S17 E7: The Acquisition Channel JRB Got Wrong ...and How They Fixed It

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, Nick Sharma. I've spent the last nine years building, scaling, and investing in brands. And through this show and my weekly newsletter at nick.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 D2C operator and TV feels like a black box, that's because most platforms give you 20 % of the actual available inventory and none of the measurement to see if it even works. On the other hand, with Tattari, you can buy linear and streaming directly, plus you can measure it like a digital channel. That's the reason over 400 brands like Manscaped, Tecovus, and Chime run performance TV using Tatari. See how they leverage the platform at nick.co slash tatari. That's n-i-k dot c-o slash t-a-t-a-r-i. Welcome back to another episode of Limited Supply. I'm your host, Nick Sharma. And today we've got a very fun episode.

1:13Nik:We've had Cody Plofker, the former CEO of Jones Road Beauty, on the podcast before. And today I've got him back and we're really diving into what was their unlock on how they scaled so fast. You know, how did they get past the point of diminishing returns on meta and continue to build awareness and drive people into the funnel and drive them down the funnel? And, you know, I think multiple years in a row, they were a top seller on Black Friday across the entire Shopify network. So Cody knows exactly what he's doing, especially when it comes to filling the funnel and flushing the funnel. So that was today's episode.

1:50Nik:And I'm very excited to give that to you here. Let me know what you think. If you've got any questions, hit up myself or Cody on Twitter and enjoy the episode. All right, Cody, welcome to another episode of Limited Supply. It's great to have you back. First of all, how's everything been since last time? I know you've got a couple of big life updates. Yeah, it's been a long time. I feel like it's been like two years, which is an eternity. So I've got at least one kid since then. And, you know, probably about a month ago, stepped down as CEO of Jones Road. So still involved on the board and still advising, but no longer day to day, which is great.

2:32So definitely I'm excited about, happy about, proud of everything we did, but I'm excited to do some new things and advise a bunch of brands and maybe start some new ones. So yeah, it's been good.

2:44Nik:Amazing. Yeah, congrats on all that. We'll have to do another episode where we also just catch up on all things AI and all the things that we've been tinkering on on the side. Oh, we should definitely do that. And show some of the people that. But excited today to have you here. And I think today I really want to focus on a channel that we've been talking about over the last couple months, especially as we think about going into Q4 in a big way, which is TV. So I'm curious just to start, right? You built the entire Jones Road engine on paid social notoriously, especially using the Bobby Brown video creative kind of first person approach.

3:18Nik:but you did all this with ever really touching a TV budget. And I'm curious why you think that background leading as somebody who, who built on digital and then came to TV, why you think that's the best kind of persona to talk to today about what it's actually like to go into TV? Well, we, we did. And then we, you know, didn't, like we were obviously very paid social and like me just like not knowing any better. I was like, Oh, TV is for, you know, you got to be a big brand and like, we got to get to a certain size and be, you know, hundreds of millions. Didn't know how easy it was, but, you know, I didn't really, I didn't really know any better.

3:52So I was just like, let me, let me just keep going on paid social. That was like what I knew that was, you know, my bread and butter and, and it worked and it worked and it worked. And then eventually it doesn't where you, you know, you got to reach new people. And we, we definitely like, not that we ever had like a flat year, but like we would hit, you know, a month where we felt like there was like a little plateau and it's like, okay, we have to go and do some other things. And, and, you know, reach new people is really the biggest one, right? You can't just pay social. You're running same strategies.

4:21You're going to run out of who you can reach. And, you know, TV is really, especially with where our demo is and was, it was like a natural fit. I mean, when we launched it, it was huge. Like we probably had like 50 % like year over year growth and like just like some pretty crazy results, which I was not expecting at the gate. So, yeah, it's been big. I mean, we had at one point we were probably spending like 25 % of our mix on TV. So it's also one of those channels that can really scale. So it's been great and it's still a pretty big part of our mix today.

4:54Nik:Has the kind of like the rise of TV ads, I feel like as Jones Road kind of got super mature, it was kind of at that sweet spot timing where also a bunch of other larger brands really took the leap into TV. Did that also just give you confidence that it's the right channel to go and test out? I was confident because, you know, our demo was definitely on there. I knew that. I knew that if it was able to work, there was significant scale there. It wasn't like we're going to put all of our effort in something that, you know, could only spend a thousand or two thousand dollars a day on. I think it also gives you, you know, a little bit of trust, credibility, you know, like there's a lot of trust of being on TV, like not every brand can do that.

5:40So it kind of makes, it makes you seem like you're a little bit of a bigger brand. And I also, you know, I don't know that I would start like TV in the beginning when launching a brand, but I think the benefit of social is you're able to really get product market fit and test a lot. Like we, a lot of our best TV ads, they were actually organic social TikToks like with Bobby. And then we would just turn them into ads, edit them, shoot them for ads. So like by the time we did go and do a TV shoot, like we felt very confident in a lot of the strategy and now it was just scaling it and bring it to a new channel.

