2023 was a roller coaster of a year for brands.

Startup valuations dropped as the fed hiked interest rates to combat inflation.

Apple continued to remove ad tracking parameters in the name “privacy”.

And ad platforms forced us into more of its black box ad solutions.

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These events (among others) has driven a lot brands to be more conservative with their spending and future sales forecasts.

And rightfully so.

Carta released data showing that Q3 had the most startup shutdowns that they had seen in the last 19 quarters.

It’s safe to say that the marketing landscape has changed a lot in the past year.

The good news is that there are still a lot of brands winning against this backdrop.

In this post we’ll cover:

What does this environment mean for us as operators?
What’s working in marketing today
1. Influencer marketing 📲
2. Email campaigns 📨
3. International expansion 🌎
4. Creative testing 🖱️
What isn’t working
1. Celebrity endorsements 🏆
2. Granular ad targeting 👨‍👩‍👦‍👦
3. Vanity metrics 🔢
What I’m excited about for 2024
1. Top of funnel video drivers 📽️
2. Low cost growth channels 💲
3. Improved marketing measurement 📈

Let’s dig in.

What does this environment mean for us as operators?

The COVID bump and the extra income from stimulus checks are over.

This means that the best path forward for us as operators is to focus on an efficient growth strategy that prioritizes cash efficiency over everything else.

Capital efficiency can take shape in a number of forms, but the main things that I have been focused on includes:

Acquiring customers efficiently
Cost cutting on low value SaaS tools, vendors and subscriptions
Conservative hiring plans

This post will focus primarily on #1 – acquiring customers efficiently and all of the ad channels that helped me with that.

What’s working in marketing today

Influencer marketing 📲

Influencer marketing continues to grow and has become an efficient growth driver for brands.

According to a report by eMarketer, influencer marketing spend is expected to reach ~$7 billion in 2024. That’s a ~15% increase from 2023 spending levels.

The eMarketer report goes on to mention that the key drivers of the spend increase are:

The increased reliance that brands have on creating video assets to scale paid social accounts
The return-on-ad-spend (ROAS) effiency that brands see from influencer content
The rise of TikTok as a new, emerging social platform

The increase in social audience growth fuels all of these dynamics further as consumers shift more towards influencer based content to help them with their purchasing decisions.

Here are a few things that my team likes to check before working with a paid influencer:

Is their audience aligned with our target demographic?
- This is obvious, but it’s suprisingly easy to mess up.
- For example, if we’re selling an expensive product in the US, then we try to avoid audiences that skew young or international.
Is the content engaging?
- We like to check beyond the follower count to see if the video viewers are leaving comments and actively engaging with the content.
Does the content have “viral” potential?
- The standard product review videos are a bit tired at this point. We like to partner with influencers who bring something unique to their product integrations.
- The best viral content combines entertainment (think Mr. Beast) with some kind of product education.
  - Here’s an example of a good one we did recently at Eight Sleep.
How expensive are they?
- Influencer costs can vary widely and we always need to make sure that the costs make sense for our business.
- We like to take a portfolio approach to testing to help de-risk our program (IE: testing 10-15 creators per quarter), which means that we can’t afford to “bet the house” all on one creator.

A high follower count on an influencers page isn’t enough to break through the noise with strong ROAS.

We like to double click into all the dimensions mentioned above to get a better understanding if it makes sense to work with them in a paid capacity.

Email campaigns 📨

Unsurprisingly, email campaigns still work and continue to be a cost efficient growth channel.

The typical DTC email playbook today includes a combination of email flows and one off email campaigns.

Ideally, brands will have their email flows set up before they run a ton of paid ads to help keep their acquisition costs down.

The main email flows that we leverage includes:

The welcome flow where emails are captured via pop-ups on the website.
- You will often see a discount offer in exhange for an email address or phone number at this stage.
- Quiz funnels are a good replacement here if you don’t want to lead with a discount out the gate. Tools like Octane AI make quiz funnels fairly easy to set up.
The abandon browse and abandon cart flows where an email will fire after someone visits a product page or adds a product to their cart, but then leaves before purchasing.

Tools like Retention.com, Safe opt and Smart Recognition can super charge email lists further for those looking to be a bit more aggressive. We haven’t used any of these vendors yet, but it is something we are exploring in 2024.

International expansion 🌎

International markets offers another efficient opportunity for scale.

Our international paid ad accounts have cost-per-clicks (CPC’s) at >50% cheaper rates than their US counterparts.

This is category dependent, but I think there is generally less competition in most international ad auctions, which helps keep the costs down.

