of years, very aggressively.

Like, of course, people are going on Amazon and looking. Then when they turn Amazon on a few months ago, um, I mean, their blended MER across the business skyrocketed, like even more than they thought it would, you know? And, um, absolutely. It's really important for brands to understand the connection between the channels.

Like that's one thing that is, um, I don't know, I could be wrong. I'd love to get your, your take on this, but like I don't personally know a ton about media mix modeling yet. I know some because some of the brands I work with have exposure to it. It's something that I want to seek to understand it at a much deeper level.

But like, I think it sounds like from my understanding, one advantage of it is it pays homage to the connection between channels. Like when you look at the other kind of like, you know, click based, it very much makes it, it very much makes it feel like the channels are separate, right? And like they're almost competing against each other.

But the reality is like Marketing 101, it's all connected, all of it's connected, right? And so like, Uh, like, it sounds like this new way of, of, of modeling again, it pays respect to the fact that it's, that it's connected. Do you agree? And I, how can you riff on that? You can join 

[00:29:56] Will Holtz: the marketing team if you want.

I mean, that's, that's like a perfect, that's like very well said. I mean, that, that is the challenge is that it's very siloed pixels or siloed based on Like DTC heavy, like if you're a DTC heavy business, again, like extremely DTC heavy, and you're only advertising on more like these click based channels, it could be still a good tool for you to use because they're daily, they're updating daily, it's very dynamic as well.

So I wouldn't shy away from still trying to use it as one of your Like quivers that you have, but yeah, I agree with you. Relying on it too heavily is going to be challenging. And also the cool thing about marketing models and pressure doesn't use today, but we're going to be getting to the futures.

We're going to bring in retail channels and other channels that also have an impact. So it's not even just your online channels. Your retail is going to be impacted by your media swept and for a lot of CBG brands, especially out there where retail is a much bigger component, but they still want to drive, you know, off on shelf velocity.

They want to shut, they want to drive velocity for their retailers, for everyone else. And so that's going to be really effective is how do you use a meta or anything else like that, or CTV or other channels to basically drive retail? Uh, huh. That's pretty huge. Um, and that's what I'm most excited about is like this pure omni channel view of like everything's just symbiotic in the end the customer is going to shop where they want to shop, but you want to drive them and you might want to even drive them geographically and region and everything else like that.

There's a lot of targeting you could do online that you can't really do in store, which makes it a very effective channel for that. 

[00:31:29] Jon Blair: That's actually really timely that you brought that up because I've been talking with a couple of guests on, on the show for the last couple of weeks about expanding into retail and like, um, the thing is what, what, um, and actually, you know, I can't take credit for this.

This comes from, uh, from my buddy, Ryan Rouse, also a mutual friend of ours. He says like, look, dude, if you want your, your brand to hit a certain size, generally speaking, 50 plus million a year in revenue, you have to ask, you have to expand outside of DTC. There are very few brands who can do 50 plus million, um, DTC only.

Right. And so certainly there's Amazon, but let's just say to do 50 plus million, you quite likely need to expand beyond e commerce. Right. And, and I'm saying that because like, One, there's no problem. There's nothing wrong with building a profitable brand that does less than 50 million and staying D2C.

That is great and awesome, especially if you've got like this really kind of narrow niche and you just crush it D2C. But if you've got aspirations to grow 50 plus million retail. Probably inevitably is a must at some point, right? It just, it's, there's only so much Tam DTC and only so much Tam on Amazon.

And so like we'll just said, you have to meet your customers where they are, but here's a beautiful kind of advantage of being a DTC first brand. If you're crushing it top of funnel. You can drive traffic and sales in these brick and mortar retail locations. And so like when I think about, I think about the early days of EECOM, I was talking about this with one of, uh, one of the guests that in our retail conversation, like a couple of weeks ago, like early days of EECOM, when you were just like the first brand to sell that product on EECOM, It felt like, or at least there were stories, maybe they weren't all true, but it felt like you could get to 50 million a lot easier D2C only.

