Latest / The Growth Class with Phil Masiello / Influencer Marketing Strategy: Scaling Early DTC Growth Through Trusted Communities with Aaron Zagha

Transcript

Influencer Marketing Strategy: Scaling Early DTC Growth Through Trusted Communities with Aaron Zagha · The Growth Class with Phil Masiello

• 0:18
  SPEAKER_01: Hey everybody and welcome back to the growth class.
• 0:20
  SPEAKER_01: I'm your host, Phil Nastiello, and today's guest is Aaron Zaga, who spent his early career in investment banking and strategy at JP Morgan.
• 0:29
  SPEAKER_01: But for the last decade, he's been in the trenches of the D2C world.
• 0:33
  SPEAKER_01: From co-founding startups like ONSA to leading e-commerce at Teleflora and now overseeing brand and growth at Newton Baby, he's seen what it takes to scale the fastest growing companies in the space.
• 0:44
  SPEAKER_01: And on this show, we strip away the fluff, focus on the mechanics of real growth, from Amazon ads and influencer marketing to medads, Google ads, et cetera, to the unit economics that actually matter.
• 0:56
  SPEAKER_01: So let's get to work.
• 0:57
  SPEAKER_01: Yeah, so if you could sort of give us a little history, your background, because it's not exactly the usual background to get into direct to consumer.
• 1:05
  SPEAKER_01: You sort of spent a lot of time as an investment banker or on that side of it.
• 1:09
  SPEAKER_01: Uh so sure.
• 1:11
  SPEAKER_01: I'd love to hear the background story.
• 1:13
  SPEAKER_00: Sure.
• 1:14
  SPEAKER_00: Uh background in my career is basically I wanted to be an entrepreneur, but I didn't have a good idea of a company to start.
• 1:21
  SPEAKER_00: So I figured out the best way to learn about business while waiting around for the Eureka moment was to get paid while doing it in investment banking.
• 1:32
  SPEAKER_00: So uh I went to school for finance, did investment banking, quit, did a startup, that failed, went back to investment banking, quit, did a startup.
• 1:41
  SPEAKER_00: It kind of bounced back and forth that way uh with more, a little more finance time and startup time.
• 1:47
  SPEAKER_00: Um, but about 12 years ago now, uh ended up in a finance and MA group at the Wonderful Companies, which was um they own a bunch of big consumer brands, uh Fiji Water, Palm Pomegranate Juice, uh, and one of the brands was Telefore, which is online flour sales.
• 2:07
  SPEAKER_00: And an opportunity arose to run their international e-commerce, and one of my startups had been in social commerce, and so they stuck me in there and it ended up going pretty well, and I decided to pivot my career at that point to e-commerce.
• 2:19
  SPEAKER_00: And then I joined Newton about nine years ago.
• 2:22
  SPEAKER_00: I'd known the founder for a while.
• 2:24
  SPEAKER_00: Newton was tiny at the time.
• 2:26
  SPEAKER_00: Uh and he brought me a board to really scale their uh revenue at that point.
• 2:32
  SPEAKER_01: So um he's I read about the the founder of Newton.
• 2:36
  SPEAKER_01: He's he's a third-generation baby retailer or third generation bedding, yeah.
• 2:42
  SPEAKER_00: Mattresses and bedding and and things like that.
• 2:45
  SPEAKER_00: For babies, specifically for babies?
• 2:46
  SPEAKER_00: No, no, the other ones weren't for babies.
• 2:49
  SPEAKER_00: Um yeah, Newton was the first one for babies, and it was the first one that was really uh he went he really wanted to build the D2C brand.
• 2:55
  SPEAKER_00: And so he came across the material, which is now the core of our mattresses, very different to differentiated.
• 3:02
  SPEAKER_00: It looks like ramen noodles before you put them in the water.
• 3:04
  SPEAKER_00: Um, and he realized a perfect use case for it would be embedding specifically for babies because there's so much air in it you could breathe right through the mattress, so there's no suffocation risk.
