Last week I was talking with a really smart performance marketer friend who runs the paid media department for a large DTC brand. As I was walking around Chelsea talking on the phone, they said something interesting. "We're spending about a million dollars per month on paid social, and our CACs have crept up with the inability to move them back down. We’ve hit a ceiling, and we can’t grow with sustainable unit economics anymore. We’re worried that if this continues, we’re going to have a really rough BFCM and Q4.”
This is something I’ve heard several times and there are only a few things you can do in this situation. You can:
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Raise prices to make your unit economics better so you can spend more.
- Release new products or variants/bundles to see if you can unlock new revenue streams or higher AOVs (launching bundles is easier, but launching new products is hard and expensive, and not something you can accomplish overnight).
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Really think through the full funnel from the ad creative variants to the copywriting and positioning, to the targeting, landing pages, offers, opt-ins, and follow-up sequences via email and SMS to see if you can squeeze out more margin. Most brands at scale are already doing this, so yes, there's always more to be done here, but it’s easier said than done.
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OR, you can test new channels to see if you can find something else that will give you an acceptable CAC so you can keep growing while you figure out your other paid channels and look for more ways to optimize them.
So, typically, when a brand tells me something like this, my advice is to quickly start testing new channels, especially with the fact that BFCM is going to come sooner than you think, so the time to start testing is now. I say this because unlike launching a new product, launching a new channel can happen in a few days or at most 1-2 weeks.
The main problem that this particular brand was having was scaling its top of funnel. They are already doing meaningful revenue and spending a lot on paid social and what they really needed was more new people to learn about their brand and hopefully convert.
They also needed a channel that could move the needle and turn into something that could (if done well) become a new 20%/year growth lever for the brand. Basically, they wanted to prioritize testing something that could handle significant spend and hopefully bring in multiple 7 figures of additional revenue if it worked. And as I mentioned, lastly, they wanted one thing that could help them better maximize BFCM and Q4 in case paid social kept underperforming.
So with all that in mind, I started talking about CTV. I really like CTV right now because it has a lot of these attributes. Massive inventory. Relatively cheap CPMs, lots of attention, and the ad placements are huge and beautiful on most people’s TV screens. Here’s a little more on why I like it.
Imagine that your prospect just finished dinner. They're full, relaxed, and scrolling through their favorite streaming app. No Slack pings. No email distractions. No doomscrolling on TikTok. Just them, their couch, and the biggest screen in their house.
If you were a smart marketer, what would you want to happen next? If you’re anything like me, you’d want them to see your ad on TV in crisp 4K resolution on a 50-inch screen or larger, with sound pumping through their Sonos speakers. That is exactly where you want to display your brand.
I think a lot of founders and marketers are sleeping on this, so I thought I’d write an email sharing the same advice I gave this brand.
I basically said, look, I think we’ve hit a bit of a turning point with CTV. The average consumer now streams just as much or more than social media. The data I’ve seen says consumers are spending 2+ hours per day streaming TV and during Black Friday weekend, the numbers go up. With CTV, you get TV’s massive reach combined and the tools to buy and measure are much better than they used to be. I recently read that Roku alone accounts for 47 percent of all streaming time and unlike social media where users are multitasking between apps and swiping through the timeline not really paying attention, streaming viewers are more focused on consumption while they are watching their favorite long form movies or shows.
So I kept it simple and basically said, next week, go to Roku Ads Manager and set up a test. Creating an account takes 5 minutes. While you're getting set up, go find your top 10 social video ads and watch them to figure out if any of them make sense for TV. Choose your favorite 3-4 and edit them to 15 and 30-second versions. I would include a clear CTA in the last 3 seconds and a link to special landing page like yourbrand.com/tv or /roku and export them as MP4s, with either 4K or 1920x1080 resolution. Roku Ads Manager actually has ad formats that let viewers interact with your ad directly from their remote so they don’t need to separately type out your URL, but I’ll talk about this more later.
