This week on the Digital Velocity Podcast, Samir Balwani of QRY joins Erik and Tim to discuss the five stages of growth that brands work through as they develop and scale advertising programs.
Brands may try to advertise too early in their development leading to wasted time and resources. Samir says, “…a lot of brands are not ready for growth, and that's the biggest problem. Our hypothesis is a lot of brands start advertising too early in their life cycle, and they end up wasting a lot of money with the wrong message, the wrong customer journey, and the wrong budgets and channels all around.”
As we head into a potential recession, brands might want to decrease media spend. However, Samir says, “Don't cut your media spend in a recession. I think that's the biggest mistake people make. What you don't realize is if you cut your media spend, you're just making it cheaper for your competitors to buy media ‘cause you're leaving the auction and you end up being behind the eight ball when we come out of it, which we will.”
Brands can use an economic downturn to capitalize on advertising opportunities. Samir explains, “So, if you have the cash flow and you have the ability to do it, don't cut your media spend 'cause you do want to be front and center. Recessions is when people switch brands. They look for offers. They're more price sensitive. It's an opportunity to capture new customers into your brand. So, I will reiterate, do not cut media spend during a recession.”
Listen to this week’s episode to learn more about creating and growing a profitable advertising program.
About the Guest:
Samir Balwani is the CEO and founder of QRY, a media agency that helps e-commerce and DTC brands like Delsey, Zadig & Voltaire, and Peak Design accelerate their growth. Samir is a true marketing strategist and thought leader, with over 15 years of marketing experience. He’s held high-level positions at companies including PMK*BNC, StyleCaster, and American Express.
Tim Curtis: [00:00:00] Hello, and welcome to this edition of the Digital Velocity Podcast. I'm Tim Curtis, CEO of CohereOne.
Erik Martinez: And I'm Erik from Blue Tangerine.
Tim Curtis: Today on the show we have Samir Balwani, who's the CEO and co-founder of QRY. It's a media agency that helps Ecommerce and direct consumer brands like Delsey and Peak Design accelerate their growth. Samir is a marketing strategist and a thought leader, and he's got over 15 years marketing experience. He's held high-level positions in companies like PMK*BNC, StyleCaster, and American Express. Samir, welcome to the show today. Looking forward to having you.
Samir Balwani: Thanks for having me.
Tim Curtis: Well, [00:01:00] let's kick off and talk a little bit about, you've got an interesting background with some of those brands. Tell us a little bit about your story, how you arrived to the point of founding QRY.
Samir Balwani: Yeah. So, I like to say, entrepreneurship is in my blood. My parents own their own business. My sister owns her own business, so it was just a matter of time before I owned my own business. I graduated college, fell in love with marketing, fell in love with advertising. It was back when, you know, Facebook advertising and Google Ads was just beginning.
I had a great opportunity to work on some really awesome brands as a digital strategist. Worked as head of marketing for StyleCaster. Worked at American Express. I got a chance to do the startup life, the enterprise life, and while I was at American Express, realized there's a gap in the market for mid-market brands. Enterprise businesses have realized that there is a lot of value in having your media agency and your creative agency as two separate people.
I like to talk about this as the tension that comes between the two of them. The idea that a creative agency wants to be the steward of the brand and do really brand-driving and innovative [00:02:00] things, and your media agency generally wants to drive as much efficiency and performance as possible. Having them on two sides of the coin and forcing them to work together ends up coming out with some of the best work from what I had seen while I was at American Express. That didn't exist for mid-market brands at the time, and so we launched QRY with the idea of being a best-in-class media buying agency and partnering with creative agencies to make sure our clients can get that tension and that long-term vision and efficiency over time. So, that's how we started and that's what we've built.
Tim Curtis: Something to the tension for sure.
Erik Martinez: Yeah, just kind of addressing that tension. Do you find that the creative agencies, I mean, it has been our experience cause we kind of operate very similarly as to how you guys do? We find that the creative agencies always want to take control of the entire process. How do you guys go about addressing the rules of the road in those relationships?
Samir Balwani: Yeah. So, we love to partner with creative agencies that we like working with is kind of the first one. The ones that appreciate the fact [00:03:00] that it's, you know, 50% creative and 50% media buying and strategy. That's step one. Step two is data doesn't lie. One of the biggest frustrations for me, and I tell my team like, if you come to me with I feel or I think, I'm gonna lose my mind. You gotta show me what worked, what didn't work, and you gotta explain to me why, and that's where QRY comes from. It's from answering the idea of why and that's what we do for our clients and that's what we do for creative agencies.