• 3:15
  SPEAKER_00: And also you can actually wash the inside of the mattress, which is vital for babies which have leaky deckers.
• 3:22
  SPEAKER_01: Yeah, yeah.
• 3:22
  SPEAKER_01: That's that's fantastic.
• 3:24
  SPEAKER_01: So so how do you uh have you been building it?
• 3:28
  SPEAKER_01: I mean, it's it's probably not ads, right?
• 3:30
  SPEAKER_01: I mean, ads are expensive and it's not really the way to scale.
• 3:35
  SPEAKER_00: Uh well, ironically, it was it was not necessarily ads, but in the early days, and you know, this is going back almost 10 years now, um, we really started scaling the business through influencer marketing.
• 3:46
  SPEAKER_00: Um we, you know, I had tried it in previous lives without all that much success, but there's no community where, you know, I think at least historically made more sense than in the you know mom baby pregnancy community, where if there's someone you follow and you really trust, you're gonna pay attention when they say, Hey, I found this amazing new product, it gives me so much peace of mind.
• 4:11
  SPEAKER_00: Um uh and so that's really how we scaled the business in the early days, um, along with the the regular, you know, Meta um and Google ads.
• 4:21
  SPEAKER_00: Yeah.
• 4:21
  SPEAKER_00: Um, but yeah, influencer was really what built the business in the early days.
• 4:25
  SPEAKER_01: Yeah, I would think so.
• 4:27
  SPEAKER_01: Babies and puppies on influencer marketing definitely.
• 4:32
  SPEAKER_00: Well, it's a funny, it's funny you mentioned that.
• 4:33
  SPEAKER_00: So uh the the founder wanted to sell pet beds using the same technology.
• 4:38
  SPEAKER_00: It really is a good use case for dogs, also, because of the breathability and washability.
• 4:42
  SPEAKER_00: Um, and he really just wanted to have puppies on the website, puppies and babies, right?
• 4:46
  SPEAKER_00: So it ended up not working out all that well.
• 4:50
  SPEAKER_00: It was one of our our only misses, I would say.
• 4:53
  SPEAKER_00: Um, it turns out people love their babies and they love their puppies, but they're not willing to spend$300 on a puppy mattress.
• 5:00
  SPEAKER_00: So it was tough to sell those.
• 5:03
  SPEAKER_01: Huh.
• 5:04
  SPEAKER_01: I don't I don't I don't know about that.
• 5:06
  SPEAKER_01: I uh I got uh I have memory.
• 5:11
  SPEAKER_01: I'm a dog lover and uh I have memory foam mattresses for my dogs.
• 5:16
  SPEAKER_01: I have uh cost$300?
• 5:19
  SPEAKER_01: Yeah.
• 5:19
  SPEAKER_00: Oh wow, all right.
• 5:20
  SPEAKER_00: I have stuff going on to you somehow.
• 5:22
  SPEAKER_01: And I I I will tell you that, you know, from our side, right?
• 5:27
  SPEAKER_01: I run an agency and we have a couple of pet brands that are on the uh that gear towards the really high end um selling all kinds of pet stuff.
• 5:38
  SPEAKER_01: And it's amazing what people will spend on their on their pets.
• 5:45
  SPEAKER_01: And you know, I am a testament to it.
• 5:47
  SPEAKER_01: It's it's not something I mean, I have a I have a sofa for my dogs.
• 5:51
  SPEAKER_00: Yeah, I love those.
• 5:52
  SPEAKER_01: It's uh so you know, but I understand, like the average person, yes, you're 100% right, the average person's not gonna do it.
• 5:59
  SPEAKER_01: Um on we also had a guest on the show, this guy, Joe Rothley, who founded Greenies for Dogs, and he understands a pet business better than anybody I've ever ever met in my life.
• 6:11
  SPEAKER_01: Uh he exited to Mars.
• 6:13
  SPEAKER_01: But um, you know, he he the stuff that he's seen with people doing with with their pets and how much they've spent and what you know how they do it, it's it's hysterical.
