S15 E1: The Growth Levers Most Brands Ignore in Q1

0:00Nik:Welcome back to Limited Supply, the podcast where we get deep into the tactical and strategic side of e-commerce, digital marketing, and building consumer brands. I'm your host, Nik Sharma. I've spent the last nine years building, scaling, and investing in brands. And through this show and my weekly newsletter at nik.co slash email, I'm here to share everything I've learned. The wins, the losses, the experiments, the tactics, and the insights, all so you can unlock your next$100 ,000 in revenue. Today's episode is a good one, but before we dive in, let me tell you about our chosen sponsor for this week's episode.

0:34Nik:If you're a Shopify brand, pay attention. Roku Ads Manager is built for growth marketers and makes connected TV way easier to test. Go to advertising.roku.com slash limited supply. Without further ado, let's get into today's episode. So I want to focus on basically a handful of things that everybody's talking about. Q1 is typically that time where you're not running heavy promos unless you're a health and wellness brand or a fitness brand, maybe Food & Bev. You're taking advantage of this new year, new you mindset, right? Everybody's in the mindset to lose weight, sleep better, run faster, lift heavier.

1:13Nik:And so you may be taking advantage of that and running some sort of a promo there. This is typically the Black Friday equivalent for vitamin supplement brands. However, this is also the time where, for most cases, CPMs are down on ad platforms. There's just less congestion in the highways of bidding and auctions for these ads to be shown on specific people's screens. And so it's generally a good time to test things out. Everything is generally a little bit cheaper, it's a little bit slower. So it really gives you time to properly test and flush things out. I don't know if we're going to get into the actual how to do the testing part for today.

1:50Nik:I'll talk about it a little bit per channel, but specifically when I think about the how, I'm talking about how do you approach creative? How do you approach finding the right, whether it's creator, collaborator, the right audience, building an offer that fits the channel and the channel experience that somebody is having before they get to your website or to a shopping experience to buy your product? But anyways, let's get into it. So the first one is actually, and I put this up at the top, is internal creators. Now, internal creators, you remember I had Hudson on the podcast, an interview we did with Hudson at Ecom Founders, probably a couple months ago.

2:31And Hudson is the, I think now it's just called the Hudson method or the Hudson way or the Hudson strategy is what I'm hearing. But Hudson has basically decided that he's not going to go out and hire a bunch of random creators. Instead, what he's going to do is build his own network of internal,

2:49Nik:what he calls internal creators. These are essentially contractors and freelance creators who exclusively create for comfort, which is his apparel brand. So why do I think internal creators is a channel that's worth testing? Well, first of all, it's not a channel. It's more of a content assembly line that makes every other channel cheaper and faster. For some brands who I know leverage this role well, they may also have this role named internal creative strategist. Now, the difference would be that the internal creator is actually making the content themselves, whereas the creative strategist is probably just coming up with ideas that then get tested across a network of creators or agencies or freelancers or whoever it is in your content assembly line that you've got going on.

3:39But with an internal creator, you get a ton of advantages, in my opinion. One is just speed.

3:46Nik:If you have an idea and you have an internal creator, within the same hour or two hours, you can have that concept done. An internal creator does not require an editing team. They go in and use their thumbs to edit the video themselves. They know exactly what is primary footage, what is B-roll, what is behind the scenes, what angles to incorporate, all of that kind of stuff. They also tend to know, they just have a better pulse on what kind of hooks are working. What is trending in the platforms, whether it's TikTok or Reels or Shorts, right? What is it that's actually driving engagement and usage on these platforms?

4:22And then how do you then apply that to the brand that you're working at? A lot of people tend to fall short here because they feel like this, one, they feel like this role is too expensive, which to me is crazy. Because if you're spending$200,$300, half a million a month on Facebook ads, and you're telling me you can't afford$5K to$6K on the low end, maybe$10K to$12K,$13K on the highest end, you can't afford that, but you're spending$300,$400,$500 a month in media on these ad platforms.

4:54Nik:this 6 to 12K internal creator would get you so much more efficiency out of that media spend. And we know that this short form style is the dominant creative format for anything paid or organic, right? So why keep trying to source random agencies and pay them 15K, 10K minimums to try to get something to work when you could just go find your own internal creator who's entirely dedicated, The 100 % of their share of mind is just dedicated to testing new ideas, new concepts, new angles, new hooks, new storylines, new formats, all of this, right? And I can't even stress it enough, like how straightforward this actually is.

