Diversify Now: The 6-Week Q4 Window Closing Fast

hey, here's a long-term plan for how we grow. This is actually a way to sort of manage risk as you go into Q4. So look, why don't you talk to us a little bit about the various forms of diversification we're going to talk about today and the way we've maybe changed our thinking on them. This episode of the e-commerce playbook is brought to you by Outer Signal.

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You'll get your first 1000 customers in rich for free, plus 50% off your first two months, when you upgrade. One more time, Outer Signal.com/thread to discover the VIPs buying from you. Hey folks, welcome to the e-commerce playbook podcast. I'm your host Richard Gaff and Director of Digital Product Strategy here at Common Threat Collective. And I'm joined today and what I want to start out is redressing some rocks.

I'm joined today by our president here at Common Threat Collective Mr. Luke Austin.

“And I believe last time he was on the pod, I referred to him as our senior VP of e-commerce”

growth or whatever job he used to have. And so, I want to correct the record.

I missed the first five minutes of the meeting where they announced the promotion.

But Luke is president here at CTC now. And let's quickly say, Luke, how does that feel? Friend. It's kind of like, you ideally, I think we all sort of step into the areas that we see as being impactful and start to solve problems that are necessary, problems to solve on behalf of our customers and the business and over time you sort of look around and, okay, here's the, this is the void to fill, or this is the job job to be done. So, yep, show, show up normal day.

Got my kids this morning at the workout this afternoon. Got a bunch of problems to solve. But yeah, I appreciate the recon to you, Richard. I was distraught. I was distraught. Yeah. Well, that's the attitude we like to see it later. So, but anyway, I just wanted to acknowledge that. So, our president Luke Austin is joining us today. And what we're going to talk about today is, obviously,

it's almost September here, which means Q4 is right around the corner, which means holiday is

right around the corner, which means prep should have started yesterday. And a little bit, what we want to talk about today is diversification. And in a couple of different kind of, couple of different strands of conversation around that, we frame it up maybe by in the past on this podcast and elsewhere in our content, we've talked a lot about channel diversification, specifically being sort of unnecessary, or maybe not like the right next move before you sort of

nail downbed in Google. But a lot of the game has changed in terms of our ability to measure our ability to understand the actual incremental impact of those platforms. So, we've changed our tune a little bit on that. So, that's part of what we'll talk about today. And then we have a

“couple of other diversification topics. But I think the point we want to frame this as is that diversification”

in these various ways is not simply a growth initiative in terms of like, hey, here's a long-term plan for how we grow. This is actually a way to sort of manage risk as you go into Q4. So, look, why don't you talk to us a little bit about the various forms of diversification we're going to talk about today and the way we've maybe changed our thinking on them? Yeah. So, specifically we want to talk about is how we define channel diversification and

creative diversification. And what we see is being helpful pursuits in each of those categories. I think in those, those two things specifically, channel and creative, and then diversification that it can be defined in so many different ways by so many different people and then pursued in a lot of different ways as a result of that definition that can be what we've seen can be some of those pursuits can be more helpful than others in terms of our vantage point

and that brands that that we see within our with our data set. So, what does helpful useful diversification of channel and creative look like for e-commerce brands? And what we see across our data set that that lends itself to producing effective contribution of margin growth for the brands that are that are let's start with channel diversification. So, this topic, I think there's as has been any topic in the D to C, D to C world over any number of months or years,

has has what our sort of approach and perspective on it has changed over over the years as a result of a number of things, which is for for many brands like meta, meta, still king,

and still like across our data set, Apple ovens, one of the fastest growing channels, 250%

“year or year growth in terms of it, but it's still low, low, single digit percentage points in”

aggregate, it's just like relative to meta and Google, the amount of spend and the amount of impact that you can have in terms of the focus on those channels, it's just such a small piece of the pie and you can sort of extrapolate that down to YouTube, Snapchat, Pinterest, TikTok, x ads, CTV and sort of on down the line from there, right? So, there's a trade-off and sort of focusing meaningful attention and resourcing to things that occupy in aggregate on the data set, a very

small percentage of the overall pie, right, which is like, okay, these additional channels you're trying to diversify in, could you be the outlier to where that channel becomes 10% of your media mix, 15% in it, actually occupies a meaningful portion of the pie? Yes, we've seen it, but in aggregate and for the most case, no, like that channel is going to like you go to 2% of your overall media mix, 3%, where like you can just get so much more impact out of the 97%