• 6:24
  SPEAKER_01: We um we had a shaving brand uh a bunch of years ago that we founded, and we actually we put puppies in one of the commercials, and it was one of the better spots we did for TV because I don't know, people just related to it.
• 6:41
  SPEAKER_01: And we were trying to figure out how we can get babies in there as well, you know.
• 6:45
  SPEAKER_01: Like, how do you get babies to shave dad?
• 6:47
  SPEAKER_01: You know, something like that, but we could never figure it out.
• 6:50
  SPEAKER_01: But the puppies worked.
• 6:52
  SPEAKER_00: Yeah, I mean, we we found that even though we weren't selling that many crib mattresses with them, uh, including the petbed ads in our Facebook campaigns, actually improved conversion on the baby stuff.
• 7:04
  SPEAKER_01: Were they separate businesses?
• 7:06
  SPEAKER_01: You weren't doing it on the same business, were you?
• 7:08
  SPEAKER_01: Same business.
• 7:09
  SPEAKER_01: Yeah, I would have separated them.
• 7:10
  SPEAKER_00: I think that's Newton for all your babies.
• 7:12
  SPEAKER_01: Yeah, yeah, yeah.
• 7:13
  SPEAKER_01: I think that's uh I think you gotta kinda separate out the businesses there.
• 7:18
  SPEAKER_01: But uh well, that's just my opinion.
• 7:20
  SPEAKER_01: You know, again, I don't what the heck do I know?
• 7:23
  SPEAKER_01: Um But yeah, it's interesting.
• 7:25
  SPEAKER_01: I mean, the baby business, you know, it's it's one of those businesses where, again, you're 100% right, the influencer community is very, very strong and very powerful because you know moms are very, very cautious about what they're gonna do for their babies, and they're always looking for validation.
• 7:43
  SPEAKER_01: And when you can get people to validate.
• 7:45
  SPEAKER_01: Um, so are you still doing a lot of influencer marketing?
• 7:49
  SPEAKER_00: Um, no, we've pulled back quite a bit.
• 7:51
  SPEAKER_00: So we use uh UGC all day long, especially in our paid ads, but we've seen rapidly deteriorating performance of the pay-to-post model um for a number of different reasons.
• 8:02
  SPEAKER_00: But the biggest one is just as ad load has increased on the platforms, uh, they're showing fewer and fewer followers your content.
• 8:11
  SPEAKER_00: Um at the same time, a lot of the big creators haven't dropped rates to take that into account.
• 8:15
  SPEAKER_00: Yeah.
• 8:16
  SPEAKER_00: So uh getting licensing the content for for ads works really well, but the paid to post doesn't work nearly as well as it used to, you know, even just two to three years ago.
• 8:26
  SPEAKER_01: Yeah.
• 8:27
  SPEAKER_01: Yeah, it's it's getting crowded.
• 8:29
  SPEAKER_01: And uh I think people are skeptical on the paid to post, but uh they they definitely like UGC content.
• 8:36
  SPEAKER_01: And and if you can do it, you know, and if you can keep your pipeline going with making sure that you know people have the products to talk about and and uh create the content, it's you know, it's fantastic.
• 8:48
  SPEAKER_01: Do you do any uh TV?
• 8:50
  SPEAKER_00: We do.
• 8:51
  SPEAKER_00: We do uh quite a bit of TV.
• 8:55
  SPEAKER_00: Uh you know, everything from uh YouTube on the big screen to CTV.
• 9:00
  SPEAKER_00: We've done a bunch of linear as well.
• 9:02
  SPEAKER_01: Yeah.
• 9:03
  SPEAKER_01: How do you find uh CTV?
• 9:06
  SPEAKER_00: So it's interesting.
• 9:07
  SPEAKER_00: When we first tried CTV, it didn't work for us at all.
• 9:10
  SPEAKER_00: Um we're we're scaled, like we're the dominant player at the high end of the crib mattress market, and that's our hero product.
• 9:16
  SPEAKER_00: And so uh we decided to give CTV a test.
• 9:20
  SPEAKER_00: And this was, you know, four or five years ago now, when CPMs were well north of 25 bucks.