You can come to me with a really cool, creative idea and I'm gonna say, Okay, I'm on board with it. What's the objective? I guarantee you the objective is not to be cool. The objective is probably to build brand awareness, drive top-line revenue. If that's the case, I'm gonna measure that. I don't really care about cool. We give that feedback to our creative partners. We give that feedback to our clients and we can iterate with them over time, and looking at this partnership of being like, we will tell you what works. You can bring us what you think is the best within that box. We'll have a great relationship and the client will be successful.
Tim Curtis: That's kind of threading the needle though too when you're talking about tension. That tension's gotta be in [00:04:00] balance. You've gotta have the tension because out of the tension, the ideas are sharpened. Yet, if the tension gets to that point where there's not the level of collaboration, it starts to get maybe messier, if you will. How do you find that balance? I mean, obviously, you mentioned you like to work with a set number of creative agencies, but you've had to obviously go through that birthing process to get to where you are.
Samir Balwani: Yeah. I think part of it is managing the fact that we can be wrong too, right? So, like part of it is knowing what we think is driving the results may not actually be what is driving the results. So, being open-minded to that on both sides. Tension doesn't need to be war-like tension, right? Tension just means from our perspectives that, you know, we're gonna work together to get the best result and that we'll push each other.
So, we love when a creative agency comes to us and says, Hey, I appreciate that putting 20% off in the image is gonna lead to better results, but that's not good for the long-term vision of the brand. You need to figure out how to get the best out of it without having that there. [00:05:00] I'm on board with that. That's the point on this, right? How do you manage short-term profits for long-term brand stewardship? That's where that, you know, I say tension and partnership comes from, and so sometimes there is room for us to say, Yeah, no, the numbers don't lie but we want someone being on the other side saying, but here's the long-term trade-off you're making, and that's kind of the conversations that we generally are having.
Erik Martinez: Yeah. I find that conversation to be very interesting because I've worked with a variety of creatives, And sometimes you're working with the in-house team at the client and they have a very, very distinct point of view on their creative and what they're trying to do with their brand. Or sometimes I feel like they don't know. Right? They're so entrenched in what they do that they're not willing to consider another position.
So, when you run into those situations, or maybe you don't because you choose wisely when working with your partners or brands that you work with, but when you run into those situations, what [00:06:00] do you do to lay out the strategy and say, Hey, look, we're trying to accomplish this. The creative that's going out is trying to accomplish that. How do we meet in the middle? What do you do in that scenario?
Samir Balwani: You know, one of the things I think is key for this is being very clear on the objectives and what's realistic. I can't tell you how many times, you know, you talk to a client and they're like, Yeah, our last agency just said anything is possible, and every time you get on a call with them, it didn't matter what the numbers were, they were just super excited.
I need a partner that can tell me the truth, and so that's kind of where we come from and say, All right, what was your objective? If your objective is to grow 30% and you're gonna give us creative, and that creative doesn't work, and we're all on board with the media buying strategy. We know the audience is working. The creative is really struggling, or in some cases, the audience is struggling too.
We will miss that 30% growth and have to have a conversation about what's not working, and sometimes it's the creative didn't resonate with the audience. We need to have a conversation. [00:07:00] Either the audience you're going after is not actually who is purchasing your product or engaged with your product, or the message that you're sending to that audience is not actually resonating with them. We have to rethink that. There's only a handful of things. There's only a handful of levers. There's no secret media buying technique that's gonna change everything. We're not a silver bullet, right?
Erik Martinez: What? I'm shocked.
Samir Balwani: Like, there's no cheat codes to Facebook. It's not like you hire the agency and they type in, you know, some cheat code in the background. They get like cheap results. It is an iterative process. We're gonna work with you to figure out what the creative messaging is, and we're gonna work with you to refine and identify your audience. That's what ends up happening.
I can't tell you the number of times clients come to us and I'm sure you guys do this. We do an onboarding of like, who's your customer, who do you think they like, all that kinds of stuff. The amount of times that customer is absolutely not the person purchasing and the mismatch there is so common.
It's interesting cause we talk about this in our five stages of D2C in Ecomm advertising. Stage [00:08:00] one is just product market fit. Are you selling your product to the right person and do you know who that person is? Because if you can't get that right, you know, we're just gonna be kind of throwing paint at the wall and figuring it out from there.
Tim Curtis: You mentioned something there I want to pivot off of. You talked about realistic, right? Being realistic with the expectations. There's obviously a lot of conversation nowadays about just the fluidity of the space that we're in, right?