“going to meta and Google and so the trade-off becomes too full, it becomes a resourcing constraint”

and it becomes a measure measurement constraint around these channels being worthwhile pursuits in terms of pursuing diversification meaningfully, which is, okay, we want to launch on net new channel A, what we are going to need to do is, is develop resources in the form of meetings and conversations and individual people to be able to manage those channels and build up the ads and optimize and the platforms, et cetera, so we have to dedicate the resources and then, too, we're going

to need to have a measurement framework and do some measurement work to really understand the true impact of this channel because as we all see the incrementality factors of every channel is widely disparate and we have to get clarity on that piece as well, to where, again, like, if that channel is in aggregate, maybe it becomes 2, 3, 4, 5% of your media mix, like, is that trade-off worth it relative to dedicate the resources and the focus on these core channels that can produce

a lot more and, and for a lot of brands, the answer is still no, like, it's, it, it, it potentially

isn't, potentially isn't worth it. What's changed though? So what's changed is we've devoted a lot of our tech and resource in, as it relates to stateless into automation around the, the media buying and building on these platforms. So we have pushed to build, built in stateless, connected to the adlog, which connects to the dam, the digital asset management sort of system for all overbanned. So we can take, we're, we're literally launching thousands of ads a month per, per individual

brands and, in many cases, through this system and the tech is enabling this workflow in a way that it was, that was not enabled before and we're, we built that around meta and now it's expanding to now push those same exact assets to TikTok and YouTube shorts and all the other 9x16 vertical placements, right? So the resource against race is becoming less and less of an issue and that in the, in the wake of the platforms and how consolidated they're becoming an automated and then the,

the tech that enables pushing them that way. And then the second piece is measurement. Historically,

to get a really good measurement read on a channel, working with a high-level measurement tool could cost you on the low side $5,000 a month to most likely $10,000 plus them on. To do think of a reality, do you hold out testing like get a really good stat, say, experimental, experimentally driven read on net new channels and the impact. And so you're like, okay, I'm going to spend 10 grand on the measurement solution and the resourcing and spend on the channels

that work with it. Well, that's something to constrain anymore either because we've built our geohold out solution and the data team supporting it and turning here at CTC as a part of our core workload and the profiting where it's, it's the resourcing and the cost constraint on both sides and with the measurement is just not as, it's not a big barrier anymore. It's a much lower cost, it's much more streamlined. The tech is enabling so much more of the workflow that to launch

app love and and say, maybe we get $15,000, $20,000 a month of spent on this channel, it pencils. It actually makes sense in terms of a pursuit relative to the resourcing and measurement solutions available. We're previously, again, we're going to get the $20,000 and spend 10 of that we're going to spend on the measurement solution and resourcing. Then after a cog's like you're losing money on that pursuit relative to like what the upside impact is.

So those are the things that have changed as it relates to channel diversification and what that

“enables, I think it's really important to sort of teap what historically has been more of a”

barrier from our perspective and what is enabled now to make that less so, the case. Yeah, so yeah, just in the recap, like there's specific types of tooling that you need to have in place in order to make channel diversification make sense, at least at a smaller level. So that's something that we were told for now, but obviously as you're alluding to,

there's another type of diversification that is, if anything, more critical moving into,

it's creative diversification in a sense, but it's not the way you think. So talk to us a little bit

“about what, how, how to do approach diversification in creative here. This episode that you”

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Once more, outer signal.com/thread to discover the VIPs buying from you. Yeah, so creative diversification. We creative volume. If you were to sort of put us on like a bit a spectrum line of diversity with volume and CDC like probably we get indexed more towards the volume side of things. Okay, why do we why do we do that? Well, diversification of creative as a pursuit and of itself is is it really challenging and we'd argue because of the subjector

subjective nature of it is like a setting that out as your pursuit. Like I want to have increased the diversification of my creative by making more creative assets from this source. Like that's

“a faulty premise to start out because like what does that even mean? How are you measuring it?”

Met is getting better at showing us how they track the entity ideas on their side and so more

that will become transparent. But what gets challenging is that the volume these things are not disconnected. Like you need increased volume to be able to to be able to have increased diversification. But if you're a consolidated in terms of your sources of that creative volume, you will not the diversification necessary. So our perspective on what is helpful diversification as it relates to creative look like for e-commerce brands is that you have diversification of

production sources producing a high volume assets. You have at least three different sources of creative in terms of people, vendors, platforms that you're getting creative from. That is how you get diversification from those assets because you have varying producers that lend to different creative types and different creative styles and all the different things that come from that versus like here's our creative resource. They're going to make 500 ads this month and we're going

to ask them to make diverse creators. Okay, what is that mean? Like how are we how are we to find it as a relationship on source versus we have this platform this agency, these internal folks, et cetera, that each service different projects and production forces and ramping up a volume from each of these sources will also continue to expand out the amount of sources that we have available to us. And what we all see happening with this and the wake of TikTok shop,

tribe, yuka has they just released, they've historically been sort of more to TikTok shop focused platform, they've recently released like their sort of tribe equivalent, growies doing something similar. So all these platforms that are creative create a marketplace is oriented. What we've seen is that like the way to achieve the highest volume and that largest diversification of the creative is like if you're using these platforms and these affiliate networks effectively via tribe,

