Bonus: Inside Meta’s Disruptor Playbook with AS Beauty: AI, Creators & Campaign Tactics for Q4

0:00I feel an inherent responsibility for us to work with these companies to truly innovate and to build something net new that becomes the next best practice globally across our platform. What are some of the challenges that we think are facing brand marketers this holiday season? It's one word, it's uncertainty. The best ad, the best script you think is going to win almost never works. For every marketer out there, DTC leader, challenge your team to use measurement. A lot of the companies that we work with that are truly the best of the best use two or three different sources of truth. When you're only competing at the bottom of the funnel, last click and not focusing on incrementality, then you're truly missing the larger opportunity and you're going to spend yourself out of being able to grow a business profitably.

0:53Welcome to a very special episode of the DTC podcast. today, we have Jake Bailey. He's the head of industry as well as specialty and disruptors at Meta. And we've got Scott Kramer, VP Growth at AS Beauty. Jake, I was just saying in the pre-interview, I remember learning about what the disruptors were within Meta. And I thought that it was such an interesting approach to all these disruptors in the industry. Talk a little bit about your role at the disruptors and what the disruptors are. Yeah, great question, Eric. And thanks for having us. The disruptors team within Meta is primarily advertisers and brands that are D2C.

1:27A lot of the companies that you've probably spoken with over the years, we work with every single one of them. Many of them are digital natives, meaning they're born on digital, either app or web. And they are a fast moving group that loves to test and move very, very quickly. So our job is to keep up with them and help them push the boundaries on the platform. And it goes across all verticals. Correct, yeah. It's primarily, I would say the fair amount of them are beauty, apparel, and food tech. But those are a few of the primary ones that we work with. But it does go across all verticals. Scott, why don't you tell me a little bit about your role as VP Growth at AS Beauty?

2:04As the VP of Growth at AS Beauty, I oversee all of our paid media, performance, marketing, and really have a close eye on how is that helping drive revenue across all their different sales channels. So in the early days, a lot of DTC brands very focused on e-commerce, Shopify numbers. We've seen a significant growth to our Amazon business as well as some other sales channels. So we're really starting to think this year about how are we kind of driving revenue both on our Shopify and dot-com store, but our other channels as well. And working with the Meta Disruptors team has been an amazing opportunity.

2:36I think for anybody that's been in the Facebook media buying or advertising landscape has always looked up to the Disruptors team and everything that Jake's done. So we've been a part of that group for almost two years now. And it's just a very exciting opportunity. and kind of like being at the forefront of testing new campaigns, new strategies, and just looking at data from a much more like holistic landscape has been an amazing opportunity and especially important for our growth. Jake, are Disruptor's like a two-way system? Like the coolest thing about meta ads is just how fast you can move, how many different ways you can take it.

3:11Are you both like learning from Disruptor brands and then sharing what works with other Disruptor brands? Is it a two-way street? Yeah, it really is. Eric, and it's a great question. One of the things that gets me so excited in working with these companies is they truly push the boundaries of what's possible in the platform. So our job, I feel an inherent responsibility for us to work with these companies to truly innovate and to build something net new that becomes the next best practice globally across our platform. So a lot of things that Scott and his team build with us in alphas and betas ultimately become new features that we roll out globally and especially across disruptors.

3:50These companies move fast. They will turn on a dime and follow the data. And they're all extreme performance marketers. And that, for us, makes it a lot of fun because things change every single week, every single month. That's super cool. It's such a unique opportunity. I mean, I think that's where it's like we learn from them just as much as they're learning from us. It's such an important channel that we're able to have that direct communication line. and they're actually so receptive to it, I think is what makes it this kind of like illustrious group to be a part of. So we're thankful to be in there and helping push the boundaries for us and for all other brands too.

4:26I think it's unique. I think there's a rap that sometimes platforms get about their reps not being that responsive and always sort of pushing maybe the company line about how they think things should be used. But as a performance market, I've been doing this for over 10 years, it's always a push and pull. You're always innovating yourself, taking with what your rep says with a grain of salt, trying to do that as much as possible, but also having your performance marketer roots where you're trying to push on hypotheses that you have or whatever. So it's really cool to hear that Meta for a long time now has integrated that push and pull into how it innovates, which makes a lot of sense.