• 9:27
  SPEAKER_00: And what we found was that we saw a lot of conversions in platform, but none of them were incremental.
• 9:34
  SPEAKER_00: Um, we just weren't reaching new audiences because frankly, there weren't that many more audiences to reach.
• 9:41
  SPEAKER_00: Um, but that point in time, this was this was kind of how we discovered that we were at scale.
• 9:45
  SPEAKER_00: At that point in time, we were serving pretty much every pregnant woman in the country 20 impressions a month.
• 9:52
  SPEAKER_00: And there's just not that many of them.
• 9:54
  SPEAKER_00: And adding on another touch point at three times the cost of a Facebook ad just turned out not to make sense.
• 10:01
  SPEAKER_00: Now, over the past three years, really, we've dramatically increased our uh product mix and we have all kinds of other products to sell to customer, and so we've seen CTV work for us uh, you know, kind of over the past year as we relaunched it, because we do have so many more products, and the awareness of those products isn't nearly what it is for the Crime Matches yet.
• 10:22
  SPEAKER_01: Yeah.
• 10:22
  SPEAKER_01: Are you managing that yourself or do you have a a customer?
• 10:26
  SPEAKER_00: We've uh worked with a bunch of different vendors on it.
• 10:28
  unknown: Yeah.
• 10:30
  SPEAKER_01: I uh we had brands over the years that we for our own brands that we wasted money on traditional TV, which is a CPM model, and I didn't like that because it's not trackable.
• 10:43
  SPEAKER_01: But we fell in love with CTV uh probably, well, you know, f five or six years ago.
• 10:48
  SPEAKER_01: But it's I think it's improved dramatically and the targeting has improved because it's it's programmatic on this at this point.
• 10:55
  SPEAKER_01: And so but it's very um in my opinion, it's very traceable, very, very uh uh and even the retargeting side on online is is phenomenal, and we see tremendous returns on CTV ads.
• 11:10
  SPEAKER_01: But I think that the two keys uh and people sort of disregard one is you have to have a great piece of creative, you have to have something that people are gonna respond to, and it takes you know, you've got to have something in the first three seconds that they're gonna stick with it.
• 11:25
  SPEAKER_01: The second one is you really, really, really have to understand who the target is that you're going after.
• 11:31
  SPEAKER_01: You can't just say too many people come to us and they say, Oh, you know, it's we sell, you know, we're in the shaving business, so we sell to everybody, which isn't true.
• 11:39
  SPEAKER_01: You know, when we were in the shaving business, I could tell you that the our core audience was 28 to 45 because a guy that's over 45, he's been using the same three-blade razor for, you know, his entire life.
• 11:49
  SPEAKER_01: It's not it's gonna be hard to convert him, right?
• 11:51
  SPEAKER_01: A guy under 45, he's willing to try anything, right?
• 11:55
  SPEAKER_01: So, you know, people and it's amazing to me how many brands don't really understand who exactly i they are talking to and how they're talking to them.
• 12:06
  SPEAKER_00: Makes sense.
• 12:06
  SPEAKER_01: Yeah.
• 12:08
  SPEAKER_01: So, I mean, you guys, you've been doing this a long time, and like you said, you're the king of the you know, of the category, so you must have a tremendous amount of metrics on exactly who you're talking to and where you're talking to them.
• 12:19
  SPEAKER_01: Are you still finding meta ads are working?
• 12:22
  SPEAKER_00: Absolutely.
• 12:23
  SPEAKER_00: Yeah.
• 12:23
  SPEAKER_00: Probably probably better than in the recent past, even.
• 12:27
  SPEAKER_00: Um yeah, uh, you know, uh their algorithms are just better than everyone else's.
• 12:33
  SPEAKER_01: That's uh that's funny to hear.
• 12:36
  SPEAKER_01: Um just because we get so many uh so many complaints about meta ads.
• 12:42
  SPEAKER_00: It's easy to complain about them for sure.
