Don't Go Dark: How DTC Brands Should Plan 2027 Marketing Budgets | Harness the Halo 6/6

And we could see within our system, when you lean into the optimization process and the algorithm, you can actually see better results and those results compound year over year.

We have quite a viable evidence that when you spend at the top of the funnel and spend more at the top of the funnel relative to the bottom of the funnel, it lifts all boats.

“I don't think you should be scaling within one platform. You can have different tactics, you can have more video, kind of top of the funnel.”

That's going to interact with your tactical short-term, bottom of the funnel activities, but I think diversification is something that we've seen as more beneficial to the brand. Hello, and welcome to the DSE podcast. This is Harness the Halo, a six-part series with keen on how better measurement earns you the right to make bigger bets. This is the final episode six. Today we're talking to the person who built the measurement system. Greg Dolan is the co-founder and CEO of keen decision systems. Greg, welcome back to the DSE podcast. How you doing?

I'm doing great, Eric. It's great to be with you. Just take me back to the beginning. What was it that you were seeing brands doing that made you want to build keen? It's been hard to believe it's been 16 years, but I was a brand marketer myself and the CPEG world for 10 years. I kind of lived through the challenges of traditional marketing mix consulting. In the fact that it took six to eight months to get a PowerPoint deck and

wasn't really helpful in making the next decision. Ultimately, that entire industry was right for disruption,

and felt like technology was going to disrupt, so created the software, our software system, that essentially serves as a closed loop system that takes all your data and real time keeps up with the market. Most notably, then ties directly to financial outcomes, which is the challenge that me and every CPEG or any other DSE, any other marketer is facing right now. How do I take all the information that's available to me,

“the best intelligence, and then translate that into a decision that drives a better outcome?”

So that's the journey we've been on for 16 years. A little ahead of the curve, you're saying in the pre-interview, we're living this age of AI,

everyone's turning to AI to help kind of plan their next move. You guys are doing this long before

LLMs. How has the advent of LLM and AI sort of lent to your model and its momentum? We've been waiting for this time for a really long time, so we like to say we're AI before it was cool. So really based on machine learning and how do you make sure that you have a model that continues to learn from new experience and new data points? So we are very excited about the age we're in and kind of where AI is taking us, and that it helps through the agent process,

agentic process, it's actually helping marketers make faster decisions and leveraging those agents that can drive better outcomes as well. So we're excited about LLMs as they continue to build,

“as they continue to be smarter, that's what our model is based on. So we have our key”

AI cortex, which is our intelligence system that really fuels a lot of the recommendations and decisions that come out of our system. So we're excited about the world becoming more and more agentic and what that means in terms of speed and measurable outcomes. Can you walk me through? So you described the process, the cycle as measure plan by and reconcile. Can you maybe walk me through without naming a brand necessarily, but walk me through what that loop looks like? It's getting faster, right?

Because when we when we start we're generally taking you about two years of data as a starting point, but then the models can be updated every single time there's new data points available. So that could be daily weekly. And AI is actually enabling those faster decision cycles. So what we're doing is taking your historical financial information, your historical marketing activity data, so your impressions, your clicks, your GRPs for TV, marrying that up with our own intelligence. So it's a

Bayesian process where we start with our priors and then every data point data signal is actually pushing and pulling those priors in the direction of the data. And it's all being done algorithmically within the system with a click of a button, right? So as soon as data is getting in, you click a button, you have a measurement model. So you're getting all of your historical ROI's and contributions, but most importantly, then the market can make the next decision. So how do I take that information

in the latest model and then drive the next decision through the optimization process? And then what you get out of the system is a week by week buying plan. So it could feed directly into different buying systems and we're looking to integrate more and more with those ad platforms that are actually buying the media. And then once we have new information, we can actually reconcile the actual versus what we forecasted in the system and then those new data points will create the next model

that's almost instantaneous now with data coming in, mapped directly to our system. A brand could

come in and have a new measurement model every week to then make the next decision that feeds directly into the buying platform. So it's completely automated and going to drive drives the process directly from the data coming into the system. You also have, I guess, your Bayesian network, I think you call it the marketing elasticity engine that happens. It's sort of the insights layer that you can get insights even before you connect your particular data. Like I'm sure your data

really completes the loop, but you can get a large amount of data just from the benchmarks that you've created for other brands like yours as well as different channels and platforms. Talk about the insights layer a little bit. Absolutely. So that's really what drives our entire system. It is