So, we have Apple's intelligent tracking prevention to really shut down iOS from feeding into Facebook. Cookies are being eliminated right and left. I think Google's now pushed it to 2024, Brands have to understand the impact that these changes are having on their media buying and the ability to target, and it's not that there's not value in some.
For example, Facebook. No question Facebook's targeting has been severely compromised in many respects, but that doesn't mean that there's not inherent value that you can utilize Facebook for and still have it. But you've gotta set the expectations and align the expectations to [00:09:00] reality. Especially now that we're clearly heading into recessionary territory here. What's your response to all that? How are you managing through all of that?
Samir Balwani: Yeah. So, there's a few ways we manage through those. There's actually like three key elements for us. The first element is, and we get asked this all the time, like Oh, did iOS kill your campaigns? And the reality is, for us it didn't. The reason why is because a lot of agencies looked, and a lot of media partners looked at paid social as a revenue-driving channel.
A lot of people were playing that arbitrage of low CPMs to high conversion rate and saw that as a revenue creation channel. We've never looked at paid social as a revenue-driving channel. We've always looked at it as a product discovery channel. So, our goal was always, okay, what are we doing from paid social to introduce new people to the brand?
So, when iOS killed tracking and all of that, a lot of the areas where we got hit was on reporting for most people cause attributed metrics went [00:10:00] into the gutter and that really hurt a lot of people. So, this was the second part. We don't track attributed metrics. We use it as a gut check, but all of our campaigns are based on last-click data because we want to de-dupe, have a really clear understanding of things.
We do do modeled attribution for some of our clients if they have enough ad spend to make it worthwhile and need that level of accuracy and then marketing mix modeling if you go all the way through. Baseline, we look at last click metrics because it gives us a really clear understanding of where things are going and how to drive results.
So, we didn't really see a lot of that happen. A lot of that hurt 'cause we weren't getting inflated attributed metrics to begin with. So, last click stayed the same. Those two things ultimately for paid social helped us kind of weather the whole iOS thing.
From a recession standpoint though, our philosophy around media buying is we work with brands that want to grow. So, if you come to us and are like, We need a 10x return on our ad investment, we're not the right partner for you. Because top-line revenue growth is a lever. [00:11:00] You can have high ROAS and slow top-line revenue growth or low ROAS and high top-line revenue growth. You can't have both, and so you really have to make that decision.
So, what we do is actually we work with a break-even return on ad spend. Work with our clients, understand their product margins, create a breakeven return on ad spend, help them understand how do we use media to drive brand awareness while paying for itself. So again, we don't look at media as a performance-driving channel. We don't look at as a revenue-creation driver. It is a brand awareness channel being fueled by the revenue it is created. So, self-fulfilling system.
Tim Curtis: That clearly would set you up to not have the catastrophic impact in areas where others were maybe over-leveraged or exposed in the channel.
Samir Balwani: A hundred percent. 'Cause we have to diversify all of our channels to make sure that we're hitting audiences in every aspect of it. Because again, we're thinking about it from our performance drives our brand [00:12:00] awareness. So, we need to do both effectively and efficiently because that's what leads us to top-line scale.
As we come into recession, a lot of our clients are coming back to us and saying, We are comfortable slowing our top-line revenue growth to pad our profitability a little bit, and so we're working with a lot of our clients to say, Okay, cool. Our 12-month forecast, instead of targeting a break even ROAS, we're gonna do plus 10%, plus 20%. Your top-line revenue growth is gonna slow, but you're able to hold a little bit more cash, manage your cash flow effectively, kind of go from there. So, we can have a very simple lever conversation. What is this lever that you want to do? What's feasible?
We also don't believe in having advertising drive more than 40% of your Ecomm revenue. We feel like it's really dangerous. It also doesn't lead for organic growth to keep up. It hides a lot of brand problems. So, if you have bad customer service, your product is breaking. All of those things can be hidden from a first-time purchase through [00:13:00] advertising. You never solve any of those problems and you cap yourself in the long term. So, 40% is our target, break even ROAS. You make your margin on the 60% that's coming in through organic.
Tim Curtis: You mentioned your five stages of direct-to-consumer in Ecommerce. You wanna go over that and maybe kind of explain how some of that fits into this philosophy here?
Samir Balwani: Yeah. So, as you can see, our philosophy is around high growth. What we realize is a lot of brands are not ready for growth, and that's the biggest problem. Our hypothesis is a lot of brands start advertising too early in their life cycle, and they end up wasting a lot of money with the wrong message, the wrong customer journey, and the wrong budgets and channels all around.