• 12:45
  SPEAKER_00: Um and you know, I used to be a maniac running 30 channels at the same time.
• 12:49
  SPEAKER_00: And we've dialed that you know back down to probably really 10 now.
• 12:54
  SPEAKER_00: But for scale especially, it's hard to be meta.
• 12:58
  SPEAKER_01: Yeah.
• 12:59
  SPEAKER_01: I would think that um yeah, I would think that you know, if you can target really well um but are you going directly on the meta platform or are you using like a programmatic system and putting ads on on meta through programmatic advertising?
• 13:17
  SPEAKER_00: Uh it depends what you mean by programmatic, but I think we're basically we're like a demand-side platform, like a DSP.
• 13:24
  SPEAKER_01: Are you going through meta?
• 13:24
  SPEAKER_00: No, no, no, we buy straight through meta.
• 13:26
  SPEAKER_01: Yeah.
• 13:27
  SPEAKER_01: Um so what's are you um are you uh you don't have any uh uh retail stores, right?
• 13:36
  SPEAKER_00: You're strictly demand uh, so it's it's been an interesting journey as a company from that perspective.
• 13:42
  SPEAKER_00: When we launched, it was D2C plus buy by baby.
• 13:46
  SPEAKER_00: Because, you know, 12 years ago when the company launched, we really felt like you needed to go have a place you could go in person, touch and feel the mattress.
• 13:54
  SPEAKER_00: Um, COVID obviously completely changed all that, and we were really well positioned, and then bye bye baby went out of business, so it was a moot point.
• 14:01
  SPEAKER_00: Um, but we you know think that there is some incremental reach um with some of the brick and mortar.
• 14:08
  SPEAKER_00: There are still people who want to buy in-store.
• 14:09
  SPEAKER_00: So we actually launched with Target last year uh in-store on NCAPs, and that's been going pretty well.
• 14:15
  SPEAKER_00: And we're evaluating additional partners as well.
• 14:17
  SPEAKER_00: We're also uh in-store at some crate stores.
• 14:20
  SPEAKER_00: Um and and yeah, we're always we're always evaluating.
• 14:24
  SPEAKER_00: But D2C uh and Amazon are really always gonna be our top two channels, probably.
• 14:29
  SPEAKER_01: Yeah, are you FBA with Amazon?
• 14:31
  SPEAKER_00: We are.
• 14:32
  SPEAKER_01: Yeah.
• 14:32
  SPEAKER_01: How do you find that?
• 14:33
  SPEAKER_00: Uh well, sorry, we're FBA and FBM.
• 14:36
  SPEAKER_00: It's kind of hybrid.
• 14:37
  SPEAKER_00: The mattresses are big and bulky, and it's too expensive to go FBA.
• 14:40
  SPEAKER_00: Um, but on all of our smaller things we're FBA, on the big bulky things we're FBM.
• 14:45
  SPEAKER_00: But we're seller on all of them, not vendor.
• 14:48
  SPEAKER_01: How do you find that uh how do you find that business has changed?
• 14:53
  SPEAKER_00: You know, it's it's interesting, and I mean this is very specific to baby, but Amazon was bigger than our Z2C when I took over.
• 15:00
  SPEAKER_00: I flipped that and made Z2C bigger.
• 15:02
  SPEAKER_00: Then uh a year and a half, two years ago, Amazon was growing much more quickly than our Z2C, and now it's flipped again.
• 15:09
  SPEAKER_00: So, you know, look at as a as a seller, I always want to be wherever the customer wants to shop.
• 15:15
  SPEAKER_00: I want to honor customer preferences.
• 15:17
  SPEAKER_00: And for a lot of people, they'll they won't buy anything not on Amazon.
• 15:20
  SPEAKER_00: And I I'm probably one of those people to some degree.
• 15:23
  SPEAKER_00: So I I always just want to make sure that we're wherever, and baby registry is a big part of our business.
• 15:28
  SPEAKER_00: And so the two biggest baby registries are babylist and Amazon, and we're on both.
• 15:33
  SPEAKER_01: Yeah.