Right today, all the competition online, like you're going to go retail. And the reason why that's important to understand is because like, you actually can drive some of that demand in a way that like a, a retail first brand really can't. Right. And so I think the future, I think, I think the, the seven, eight, nine years ago, you could build a nine figure brand D2C like, um, much easier.

But today the nine figure brand that started D2C is omni channel like bottom line. So when you talk about the marketing measurement, Of becoming a nine figure brand. It sounds like marketing mix modeling like is a, is a must because like you, you, or like one, you need to understand how, how you're, how you can drive sales in these new channels that you open up.

But. It's, it's, it's like a, it's a strategic lever. Like, how do you, you, you, you use the analogy of a quiver. Like, how do you like really load up your DTC marketing prowess and use it to crush it in retail? You know? And so like, I'm seeing more and more that like, if you want to build a big brand, I'm talking about retail and Amazon and talking with guys like Will right now, because like, You've got to think about your big digitally native brand as being omni channel and you got to think about it today before you're 50 million because you don't want to get there and figure it out, you 

[00:34:44] Will Holtz: know?

Yeah, there's so much to that and I totally agree with that, all those things you said. But I think what's also really important is that you need to be comfortable with your budget. And how do you scale your budget, which is really important when you're going omni channel and something that like marketing mix modeling, you know, it's not just getting numbers and saying, here's your ROAS, right?

It's actually optimization as well, which is if I have a budget, how do I allocate it in the right manner? We have an automatic optimization tool that will allocate your budget based on saturation points of your campaigns. And so, you know, where should I be pulling back and spending more on? And once you feel confident that you're getting your highest return, let's say on a campaign and you're.

Economics are good, like your economics are good, then you start scaling. And that's what we've seen with the best brands out there is that you get comfortable with your base, you get really strong, you start scaling from there. And then, because also retail economics are not going to be better. Like, typically, they're going to be a lower margin product.

However, you get more scale as a result of that. So, That's why it's really important to understand your own product and understand, like, how can you acquire customers? What is your margins on your product? The gross margins on your product? How is that going to be different in retail versus online? And that's going to then help you how to think about directing strategy.

And I think the last point, the data point on this is that, like, I've seen a lot of these brands that expand to retail, they're doing like impression brand free frequency and reach campaigns, like really more top of funnel stuff. And that might not look good for your econ business if you're kind of putting it all together, blending those stats together, because that's not going to have an online return for you.

But that's why you need a whole view of the business because if you're just looking at that and saying, I shouldn't spend on these campaigns because it's not having direct impact on my sales today. That's when you get challenged, you know, if you don't feel confident about that relationship between spending that online spend on top of funnel and actually getting a longer term return, let's say in retail.

Um, which is really, really important for your growth. For 

[00:36:41] Jon Blair: sure. For sure. Um, you know, another thing that is not necessarily tied to this conversation about like, um, attribution and, or like marketing or, or the media mix modeling. Sorry, some people I talked to call it media mix modeling. It's Mark. I don't know.

[00:36:58] Will Holtz: I think my marketing team told me I had to call it marketing mix modeling, but I was calling me to mix modeling, but it's interchangeable. Yeah, 

[00:37:04] Jon Blair: I was talking to someone, I was on someone's podcast last week and he's like, do you call M E R or Mer? He's like, I call it mayor. I'm like, Oh, you know, I call it whatever you want.

Marketing 

[00:37:13] Will Holtz: is 

[00:37:13] Jon Blair: percentage of sales. Yeah, exactly. Yeah. Um, I, the, the, uh, COO, I think he's the president now over at Nectar, uh, mattress. He calls it marketing cost of sales. And I actually, he was an advisor to us at Guardian and I kind of latched onto that. Cause it made sense to me, marketing cost of sales and as a percentage of revenue, definitely.

