Drive and Convert

Announcer:
You're listening to Drive and Convert, a podcast about helping online brands to build a better e-commerce growth engine with Jon MacDonald and Ryan Garrow.

Jon:
So Ryan, I know we want to talk a little bit about social traffic and I think this is all coming from the fact that Apple's iOS update in 2021, everyone thought was going to kill Meta, and especially social ads. I know it had a lot to do with the stock dipping quite a bit, but Meta stock is really up just what seems to me like an insane amount over the past year. I really wish I had bought it back in '21, although I admit I was one of those people that was like, "Yeah, Meta's probably not going to survive this as well. It's not going to die completely, but it's definitely going to be hurt for the long run."
But now that the stock is up, we likely think that that indicates things have improved. At least that's what the general public, the investing public I will say, thinks. I'm interested in this topic today because things were not looking great for Meta up even last year in 2023. TikTok, ad spends were down. All of these types of social traffic was just hurting, and what's going on now? Why has that changed? What has changed?

Ryan:
Yeah, we saw just a lot of merchants pull out of social after the iOS. Our sales org struggled to get brands to believe in the platform. Even some of the team optimizing the work was just, it moved very far up funnel, almost a complete reversal from what it was before the iOS update was phenomenal. Even just getting bottom of funnel. We know this person's ready to purchase something for their pet, put something in front of them and they buy it. But yeah, the stock has gone bonkers. I should have bought it a year ago because you would've more than doubled your money just for sitting on Meta stocks.

Jon:
Aye.

Ryan:
But it's an indicator that, and their earnings have shown, that it is working. Brands and people are spending money on Meta. We have some crazy numbers on TikTok right now of just the advertisers really coming back and understanding what's going on with the traffic. It's different than what I would've expected, and I tend to have more data than most.

Jon:
Right, and I'm wondering-

Ryan:
So it's all really good.

Jon:
What specifically has changed? Because Meta isn't able to individually profile based on a lot of other data points that it was getting before, so knowing that's the case, they're just profiling and grouping customers based on what they do on Facebook. Is that accurate now, or do you have any idea of how they're getting that data? Because to me, from an outsider's perspective, and I say outsiders loosely, we don't do anything with driving traffic at The Good, and so I look at it as, man, that stock is overvalued.

Ryan:
I would say Facebook was overreaching for a while with a lot of their data and what they were doing, and so that part is put to an end. I'm not confident they had to get rid of all the data they got in not very good ways, at least I'm not privy to that. So yes, you had to stop collecting that data, but if you had all this that you knew about me five years ago and I haven't updated a status on social, so I'm still married, I still have kids, you probably still know quite a bit. And then my browsing history, you do know and they're keeping, what Meta has been doing a good job of I think is keeping the app experience in a good way. They have their in-app browser essentially, so if I'm in a Meta platform, Facebook, Instagram, I click on a web link, it doesn't take me to Chrome or Safari.

Jon:
Right.

Ryan:
It keeps me in the app. So once you're in that and they see you're browsing, they own that data, they know what you're doing, and so they don't have to send that back to Apple. They just, no, that's our information because this person did that in our app. They've still got a lot of really great data around people, and what they're doing and using, but that in itself I will say doesn't drive advertisers or stock prices, the fact that Facebook has this data. I think companies that advertise on Meta are now more comfortable advertising without great data. GA4 update last year ruined everybody's ability to get awesome data and analytics.

Jon:
Yeah, we did that episode not too long ago, right? WTF, GA4? I mean, that's pretty much my thought process lately.

Ryan:
Companies went through a process like, "Okay, I can't advertise on Meta. I've got to advertise maybe more heavily on Google." That maxes out quicker than they may have expected or wanted. To grow, you have to be willing to take risks, and so I think a lot of business owners are like, "All right, I'm going to take a risk." We maybe can't see data on Meta results when we're advertising on it directly as easily as we used to be able to, but we're seeing business growth. It may not be direct correlation, but business owner guts are telling them I'm doing some good things and it's growing. There's also third-party tracking systems that have made it a lot better that we touched on third parties like Triple Whale that does allow for first-party data.
I think while things change, and the rules of the game may change, marketers are going to figure out how to grow businesses, and a lot of that's going to come down to how are we getting data, what are we doing with it? There's a lot of really cool first-party data companies putting reporting together and saying, "Hey, you own your data now." So yeah, it's not analytics, but it's actually your data and it's probably better if you have some structure around it and the ability to create reports with it. We're seeing a lot of companies spending a lot more on Meta, and we're getting a lot of clients coming into Logical Position even just on social without running Google Ads too.