• 15:34
  SPEAKER_01: Yeah.
• 15:34
  SPEAKER_01: I think um, you know, we've been selling on Amazon in different ways since 2006, and I the platform has changed dramatically.
• 15:43
  SPEAKER_01: But I also think it depends, you're 100% right.
• 15:45
  SPEAKER_01: People want to buy on Amazon.
• 15:47
  SPEAKER_01: It's the first place they look.
• 15:48
  SPEAKER_01: As soon as they hear about something new, they go to the app, they look, they'll make that purchase for a lot of different reasons.
• 15:53
  SPEAKER_01: One of which is they trust Amazon because they know that if there's a problem, they're gonna get their money back, you know, and and all that.
• 16:01
  SPEAKER_01: But the fees have just gotten uh, you know, crazy.
• 16:05
  SPEAKER_01: And I had we have a uh friend who has a uh a beauty brand, been selling on Amazon for about you know 10, 11 years, all over the world, just an FBA products all over the world.
• 16:17
  SPEAKER_01: And he actually stopped, couldn't figure out, you know, all the fees reading to his profit.
• 16:24
  SPEAKER_01: So what he did was he started pulling back on his advertising on Amazon and he started putting all his money into just micro influencers on TikTok primarily, because what he found was if he can get a hundred micro influencers, and to him, that means nothing more than sending them free product, you know, and explaining it and having them make videos.
• 16:44
  SPEAKER_01: He gets a hundred a month.
• 16:45
  SPEAKER_01: He's got a person that that's all they do.
• 16:47
  SPEAKER_01: He tries to get a hundred good ones a month, and he sees that the sales from TikTok go either to Amazon or to his website.
• 16:54
  SPEAKER_01: And so he's really stopped, he's stopped spending uh at all on Amazon for for his advertising, which has saved him about 15%.
• 17:01
  SPEAKER_01: So, you know, the it's really difficult uh to sort of manage that uh growth.
• 17:10
  SPEAKER_01: But I do like what they've done in the last year between Cosmo and Rufus.
• 17:15
  SPEAKER_01: I think those two things are game changers.
• 17:18
  SPEAKER_01: It requires you to restructure your pages, but I think once you do it and you do it correctly, it's it's a game changer.
• 17:25
  SPEAKER_00: Yeah, agreed.
• 17:26
  SPEAKER_00: I mean, they're always gonna be at the cutting edge, and and so it's interesting to see how they've experimented, especially with Rufus Lelia.
• 17:32
  SPEAKER_01: Yeah, yeah.
• 17:32
  SPEAKER_01: I think but but you're 100% right.
• 17:34
  SPEAKER_01: You have to be on it.
• 17:35
  SPEAKER_01: And the baby registry, the bridal registry, those things are really powerful on uh so you're in a yeah, I mean you're you're definitely in a unique sort of category where um you know somebody has a baby, it's almost a necessity, right?
• 17:47
  SPEAKER_01: You've got to find the best of the best and people don't skimp.
• 17:50
  SPEAKER_01: They want the best strollers, they want the best car seats, they want the best bedding, they want the best everything, and and moms are obsessive about it.
• 17:58
  SPEAKER_01: And then you've got all the baby showers and everything.
• 18:00
  SPEAKER_01: So you've got all these other people that are buying products for you.
• 18:03
  SPEAKER_01: You know, it's it's not like uh some of the other categories you deal with, which are sort of not necessary, you know, nice haves, but not a must-haves.
• 18:12
  SPEAKER_01: Um so you what are your top priorities for growing the company in the next, say, six to twelve months?
• 18:19
  SPEAKER_00: Yeah, I mean, at this point, growth for us is really um driven by new products.
• 18:26
  SPEAKER_00: So scaling the new products that have been launched and then new product introductions as well.
• 18:30
  SPEAKER_00: Uh that's where pretty much all of our growth at this point is coming from.
• 18:34
  SPEAKER_00: Um so we have a pretty robust product roadmap.