So, we look at it in five key elements. I'll walk you through all five steps, and then I'll walk through what each step means. So, the first is reaching product market fit. Do you have a brand that people want to purchase from? Are you selling products people actually want? That's step one.
Step two, starting to [00:14:00] build that initial brand awareness. Starting to get the word out. Get people to know who you are. Step three, that's when we start to really scale paid advertising. You have a little bit of a snowball effect happening. Step four is, I'm ready to grow brand awareness in a meaningful way, and then step five is this idea of consistent growth and scale where everything is kind of working together. You have this consistent growth where you can be very confident in what your next 12 months look like, what your next 24 months look like. Obviously, the holy grail is to get to step five, but you have to work through each step to get there.
Let me start with probably the first three, which I think are the most important. Reaching product market fit. For us, the way we look and see if a brand has reached product market fit there are two key things that we look at. The first one is conversion rate on your website needs to be at higher than 1% and your AOV needs to be at least $60. The reason why is because you need to prove that you can get people to purchase from you from a [00:15:00] meaningful amount and are kind of trust your brand. You've proven that there's value in what you offer and they're willing to give it up.
The second one is organic search volume. Is organic search volume growing, or is it flat, or is it declining? 'Cause we want to know are you activating word of mouth? So, are the people purchasing from you actually interested in telling their friends about what they purchased? Are you building that initial ground swell? So, that's reaching product-market fit from our perspective.
The second one is building brand awareness, and a lot of people at this point think, Oh, they must be running advertising. We actually don't recommend running advertising at this point. You might wanna run some remarketing campaigns to anybody that came to the site, but building brand awareness at this point is influencer, PR, and literally, you going to trade shows and markets and being the face of the brand and getting out there. You want to use as cost-effective ways to build brand awareness across as many people as possible because again, you wanna make sure that you have real product market fit and are able to get people to know who you are and have them start to purchase organically.
[00:16:00] Stage three is when we start to bring in some performance media and start to drive some of that scale. Again, if you remember 40% from paid media, 60% from organic. You need to have enough of an organic revenue to make paid media even worthwhile, to begin with. Especially, if we're gonna keep that kind of split going through. So, those are, I'd say, are the first three steps. Once you hit four and five, now you're ready for a sophisticated media buying agency, or marketing agency, to really start to scale and start to really grow the brand from that point on.
Tim Curtis: So, the 40% media and 60% organic, you're watching the organic percentage growth to really determine are we moving the right direction. If you're not seeing that if it's flat, what are you then doing if you're not turning to paid media to drive more? Are you encouraging them again, to go back, do more on the influence with the PR on the trade show side? What's that look like?
Samir Balwani: Yeah. So, part of it is, yes, we're going back and saying, Hey, we need your help here, right? We're capped at where we're at because it's an uncomfortable place to be if we are driving 50 or [00:17:00] 60%. We can do it. It's just not a healthy place to be. So, we'll work with the client to just understand what's happening. We expect that when we are driving 40% of their revenue and are investing because we're a break-even return on ad spend, we're investing in brand awareness. We should continue to see that 60% grow just out of the fact of that.
But if they come to us and say, Hey, we wanna go faster. Well, our response will be, Okay, well what's your marketing tent poll? What's your marketing calendar look like? Help us understand what is gonna happen that you're gonna build outside demand for, or do you wanna take a loss on your return on ad spend? So, that way we can fuel more brand awareness and help you grow faster. Again, the beauty of this is it's just levers. We're just trying to figure out what that lever is.
Tim Curtis: When you're talking about that 60%, and yes, that halo effect that's coming from the paid advertising, the assumption is that that would continue to drive some of that organic traffic. There's gonna be a residual, I think, you know, percentage, and Erik and I are both very used to the halo effect in our careers.
We've [00:18:00] dealt with it significantly on the print side. Print drives a lot of search and organic when it goes out the door because that's one of the first things that people do, right? Is they will go and search the brand. That was interesting to me 'cause I'm sort of resonating with that concept of really watching that organic percentage and zeroing in on that. I'm kind of unpacking that here. Yeah, that's really interesting.
Samir Balwani: Yeah, I mean, we're so hyper-focused on those numbers, that it's actually on our executive summaries of our media dashboards. Like, how much of your revenue came from media? Are we tracking in a good place or a bad place? And we'll map both of those out so that people can see what that growth looks like over time.