Um, but, um, what, what I was going to say is, um, We talk a lot as fractional CFOs for D2C brands about like connecting contribution margin dollars back to the efficiency of your marketing, right? And like one thing that we are starting to see with brand founders is, as I'm sure you see over at Prescient, is that like we understand certain concepts and same thing with you guys over there and like your tools do some.

math that like you're, the operator doesn't need to understand that stuff like in the weeds, but they have to have like a somewhat of an understanding of like how these things, how these drivers are interconnected and produce certain outcomes. Um, but the implementation for us of like understanding the connection between marketing efficiency and contribution margin dollars, we understand it really well, but Implementing that with the operators were really learning how to do that better and better and better.

And one thing that we're finding is the partnership or lack thereof between the operator and like, say the founder and whoever's actually doing the media buying, right? Whether it's an outside agency or it's someone in house and getting them to use your advice and your tool to produce the outcomes that are best for the business.

You might have the operator who understands one thing. And the, an ad buyer understands a different thing, right? And really, you can't have one without the other, or you're gonna run into issues. You're ultimately not gonna have an outcome that aligns with, like, expectations. One thing we have shifted to, or starting to shift to internally, is to say that, like, Hey, we want you to understand that there is a range of marketing efficiency, um, of marketing efficiencies that get to the same contribution margin dollars because the plug is scale, right?

How much can you scale your ad spend? And what we found is that when you give an ad buyer just one marketing efficiency metric, to stay within when they inevitably are not, they're scaling ad spend and that they start falling below that they freeze generally speaking. And they may not realize that if they were tooled up with knowing that like, Hey, even though marketing efficiency has dropped, you're on the path to scale enough that it's actually going to produce more profitability for, for the business.

And so we're moving to this kind of sensitivity analysis. Type of like model where we give a table to the brand and the ad buyer and say, look up the marketing efficiency that you think you're going to hit and then look up the ad spend that you need to spend at that efficiency to hit the margin dollar goal that we have for the month.

What are your thoughts on thinking about, you know, really, I'm sounding this in the marketplace. Stop setting one target and just holding yourself to it. You need to set a guardrail, but know the different scenarios that lead to the same outcome. Bottom line. What are your thoughts on that? 

[00:40:29] Will Holtz: Yeah, it's, um, it's interesting.

I like, I like that approach. I think it's, yeah, I do think it's challenging when people have one goal in mind in one number in mind. Uh, and that's, I agree with you, scale is the most important part and it's like, also, what do you want to do? Like, what is your strategy for the next period of time? Like, is it to become profitable or is it to, to grow a top line or is it to become efficient?

So it's, it's all these different things where you do need, I think, really good people that provide that advice. I think the point that you made is how do you connect like a metric to the end goal, which is let's say revenue or profit and like selling the connection between the two, I think is really what will help.

In the end, because all these numbers are really don't mean anything. And that's what I think, like, a lot of these numbers don't mean anything. If this is not your target, it's if it's ltd, if it's like long term customer, you can then share it. So that's why I think it's a little challenging to communicate it with the other boundaries.

I still think the most challenging spaces, there's too many acronyms, too many acronyms. Mer is an acronym that didn't, to be honest, be around, like, it's just, it's the inverse of a finance term, you know, marketing is percentage of sales that we just said. And like, it would be a lot simpler if we just kind of set it out there versus like abbreviating it.

But I think there's a lot of, that's what I've seen in the space, a lot of ways to obscure information versus just being very simple and directive. If you gave a grid, exactly what you're saying, and that's what your bottom line is going to look like. You know, that's how much cash you're going to have in your bank, you know, at the end of the month.

Perfect. Get this strategy. And I think people probably should do more like retroactive analysis and say, what did I fall in? You know, based on these metrics, were they the right metrics to measure, you know, initially to get to my outcome or not? And that's what I've seen again, in talking to the best operators that I've seen on my own podcasts that I've been doing, they are so outcome driven versus, um, KPI driven, if that makes sense.