“our brain. That's why we call it the AI cortex. And as part of that, the elasticity's reside,”

the prior is reside within that database. So we have about $48 billion worth of data and

spending it going through our system. It's growing at about 750 million per quarter. So we have more more brands across different industries with information feeding into the cortex. And ultimately, we could pull out benchmarks and performance indices for different size brands and different categories with different distribution models. Show you exactly where you spend and your results in our comparative to the rest of the database, similar companies, even companies across different industries.

So being able to leverage that as another data point to say, am I doing the right thing that we know is driving better outcomes in our system? And we could actually track adoption and how that adoption then translates into better outcomes too. So part of the challenge that we have with AI right now is everyone wants to use AI, but we're not deploying it and we're not trusting the models. And we could see within our system when you lean into the optimization process and the algorithm,

you can actually see better results and those results compound year over year. So the companies are actually leaning into the decisions coming out of the system are actually seeing better results in the near term, but also they compound year over year and become even more significant as the brand has more experience. You mentioned this process being automated and I think what a fairly new, it's something actually we've taken on at D to C. We've we have our automated

media buyer Gary now who's an agentic buyer who's you know checking campaigns every 15 minutes. How does this automating buying process, which some brands are embracing, change the planning conversation? It's continuous, right? So you can almost plan, have a new plan every single day,

“right? And continue to optimize as you're learning, right? So that's the key to this process.”

You're learning from every data point that's coming out of the market, right? So you put a dollar in, you buy media, you're able to get almost an instant understanding of how that's performing and then benchmark that against other brands of similar size and in similar industries, right? So it's completely changing what had been a set it and forget it and you know start annually and then it's gone accordingly and now it's you can plan weekly, particularly with you know digital channels

where you have really good data and that data is flowing in so you can update the models more frequently. We've had some interesting hot takes on in this series and I think back to our most recent one with CFO Drew Fallen talking about brands at certain sizes and him sort of saying you know a lot of this this this series is about being able to take bigger swings top of funnel in brand building

exercises. He sort of had the hot take that brands under 10 million shouldn't even really be thinking

about that and that you can scale to yeah I think he even said like a hundred million or something just on meta. I'm curious what your thoughts are on scales of brands and like at what point they should start thinking about those bigger swings. Well I'll be be thinking about it. If you want to build a brand I would be thinking about it from the beginning right because we know and we have quantifiable evidence that when you spend at the top of the funnel and spend more at the top of

the funnel relative to the bottom of the funnel it lifts all boats right so it's going to have longer term impact you're going to have you know longer term residuals that are help to help impact your business but also it will interact with all the bottom of the middle and bottom of the funnel marking activities as well right so those will become more effective when you have top top of funnel cover fire as we like to say right so you're building a brand you're having

longer term impacts and there's a halo effect on all of your other marketing tactics you know throughout

“the funnel so that's that's what you know any brand of any size should be thinking about”

if you're looking to build a brand because if you spend way too much in the bottom of the funnel it's going to have a short term impact and over time it's going to be more and more expensive to get the same outcomes right because you're not building brand equity at the top of the funnel so that again I don't care what brand or what industry you're in you you're in the business

the funnel activity gets you at you know for brands of any size but is there a channel restriction maybe with sizes where whereas like you know you might be thinking about top of funnel brand

building for you know a brand under 10 million you might be doing that more on meta than moving

into out of home or streaming or app level or any of these places do you have anything to say