5:40Nik:The output of creative is insanely high. if you're able to understand if this person can come in also and really understand how your organization works both from a politics standpoint and approval standpoint but also what is within brand or what is off brand and what's allowed to test and how far can you push those guardrails then in a perfect world this person is not only creating but then kind of oversees and helps you run all your different external creative partners whether it's an agency, whether it's other UGC that you source from customers, whether it's freelancers and creators that you find on TikTok that you want to bring in.

6:21And again, creators from TikTok, they don't necessarily have to be people who are standing in front of the camera and talking, but they can just be people who are really good at motion graphics or people who are really good at building statics, whatever it may be.

6:31Nik:All that said, hiring an internal creator, it's a force multiplier for your brand. You can basically get... I mean, I know brands that are doing five to 10 short videos a day from an internal creator, um, with two to three of those going straight into ads. And, um, to be honest, I don't know why more brands aren't doing it. You also get the whitelisting benefit, right? If you whitelist from a creator, your CPC goes down, your CPM goes down, your CTR goes up. If you happen to, um, really like I, when I worked at Hint, this was also, you know, eight years ago now, but, um, I used to go get creators verified on Facebook and Instagram.

7:14This was back when you couldn't just pay for it. Now you can pay for it. You can get your internal creator, give them$14.99 a month, let them get verified, run the ad with a verified account. Performance is way better. If you're also, okay, now let's say you don't, I'm just going off on a tangent here. Let's say you don't want to spend$6 to$12K a month on a full-time internal creator, but you are the founder and you have an Instagram account or you are on, honestly, even if you're on the marketing team, I used to do this and whitelist my own account back in the day.

7:45Nik:Create an account, whitelist it, verify it, get it going, start filming stuff, put it out, see what happens. The time from ideation to the ad is live and now we're seeing in the feedback loop if it's good or not can be less than 30 minutes, 30 to 60 minutes on average. It just comes down to how badly do you want to try it out and test it out and put it out and see what happens, right? You could run the same idea, the same process of, all right, we have this angle. Let's say we're selling a hydration mix. We have this angle for busy moms who don't do enough to stay hydrated because they're just so busy.

8:23Nik:They're running from one place to another, right? You could go and brief that with an agency and then they have to go shoot that or somehow claw together a handful of AI-based clips, which by the way, have to now be labeled and add. So I don't know how that's going to play out. I I know we're seeing a ton of AI stuff, but I'm curious to see how that plays out in terms of ads. But if you're briefing this with an agency, you're talking two to three week minimum just to get the first concept out and in your ad account. If you have an internal creator who understands what the brand likes, what they don't like, what's been tested before, what hooks work, what headlines work, what subject lines work in email, all of that data and information gets centralized in this one person's brain.

9:07Nik:And they can use that to go and produce this one ad for moms within 15 minutes, 30 minutes. So internal creator, I made it number one because if you do nothing else, this is the easiest thing to get up and running in terms of budget-wise, cost-wise, resources-wise. Plus, once you have somebody who's good, which it's not that hard to find somebody who's good. Think about how many amazing pieces of content you come across any social network or really anywhere. Creators are everywhere now. And they're only going to continue being everywhere. So the more you can adapt to how you can basically lean into that, the easier it's going to be for you to continue staying ahead and keep getting ahead.

9:53There's even, I'm sure you've seen on, if you're on Twitter, there's this kid, Josh Suggs. He's known as the street interview guy. So many brands just hire him to create street interviews.

10:04Nik:and what is he doing? He's basically assigning a creator to your brand and then testing a bunch of stuff. Street interviews is one that massively hits right now. If you had an internal creator, could you go do that? Hell yeah, you could, but you don't. So you end up hiring Josh and he does a very good job, to be honest. All right, next one is YouTube stuff. So I have YouTube stuff and TikTok stuff as two different ones, but YouTube stuff comes to mind because most brands are heavily reliant on two channels. That's usually Meta and Google, right? It's a tale of as old as time. Typically, two brands are able to get on those two channels, ride their revenue to$10 million to$20 million, and then maybe even$30 million,$40 million.