5:01With that also comes a bunch of challenges too, because they're pushing every single boundary. And so they keep us honest about what really works well and what doesn't. And so the most common theme that we see, Eric, is like a lot of the best disruptor brands, DTC companies, have a permanent testing roadmap in place. So they always are working on what's the next test we're going to run. And it sounds exhausting, but that's how great performance marketing companies truly get to the next level. Let's talk a little bit about this holiday season. The only constant in this industry is change, changes on the platform, innovations in the tools, changes in the cultural landscape.

5:38What are some of the challenges that we think are facing brand marketers this holiday season more so than previous years, Jake? Yeah, I would say, Eric, if it's one word, it's uncertainty. And it's uncertainty in the economy, with the consumer, with inventory levels that they should have in preparation for this big holiday season coming up, tariffs, interest rates, and the list goes on and on. And I would say more so than the last number of years, a lot of uncertainty. But with that, also has been a ton of resilience that we're seeing. So from that standpoint, it's been really encouraging to see it.

6:16I just saw a news headline this morning about the Big Mac Index right now and about how McDonald's sales are going down maybe for the first time in a really long time. And they've used that as an indicator about consumer confidence. What are you seeing heading into the holiday season, Scott, around consumer confidence? That's the Big Mac index. In New York City, I think we call it the subway price or the pizza price index. And that continues to go up. They just raised it another 10 cents. But yeah, I think all the things that Jake said, it's like we're closely watching everything from consumer confidence, I think economy tariffs.

6:53That all just plays into consumers' sentiment for are they ready to buy? Do they want to buy? I think also this year, tougher than ever is tariffs. And I think while some brands have more or less exposure to tariffs, it still is hitting all of our bottom lines. So we're all kind of talking about price increases and kind of counter to that in Black Friday, Cyber Monday. It's like people want the best price. So how do you kind of figure that out? Is there other ways we can find items that have better margin that we can kind of bundle together to help ensure that we have those same kind of profit levels to keep scaling and pushing?

7:24I think the one thing that is better this year than last year, if we think back and looking at November last year, we had the election. And we've had so much uncertainty, I think, around the election for consumer buying. And I think that's the interesting thing. It's like consumers don't always think logically. I think they're always kind of fearful of like what's going to happen in this election. But in reality, the election doesn't change anything like that next day. Like nothing's going to happen until the next term when presidents actually come in. But there's just that concern of like, okay, if it goes one way or the other, am I going to have more money, less money?

7:56What's that going to mean for the economy? I think just those levels of fear, I think, really kind of affect consumers and their buying habits. I think that's what we're hopeful that this year we can have a little bit more certainty, at least in November for holiday and holiday planning. But and then also the competition of advertising. October was a very aggressive month. Again, as you look at the ad spend of the political landscape and what that did last year compared to this year. Super cool. What about the lipstick index? While we're talking about index, I think the lipstick effect. That's something we talk about on the podcast a lot is that even in tougher financial times, people are looking for those things that are sort of acute pick-me-ups in a way, right?

8:36Is that something that you see? I mean, yeah, the lipstick effect. You look at it during COVID. I mean, brands that were selling workwear and things like that, those brands suffer. But again, the lipstick effect are kind of how the brand people are buying things that make them feel happy. I think that's the nice thing of where we even sit in the beauty and cosmetics category. We call ourselves in the mastige, so not mass and not prestige. So kind of in that happy medium where it's a price point that hopefully most people can afford. And that's where our AOVs sit,$50,$60. We're always wanting to increase AOV because, again, customer acquisition costs get more and more expensive.

9:12So I think that's the challenge and what tactics are we doing on site with post-purchase, upsells, cross-sells, all those things. So I think we definitely are fortunate to be able to take advantage of the lipstick effect. But there are always other challenges as well we're trying to work through there too. Yeah. So there's challenges in the market and there's constant innovation from Meta's side. Jake, with working with the disruptors, working in industry and specialty, what's sort of the top line messaging that you're coming to this podcast with for brand owners looking to have a better holiday season than they had last year?