“around channels and and whether you should be looking at specific top of funnel channels or just”

top of funnel activities within things like meta I don't think you should be scaling within one platform we've seen that as well right so you can have different tactics you can have more video kind of top of the funnel via meta that's going to interact with your your more tactical short term bottom of the funnel activities but I think diversification is something that we've seen as more beneficial to the brand as well so surround sound being you know having more

span across they're also going to interact with each other so we're going to see meta and Amazon come interact with each other as well which will have a long term more of a long term impact as well so I think just the key like anything else is really being conscious of the margin returns right so that's a big thing that we focus on right so how it's not the last dollar it's not your row as it's not your historical ROI or contributions it's really about where

you are on that response curve and where you could be spending more profitably and profit is key so it's not just about revenue it's about is it actually driving long term profitable growth as well which is what your marginal returns will say so once the impact of the next dollar spend relative to everywhere else you could spend right so being having a really good understanding of that

“regardless of whether you're in one platform or across I think it's the key to make sure making sure”

you're spending to drive long term growth and sustainable profitability I don't ever like to pick on one channel but one of the the hot takes the true offer to in the last podcast what he

at his scale he'd never seen app love and work at scale is that something what do you think about

that statement is that something that because I've heard lots of stories about it working in the wild yeah I think it's a broad generalization I don't I don't agree with it so my hot take is that every brand is is different a lot of them behave similarly we've seen that on our own database but you have to look at what the objective of the brand is and the business and then where your consumer is and then how you reach that consumer as profitably it's possible right and that's

where you get a good understanding of what your channel makes should be not only your channel mix but also your timing and fighting right so if you're spending too much in certain weeks you're overspending right so there there's also a timing element to making sure spending optimally as

“well and you know I think that as long as you can buy it efficiently and it's having the intended”

impact and outcome associated with you driving profit with the man then you know I don't I don't think that any one channel is you know any worse than anything else right they all kind of scale based on how it's changing behavior and how it's driving behavior with your consumer both Google and meta now give away free marketing mix models I think it was on one of our last podcasts someone from your team mentioned that's the danger there is that they're

grading their own homework I'm curious what what you're thinking is on the in-platform media mix measurement tools and where they fall short well they're my topic right so it is kind of brand your own homework and they also are not calibrated right so one of the benefits of having a system that's been around like ours for 16 years and having our AI cortex and the marking a elasticity kind of built into our prior prior database is that that's calibrated

all those results and that starting point is calibrated across hundreds of brands over over a decade of information right so every single time you're going to have a stable result and a consistent result every single time you run a model which is really important for decision making right if your models aren't stable they're going to give you the wrong answer so not only are you know Google and meta kind of providing their own solution within their platform which

grades are on homework they also are reliant on running a lot of experiments to drive the priors in their system right so every single time I'm going to have to shut off you know meta and do an AB test to understand what that prior should be that prior automatically is calibrated

in our system and comes out based on 450 different brands and 48 billion dollars worth of

of spend right so I think it requires data science resources it also requires a lot of other information that would feed into it which cost you time and money so I I think it's you're going to need a big data science team a lot of spending on experiments in order to run those effectively plus then you're only getting a view of probably a bias view of their own

earned you the right to make bigger bets can you without mentioning the brand are you able to

to give me an example of the biggest bet you've watched a client make based on what the model showed

“and how it played out I think the biggest thing is a lot of these brands are creatures of habit”

and have spent inefficiently for a long time so you know think about your your biggest kind of enterprise consumer package goods company right that's been around a brand spin around for a hundred years they had been spending the very seasonal business they have been spending very heavy and high seasonal periods for decades right and they weren't driving any better results well we were able to show show them is that there was an opportunity to actually spend more

consistently week over week and less during the seasonal periods and they'd have a a better long-term return so that was a big bet to say you know I've been spending almost seasonal summer business right so where we see a lot of our business and you know the in a certain season we convinced them not to spend as much during that season and surround that season with more spending and they're actually able to drive more significant top-line growth and they were more profitable by doing that right so