6:13Nik:Yeah, I love that. I remember that was how I first got started on TV too. It was like basically figuring out the angles that work best on that cold Facebook traffic and then figure out how to merge it in with a TV piece of creative as well. All right. I want to talk about, you know, actually before we get into the next chapter, isn't it funny how you've seen all these TV companies come out of nowhere with these crazy offers and try to recruit you with like 500 bucks and spend. I've seen, I've seen some slightly larger offers than that, but yeah. Yeah. They're all, they're all trying to start, you know, basically see who can get you on with the lowest, with the lowest, you know, like barrier to entry basically.

6:52Nik:But I feel like it's a bad, bad judge of character when you're starting TV. Yeah. And it only goes so far. I mean, those credits will go away. Really what we're all after is value and performance. And, you know, A huge part of that is having access to the right inventory. That's a big part. It's not like paid social as much as some of these other vendors will try to say it is. But it's not just like you can toss it in an ASC and hands off. There is a lot more strategy and skill. I feel credible to speak on the overall concept of TV. I wrote our TV ads. I wrote all of them involved in production.

7:28Measurement. but that being said like i've never actually successfully bought tv and i think you need somebody who really understands that because it's a very different skill set and just like experience that compared to like a paid social yeah totally we can't we can't forget attribution

7:42Nik:you're the king of attribution wars um all right so going into tv now so you just talked about this a little bit but i'm curious like when when people hear advertising on tv they usually think either i'm going to do a quick dsp sign up uh you know and spend a few hundred bucks and see if i I can drive some traffic and try to use this, you know, TV ad unit, or I'm going to go spend 100 grand on a piece of creative and then do a huge national buy. So I'm curious, like for you guys, when you started, you know, way, way before you ramped up to a quarter of your paid budget going to TV, how did you guys start and approach testing the channel in a way where like you as a performance marketer felt like this was going to hit stat sig, not just, all right, let's test it with a few grand and see what happens and then go from there.

8:29Yeah, and Sean, I would love to hear what you guys recommend and have to say about this. But we worked with an agency who was very close to Atari partner, household, still work with them today. Nick, you actually intro'd me to Greg. Awesome guy, awesome agency. And so his recommendation, and I totally agree with, any mistakes I've had launching new channels in the past was kind of dabbling. And you don't need to go and do a$250 ,000 production and spend hundreds and hundreds of thousands to prove it out. But you also can't, you know, go with no creative and then spend 500 bucks and shut it off, right?

9:04Like you do have to do it. So his recommendation, and I think it was partly based on the size of the brand we were at. Like we were actually pretty established, you know, then. And so we needed a little bit more budget to kind of see some signal compared to where we were at. So we did a production. We try to always keep things lean and stuff. So it wasn't like a 200K production. It was probably like 50K, but we got like eight assets out of it. All right. So good amount to test. And again, like we felt like they were relatively proven, at least in the market, not on TV. And then I think we went with like 200K, 150K, 200K over a month.

9:38And we're like, we're going to spend that. We're going to commit to it, you know, no matter what. So that was what we went with. Sean, I'm curious, like what you guys normally recommend. Yeah. A couple of things you said there really resonate. I mean, there isn't a one size fits all and it's going to kind of depend on where the brand's at and what the available budget is. You know, the more you can spend early on, the more you can learn, right? And achieve those stat-sick results and then scale more quickly. But to your point, you don't mean to go in at a 250K budget starting out and certainly not a creative budget either.

10:11So always advising clients, you know, to be strategy, right? Think about assets that maybe are working on YouTube and social, et cetera. How can those be kind of up leveled for the TV format so that we can can can get you on there? But yeah, to your point, there's no one size fits all. You do want to really consider kind of what what are going to get you static results and what are going to get you the learnings that can really make it a scalable channel long term for the for the brand.

10:42Nik:Sean, I'm curious, like, when you look at the brands that are coming into Tatari and end up scaling really well over time, what kind of signals do does that cohort of brands have when they come and test? Because I think like, just hammering a little bit on what we were just talking about with these offers, it's, it's, you know, it's almost like the meal kit companies just trying to steal a customer from one another to get that first purchase. But there's no real retention behind that offer. And so I'm curious here, like, what do you what do you see when you see clients coming in? Like, what are the traits you see around a brand, where you're like, all right, this is going to be a legit brand, like a Jones Road is going to come in and test with a meaningful budget.