9:43Yeah, I would say there's probably like two big things that have changed dramatically over the past, call it 12 to 18 months. And I think the first one is our investment in value solutions. And from our standpoint, that would be things related to value optimization, incremental attribution, or optimizing towards LTV. We put a lot of work over the past 24 months across hundreds of engineers in building out these solutions and just making them way stronger. And we're starting to see that really play out. And Scott, keep me honest as I'm going through this. I would say the other one that has been big for us is the shift of the consumer towards video-first experiences.

10:24And in this case, it would be the size of reels versus feed and how much consumers are spending their time looking at reels and listening to creators. And so we've invested a lot in making sure that partnership ads are thriving. And for a lot of our companies that we work with, they're seeing really strong DR performance through creators, but also seeing net new audiences. And that's the real important unlock there because when you're only competing at the bottom of the funnel, last click and not focusing on incrementality, then you're truly missing the larger opportunity and you're going to spend yourself out of being able to grow a business profitably.

11:04So for a lot of our clients, we'll have them look at things like rolling reach. What is the net new audience reached by going into some of these other services like creators and partnership ads? And that's been a big one for us. On your side, Scott, which of these aspects has been most influential this year? Yeah, I think it's all the above. I think that's where we're always looking at how do we increase our reach and kind of drive net new customers. And I think that's where we need to make sure that when we're setting up our campaigns, when we're doing these tests, we're measuring for incrementality more than ever.

11:34I think as smaller brands, when you're first getting started, I think you've got the luxury of kind of like, you know what, I can just look at my business and kind of like focus on a few small metrics. But as you evolve and grow, some of these metrics become even more important to kind of measure and kind of like keep a close eye. And so value optimization has been an amazing one for us. We've played with it in the past, but it gets at a point now that it's even better than ever. Also, incremental attribution is one that we're part of the alphas for. And we're really excited about the new wave of incremental attribution and even incremental attribution with value optimization.

12:06So I think it's kind of like, how do we just kind of take these best practices and combine them together? because I think that's where it's like looking at these tools and kind of like finding ways that we can really guide them for our business KPS. I think that's the hardest part that people forget. Sometimes like the meta in their system is so good, but you need to make sure you keep it on the right rails for your business and for your metrics. I think that's where using the right audience exclusions, building the right custom segments for that stuff to make sure if you're telling it, hey, I want that high value customer, you need to make sure that you're excluding past customers or past high value customers so that it knows to go after a net new.

12:42If you don't do that, it's just going to take the signals you're giving and it's going to go for the easiest win. So that's, I think, the challenge that us as advertisers and marketers really are becoming how are we at aligning our KPIs to the structures and kind of like building the architect for these tests and for these campaigns in the correct way to get us to those KPIs. Incrementality is the word of the year on the D2C podcast and in the industry. Practically, what does that look like? What are the tools that you're using? What are the structures that you're using to really focus on driving net new?

13:16Yeah, for us, I mean, it's pulling in all the different ways that we can guide it through those customer solutions. So we layer in a bunch of stuff in there. So from custom audiences that we can build within Meta and their different events, we pipe in our customers from Shopify, we pipe in audiences from Klaviyo, we even utilize some of the Shopify audiences on top of our kind of like CRM uploads. And then there's other tools that we've been looking at out there that are kind of like, hey, is this helping kind of increasing this exclusion capabilities? We also use TripWell for a lot of our attribution.

13:49So making sure that, you know what, while we're looking at this, how is that actually coming through on the back end? So within there, we measure our new visitor percentages, our new customer percentages. So to make sure that, hey, if we think this is actually driving it, is meta taking the signals we're giving it to go after the right types of people? I think that's the struggle we have sometimes. If you're just kind of looking at one metric or looking within one dashboard, it may look great. And you're like, hey, Ross is amazing. Let's scale. Let's push. It's like, wait, wait, hold on. Let's take a look at it through a couple other KPIs and double check it.