“I think you know just overcoming a lot of long-held I think incorrect beliefs about how to support”

your business is probably the the biggest thing and we need brands that are kind of open-minded to that right so I think the quite the comment you made around will certain channels don't scale that's not our experience right so let the data and the information guide the decision and then you can reconcile as you get new information but being open to kind of those those bigger bets and and approaching the market differently than you had in the past to get those those better results I think we've

talked a lot about I think in our last podcast and almost every podcast I have with the brands of certain size people are talking about streaming as being a really great top of funnel activities that supported most I know it's gonna depend on the brand but you're seeing that's supported in the data absolutely we're seeing more and more more more video kind of driving that and that's becoming cheaper and a lot more approachable even for smaller brands right so that's definitely an area that

we're continuing to see grow and we're not the biggest company ourselves and we're actually pursuing that as well right we're looking to do a lot more top of the funnel video in our own marketing activity and we're seeing that those results you know follow follow and drive more significant long-term sustainability I was gonna ask you about that because keen is a brand too are you are are you eating your own dog food are you using your tool on keen marketing we we have been using

it for for since the start so yeah we we let it guide all of our decisions we we just went through our

first iteration of our twenty twenty seven plan and and the keen platform and our operating system

drove all those decisions right so and we're updating it you know weekly monthly it's a weekly depending on you know you know decision cycles on our side as well but yeah we're those results are direct inputs into how we plan our business as well selfishly I'm curious about the podcast impact how is podcasts advertising it influenced your your your growth yeah it's a great top of the funnel activity so if we look at our business we're trying to build our brand so podcasts are a

great way for us to be able to drive that and build awareness for what we're doing in addition to some of the you know conferences and podcasts are probably our two biggest things that are really driving our brand equity and awareness in the market you wrote in Forbes about avoiding knee jerk budget cuts under tariff pressure brands are building or I should have built our currently building their twenty twenty seven plans right now Claudia said her clients are being a bit

conservative giving maybe some of the the financial pressures what what are some mistakes you expect to see in twenty twenty seven marketing budgets cutting that's the biggest thing like you you can't go dark because when you come back it's going to be a lot more expensive to get back

“to the place where you were before the cut and that's what we've we've seen that's that consistency”

of spend you know P and G's been talking about this for decades they have to spend through recessions and difficult time periods and we we see that in the data right so you have to recognizing that you're going to you know see cost pressures from the tariffs trying to find other places to cut other than you're working marketing dollars because that's going to ultimately you put you in a better position when things get better the hopefully the

tariffs go away and then you'll be able to have that momentum in the marketplace that you can then take off so that's that's the the biggest thing that we see it's that always the the reaction if I got cut at five cogs pressure my costs are increase I'm going to cut below the line because I

can't take price and it's always marketing so find those nine working dollars first the ones

you're cutting the least valuable or at least impactful spend and you need a system like ours to be able to tell you you know where where the the cuts gonna hurt the least but keep the let keep the lights on keep spending no matter how painful it is as long as you can do that find other places the cut that aren't impacting the consumer and and ultimately you'll be on a lot better position better position than your competitors when the market turns and you know and the environment

becomes more favorable and it's a double way me because as competitors pull out of the space that you know the inventory gets marginally cheaper necessarily and so it's like you don't want to be the one whose who's pulled out when your competitors go on all in because it's going to benefit them as

well as hurt you yeah that's one of the one of the things we always tell our clients like find find

other places to cut because we can show you how you know quantifiably it's going to impact negatively impact your business even with the increase in costs from the tariffs so one of Drew's maybe hot takes was that the only number he cares about as a CFO is cac on I guess on the growth side if you had five minutes with him what would you show him to change his mind I mean I would I would show him the full P and L impact I mean I I think as a CFO I mean you're looking to you know

create shareholder value so in our system we actually show net present value of your marketing right so you if if your marketing is building profitability and and value over time that's the most important number that's how you're evaluating capital investments at the end of the day so one of the things

we're always trying to get our clients to think about for a marketing perspective is that it's not an

expense it's an investment right and that investment builds value over time and that's why we have NPV is a net present value is such an important metric and KPI within our application I would say