And then the KPIs are very flexible based on what the outcome looks like. Well, 

[00:42:35] Jon Blair: I mean, the whole point of a good KPI of a good set of KPIs is it's a mixture of leading indicators and lagging indicators. And the leading indicator should be have a cause and effect relationship to the lagging indicator outcomes that you're trying to drive.

Right? And so that's what you hit the nail on the head from my perspective, which is like, We're not just trying to, like, measure these empty metrics, we're trying to say if these metrics are showing up throughout the month, here's what you expect by the end of the month, right? Um, but understand that, like, rule number one of setting a forecast is you're not going to hit that forecast.

Like, I'm really becoming less, I'm more and more bearish on saying like, when an ad buyer is like, Hey, what should I spend and what, and what should my, my return be? I'm like, well, listen, we can set a direction because like, yeah, inevitably when you're trying to scale spend, you, you do have an endpoint that you're trying to get to.

I'm fine with a setting a direction, but you've got to be tooled up with scenarios because we're not going to hit that single point. We're not going to hit that single combination of return on ad spend or Emmy or whatever you want to use. We're not going to hit that single point of revenue and ad spend.

We're not. So it's okay to set up the month to try to get there. But when we inevitably in week and of week one, week two, week three, are not on track for that. We want to tool you up to know what? Where could you end up? Could you still hit your goal? Your bottom line goal? If scale ends up being different, right?

You want to give them levers because what I just see, unfortunately, especially in the agency world, but I mean, in house ad buyers are plenty guilty of this as well as like, I mean, and dude, to their credit, I have empathy for this. They're, they've been, they've been beat up so often by brand founders getting to the end of the month.

And the ROAS or the MER or whatever was way off. And. Like the brand founders like what the heck are you guys doing? Why did you do this? this was the goal and Oftentimes if they went one layer deeper and looked at what contribution margin dollars ended up actually being you might find Sometimes not always but sometimes the ad buyer actually did something better for the bottom line or maybe they didn't but no one is able to to to bring the the the continuity between revenue ad spend and And bottom line profit dollars.

And that's what we're really seeking to do a lot of times. Like we're helping with other areas in the P&L, but we work with profit focused, scaling DTC brands. So what are we talking about? A lot revenue ad spend bottom line. How are they all connected? And like that communication is so key. 

[00:45:19] Will Holtz: Yeah. And that's what I love about, you know, Free to Grow and, and kind of what you're doing, which is if you stay at a top line KPI metric, and then you're not getting to the outcome in the end.

And the KPI, as you said, is just meant to be an indicator for you to understand how to actually evaluate your business and comes back to measurement, which is how are you even measuring row as how are you measuring these different things you're not measuring in a way that's effective anymore. Maybe you were using a pre iOS MTA, you know, kind of tool and you're if you're still using that number.

You're you're driving the wrong way at this point, like in my opinion, um, and you might feel comfortable with that. Same thing with last click. Um, it's a comfort thing in the end, but it's not necessarily going to drive the results you need. Um, so that that's what's been really challenging. And what I would say for those people that are actually doing that, it's again, you're not doing things wrong.

Maybe open to trying things differently, look for ways to expand like your education around these different tools that are out there and then use the tool that's best for you and your situation. Sure. Not every tool is going to work. Um, and I think that's always what I say about the other tools. When I evaluate them, the spaces, even our own tools, like ask the right questions, get confidence before you make a decision and don't necessarily just listen to everyone else in the space.

You know, saying this is the best next thing, uh, do your own research, you know, in the end and make sure you're making the best decision for your own brand. 

[00:46:42] Jon Blair: Yeah, I mean, some of the best advice I keep talking about our buddy Ryan Rouse because he's got a lot of wisdom, but like, he's, he is a guy that I really look up to in terms of going like, hey, you don't have to be like every other brand out there, like, figure out what metrics are your North Star.