14:18It's almost like, is something too good to be true? I think I've been around this long enough that you're like, if Ross looks amazing, it's like, before I start doubling budgets and adding zeros at the end of ad spend, let me make sure something else is going on. And is this all checking out before we start ramping too soon? Scott nailed this one because a lot of the companies that we work with that are truly the best of the best use two or three different sources of truth in order to triangulate what's true incrementality. And so for every marketer out there, DTC leader, it is truly challenge your team to use measurement in order to find out which channel is really incremental to your business.

14:57You don't want to be investing your precious marketing budgets on purchases that would have happened anyway. So make sure that you're truly leaning into incrementality and that will really help you right size and invest your money as best as possible. Music to our audience's ear, I can tell you. So creators and partnership ads have been around for a long time. What's changed about how they're used maybe this year and why they're more important than ever? Yeah, it's interesting. I mean, partnership ads, whitelisting, graylisting, blacklisting, some of that stuff we've done a lot over the years.

15:32And a lot of people that work with a bunch of influencers and celebrities are familiar with that. And it's always interesting. I feel like the early days of working with some celebrities and partnerships, you'd always kind of see like we'd run and we'd test. We're like, okay, if we whitelist it, if we run the same content but from our page, or if we kind of do it in partnership. And for whatever reason, for a while, it always felt like whitelisting outperformed the partnership. And I always had this theory of like the consumer would know that when they're seeing that ad served to them, when they see that celebrity name and it says like in partnership with, and it's like, that's just like a red flag to them.

16:06This person is getting paid to post. I don't care what it is. I know I'm getting sold an ad to. So that's where we always felt the white listing style perform better because it just felt more organic and more like this, this person, this celebrity, this influencer that has some value to kind of talk to the products is actually in a more organic way speaking to you. And so I think that's where we typically were running whitelists for a long time. And now with the addition and kind of the changes to the partnership, I feel like we're starting to see it really swing the other way. And we've been doing a lot of tests because it's not easy setting up whitelists.

16:41It's like working with people to get access and share that. It's a complex and tough process, especially for people that have legacy accounts that maybe their Instagram page doesn't connect of their Facebook page. And so you're trying to run it only ends up on one platform. And like, we always want to kind of like optimize for as many platforms as possible when we're running ads. So I think the recent changes to partnership ads has really helped us scale and amplify this. And we're seeing the results perform a lot better. I think also in the past, when we tested it, we'd see way higher CPMs from those partnership ads compared to whitelist.

17:13And that's where we always felt that, you know what, the whitelist looked like they were more organic. We were getting rewarded in a sense because, again, Meta's getting the signals that this content that people are engaging with, we want to serve it more, so you're getting more reach and winning more auctions. I think that's what we're seeing now with the new wave of partnership ads, that it's coming through and working to similar success that we saw back in the day with whitelist. I'm sure Jake has more context to add. That's the outside of what we're seeing, but the meats of it, I'm sure he can add more to.

17:45You nailed a lot of the good points, Scott. But one thing that I would say is important about this at the highest level is creative diversification. At the end of the day, it's about putting different concepts into the machine, into the AI that we've invested so much money in and letting it do the work and finding the audiences that will match best with that diverse creative. And by diverse, we really mean different concepts. and creators is a really great way of unlocking those net new audiences. And one of the things that we have seen early days that is performing incredibly well is using catalog ads plus partnership ads.

18:25And we've seen that to be a great one-two punch on our platform. But as we're talking about creative diversification, Scott, as you're looking to your holiday, how are you all thinking about kind of building up that machine of differentiated creative? Yeah, I mean, for us, we also, in the beauty category, a lot of brands do holiday collections. I think that's a big thing for us. We release a lot of holiday collections. We've launched them October 2nd, so they're already live on our site. And I think that's where we also do a lot of creative around us. It's an exciting time of the year, exciting holiday to talk about something different and unique.