Jon:
Well, and I was going to ask, how have the strategies changed in running or optimizing social ads over the past year even?

Ryan:
It's changed more than I'm comfortable with I'll say. I think old dog, new tricks is some of it, but at our core, we've always been big on control. Lots of manual bidding, lots of we want to know traffic intent was here and they went here and this is what happened, so we can change where things break in the process. That just doesn't work as well on social anymore. It worked okay before some of the changes happened, but now you've got so much happening on the back end of Meta that's in the algorithm black box that we don't get insight to. That's driving bids and doing a lot of the, what we would consider the optimizations that maybe we used to manually do before. We've had to pivot and change our strategies a lot.
The focus is more on creative, and testing that, and helping clients understand that the ads themselves are more for the traffic. It's not about the actual conversion and it's saying, "Hey, let's throw six ads into one campaign," and let the algorithm do some of the heavy lifting that maybe we used to do on the back end and splitting budgets up and saying, "Hey, this ad's working better than this ad for traffic. This one's working better for conversion." And just saying, "Hey, the algorithm is going to pick a winner that it likes and we're going to a month or two in depending on the volume of traffic, sub out the loser creative and test more and try to overcome that champion creative that Meta has emphasized."

Jon:
So is part of this a optimized continually type of methodology now where you're throwing a lot at it and letting the algorithm choose what's working best and then doubling down on that?

Ryan:
Until it gets stale, really. I mean, we still keep the general funnel in place where you've got prospecting, nurturing, remarketing, and separate budgets on the side for generating new followers. But inside those campaigns, you've got to have different creative that will message somebody that hasn't heard of you before. For example, "Hey, never heard of you. You're selling this. We need to communicate with these five ads to this audience." And so maybe you're targeting women between these ages that live in an urban area with disposable income over this amount potentially, and then those are the creatives in there. And then this prospecting campaign is for men living out in the country with very limited disposable income, and we separate those out because they need different creator for those. Let the algorithm pick the best one. Next month, we're deleting all the bad ones, putting in new creative to try to again incentivize the algorithm. How do we get more and more impressions, clicks, et cetera.

Jon:
Right.

Ryan:
But once they interact with a prospecting campaign, hey, we're going to move them into a nurturing campaign if they didn't purchase, which most of them don't, it's a process usually depending on the complexity of product, and then get them to take action and then it becomes a remarketing. Well, if they get to the website's remarketing, but then there's a campaign for past purchasers and all that stuff, but it's more controlling the funnel and then using creative to move people through that, and letting the algorithm pick the winners there.

Announcer:
You're listening to Drive and Convert, a podcast focused on e-commerce growth. Your hosts are Jon MacDonald, founder of The Good, a conversion rate optimization agency that works with e-commerce brands to help convert more of their visitors into buyers; and Ryan Garrow of Logical Position, a digital marketing agency offering pay-per-click management, search engine optimization, and website design services to brands of all sizes. If you find this podcast helpful, please help us out by leaving a review on Apple Podcasts and sharing it with a friend or colleague. Thank you.

Jon:
No, I'm a budding influencer, imagine. Follow me.

Ryan:
Hey, you're an author, you're beyond influencer now.

Jon:
Well, sure. Maybe in a business sense, but definitely not on Instagram talking about my Stanley water cup or whatever, right? But that is what I think about when I think influencers, so maybe my persona is off a little bit. But are influencers still a factor in social ads? If I was an influencer, could I still get paid to do this?

Ryan:
Oh, 100%. I think that the threshold to actually making money is probably getting higher, and you have to have a bigger and bigger influence to actually make it a career.

Jon:
You said 100% and I was like, "The dream is still alive," and then you just crushed it with the next sentence.

Ryan:
Yeah. You're doing just fine where you are, you have to stay in CRO or our clients are going to suffer, so you can't be an influencer. I believe, to my core, that every brand that has growth aspirations should have an influencer plan. Different brands will have different levels of focus on influencers depending on where you're at in the growth cycle and the type of products you sell, but you have to have a plan for that. Reaching out to influencers is still a pain in the ass, it's still difficult. It's very manual for most companies, unless you can go and hire a company that focuses on management of influencers.
There's a lot of companies out there now that are talent managers just focused on influencers and getting them deals, so it's like the athlete management and NIL deals. It's like, oh, there's influencer NIL deals out there all over just specifically to be influencers for brands, but we're also seeing some improvement in those platforms that have been out for a while, Impact, Hashtag Paid. There's multiple other ones as well that are out there to try to help brands get influencers and they're coming downstream, which I like, which means that they're allowing smaller brands to find smaller influencers that they can work with. I just think we're on the cusp of making it really approachable for a lot of small brands. I don't think we're quite there yet, but it's coming, and it still can be done for business owners that understand the time-money equation, be like, "Hey, if you don't have enough money to pay for a management firm, you're going to have to invest some time to do it."

