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3 Lessons For 2022 (after spending $21m on ads in 2021)

Hey fellow ecommerce aficionados. With the 1st month of the new year coming to an end, I wanted to pop in here to share lessons from 2021 that we'll be applying moving forward in 2022.

Every tidbit and takeaway I'll share with you came after spending over $21m USD on advertising in 2021. 90% of this spend went to Facebook + Instagram, TikTok, YouTube + Google, Snapchat, Pinterest, Reddit, Outbrain (& even TrafficJunky, don't ask).

^ the above spend was spread primarily across 9 companies in vastly different industries.

Lesson #1 – Awesome Post Purchase Customer Experience.

If you are lucky enough to be acquiring customers at or near a profit, then do not take it for granted. Wavering ad performance and instability in 2021 taught all of us just how valuable existing customers are. Moving forward, we are urging every client to implement a gifting practice. Positive experiences post purchase are the name of the game moving forward. We ran several tests with this towards the end of the year and saw a whopping 29% bump in customer retention rate on customers who received a free gift in their initial order. (Keep in mind, it's only been three months since this experiment started so we still don't know how big of an impact this will have in another 3, 6, or 12 months.) The best gifts will supplement the main purchase they made and include a personal (& humorous) thank you note. It is best if the gift has a high perceived value to your customer but a low cost to you. Since doing this, we also noticed a HUGE increase in engagement rates on all post-purchase retargeting ads as well as a correlation to higher e-mail open rates for affected customers. P.S – Personal anecdote about this. I bought $10K worth of furniture online from West Elm a few years back and they threw in a free set of dark marble coasters (roughly $32 retail). Never thought I needed them but they turned out to be my favorite coasters & guests always compliment me on them to this day. Guess where I shopped when I was moving? Yep, West Elm just turned $32 into another order of $24K. (I'm not a big spender but they really made a lasting impression with those freaking coasters.)

Lesson #2 – Testing More (& Better) Creative Negates 95% of Ad Performance Issues

Again, most brands were spoiled by Facebook's accuracy and lower CPMs and took it for granted. Throwing up an ad and simply stating what you've got was enough. "Buy my shower curtain. It has ducks on it." This is no longer the case, but most brands (even big ones) still haven't caught on. About once or twice a month, we fire up the ad account of a client coming from one of "the big 3" ad agencies and we cannot believe our eyes. Month after month, they test an average of 5 pieces of UNIQUE creative per month. This is a surefire way to hit a high frequency & get penalties on your ad performance while guaranteeing yourself the lowest number of chances to hit a winning ad. You absolutely need to develop a framework for sourcing content. You being on vacation, or asleep, or waiting for the response from that agency you paid, cannot be the bottleneck in obtaining new ad creatives. Also, have a video editor stitch all your content in every which way to find the best scroll-stopper intro & the strongest call-to-action. 20 videos can become 60+ solid ads if you're crafty. Right now UGC (user-generated content) is absolutely crushing it and much cheaper to produce in bulk. Brownie points if you leverage TikTok trends like generated voiceovers, green screen, & using storytelling narratives. "My boyfriend and I are long distance so he got me this ______". By increasing the frequency of tests, we increased the amount of "winners" we hit. Not only that, but our winners had to battle it out and we would find outliers that had astronomically high link click-through rates. Out of 30 tests, 28 may have 1-2% link click-through rate. Then 1 ad will have a 2.5-3% link click-through rate. And finally, you have that beast that has a 4.2% link click-through rate & you scale that bad boy. Doing this literally saved most of our clients from having to pause ads when the iOS update happened. Having more of these "superwinners" also allows you to scale higher before you hit a ceiling due to less ad fatigue. This is probably the #1 factor that enabled us to even spend $21m this past year without diminishing returns. SIDENOTE: Do not waste your money on those "high production" commercials. We bought a bunch for $20K, $30K, and even $50K. People hate ads that look like ads. Maybe they work in a movie theater setting where attention is a given. They do NOT work on social media. I don't care that it's shot on a RED camera and the script was written by a comedian who worked for SNL. Compared to our best UGC ads, they tank 19/20 times (real data). Tbh anything that doesn't resemble content that is native to the platform basically tanks. (If any of my friends at creative agencies read this, you did a great job & the quality was amazing. Unfortunately most of the redditors here cannot afford to drop $30k on "brand awareness". No hard feelings, start offering UGC-style as a service and price accordingly).

Lesson #3 – Recurring Deals With Undervalued Macro Influencers = Money Printer

After working with literally thousands of influencers, we stopped being "transactional" and started to get to know these people. We started to ask them what it is they really want and how WE can make THEM happy. Want to know the #1 answer? Stability. Most influencers, especially the small ones, do not know if their gmail inbox will have a collaboration request tomorrow, next week, or next month. Therefore, when they do "hook" a brand they throw out a price that will help them pay the bills and save for a dry spell. Most of these prices are arbitrary and decided "in the dark" since most influencers are unaware of the returns they provide to brands (we conducted a survey). Many times they can even have an inflated idea of what their ROI is. We realized that the traditional way of working with influencers was primitive and a lose-lose situation. As a brand you're essentially betting on a single half court shot. Even if it's Steph Curry himself, it's still a massive risk. We flipped this around and created a win-win situation. Rather than paying a big price upfront, for a single post that MAY or MAY NOT perform, we gave every creator 4 chances. Based on those 4 chances, they could secure a longer term deal. Rather than $600 for 1 post, we can do $200 per post once per week for a month. But here's where it gets even better. We give them a unique discount code and a commission on any sale that uses that code. Your potential earnings are WAY higher than the $600 you asked for and directly tied to performance. We always back this up with data from other influencers who work with us and we can even guess a number based on audience size. (Even though I don't recommend giving out estimates until you've done hundreds of these deals for the same product/industry etc. Can give false expectations and turn a deal sour.) Anyways, in the end you end up closing a lot more influencer collaborations this way and everyone is happier. Most of the brands where we do this are soon showered by influencers who were referred by their influencer friends. Oh, and I almost forgot! The "undervalued" part. Sadly, we find that, on average, once an influencer worked with a big brand (think HelloFresh, ASOS, or Magic Spoon) and they have a talent agency, their rates are highly inflated and almost never justified in ROI. Even after 12 months. The absolute best deals we've done are with influencers who are growing rapidly but haven't "made it" yet. This is now our "bread and butter" strategy and we do it with YouTubers, TikTokers, & Instagram influencers. So far we average 21x return on investment at the 6 month mark.

Alright, I could go on but either Reddit will crash or you'll fall asleep reading.

Those were the lessons from 2021 that we'll be adapting in 2022 pretty much all across the board. Reading is fun but now go and try executing. That is the only thing that moves the needle. Small daily actions in the right direction do WONDERS when compounded over time. Best of luck to you. I gotta run before I turn into a motivational speaker lol. Go crush 2022! – Simon

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