Erik Martinez: So, when you're doing an initial client discovery call saying, Hey, we wanna work with you QRY, but you know, let's kick the tires, and you have a brand that is used to pouring tons of money down in paid media. How do you frame that conversation to convince them that this is a better way, and then it's a better way, but it's also gonna take some time to pivot [00:19:00] from what you're doing today to what you need to be doing tomorrow? Can you kinda walk us through that conversation?
Samir Balwani: A hundred percent. Most of the time when we see a brand that comes to us that's spending a lot of money on their media campaigns, and when I say a lot of money, I mean, a lot of money in comparison to where we think they should be spending. We manage all kinds of client sizes.
A lot of times it's because they have bad reporting data, and that's probably one of the most frustrating experiences for us because we'll go through and be like, Okay, you think you have a 12x return on ad spend. We're gonna look at last click and you're actually at 0.8% return on ad spend. Oh, and here's why, and we'll pull the customer journey report from Google Analytics and you're like, Okay, paid social, paid search, both took credit. Great. That's not helpful.
This is kind of what we talk about for those brands that are reaching like stage four and five. There's few elements that you need to have in place to be able to scale your media. So, appropriate analytics and [00:20:00] tracking. So, how are you actually looking at your data? Is it good? Is it clean? So, actually, whenever we do discovery, one of the first things we audit is Google Analytics and all the ad tracking. It's one of the key elements.
The second piece of that, the second element is do you have good media planning and forecasting. So, we'll do a full 12-month forecast of here's your budgets, here are your core KPIs, here's the outcomes. So, that way we can look at it across a 12-month period and kinda show that growth that needs to happen and set those benchmarks for ourselves.
And then a third element is an advertising experimentation plan. So, how are you iterating things over time? Because if we're not iterating them, we'll start to flatline pretty quickly too. So, we are still looking for what is that next thing that helps you grow. But we want to do it efficiently and not just do it by like pouring a ton of money into it and thinking it's working when the reality is it's not. Let's put dollars where they can be the most effective.
Erik Martinez: So, when you start working on testing and experimentation, what are the [00:21:00] lengths of time it takes to get meaningful results? Obviously, some of it depends on how much money you're throwing at it, but in general, what do you tell your clients?
Samir Balwani: Yeah, so for three months we do experimentation blackout. So, when we like onboard a client, we won't do a lot of that experimentation in the first three months 'cause we're still trying to get baselines, get some key benchmarks, make sure our forecasts are accurate, and there's nothing like surprising in that process.
But once we get into that, then we'll be in a great routine of starting to test things. We'll test at least one or two things every month. It really depends on the size of the test and what we're testing. That said, we follow the Impact, Confidence Ease model for all of our testing. So, the team will actually create an ad experimentation plan for you, ranked by how impactful do we think this is, how confident are we that it'll be successful, and how easy is it to run. We'll prioritize the stuff that's easiest and most impactful, and go from there. So, early on it might be a [00:22:00] really short, we're testing very rapidly, and then as we kind of are in a good routine, tests start to take longer.
Erik Martinez: Yeah, it's funny 'cause again, coming from a direct mail background. Originally, right, testing has always been part of my DNA and it's actually relatively easy to do in a direct mail sense. Depending what it is. Creative tests are a little more complicated and a little more expensive, but I find it fascinating, over the years working with many brands, that digital advertising is like the easiest thing to test.
There's a lot of businesses out there that don't do it. They don't do it. They don't establish baselines, or their Google Analytics is totally outta whack, or not anywhere close to consistent with their internal systems reporting. So, it's refreshing to see somebody who believes in those fundamental pillars, in order to grow and leverage a business. It doesn't have to take forever, but it can take time. It can take time to establish those baselines, [00:23:00] put in all the fundamentals because your ad tracking may or may not be up to snuff on day one. It may take some time. So, that's very cool.
Samir Balwani: The other thing that we do too is we have a very real heart-to-heart with our clients and are like, ad testing's important. You're gonna pay for it, and we're gonna take 10% of your media plan and set that aside for ad testing. We're gonna put it as a zero on your return on ad spend from a benchmark standpoint because not every test will work. We may not be successful. We need to be okay with that, and so we set that expectation on early. Like really early, so that when a test doesn't work, it's not like we stop testing. We continue to because every win is a win and every zero is expected.