Right. And define that and make sure everyone on your leadership team is aligned that those metrics are our North Star and make sure they're all using the same definition. If, if they're using the definition of MER for ROAS, You know what? Whatever. I'm not going to beat you up on that, but just have the same definition.

Yeah, whatever. Exactly. Yeah. Find your definition, align on it, and, and then you're good. Who cares if other people call it something different? We call some things different at Free to Grow, but we're, we're, we're aligned on what it means. And, and, and we're aligned like will said on the connection to the outcome that you're trying to drive.

That's what's most important. Cause at the end of the day, Why'd you start a business? You started a business to change the outcomes in your life one way or another, right? So like, that's what we're all here to try to help generate. So yeah, 

[00:47:41] Will Holtz: benchmarking only gets it too far. I think in the end, benchmarking can also lead to you into like kind of the wrong direction if you're not benchmarking against again, like no, no two companies are exactly the same.

So that's where also I see some caution is, you know, be aware of benchmarking. Again, it's a useful as a way to think about, you know, maybe trying to make some answers, but just be wary that not every business is the same. Markings would look very different 

[00:48:04] Jon Blair: across the board. 100%, 100%. Well, um, I feel like we could chat for, I mean, the rest of this year, uh, you and I on episodes here, um, there's a, so, but I'm going to have to cut us here.

Um, we're at the land, the plane before we, we end. I always like to ask a personal question. And so, um, just want to ask you, like in this season of life on the personal side of the house, what's something that you're, you're really loving these days? 

[00:48:33] Will Holtz: Well, I'm loving, hopefully my first kid coming, you know, in a few weeks.

So that, that's been a nice, uh, way to prepare. But you know, I love that for that. My wife has just been incredible, you know, throughout this whole kind of journey so far. And I just appreciate like having some personal life and especially, Even like in the, in the Chris sense, um, in my current job at Prescient, like they're very family first, family focused, and I've, I've really appreciated that.

Which is like make time and carve out time for, for what you need to do personally. So, uh, that and a bunch of the sci fi books I've been reading. It takes my mind off all this other, other stuff that I'm doing across the 

[00:49:11] Jon Blair: board. Dude, I love that. I love that. Well, congrats to you and your wife. I'm super excited for you.

Um, I mean, as you know, with my, my three little kids, it's, uh, it's, uh, there's no greater journey than being an entrepreneur and a parent at the same time. It's like, uh, they're both very entrepreneurial in their own right. For sure. And, um, I know you guys are going to crush it, um, really quick. Where can people find more info on Prescient and on you?

[00:49:39] Will Holtz: Yeah. Um, starting with Prescient, uh, it's very hard to find us, uh, cause our website domain is not great. Hopefully I'm gonna change it at some point, but, uh, Prescient, um, dash AI dot IO is, uh, the website. Uh, I'm mostly on LinkedIn. So I do post thoughts from here and there, and I do have a podcast, uh, called Dont VLOOKUP.

Uh, with, with friends, uh, across the space. So hopefully that's also for data driven, you know, operators out in the space as well. We do talk a lot about a lot of the concepts that Jon talks about, but no, I appreciate you, Jon, for having me on. It's been a, it's been a fun one. 

[00:50:12] Jon Blair: Absolutely. Don't VLOOKUP, you have to check it out.

I mean, one of the best podcast, uh, names of 2024 for sure. I love it. When I saw you guys launch it, I was like, yes. I mean, being an Excel power user myself, I was like, this is amazing. Exactly. There you go. Um, but thanks for joining. We'll, uh, definitely check will out, um, on LinkedIn and, um, look, if you want other helpful tips on scaling a DTC brand, consider following me, Jon Blair on LinkedIn, and if you're interested in learning more about how Free to Grows e commerce accountants and fractional CFOs can help your brand scale alongside healthy profit, cashflow, and confidence, then check us out at Free to Grow CFO.com. Hope you guys enjoyed today's episode and until next time scale on.