Jon:
Well, the good news is you want a college-age influencer, just go to any sports team anymore in college and offer them some NIL money and make it happen, right? I mean.

Ryan:
True, but I mean those are not going to come cheap. I mean, you can't go find a football player with some influence for 500 bucks to do a post for you probably.

Jon:
Fair enough.

Ryan:
And they're probably getting reached out to a lot by fans as well as brands, so their DMs are likely tough to work through. That's I think some of the difficulty is that the only way to message an influencer at this point is through direct messages and saying, "Hey, I'm going to get into your DMs," but they're also doing a lot of other things in their DMs. So hopefully at some point the platforms get away to, "Hey, these are actual verified brands and they're going to go into a verified brand email that they want to reach out to you," and then everybody else fits in the clutter thing, but that's not been done yet. Meta or TikTok, reach out to me, I've got some good ideas for that.

Jon:
But first, buy some stock before you do that.

Ryan:
True.

Jon:
Great, let's take this to the next step, which is buying things through these platforms, right? So how are the shop portions of these social platforms coming along? Because TikTok selling online was all the rage, right? And Instagram have Instagram store. Facebook, you've always been able to do a little bit through, but I'm interested to know how is that conversion?

Ryan:
Good and bad I would say. I mean, I feel like there's only so many places that a brand can just have stores that are all their own. I get it, I've got a website. I get it that I've got to have an Amazon store because Amazon's 50% of all sales, but now each social platform I've got to have a unique shop that doesn't perform or require data in the same way? It's just becoming complicated to participate in all these things. What I don't like about that is that can put up barriers to smaller companies trying to start up, when you have to have a different feed for Instagram and different feed for TikTok and then Pinterest and then Amazon.
It is a point to say that behind the scenes you need to understand feeds, because your products have to have a place where all of the truth of that product and the attributes is stored, and then you have to have a way to send that out. So feed systems I think are dramatically more important for social now than they were even just a couple of years ago with all the shops, because you've got to be able to feed that data into the shop. And then when it's a shop transaction, how you're fulfilling that is important because you've got to be able to communicate that to platform saying, yes, I got this order from your platform, then I shipped it, and then here's the tracking that can go to the, and then returns. It just creates an ecosystem of just crap.

Jon:
The logistics alone.

Ryan:
Which is not fun.

Jon:
Well, and it's a bad experience for the consumer is what ends up happening.

Ryan:
It is, and so I think that that becomes some of the problems because it's very easy for a platform to be like, "Come buy this product from me and give me your money." And then well, it's like, yes, you collected the money from that, but then you have to find a way to make sure that product gets to the customer because TikTok sold it or Facebook sold it.

Jon:
Right.

Ryan:
So complicated. Facebook has been around longer on the shop side or the Meta platforms, Facebook, Instagram. They went into it aggressively and then realized it was complicated and pulled back I feel, and now they're going back into it. Again, it's not been flushed out really well of why people are going to take action on it. TikTok has done a great job I think, at least in the Q4 there was so much buzz around all the things you can buy on TikTok. They did a great job I think, of attracting brands that had people knew already. They weren't going and allowing the Temu which is Alibaba direct to consumer almost where it's like a bunch of crap. But TikTok was, funny enough, Newegg is one of the biggest sellers on TikTok.

Jon:
Really?

Ryan:
And that's like, "Okay."

Jon:
Tech stuff.

Ryan:
You have the old tech. Five years ago I'd have been like, "Newegg, there's no way they're going to stick around." They're selling a ton of stuff on TikTok Shop for gamers. They figured out their niche, they got on TikTok Shop. They did a great job with short form video and live sales. They did a really, really solid job. Q4, TikTok Shop was just really impressive. TikTok went out and subsidized all of the purchases, so all the numbers are TikTok I think bought up to 30% of all of that with their dollars to the retailers because the sellers didn't notice a discount, but there was a 30% discount for users on TikTok to get, I think to just get their credit card information in there. So it's very quick, simple checkout button. Great move on TikTok.