11:25Nik:And this is the right partner to come in and test versus just like, all right, these guys, you know, they want all these features for 500 bucks and spent. I think Cody kind of mentioned this, but I do think that brands need to be effective on search and social and executing at a pretty high level, you know, as they're coming into TV. So they're not just coming into it cold, right. And they're not just scraping by, so to speak, right. They've kind of, again, figured out product market fit, you know, margin revenue, et cetera. That helps. As far as other signals go, I mean, again, if you are starting to see diminishing returns or kind of diminishing audiences on some of the other channels that you've been cranking and growing the business on for a while, then that's a sign that TV may be a great option too.

12:18And then for those first few tests, again, I mean, you want to be able to invest enough money to gain the learnings that are going to unlock this channel for the long term versus just a flash in a pan, you know,$5 ,000 test or something, it's really not going to give you much. And again, especially if you already have, you know, some noise and a lot of other channels that you're running on, right? So, so you do want to make sure that you have an investment that kind of matches where the brand is at and where the long term goals are, etc. But but it's not a one size fits all again.

12:53Nik:Yeah, makes sense. Going off of that, But Cody, I'm curious where, when and where you started to see that point of diminishing returns, which made you start to think you should look outside of, you know, kind of the core strategy we're running across meta. It was definitely it was the year we did like we did like 105 million one year. So it was it was that year we were growing, you know, pretty quickly. But along the way, again, definitely like had like a few months where we were plateauing. We were like 80 % paid social, you know, and so it was very heavy and kind of diagnosed it as, you know, a reach issue.

13:32And, you know, dabbled with some other things. I tried to run reach campaigns and meta, but like they're just, you know, I don't know that that should have been the best strategy there. It was kind of like, you know, just trying to bandaid it. But we really needed like another place where we could reach people and put budgets and continue to scale. um and so that was it and i think part of it like i just naively ignorantly it's probably a better word like assume that like we weren't ready for it you know just because i didn't really know any better and when i started talking to people in here and like it wasn't it wasn't this like big behemoth that like we had to be a giant brand to do like we are ready there were smaller brands than us like often brands get started you know that like i was talking about 50 million dollar brands that get started and like have it it was very successful for them it's not i just in my head thought it had to be this giant you know production and fancy thing what were the signals that you saw

14:22Nik:that made you think that you are hitting that point of diminishing returns was it just like inefficiencies were starting to go up or you felt like frequency was getting really high yeah exactly so so just seeing like reach get worse seeing you know not not able to kind of scale and so losing efficiency when you tried to scale uh you know reach reach getting worse frequency going up um all that stuff what was really cool when we when we did launch so like there was this this clear like halo effect so we use north beam for attribution and one of the things we would look at and and this was a challenge was was um new visitor rate was just going down and down right um and when we launched tv like just shot up so our overall efficiency was really good but like without even changing anything on our paid social strategy or kratos i think it just brought in this new audience that was just like really you know brought in this new audience into our funnel and maybe gave it some credibility so paid social converted better but also like was was reaching many more new eyeballs yeah it makes sense sean is that kind of what you see also on your side as brands are coming in yeah absolutely i think that that um mention there the halo effect is really important so sometimes it can take a little bit of time as you start out on tv to build some momentum there's some clear signals right away you should see which is kind of an increase in branded search, traffic to the website, etc.

15:43But eventually, you start to see that pressure kind of down funnel and, you know, your campaigns on meta start to convert at a higher rate, your retargeting pools become larger, etc. And so we really are trying to gear at Tatari, you know, our campaigns to drive those signals as soon as possible, right? So that brands can kind of see that and feel the impact as soon as possible.

16:09Nik:Yeah, makes total sense. Cody, can you tell us about the first ad you ran? I think you ran it on Christmas, right? Yeah, we launched, good memory, we launched, I think, on Christmas Day. Yeah, so we launched with a few different creatives. We did one shoot and always try to be as efficient as possible. Launched linear to start. As the guy who is, you know, notoriously cheap about where you're spending your money, how did you decide to launch on Christmas versus, you know, the first time I launched TV, it was like, we're launching the overnight remnant buys on like the gifting networks and all of that.

16:47Nik:So how'd you decide to go, you know, just start on Christmas? It was remnant. The first one, right? Like I remember being at my family's house, my like brother-in-law's house in Miami on like Christmas Day or day before it. But it was on like, I don't want to say lifetime, but it was on like one of those channels, you know, like you would never watch, but it was like so exciting. You're like making everybody sit around lifetime TV. Yeah, for a 15 second spot or a 30 second spot. But it was definitely remnant. I think, you know, part of it was timing. I think part of it was, you know, there was, we thought there was a little arbitrage kind of like Q5 period.