10:46But after that, they try to figure out, how do we lean into more top of funnel,

10:50Nik:more middle of funnel? How do we get more brand out there? How do we do more storytelling? And granted, there are some brands that don't really have to diversify. I don't think those are good brands to necessarily look at and say, oh, wow, if these guys got to 100 million on two channels, then I should be able to do the same. That's not necessarily the case. They also have potentially a great product channel fit. They might have a great product audience channel fit. They might have a product that is basically riding the trend of whatever it may be, whether you're in lockdown and COVID and they did really well that way, or there's a big movement for X and their product clearly sits right in the middle that movement, whatever it may be.

11:34Nik:But I put YouTube stuff here because YouTube is actually a phenomenal channel to drive more awareness. So anytime I've done a holdout test on YouTube, specifically focused on ad reads, pre-rolls, mid-rolls, it always works. But when it's coupled with another performance channel behind it, that's also working hard. So for example, YouTube alone, looking at the results, you might see some uptick in that 8 to 12 week period. But YouTube plus Google plus Meta working together, but YouTube is sort of like sprinkling out the dust in the new audience, typically works really well in that 6 to 10 week window.

12:17And you can see actual results. It's enough to go ahead and say, yeah, we should go ahead and invest much more in YouTube.

12:24Nik:Now, the other ways to play with YouTube, which I'm a huge fan of, one is sponsorships. So think sponsorships, partnerships with creators. So these are, in the actual videos themselves, these are creators or YouTubers reading the ad from start to finish. A lot of times you might see, in fact, actually, you know who does this best, obviously is Mr. Beast. Because most brands, or sorry, most creators, what they'll do is they will start your ad read and basically start to finish is just the ad read. What Mr. Beast does really well, and now a lot of other YouTubers adopted this as well, is you kind of get the ad read going, but you still have clips of your main video in between.

13:05Nik:What that does is it keeps people engaged. It doesn't let you skip because you're there for the content, but you need to get read the ad. That's one, that's how Mr. Beast makes money. But two, that's what the brand's goal is, to try to get in front of more people. So the reason I like these kind of sponsorships and partnerships is one, if you can get in with a really good team that understands how to approach these creators and YouTubers and how to go to them with the right script and who to go to and what to pay them and what kind of model and what kind of offer you have. And you can track all of this, which is easily trackable.

13:43You can easily start to understand, okay, which creators actually work best for you and then which ones do you go heavy on? And maybe you find five or six out of the 20 that you tested that are really, really good. you'll also, one of the best benefits is these ads, when you run an ad on YouTube, it's programmatic, meaning it's served to that person and that's it, right?

14:05Nik:It's served to that one person who's watching at that time. But with YouTube creator stuff, like what we're talking about now, if somebody reads a pre-roll ad at the beginning, that pre-roll ad is staying there forever. So, you know, Graham Stephan's a great example of this. He does, he used to do these Morning Brew ad reads all the time. and Morning Brew to this day, because his videos are evergreen, right? They're all about personal finance and how to save money and whatever it may be. They still get views till this day. And as a result, Morning Brew still gets new email subscribers from that link in description.

14:38So you can't discount just the sponsorship partnership stuff based on 14 days worth of sales, although that is probably the best way to understand which of those creators you should continue doubling down on or tripling down on and continuing to create with. but you also benefit from this ongoing brand awareness that you get from it as well. Now, the other way to look at YouTube is more on the affiliate side.

15:00Nik:And we'll go into TikTok shortly. But YouTube is trying to compete heavily with TikTok in terms of getting more eyeballs. They're trying to steal time away from TikTok. So right now, they're making a heavy push into creator commerce, which I'll be honest, I haven't played around with a ton. but my approach to this would basically be very kind of similar to TikTok is finding a group of creators, trying to figure out how you can integrate with them, um, and, uh, and rolling it out that way. And the reason I'm pausing is because I'm thinking there's, um, you know, I use a Ridge wallet. I got a Ridge phone case here on my desk and Ridge actually does a really good job with this, with MKBHD, Marques Brownlee.