The caveat here is that that our conversion rates were also lower in new markets where we had less brand awareness built up.

We’ve been able to offset some of the conversion rate differences through:

Localizing marketing copy and ads to be region specific
Expanding payment options (IE: Klarna, Affirm and Shop Pay)
Working with influencers and partners who have strong international followings

The combination of low CPC’s and healthy conversion rates has made international markets an interesting opportunity for us.

Creative testing🖱️

The only real hedge against rising ad costs is to get super methodical with creative testing.

In our Meta account, I saw a direct correlation (-0.6) between improved click-through-rates and our customer-acquisition-costs (CAC’s).

The top ad buyers that I see are usually spending the majority of their time focusing on which hooks, stories, and offers are driving the highest click-through-rates on their ads.

They then take the top performers and iterate on what is working.

Frequent creative testing is the key to finding these winners.

Alright, those were a few areas that I saw work well for us this past year. Now let’s discuss some areas that I had trouble with during 2023.

What isn’t working

Celebrity endorsements🏆

I found that partnering with big household names did not work on a direct response basis.

The audiences of these “celebrities” seemed to be less interested in the products that we promoted. They were also less likely to make a purchase compared to some of the smaller creators that we partnered with.

Their audience mix is just different.

The celebrity audiences are there for entertainment and they are used to more brand awareness ads that they typically tune out or skip. We had much better ad engagement with smaller creators who’s audiences trusted the ad reads more.

This was an important, but expensive learning.

These tests tied up a lot of our budget that we couldn’t deploy elsewhere, which made CAC management more difficult.

The key learning for us was that we can’t make ad buying decisions based on vanity metrics alone (follower counts, downloads / episode, etc) because those metrics aren’t enough to expect a strong return on ad spend (ROAS).

Granular ad targeting 👨‍👩‍👦‍👦

The days of super segmented ad accounts and manual targeting settings are over.

I still get surprised when I see accounts targeting 50+ different interests across many ad sets.

Google and Meta have shifted towards broad audiences and use maching learning models to help brands find customers at scale. They are now much better at this than we are and we should lean into this.

My team (like many others) found the most success by consolidating our paid ad account structure to a few high value campaigns and then focusing primarily on creative testing.

We did a much better job of this in our YouTube ads campaigns during the second half of the year and the results show.

The ad wins for us in 2023 came primarily from consolidated campaigns that leveraged influencer focused creatives.

Vanity metrics 🔢

I mentioned vanity metrics a few times in regards to buying decisions, but another key learning for us was that we need to be more thorough in our analysis to understand what was working and why.

The in-platform revenue metrics that Meta and Google provide are misleading as they favor lower funnel campaigns, bake in a lot of view through conversions and report on modeled conversions – not actuals.

We began digging much deeper into the second and third layer metrics of our performance and that helped us discover the “why’s” behind our strong revenue days.

Some of the questions that we started asking ourselves included:

What are the top traffic driving creatives? What are their CTR’s, CPC’s, and CPM’s? How do we make more of those?
Which campaigns are driving the most efficient cost per email sign ups and add to carts?
How is our email list growing YoY and how does the correlate to revenue growth?
Is there anything that we should be doing to further engage our email list to increase the odds of a purchase?

We started seeing more success when we took this full funnel approach to our ad buying.

Through this process we rediscovered how important our email list was to our growth and that would have been missed if we only relied on what Meta and Google were reporting.

Now on to the fun 2024 stuff.

What I’m excited about in 2024

Low cost growth channels💲

I wrote a whole post on low cost growth channels, but the TLDR is that there are levers that brands can use to grow without needing a ton of capital.

Those levers include influencers, Meta ads, Google ads, and email campaigns.

These will continue to be the low cost base of our customer acquisition strategy as we layer in more top of funnel ad strategies like YouTube ads and CTV.

Improved marketing measurement 📈

It’s become clear to me that our standard reporting sources of in-platform metrics with multi-touch attribution tools are not going to be enough to get us to the next level.

Apple continues to remove ad tracking parameters that we rely on to track conversion paths and I do not think they are going to stop.

This means that we will need to take a much more scientific approach to our marketing measurement strategy in 2024.

This includes adding a few things to the mix:

An improved post-purchase-survey
Incrementality tests through internal resources or third-party partners (Measured, Haus or someone else)
Media mix modeling

I am really excited to begin incrementality testing in Q1 2024.

I think this will be a huge unlock for our team. We currently review marketing performance through a correlation based lens.

We need to find the causation behind our strategies. 🤞

Continue reading: How to improve Meta (Facebook) Ads performance

2023 Wrapped Performance Marketing Edition