Erik Martinez: Yeah. Hey, so going back to a conversation we had a little bit earlier about digital attribution. I wanna dive into that just a little bit. Somebody was asking an opinion about this tool, this digital attribution tool to really try to evaluate. You know, the holy grail, [00:24:00] I can tell you I've had this conversation for 20-something years about attribution and being able to truly predict where I need to put my money, right? Where do I need to put my money and make it most effective? There is a little bit of art to this. There's a little bit of art, there's a lot of science. What's your position on these digital attribution tools? What are the strengths and their limitations?
Samir Balwani: Yeah. I think one of the biggest strength is it gives you more information, and more information's always better than less information, as long as you can use it intelligently. We'll use a lot of these multi-touch attribution tools to help us validate that our brand awareness spend is actually positive, right? We're reaching the right audience, that audience is engaging with the creative, and that they are purchasing somewhere down the line, and so we find a lot of success in those for that reason.
The downside to a lot of these tools is they are digital only and they miss out on things like direct mail, out of home, linear TV. [00:25:00] That's where a lot of our brand awareness spend goes. So, it's a little hard to always use it in the best ways. They're just not perfect, and I don't know that it's fair to create a level of perfection on those. It's like an unfair expectation. So, we really try and look at attribution from a three-part program.
So, the first part is we are looking at Google Analytics, last click and first click data there to just understand what channels are introducing people to the brand and what channels are finally closing the sale. We're looking at multitouch attribution to just understand what is the percentage impact and the incrementality of each of our digital channels, and then we're looking at marketing mix modeling for how does our ad spend across the ecosphere. What is most effective for our brands?
And as we're doing budgeting, 'cause again, we are a very forecast-driven agency. We want our clients to know exactly what they're getting into and that this is our plan and we're not gonna pivot on a day-to-day basis because that adds noise to the platform. We're gonna stick to our plan and we're gonna see it through. So [00:26:00] planning is really important for us, and so marketing mix modeling is really valuable for us when we're doing a lot of our planning. So, we look at those three together to create a really holistic strategy in our analytics and attribution.
Erik Martinez: That's awesome. I think that's a really pragmatic approach to the problem. I've run into those situations where, you know, the problem I've always had with attribution is it is a set of assumptions. There's a lot of data and you can see all the touch points, but the reality is we don't really know what was the one trigger that drove this consumer this way and that consumer that way, right? When once we start getting down to the individual, there's a myriad of decisions that we are all making every day to make purchase decisions, or wait and see decisions, or whatever it is, right? We don't really know. We can identify large patterns, and say, Hey, this pattern seems to work with this type of audience and that pattern seems to work with this type of [00:27:00] audience, but none of them are homogeneous.
Samir Balwani: Well, and it's just like, how many caveats are you gonna add to this? On this day, a huge influencer did this and that's why we saw this spike. That's the end of it. Or like, how do you capture the, I was walking in New York City and I overheard someone talk about that brand, so I Googled it 'cause I was curious, right? Like, how do you capture all of that and all that stuff is just never gonna happen? So, you know, there's just an element of it's never gonna be perfect because, at the end of the day, you're trying to measure people and people are imperfect. Like, it's just never gonna be perfect. You just have to come to terms with it.
Tim Curtis: That's part of the challenge that I have with the whole attribution industry if you will. I get it. They're making a product and they wanna sell that product, but we've just identified here several things that fit outside the loop of what they're going to be able to realistically track. Depending on the degree to which those brands are invested in some of those, channels [00:28:00] that are not clickable, right?
It creates large holes in the attribution potential, but yet that is presented as an attribution model, and decisions are being made on things where there's glaring holes. You just need to understand also the profitability by channel. What is your contribution coming in from each channel? You know, when you're talking about that break-even ROAS. You've gotta understand some of those elements in order to create that level of profitability in order to measure. If you don't, you're kind of back to guessing. I just think we're beyond that. Ten years ago, that's where attribution was. It hasn't progressed a whole lot since then.
Samir Balwani: Yeah, and I think one of the biggest reasons why I'm most excited about attribution modeling and hopeful for it is I think it forces people to have a campaign focus versus a channel focus. So, I can tell you like our benchmark return on ad spend for paid social is 0.5. If every dollar you spend on Facebook and TikTok [00:29:00] and Pinterest and Snapchat, you make 50 cents. Our campaigns, we're happy about it because we know all that demand is going to Google search or some remarketing campaigns and we'll make the money on that end, but we gotta fuel that top brand awareness.