17:22People are, you know, sitting around. So it just could be a little bit cheaper CPM. because that's when people are sitting around having time to kind of watch TV, not at work. So we thought it was like a really good time to start for us. Yeah, I was just gonna chime in there. I think remnant is not a dirty word, right? I think it maybe sounds like it means that it's like cheaper, lower quality inventory, but particularly in the TV space, this is the same inventory that some of the largest advertisers in the world are spending a gazillion dollars on and upfronts, et cetera. There is just, of course, a portion of that inventory that goes unsold.

17:57And so it is smart sometimes to start out that route to find efficiency early. Yeah.

18:03Nik:Is that how brands mostly start? Like what's typically the path for a brand that's coming in and wants to start? How do they make sure that, you know, they're not like spending a ton of money out the gate, but also they're not spending not enough, but also, you know, they're not buying bad inventory or, you know, not focusing on exclusively smaller sets of inventory because it's more premium? Yeah, so it does depend on the brand and kind of what their target audience is as far as how we would build that initial pilot campaign strategy with regard to, you know, how much on streaming versus linear and whether we're buying programmatically or buying directly, etc.

18:40But, you know, we would go in and basically take kind of a balanced approach. So for Jones Road, right, you want to be on some of those larger tier one cable networks, your Bravos, your E! Entertainment televisions of the world. But then there's those smaller networks that hit that same demo. And we have research to support that, such as Lifetime, etc. And want to make sure that we're on some of the smaller networks, the larger networks. And again, in that remnant space, we're able to effectively bid, essentially, at a rate that we think is fair and is going to clear the spots. but in kind of the most cost-effective way possible.

19:19So it's kind of this balancing act. We want to make sure we're delivering spots on the networks we think are going to matter and we need to gain learnings on. We don't want to pay necessarily top dollar for it either. And that's something that our model at Tataari has really been able to execute effectively with a lot of data over time and identifying what is the right rate to pay within the remnant space.

19:42Nik:Yep, makes sense. Now, going off that, One of the things that TV companies are very particular about, just like food companies, is how they write about the inventory they have, whether it's organic versus all natural versus natural. In TV, it's like programmatic versus TV versus CTV versus fast. And so I'm curious, can you explain all these acronyms and just tell us a little bit about what do people think they're getting? What are people actually getting? and, you know, for example, how did Cody's plan differ than what people might think they're getting themselves? Yeah, there are way too many acronyms, too much jargon out there, which is notorious in the ad tech space.

20:25I mean, at the highest level, there's linear and there's streaming and linear is that more traditional TV that people think about, that cable subscription or the broadcast networks you could get on the bunny ears antenna, right? Your NBC, ABC, et cetera. Streaming is really anything delivered over IP. So OTT is somewhat synonymous there. And CTV as well sometimes gets referred to that as well. For the audience, I think it's important to realize that they're just considering what they're watching TV, right? They're not going and turning on their TV and going, oh, I'm watching Paramount Plus. This is TV.

21:08Or I'm logging into my spectrum or satellite network account and this is TV. To them, it's that viewing experience. And that, I think, gets kind of to the heart of what we talk about with convergent TV. That fact that there's these different kind of services and platforms and delivery methods. But at the end of the day, it's all TV. And from a media buyer standpoint, there can be importance to any of the pieces of that puzzle, right? So for one brand, it may be really important to be more heavy on linear than streaming, but there's still a place for streaming, right? Or it may be important to be on the subscription streaming services because of their demographic and their product, but not on the free ad supported platforms, right?

21:55And so that's something that we, you know, really try to educate the brands that are new to TV on and then come up with a strategy that's tailored to them.

22:04Nik:Yeah, makes total sense. And Cody, as like somebody who came in from the digital side, you know, no TV background before, were these formats different to you? Or how did you decide which ones to approach first? They were very foreign to me. And I would hear all the things and I'm like, what's CTV? What's OTT? So I had to like do a lot of research, listen to a lot of podcasts, even like understand what a lot of the acronyms are. We decided to go linear again, a demo, right? We felt like our demo was watching linear at the time. And then, you know, CPMs and then just, you know, my strategy going into any new channel is just use my network, talk to as many people as possible.

22:42So, you know, talk to people like you, like Greg, like talk to other brands and just see what they recommended and kind of put the pieces together because you know you might have one person saying one thing or whatever so that was it but I think just based on the CPMs and based on you know we thought we could get to you know some decent scale before then introducing you know like a streaming or a CTV which which is what we did and I think that worked out pretty well.

23:05Nik:If you've ever wondered how the top brands actually run TV here's Calm on why they use Tatari. At Calm, we treat TV just like any other digital channel from a KPI standpoint. So we look at how many people we are able to reach with our offering and product. Down funnel metrics like cost per install, cost per trial, and kind of the North Star metric is the profitability metric, which is ROAS, the return on ad spend. With Atari's ad platforms, we were able to measure our business outcomes across both linear and streaming. And then we're able to independently verify it with the data that we see on our end and our back end.