• 18:37
  SPEAKER_00: Um, you know, I think we're really only limited by well, production schedules and calendars and then tariffs and then whatever other changes, wars.
• 18:49
  SPEAKER_00: Um so you know, those are those are kind of the things that are really top of mind with respect to growth.
• 18:54
  SPEAKER_00: You're manufacturing offshore, I guess, for most of the So the core of our mattresses are made in Tennessee, and that's that's really been a great thing for us.
• 19:02
  SPEAKER_00: Um but the rest has to come from offshore.
• 19:04
  SPEAKER_00: There's there's nowhere onshore, they can really make most of the things.
• 19:07
  SPEAKER_01: Yeah, yeah.
• 19:08
  SPEAKER_01: Tariffs are uh it's not just the tariffs either.
• 19:11
  SPEAKER_01: It's it's you know the delays in getting product.
• 19:14
  SPEAKER_01: You know, we've got a a a brand that sent product I think a month and a half ago, six weeks ago, was supposed to land last week, and now it's gonna take another delay and another delay, and it's it's uh everything is uh is sort of costly.
• 19:27
  SPEAKER_01: So it's really challenging, I think, to uh to buy offshore right now.
• 19:32
  SPEAKER_01: So um but what do you think is one tool uh that you use that you think is game changing today in your business?
• 19:42
  SPEAKER_00: Yeah, and I I think one of the tools that I would really credit with helping us achieve profitability, this is like two, three years ago now, um, was House.
• 19:51
  SPEAKER_00: Uh I'm a huge uh fan of theirs.
• 19:54
  SPEAKER_00: Uh we use them for incrementality testing in the beginning.
• 19:58
  SPEAKER_00: Um, and it really helped us hone our channel mix and figure out what was and wasn't incremental, where we should be spending, different spend levels.
• 20:06
  SPEAKER_00: We did a lot of spend level tests, we did cross-channel allocation tests.
• 20:10
  SPEAKER_00: Um, but having a good incrementality testing platform or program, I think, is really vital, especially as as you get to scale.
• 20:18
  SPEAKER_00: Um, nothing's more important in terms of of really dialing in that mix and and achieving profitability.
• 20:24
  SPEAKER_00: And now we use them for uh media mix modeling as well.
• 20:28
  SPEAKER_01: Yeah.
• 20:29
  SPEAKER_01: What do you think are the what do you think are the three big challenges you think you're gonna face over the next 12 to 18 months?
• 20:36
  SPEAKER_00: So um, you know, I I think these new product launches are always the most challenging.
• 20:42
  SPEAKER_00: Yeah.
• 20:43
  SPEAKER_00: They take so much work, execution is really needs to be tight to get it done properly.
• 20:49
  SPEAKER_00: Um, you know, maybe in a way we're lucky because we don't have to, you know, set up a thousand stores and make sure that all goes right.
• 20:58
  SPEAKER_00: Right, right.
• 21:00
  SPEAKER_00: Forecasting, initial demand, things like that, uh, you know, at the end of the day, we're guessing.
• 21:06
  SPEAKER_00: And those guesses have to be good, or you either stock out or you're left with a ton of extra inventory.
• 21:11
  SPEAKER_00: Um, thankfully it's been more the former for us, but that's still a painful thing when you know you could have sold 10 times more and you're out of stock for three months.
• 21:19
  SPEAKER_00: Um you can restock.
• 21:21
  SPEAKER_00: So that's, I mean, really new new product launches is is number one, two, and three for us, um, and by far the most important.
• 21:29
  SPEAKER_00: Um, other things that are on our roadmap, of course, are just the constantly changing landscape with respect to AI.
• 21:38
  SPEAKER_00: Um, I think like everyone else, we saw a lot of SEO clicks disappear as as the the channels gave answers instead of sent traffic, which I think is fine.
• 21:48
  SPEAKER_00: I think it's probably net neutral to the business.
• 21:50
  SPEAKER_00: Um, those probably weren't qualified clicks anyway.
• 21:54
  SPEAKER_00: Uh, but it's still disheartening to see traffic down, regardless, especially when you spend so much time on SEO.