Jon:
Yeah, great moves. I thought it was interesting as there's a new push in the US government to ban TikTok or make them sell to a US company. One of the tactics that TikTok deployed I was reading about even just this morning was that they're making a big deal the fact that there's over a billion, I think they said 1.4 billion in sales off of their platform for small business, and they're like, "Hey, you shut us down, that's going to hurt your economy." So I mean, they're being effective.

Ryan:
TikTok is not going away. There's just no way that it's going away. It's likely that there's some things behind the scenes within the political realm, but when it comes to Americans and their entertainment is generally what people talk about TikTok on, it's not going anywhere, and brands behind it are now seeing the value of saying all I got to do is capture eyeballs. It's basically saying that you were going to take TV away from people in the '70s. It's like, no, it's just not going to happen.

Jon:
Yeah, it was interesting. I saw a Scott Galloway interview and he mentioned, he's like, "There's no way that TikTok gets shut down." Yes, somebody in the US might have to buy it, something of that sort, but the end users won't know any different in the end. His whole point of view on this is that there's too much institutional money, too much venture capital, et cetera, from US investors in TikTok that carry so much political weight that there's no way they let it shut down. It would be disastrous for just the economy and the government, because even if you shut down the 1.4 billion in sales for small businesses through that platform, if you don't go that route and you shut it down, you still have all these investors that have lost all their money. It's a big chunk of venture funds are now in this. So yeah, there's a lot going against movement on that I would say for sure.

Ryan:
Yeah, we're in an election year so.

Jon:
Yeah, it's another thing.

Ryan:
We're not going to get.

Jon:
You don't want to upset the young vote, right?

Ryan:
The people funding it. Well, not even that, but the people that are funding your election campaign are those venture funds, and so it's just not going away. Put on your tinfoil hat and protect yourself, but it's not going away. But TikTok, their shop did over a billion in Q4, and it launched in September of '23, so it hadn't been around long a billion dollars in sales. That tells you something there, and I think what we've learned is there's really two things you need to be aware of when you're selling on the shops systems. Meta and TikTok primarily are the ones I'll be speaking about.
But you've got one group that is going to be not purchasing on the app, not buying through shops, but it's still going to have an impact and they're going to buy. We had a client in the beauty space, which I think something crazy that one-third of TikTok Shop purchases are in the beauty space. And then it's funny, it goes beauty, women's underwear is the second largest, and men's underwear is the third largest within the TikTok Shop space.

Jon:
Wow.

Ryan:
And I was like, "Evidently, we need to buy our underwear through TikTok Shop." I had no idea, I was so behind the times.

Jon:
Yeah, right?

Ryan:
I've not got my underwear on TikTok.

Jon:
I don't even have TikTok installed. How is that?

Ryan:
I don't know, yeah. Maybe my wife is buying me my underwear, I don't know, off TikTok. But we had a beauty brand that's sub $50 acquisition point or AOV, and so we know that it's a fairly impulse purchase in this space. Sub 50, we can impulse buy. We ran some ads on TikTok, did not see the conversion. We're like, "Okay, we threw 5,000 a month at it." It was a small piece of their budget and they'd invested in content, so we figured that they would be a good client to experience good results on TikTok, not great. 5,000 for $100 in sales I think is what we tracked. So we're like, "Okay, didn't work. Pull it back."
Met some partners in the attribution base. It was KnoCommerce actually. They came back to us and said, "Hey, we need to put this on there and then you need to test it again because we have faith." We're like, "Okay." Got some supplement dollars. Turns out, for an impulse purchase price point on beauty, it took about between three and four weeks for somebody to see an ad, interact with a little bit on TikTok and then go make a purchase.

Jon:
Wow.

Ryan:
So it was way longer than we expected. Now that that client is spending heavily on TikTok because it's succeeding, we just needed to have a better window of attribution or think about it differently than we initially out of the gate thought. So some companies need to think about that, and then there is a heavy focus on impulse purchase though like I would've expected. Now that we have more data from the shop platforms, we know that a tremendous amount of people are using the social platforms and the shop features to just make impulse purchases.
There's probably great time of day attribution, like Friday nights at 10 o'clock, a lot more impulse buys maybe, people's inhibitions may be lowered for the day. But we've seen that you have on TikTok, I think it's something like 70% of TikTok users have said that they have impulse purchased. No, just over 50% have impulse purchased on TikTok, which crazy that people are just like, "Yeah, click and buy that." I don't have the data around the AOV on that. I assume it's lower, but still over 50% have just been like, "I'm going to purchase something." That's crazy so we can get some great data from the TikTok Shops. And there was probably some of that was mixed in with the subsidies coming from TikTok making it at a no-brainer, so I do have an asterisk by that particular number.