19:01And it also brings that perspective of creative diversification when we're maybe heavy on UGC content and some statics and stills. like how do we kind of mix it up so we're also adding a lot of hi-fi we do a lot of stuff with the the founder of our business laura geller and kind of content that we shoot at our home yeah the founder style but again we're doing it in a like an old school kind of way uh we've we've a really strong qvc business as well and so it's kind of this like the the hi-fi kind of in our home in our kitchen it kind of looks like those kind of like um live shopping stages and just showcasing the product i think is exciting so it's kind of just creative differentiation in all aspects of it, of like content, the content style, the lengths.

19:42We see a lot of times, is it short length? Is it longer lengths? And mixing that up as well to kind of just give the machine of meta as much opportunity because the more we can feed it, the better it can optimize. And it can take that micromanaging out of our hands. So we don't need to be like going in and tweaking and be like, okay, this is going to be a campaign just of Instagram stories. If people remember that back in the day, it's like, oh my gosh, I want to get more reach on Instagram stories. Let me do an Instagram stories only campaign and kind of try and like push the system that way.

20:12So I think it's like, how do we just feed more into it and kind of hit all the advanced shopping, kind of toggle those on, make sure you're optimizing for it. I think even, I know we haven't got there. I'm sure we're getting to AI. So I don't mean to jump the gun, but I think even some of those things are awesome about like just making sure that you can serve on all those different placements as well. I think the catalog plus creator aspect is like, I've always loved catalog ads for that bottom of the funnel. But I think of the creator more as the top of the funnel or awareness generation. So when you combine those, you get probably a pattern disrupt where people are used to seeing static images, maybe in a catalog ad, and instead they're being shown something by a creator.

20:54Are we now at the era where partnership ads and creators are kind of used up and down the funnel, not just at top of funnel, Jake? Absolutely. It's both. Obviously, for brand metrics, it's upwards of 90 % increase in brand lift for a lot of our DR advertisers, which is big. But at the same time, they're seeing really strong DR performance. In some cases, it's 20%, 25 % improvements in CPA. And when you do those things together, that's a really powerful combination. Scott, when you're working with creators, are you giving them scripts based on top of funnel style things and bottom of funnel style things?

21:32Are you thinking about creators delivering messages custom to where a customer might be in the funnel? I think it's interesting. We want to give them a little bit of creative freedom, but we'll also kind of pull on, hey, what's worked in the past? Because I think that's the hardest part. I mean, we've been doing this a long time. I'm sure, Eric, you have as well. It's like the best ad, the best script you think is going to win almost never works. I think it's The sticky note. Yeah, the sticky note, the very hot, ugly ad or any other number of things. I think that's where, I mean, I learned this years ago when we kind of would test across all media buyers when I was in my agency days.

22:05We'd ask them to be like, okay, just for fun, let's make a contest out of this. Pick which ad you think is going to do best. And then, of course, a week later, it's like we're hitting a 25 % score of who was right and who was wrong. Man, I thought we were all smart. I thought we know this. I think that's part of it. It's like the creators know their platform. And I think that's also the interesting part of us trying to kind of talk to, hey, maybe we have a woman who has a large audience of mothers or something. And so it's OK. We may be like, hey, we think we need to have her talk the mom angle and tell her how great this is for moms on the go.

22:39And us forcing that maybe isn't the thing that works, because maybe it's like those people know that they're watching that they're moms on the go. So it's like us telling her that audience, but something that is unique about how she goes about her day is something that like inherently her audience can connect to instead of being forcefully told it. So I think that's where it's like letting them kind of have these organic aspects of their graders and kind of what they see resonates with their audience. And then it's also how you can like tap into more of it. So, you know, maybe we want to go after that audience.

23:07Let's not tell them what to do. Let's just kind of reach out and let's, let's work with 10 different people in that, that category or in another category. And it's not like forcing the narrative around it or a product is like letting them kind of speak to their audience the way they do and showcase why they love a product and not really kind of forcing that problem solution angle as much as we thought we had to. Where are we at with campaign structure these days? I just did a podcast yesterday where someone was talking about they're done with breaking out retargeting into its own campaign. A lot of people talk about testing campaigns and scaling campaigns and just keeping it on those two tracks.