So, if I can get our clients, and it's a lot of education from our end, stop looking at it on a channel basis. Don't look at paid social and see 0.5 and be upset. It's see paid social at 0.5 and know that you're fueling brand awareness with it, but overall you're at a 1.8 or a 2 or a 2.4. That's what we want. Helping clients kind of get that mindset is an uphill battle sometimes, but it is imperative if they wanna see the growth that they wanna see.
Erik Martinez: You really did just scare the pants off of everybody listening right now. Wait. What do you mean? I've gotta go at 0.5. My CMO's gonna shoot me.
Samir Balwani: I think my media team has spoken to more CFOs than CMOs at this point now because we just end up having to be in that conversation to help them understand. [00:30:00] We do more education across the C-suite than we do like CMOs are on board. They see it. They know it's ahead. They need support to be able to explain to their CFO why this is a worthwhile investment and why they need to be looking at it from a holistic standpoint too. Again, it goes back to our philosophy, to begin with, media should be a self-fulfilling tool. Which means that we are taking our revenue that we generate and reinvesting it in brand awareness.
If someone comes to us and says, Hey, I actually found a better deal for us, and oh, we're gonna take over the stadium, and that's a great CPM for us. Like, we are more than happy to change our campaigns to let you take the money to go there. Problem is that that's not sustainable. That's a one-time engagement. You're gonna do it once. So, we see a lot of value in creating a system where it is sustainable, where the whole system kind of works by itself. And then you look at it and go, Cool, 40% of my revenue, I don't have to think about. Media team's got it. The media agency's gonna work on it and it's gonna continue to grow and fuel growth everywhere else. That's awesome for us.
Tim Curtis: [00:31:00] So, things are shifting, right?
Samir Balwani: Understatement of the week,
Tim Curtis: Yeah, by the week, by the day sometimes, depending on what the announcements are. So, let's talk a little bit about, I know you've brands in the fashion place. We do as well. I'd love to hear some of what you're seeing in terms of trends in retail and marketplace for some of these brands.
Samir Balwani: Yeah. Fashion apparel is a fun but tough world to be in. Everything from inventory management, sizing, the whole seasonality around it. That if you don't sell enough product when the season goes, it's gotta go into either sale or be destroyed. I think the areas where we're gonna start to see is more fashion and apparel marketers be a lot smarter about merchandising and customer journey and supply chain management because it's starting to impact their life more than they realized.
Everything from lost revenue because most popular sizes are out to lost revenue because too many sizes are [00:32:00] in. It's crazy how inventory really impacts whether you made money or not. Your campaigns and your marketing can be perfect, but if you end up with too much inventory or too little inventory, you've just lost a lot of money. So, I do think merchandising is gonna be a really big piece of it too.
I think offer management is the other area. How do you create an offer on your Ecomm business that is better or on par with what your retailers are doing and what your marketplaces are doing? How are you differentiating why they should purchase direct from you, where your margin is versus from all of these retailers, and so on and so forth?
There's just some strategic questions that need to be solidified for a lot of fashion apparel brands that haven't really gotten around to really thinking about it yet because they've been dealing with so much other stuff. So, I am excited about that. The other piece of it, and a little bit more of a tactical piece, which is kind of interesting.
We all know CPMs go up every year at least 10%, more often, like 15 to 20%. That kind of just gets baked into your overarching [00:33:00] campaigns. The problem with fashion and apparel and a lot brands that have a lot of retailers is, you end up having to pay that 15 or 20% on your branded terms as well because you are paying for competition against your own branded terms.
So, we will tell a lot of our clients, if you are negotiating retail contracts, and you have any opportunity to tell them that they cannot bid on trademark terms, you should absolutely do it. You do not understand the value it will have on your brand and how much money you will save by just that one thing. I mean, if you have an Ecomm site, you should own your brand names and they should come to your site. So, competing against yourself kills a lot of fashion apparel brands.
Tim Curtis: It's not always easy anymore either. That little trick, for example, on the contract side, I'm not sure the first five years anybody even thought of it.
Samir Balwani: Yeah.
Tim Curtis: And so you had so many of these brands' resellers were working against them on the branded key terms. Everybody had the same key terms they were using. Driving up the [00:34:00] cost on every last key term. That's a fantastic illustration. I think the other thing, you know, you mentioned strategic discussions related to brand, and I think there's brand dilution. For the longest time, you had the fact that Amazon was a good deterrent for a lot of brands from selling the merchandise on Amazon and diluting that brand. And of course, now, you have Amazon getting into luxury and having some of these luxury stores propping up. So, it's just not as simple as what it once was. A whole lot more conversation.