Jon:
Right.

Ryan:
But it does say that people are willing to buy there and once your credit card's on there and you've got a successful transaction, you're probably going to trust all the future transactions pretty readily on there. But then the one for the longer term purchase cycle is over 70% of TikTok users have reported that they have started shopping for something after they stumbled across it on TikTok feeds. As an e-commerce brand, I mean you can't ignore numbers like that.

Jon:
Right.

Ryan:
And saying, "Hey, I might not have direct attribution to the person that is going to buy in two, three weeks," but you've got to have faith that upper funnel, eyeballs alone has value, and it's going to trickle down. And so you as a brand need to think about your full funnel approach. You're not going to go advertise a bunch on, or you shouldn't likely advertise a bunch on TikTok and Meta at a higher funnel prospecting standpoint if you don't have a nurture campaign on the social channel, and you don't have something on Google and Microsoft to capture that demand once it hits the search engine.

Jon:
Right.

Ryan:
Because they will go off platform and look for things. Amazon being another thing you have to throw into the mix there, but social is working.

Jon:
What I'm hearing from this is it's not necessarily that the changes from Apple have hurt the brands. They did maybe momentarily, but they're back. It's more that it's gotten more complicated for the brands because now they have to be everywhere with shops. Not just having a presence and posting once a week or whatever, that's no longer good enough. You actually have to be on there really selling your products, which I think is a newer approach. Not new, but it's a newer approach. And like you said, it's a logistical nightmare, which ends up typically in a bad digital experience for customers.

Ryan:
Yes. I mean there's so many moving pieces now that smaller brands likely have to focus on one at a time and say, "Hey, let's get the Meta shops up, and then let's go into the TikTok Shops." But you can't be constantly selling. You've got to be educating also, presenting a friendly persona that you should follow me on TikTok. We haven't seen, by the way, advertising on TikTok work well if you're not posting organically and having that authentic brand feel. You can't just be like, "Nah, I don't have a TikTok presence. I put up a video a year ago, now I'm going to go advertise." The users on TikTok are going to see through that, and they're not going to trust you, so you're not going to get sales.

Jon:
Interesting.

Ryan:
And that's complicated. As a business owner myself that's not on TikTok, going and creating reels and videos and content for TikTok seems daunting, and it's not something I want to do because I'm actually running a business. I can't go just shoot videos and be like, "Hey, look at my brand and look how authentic and friendly I am."

Jon:
No, I want to see some dance videos, Ryan. That's what I want to see.

Ryan:
Yeah, maybe I can do that as one on my influencer persona.

Jon:
Maybe Friday at 10:00 PM you can do that, huh?

Ryan:
Yeah, that'll be what I'll do. You and I can go have a bottle of wine and do some TikTok videos.

Jon:
Nobody here wants to see that. Nobody wants to see that.

Ryan:
Nobody needs to see that, no, it's not fun or exciting there. So it's complicated, it's not easy. It takes a commitment from a brand to be able to make these platforms work. You shouldn't try it for a week if it doesn't work, give up on it and never come back to it. It's making sure that you have allocated budget to figure things out and know that the more eyeballs you're in front of, generally speaking, the more awareness you have and the more people will come looking for your product to buy your product. And that's how I think a lot of brands need to approach social in addition to sprinkling in the TikTok Shops, the Meta shops and saying, "Hey, we can get some initial sales," but we're also pushing upper funnel with a lot of the social platforms and using those algorithms that have figured out a lot.

Jon:
Awesome. Well, I am a little overwhelmed myself, and I don't even have an e-comm store, but I think that this is a great breakdown of all the things people should be thinking around social ads these days. Social traffic I should say, not just ads. Thank you for the overview. Man, it's exciting times. I know there's a lot going on, but it's still super exciting, which I wouldn't have thought before we had this chat that social traffic would've been that exciting anymore, what has changed, so thank you.

Ryan:
Yeah, and I'll say we're seeing the larger brands that are growing the fastest are usually out spending on social channels what they're spending on the Google.

Jon:
Wow.

Ryan:
And the Microsofts of the world.

Jon:
That's interesting.

Ryan:
Time to relook at social.

Jon:
There you go. Thank you, Ryan.

Ryan:
Thank you, Jon.

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Thanks for listening to Drive and Convert with Jon MacDonald and Ryan Garrow. To keep up to date with new episodes, you can subscribe at driveandconvert.com.