TikTok shop, yuka, et cetera, you can be getting a thousand ads a month and they can be coming from 300 different production sources, right? Like 300 different creators each making three ads each,

“you know, let's 3.3 heads you have whatever the map. So like but that's how you get to a place where”

you're like you're making thousands of ads a month and the brands that are growing effectively, that's what that's what's happening. And so a year ago as you're creating 100, 200 new ads a month of the out of counts like oh that's pretty solid business, you know they're doing doing this well. Now brands are creating 1,000, 2,000 net ads a month and they're how to count them. And those are coming from production sources that are like in the 100, right? Because you have

this network of creators plus you have static imagery coming from this source, plus you have your internal team doing this and you have a wide variety of how your brand is being how your brand and product being communicated and perceived in the various channels, because it's coming from so many different perspectives and sources that that is how you solve for diversification. You don't solve it, solve it, they like grid formats, let's get of our

thousand ads, let's get this movement, this goes, let's go for these five personas and then let's

source needs to be completely different to achieve the level of diversification at the level of

volume. So sorry. Yeah, I mean yeah it's a good point because what you're avoiding is a situation where you have like say creative strategists like one creative strategist that is trying to come up with a bunch of different angles or put on a bunch of different hats and be a bunch of different people or whatever which is essentially what you're asking them to do. And instead just ask actually find 300 different sources who are going to have different perspectives and different

ability or different kind of methods of creation and that sort of thing. So talk to us a little bit about and you already alluded to some of it, but what the typical like what a typical like healthy creative diversification stack looks like in terms of like what sources are these people

pulling from. So so I think most recently what we are in the round is a brand so I have three to

forward distinct production sources for the creative that's like a helpful starting point to get to

“which is one unique understanding of how many ads you need to create every month. We've created”

the creative domain model, so I assess that deal with what that looks like. Do you need to be creating 200 new ads next month or two thousand times based on spend degradation, how you can perform and you can surface its targets, what you spend targeted is it's fun. So all the things that are necessary to look at. So getting understanding of the volume of what the job to be done is. And then from there having three to four or more distinct production sources to be able to get

to that plane of volume is a good place to start for anyone to think about okay what is a source

that is going to create or low-fi UGCL content. Okay we're going to start what is our source

that's going to create static branded imagery using the existing assets have what's the sort of motion graphics based on existing library of assets and what's the source that's going to are affiliate work of create that work that works. So that's it that's a helpful starting point but sort of inherent into that is one of the production sources should be subversion of creator creator led percentage of GMV high volume high diverse you know

certain work of creators that are coming through that is going to be achieved through a combination or focus on TikTok shops, tribe, UGCL one of these creative market places where you're able to get 100 creators making making a handful of ads each on behalf and that really is going to get you to a place where you have 100 different production sources for your brands that are making a thousand plus ads a month right like that's the the building thinking about it that way I think it's

the the stair step approach sometimes is necessary for brands to think like okay we need to create 500 new ads a month based on based on where we're at we currently create 50 could we get to 100 next month and add in one new production source like that's that's helpful like let's make progress towards the goal but I think the exercise for most people is like how how do we get a thousand new ads a month or more from 100 or more different production sources being production

again vendors individuals on the team or network and/or network of creators right so 100 different sources a thousand it's in terms of the output what is what is going to be necessary

“to be able there I think is is an important exercise for any brand to think of because sooner”

later that's just it's just that is just a barn all of what a what brands are doing and how they're showing up in and so sure and it's why we've we've leaned in pretty heavily on both TikTok shops watching that division as well as an affiliate management service where we're leveraging tribe and you can some of these platforms to be able to manage this workflow for brands so that we can help you get hundreds of ads among from all these different production sources

because it just is what the what the bar is in terms of what this what it looks like so then maybe this goes a little bit without saying but obviously it's it's almost a temper as I said at the top of this episode and Q4's rapidly approaching it's talking about like the the importance of kind of nailing this down in the next six-day weeks let's say if you don't already obviously like there's producing black Friday creative that's obviously part of it you know there's there's

a volume and a dissert of an additional volume element there but talk a bit a little bit about like