“to Drew that that's more important than strictly just looking at cac because that's a that's how”

your value and your profit is driving value over time which is you know what strong brands do and that's where sustainable long-term profitable growth comes in a play who should own the marketing budget the CMO or the CFO the CMO should you know I think there's an upskill necessary I think you know we always talked about the CMO needing to learn the CFO's language there's been way too much focus in the past on well you know what we would refer to as vanity metrics and KPI's

that you know the the CFO just doesn't understand and that's why we have NPV that's why we talk profit that's why we talk marginal ROI in our system because you know we're equipping the the CMO with the language and information necessary to have that conversation with the CFO and be accountable for the budget and the impact it's having not only in the short term but the long-term in terms of

full P&L you know top and bottom line impact I never want to give budget back to the CFO

“so I think the marketer has to own it but also be accountable for where they're spending”

and the the expected outcomes that they're looking to achieve I actually just read a piece that Brad wrote in I forget what what publication it was it just came out this past week but it was about you know with with employees being able to use AI you really need to be focused on on almost every member of your team really not just understanding their role in a silo but really understanding business but like the the business outcome of of what their activity is

that's something obviously you agree with hundred percent yeah we took we talked about that all the time and having a line KPI is also important it's a lot of times we see in our client organizations you have different groups that are incentivized based on different KPI's at the end of the day it's about profit right so you're you're you're not in business unless you're driving profit right so being able to align around that one KPI allows for more consistent decision making and ultimately

you're making decisions that are driving the long term sustainable profitable growth of the company so that's I would hundred percent agree with that it's not what we see in a line of cases in the marketplace no what kind of education is necessary to make that more prevalent in in brands and

“their teams yeah I think we're seeing more and more of more more of bits you know we there's a bit”

a lot more talk about outcomes which is a great step in the right direction so you're making a decision to drive a certain outcome so being aligned around what you're optimizing for is is a great first step and I think that with that accountability has has come you know the it's been more necessary for the marketer to understand the finance and able speak the the same language as the CFO but it is it's more kind of just holding them accountable to that one number and we're seeing

more and more of that you know in the market and more and more kind of push from the CFO

is and it's more and more aligned around the P&L outcomes than that it has and at any point since

we started this this company 16 years ago so that's encouraging as well you've been ahead of the curve 16 years in where do you see all this heading over the next couple of years like what's going to change about how brands plan and buy over the next couple of years I mean it's going to be completely

“autonomous and agentically driven and that's what we're preparing for and I think the and it's”

it's not necessarily just you know traditional SaaS experience or user interface it's going to be headless and it's going to be algorithms agents speaking to each other you know we have we have an MCP that we're building so we're planning for all of these decisions to be made autonomously through whatever AI workflow and instance that the client is looking for the brand is looking for so and that includes being able to do everything in our system now all the way through

media by so and I think that we're going to we're going to need to see more trust in the algorithm over time for that to be enabled you know everyone is I think I think that's on the fact from BCG a study in BC from BCG that I think 74% of marketers are expecting AI to have an impact and only 13% are actually utilizing the algorithm to make decisions you have to lean in ultimately

“to be able to see the impact and I think we're going to see more and more that over the next couple of”

years but we're preparing for that autonomous agentically driven experience where you can prompt any LOM and say run me a model with this many markets with this data set set run me an optimization that maximizes my revenue and then go and buy it that's that's ultimately what we're planning for

so where's the most important human in the loop there's that the CMO who's kind of wielding this

autonomous system I think you're going to have algorithm the the the human capital it's going to mean needed in that system is checking on the algorithm and checking on the agent's decisions right so it could be the CFO office it could also be the marketing group and having a bunch of analysts that are kind of checking algorithms as you go you know we also have to be willing to you know fail fast in order to see the big impacts that we're looking for and that's something that we're

we're really focused on it at keen it's like we're going to lean into this because we know the positive impact we're going to put the right governance and control around those decisions so we're checking it but ultimately we know that that agent's going to be smarter than us so when we trust that we're going to see better outcomes and we'll be able to hold those decisions accountable to those outcomes any comment we're just in the in in the run-up to the heat of Q4 here any commentary on what