• 21:59
  SPEAKER_00: And it's it's Still there and it still works.
• 22:01
  SPEAKER_00: It's just in a very different format.
• 22:02
  SPEAKER_00: And so it takes some adjustment.
• 22:04
  SPEAKER_00: But really understanding AI, making sure we're staying on the cutting edge of it and staying competitive on that front is another key determinant of success in these two years.
• 22:37
  SPEAKER_00: And then we focused a lot more on the off-site communities and community building and making sure we're optimized there.
• 22:45
  SPEAKER_00: And then also, lastly, making sure that we're included on the third-party sites that most frequently get cited by by the AI overviews.
• 22:55
  SPEAKER_01: Yeah, I think the one thing I love about AI is that building workflows and taking away repetitive tasks in marketing, I think it's great.
• 23:10
  SPEAKER_01: What I don't like is all this new bright shiny stuff that people are put pitching that you know doesn't work.
• 23:16
  SPEAKER_01: This, you know, let's build fake UGC content, let's build fake ads.
• 23:21
  SPEAKER_01: You're trying to be authentic and your customer wants you to be authentic.
• 23:24
  SPEAKER_01: You're trying to make a connection with your customer.
• 23:26
  SPEAKER_01: So, you know, the minute you have you've spent all this time building a brand and then you start putting fake UGC content out there or fake ads, customers see it, and then all of a sudden you lose everything that you've built.
• 23:39
  SPEAKER_01: So, you know, I I tell people to be aware of that, but but unfortunately, like we have clients that come to us and go, Well, you know, the prices should go down because you should be using more AI.
• 23:48
  SPEAKER_01: And we go, Yeah, we we we do use AI.
• 23:50
  SPEAKER_01: We use it for workflows, we use it for this, we use it for for for different things, but we're not generating content with it because it's inauthentic.
• 23:57
  SPEAKER_01: And and do you want to kill your brand or you want to build your brand?
• 24:00
  SPEAKER_00: So yeah, uh we actually ran a giveaway uh where we gave$50,000 for a college fund, basically.
• 24:09
  SPEAKER_00: And it was uh, you know, over the summer when AI was all the rage and we were messing around with Sora and things.
• 24:15
  SPEAKER_00: And so we did a video of a baby in a graduation cap taking off and flying.
• 24:20
  SPEAKER_00: Uh and and we got so much flack for it.
• 24:24
  SPEAKER_00: Yeah.
• 24:25
  SPEAKER_00: Like, oh, why are you using AI babies?
• 24:27
  SPEAKER_00: You can't even use your baby company games.
• 24:28
  SPEAKER_00: Like, no, I I don't I can't get a baby to fly.
• 24:30
  SPEAKER_00: I'm sorry.
• 24:31
  SPEAKER_00: Yeah, yeah, yeah.
• 24:32
  SPEAKER_00: But but I I understood with you know the sentiment, and we ended up pulling down a lot of those ads.
• 24:36
  SPEAKER_00: Um, and yeah, you gotta be really careful from branding perspective.
• 24:39
  SPEAKER_00: Yeah.
• 24:40
  SPEAKER_01: Well, I apologize, we got to wrap it up.
• 24:43
  SPEAKER_01: We're we're running out of time, but I I appreciate you taking the the time to to come on and talk to us.
• 24:48
  SPEAKER_01: Uh and any last words?
• 24:51
  SPEAKER_00: Uh no, just go have some more babies.
• 24:53
  SPEAKER_00: Uh, you know, baby bust to make sure that that we hit those targets.
• 24:59
  SPEAKER_01: I've had five in my life.
• 25:00
  SPEAKER_01: I think I'm uh good job.
• 25:01
  SPEAKER_01: Thank you for your service.
• 25:02
  SPEAKER_01: Yeah, yeah.
• 25:05
  SPEAKER_01: All right, you know, Aaron, I appreciate you taking the time to come on and uh and um yeah, thanks for uh uh thanks for sharing.
• 25:13
  SPEAKER_00: Pleasure.