15:41He's got a, he's obviously one of the, I think he is the biggest tech review, tech YouTube channel, one of the biggest YouTubers in general. And many of his YouTube videos, at least from what I remember, have Ridge products linked below them. He created a custom design Ridge wallet. He reviews iPhones, so it makes total sense for him to have the iPhone cases linked there. He also did a video reviewing the Tesla Cybertruck, where he fit two suitcases, Ridge suitcases in the back. Those were linked below. And he's making an affiliate cut on all of those. Now, I'm not exactly 100 % sure how that affiliate commission works.

16:20But for example, with Amazon, if somebody clicks the affiliate link, that creator now gets, call it 3 % to 9 % of that entire cart, not just the one product that was ordered.

16:31Nik:So all that said, YouTube is another one that's very easy to track in the sense that if you're running the sponsored stuff, the programmatic stuff, the ads, through the Google Ads platform, run an incrementality test. Easy way to understand. If you're running YouTube creators, sponsorships, partnerships, mentions, pre-rolls, mid-rolls, host read, yada, yada, yada, use custom URLs. So maybe it's goodanyah.com slash mkbhd. And that is then, then that redirects to drinkgoodanyah.com slash partner slash MKBHD dedicated YouTube page with all the UTM codes. But you just make it easy on the front end because if you know me, I love my vanity URLs.

17:21Nik:Shopify brands, this is the one. Roku Ads Manager lets you connect directly to your Shopify store and run streaming TV campaigns that can drive action, not just awareness. Roku's positioned this as a big differentiator. Shoppable TV through action ads and their Shopify integration. If you want top of funnel on the big screen with a proper path to purchase, go to advertising.roku.com slash limited supply.

17:49Nik:The last thing I'll say on YouTube is, and this goes, I would say, pretty in general with creators, is don't give them a script to read. Before I did, before I even worked at Hint,

18:02I worked, I kind of, I was just basically trying to hustle. And one of the things I I was doing when hustling was I was finding these deals where I could find like a, at the time it was mobile games that had, you know, 90 to a hundred million monthly users or players. And they wanted to integrate with YouTubers here in the States. And so I used to help them kind of marry those two opportunities together, basically, you know, help one another. And then I would take a check out of that, like a small percentage out of that. And the biggest thing I learned was that

18:38Nik:you cannot tell YouTubers what to say. You can give them guardrails. You can give them a couple of bullet points. You can tell them, hey, basically stay within these parameters, but do not give them the verbatim, word for word or phrase for phrase type of a script. It sounds insanely inauthentic. You have to remember, you're not advertising to who you think your audience is. You are stepping into somebody else's world, and then they are going to speak about it. So they have to speak natively to their own channel. And when you go ahead and don't allow that by giving them a script to read, the downside is these people immediately know it's an ad.

19:18But not only is an ad, it's just a terrible ad. So with any creators, I would say focus on that. I'm going to skip around and jump actually into TikTok,

19:29Nik:just running off of YouTube. Now, TikTok I put into one line here, but TikTok Live, TikTok Shop, TikTok Affiliates, it's been a couple of years now. This is roaring. TikTok Live, I know for a fact, has calmed down. Brands that were making 60 to 100K per live are now making a fifth of that now on the same kind of live streams. but it's not dead. It's still there. And there's still the arbitrage. The arbitrage is still there. It's just smaller, but it is still there. TikTok shop and TikTok affiliates is still ripping. And TikTok is, they're smart, right? They got everybody in on their super low fee.

20:12I think now the fee might be up to 10 % and going up again soon, but they're making a ton of money and it's working. And whether you're a supplement, I mean, supplement brands are absolutely destroying it on TikTok. But whether you're a supplement brand, you're an apparel brand, you sell a little tchotchke, you're selling a watch. And by watch, I mean lower price, not talking about a$10 ,000 watch here.

20:37Nik:But whatever it is, TikTok shop is ripping. And it just comes down to understanding, if you understand how to work with creators and how to put out content that feels relevant, engaging, interesting, exciting, and basically allows somebody to get sucked in with their eyes. And I'm giggling because me personally, I've been trying to work on not getting sucked into the short form. I've tried to almost eliminate short form from my PM hours of the day because I realized my sleep is actually horrible when I watch short form content before sleep. That said, it does not mean you can't still take advantage of the arbitrage that TikTok has created.