“you're seeing kind of in market right now I know a lot obviously I think I saw it's met a CPM's”

are up 13% which is nothing new obviously they're up every year is there anything you're seeing

in market from brands that are are gearing up for for Q4 this year I think it's always it's always

more difficult during an election season because that drives prices up everywhere but I think that obviously after that we'll see some more normalization of prices in the market as well but I think overall that might be masking some softness overall in in the market I think tariffs are having a much bigger impact you know on overall spend we're seeing that you know a lot of budget challenges across industries right now in terms of being able to support that so I wouldn't

anticipate they're being some more softness as we go into the first quarter post election but with all the external challenges that we're facing economically I think being you know really having a good sense of how to optimize and spend every dollar and have that dollar work as hard as possible is is even more important one of the things the key does is sort of contingency planning or scenario planning as you guys call it does that include things like I saw a statistic the other

day that something like 70% of brands have raised their prices or have altered their prices because of tariffs is price changes something that you plan for in in your scenarios absolutely so we we look at pricing any kind of external factor that could be impacting demand has to be accounted for right so that's competition that's pricing that's distribution and a lot of cases so we're looking at those price changes and a lot of times we're looking at relative price so

how is your price relative to your competition and quantifying that impact over time it's also impacting your margins right so if you're able to take price that'll help your gross margins as well offset those tariffs and that profit profile then has an impact on the optimization scenarios

at an at a more scalable level so that's something that we account for in our in our exercise

“and all of that's quantified so we're able to decomp that to show here's how much marketing is”

impacting your business and here's how you know quantifiably all these other factors are impacting impacting the business right so we can actually you know show that it's not it's not all mark mark marketing's fault when things aren't bad that's all not all you know something that's not driving everything on the business either right so we're able to really you know to mentalize that

against each other and be able to show how marketing may be off setting softness from

distribution or any other factor there and vice versa so much of meta's results are all social

“results can swing with creative can your marketing mix model tell a creative problem from a channel”

problem so a lot a lot of times we see average creative you know the only time we see creative really having a big impact is when it's just great creative right so it's a buffed home far above the norm in terms of effectiveness you know we're able to account for that right so a lot of times we break campaigns and be able to look at campaign a versus be with different creative elements so you know same channel different creative we're able to get an understanding of the relative

effectiveness of that but generally we don't see creative and this is a hot button this might be hot take you know people really focus on creative we don't see it having as big of an impact as people think so it's it's more about you know where you're spending and and the time we have that spent having the bigger impact very cool well I want to thank you for this awesome harness the halo series any closing words for listeners of the series who have followed along on six

episodes and are ready to take some bigger swings top of funnel and create those halo moments in there in their marketing program yeah I would say keep the lights on right keep spending keep experimenting make sure you have a system that has a really good understanding of top of the funnel versus bottom of the funnel and how those interact with each other and make sure that you also have a system that is able to kind of decipher all the the external headwinds it might be you might be facing

“from the impact that you're marketing savvy so I think that just there's this power knowledge and”

being able to be able to use you know a system that's helping you make faster decisions that you can actually show you know creates better outcomes as the key as we go into next year and if you want to measure these better outcomes you got to go to keends.com I want to thank you as well as the whole team just and Bradley Mike Jesse Claudia as well as the operators who joined us great to have once upon a farm and a hand of Fleming from Carve as well as Drew Fallen coming on this series it was

a really a really eye-opening one for me and thanks for working on it with us it was awesome.

Yeah I appreciate the opportunity and always good to see you.

Thanks so much for listening to today's episode. If you're not a subscriber to our newsletter you can do that right now at direct to consumer all oneword.co. I'm Eric Dick and this has been the D to C podcast we'll see you next time.