“this particular part of Q3 and it's important for for prep so on creative what we all know is”

that a good chunk of our top-performing ads over any marketing moment or holiday period are still going to be your top-ever green that's right and it's going to be a lot of this low-fi UCC content that's driving driving so that's the impetus to find this find this right now because it's going to take it's going to take a number of weeks to ramp up this workflow get to the output volume necessary also that's going to be very new customer acquisition oriented over these next

few months and all those new customers are potential reviewers for you and Q4 so ramp it up that production prior so that you have a lot of evergreen high-performing evergreen content a lot more

months you're going to the the the math on trader let content is the same as any of other content

which is which is that percent of your ads are going to account for 80 percent plus of your

spend right this this outlier this outlier idea which is you're going to launch a hundred creator ads and three to five of them are going to be the meaningful volume drivers for your account like to stand out and so the the important workflow over the first these first couple months is going to be launches high volume and then identifying here's my top 20 to 30 create that are that are making content it's resonating with my customer that's selling product and then I can

double down on to increase content from them specifically potentially put them on retainer negotiate structures with these folks that we can lean into this more and then what you can do as a result of that then is around the cue for timing or leading up into that do content programs

with those individuals oriented around your offer shines right like have an early bird offer

running have your top 20 creators you're going to work with them on creating on creating content specifically for your early bird offer in the back end of October November and right BFCM so you're going to have all this great top point evergreen content that you can continue to build on but then you're going to be able to hone in and sift through who are my top creators and then how do I create a strategy with them where I'm able to get content from people that I know are top

performing that's actually focused around these these core marketing moments for us in addition and makes an end to our you know static headline big a sale year as that we're going to have running exist well right so that that's that's important on the creative on the creative side of things it's

going to is just going to pick up for the brands that are engaged in this now or or dedicated you

know these next two months to really ramping ramping this up and the same holds true for the channel diversification topic as well which is the channels there is a number of channels that were pretty interested in a couple months in helping brand push against Apple oven is just going to

“continue to be in the mix tick talk there's not a ton to be said there I think it's for brands”

running on shops running the acts is incredibly important it's just as part of the game and then the tick talk that's platform as well is is important but heading up into Q4 YouTube demand Jan and then he connects to TV or two other two other things that weren't exceeding against with brands and putting the other some pretty interesting things we've been working on with deeper partnership with mountain on the CTV side and then with the Google folks

as well they were out here and we have we have some pretty interesting things that we've been testing with some brands of user recent months that were putting together that is YouTube demand can I combine with connect to TV geohold out incrementality testing for those channels over these coming weeks in Q3 to lead up to Q4 that were that were excited about and that we've seen impact from so like that that's the that's the reason to do any of this over the next couple

months it's kind of the kind of the window to pursue the biggest highest impact opportunities you see on the channel the investigation and the creative diversification sides right and as uh and as the things roll out of course we will tell you about them here but yeah I think the overall

“point being that like these diversification initiatives have now become critical if you want to kind”

of dig up all the opportunities you possibly can before Q4 actually hits and I mean it's hard to believe that we're in that season again but as time goes on here as we approach we'll get more into the specifics that you mentioned Luke kind of seeking with your creators on offer strategy and that type of thing will definitely dig into that more and talk a little bit about what the flow of Q4 looks like as we approach it but cool yeah Luke anything else you want to hit on this topic

it gets the diversification word is is one worth getting really specific and clear about in defining because in the subsequent actions for you your organization the partners that you work with that the action is going to follow how you define this thing and what and the importance of it with the organization so for us creative diversification is diversification of production sources that that gets you to the necessary volume of add output to achieve your business goals and then

channel diversification is a is a math problem right like what is the necessary resources and then measurement solutions necessary to engage in this channel based on the aggregate data set how much of our total spend do we think it could make up is that trade-off worth it relative to it and the bar is getting we've been lower and lower relative to the cost and sort of barrier and tree which is why we're seeing doing more of this makes sense in terms of the terms of the math

“the math problem the output on the other side but that's how we think about it that's how we think”

it's the most helpful to engage with this topic and these areas especially as we had into

somebody who's doing it already somebody has the tooling to make channel diversification and

“expansion and creative diversification makes sense for you you know who to call comment for code.com”

hit the highest button let us know you're interested we would love to talk to you particularly

if you were an eight figure brand about building this system for you so yeah that's going to do it

“for us for this time and we're in Q3 almost to Q4 and there's going to be a lot more on this topic”

because we go so all right take everybody thanks for listening