Samir Balwani: And you know, the area that we struggle with is when brands are not strategic about how they're gonna appear in marketplaces and understand what the role of the marketplace and retailer is, right? Go into a retailer, go wholesale because you recognize it as a way to get third-party validation and build brand awareness. Don't go into it always thinking you're gonna make a ton of money into it. Because the reality is, if you do that, you may be sacrificing in other areas because you're gonna have to give really big concessions to retailers to get that sell through [00:35:00] either in marketing spend, early discounts on product.
The thing that kills us is when we look at a retailer and they've got 30% off and free shipping, and then you go to the Ecomm site and they've got a 15% off welcome offer. My question will always be, why would anyone buy from you when they're only gonna buy your one product and not go to your retailer?
So, if you think about it as, I know I'm not gonna make money on the retail side, and it's really just there to get people to know who we are and come buy from us. Again, I think we're seeing a lot of this like around omnichannel and thinking about how every piece of the puzzle fits together. It is like a real strategic question that people need to be asking themselves of, what is the value of this? Why am I doing this, and how does this help everything? How does it help or hurt other pieces of my businesses, and am I willing to do that? That's a question that needs to be answered. You need to have someone that owns that understanding.
Erik Martinez: It's funny that you say that because I think the other part goes back to something you said earlier about inventories and fashion. It [00:36:00] doesn't matter what business it is. Inventories are hugely important in any piece of business, and I've seen a handful of clients who are in these marketplaces and they're in there deep and they're in there because they generate a ton of revenue, but they're also buying a ton of product.
And when that channel starts to underperform, guess what happens? You get stuck with a lot of extra inventory and so there goes your profits and your cash flow and lots of other unsavory ramifications from those decisions. So, you're right. Those people really need to pay attention to their channel mix and understand where the marketplaces fit in relationship to their overall brand strategies.
Samir Balwani: Yeah, it's interesting 'cause on like the agency side, as agency owners, we deal with something called client concentration. How much of your revenue comes from one or two different clients? So, a lot of things that we do with our brands is we talk to them about channel concentration. Are you getting 90% of your [00:37:00] revenue from one channel?
Again, it goes back to our 40/60 rule on the Ecomm side, right? We don't want to put so much onus on one area and create a fault because that can break your business, especially on an Ecomm or a retail goods brand work cash flow is what kills the business. You know you don't go bankrupt because you couldn't sell anything else.
It's because you gotta fuel inventory and you gotta get paid. Managing that is where it becomes really difficult. So, being very clear on, okay, I've gotten an Ecomm side. That's giving me positive cash flow right away, and that's fueling my retail where I am on net 90. Great. You gotta know strategically how everything kind of fits together.
Erik Martinez: Yep. Absolutely. So, as we start to wrap up, Samir, what last piece of advice would you like to give our audience today?
Samir Balwani: Don't cut your media spend in a recession. I think that's the biggest mistake people make. What you don't realize is if you cut your media spend, you're just making it cheaper for your competitors to buy media cause you're leaving the [00:38:00] auction and you end up being behind the eight ball when we come out of it, which we will.
So, if you have the cash flow and you have the ability to do it, don't cut your media spend 'cause you do want to be front and center. Recessions is when people switch brands. They look for offers. They're more price sensitive. It's an opportunity to capture new customers into your brand. So, I will reiterate, do not cut media spend during a recession.
Erik Martinez: The funny part of that is the converse of that is true. Don't cut your media spend when things are really good either.
Samir Balwani: The baseline is just don't cut your media spend.
Erik Martinez: Just don't cut your media spend. Keep investing in your marketing to keep fueling your future growth is a really important point. Well, Samir, we wanna thank you so much for coming on today.
Tim Curtis: Yeah, absolutely.
Erik Martinez: Those are great insights. It's scary. I was listening to you talk and go, man, I've had a lot of those conversations with my teams and my clients, and maybe not as succinctly as you have summarized, but it was a fantastic conversation. We really appreciate you joining on. If anybody wants to reach out, [00:39:00] what's the best way to get ahold of you?
Samir Balwani: Yeah. So, the best place to check us out is weareqry.com. That's our website. If you request a consultation, that's my calendar. So, by all means, just put some time on my calendar. Happy to chat. As you can hear, I love talking about this stuff. So, thank you for having me on. I just love sharing this, so I really appreciate it.
Erik Martinez: Thank you very much. Well, that's it for today, folks. I'm Erik from Blue Tangerine.
Tim Curtis: And I'm Tim Curtis from CohereOne.