Customer Identification: The Death of the Cardboard Cutout

tommy

Tommy Swanson, is CEO of Stripes Agency, a Dallas, Texas based, performance-marketing-focused social advertising agency. In this interview, Tommy talks about intriguing changes in digital marketing, including the increased use of FaceBook as a marketing platform, other trending platforms and platform tools that will impact the industry, brand lift studies, and how behavioral data supersedes demographic profiling for effective customer targeting. A couple highlights:

1. Keys to marketing success on Facebook:

  • Understand that behavior is a better predictor of action than demographics
  • Instead of trying to hyper-target the “ideal” customer, trust the platform to find the customer
  • Decrease reliance on revenue-sharing (questionably reliable) “third party” data providers

2. Brand lift studies, which came out in the most recent presidential election, will become increasingly important in the future as a way for marketers to measure impact. These studies:

  • Attempt to measure your campaign’s perception, intent, favorability, and choice impacts rather than counting dollars or leads
  • Facilitate tailoring future creative efforts to target audiences.

 

Tommy can be reached on his website at: stripesagency.com or by email at: mailto:Tommy@StripesAgency.com.

ROB: Welcome to the Marketing Agency Leadership Podcast. I’m your host, Rob Kischuk, and I’m joined today by Tommy Swanson, CEO at Stripes Agency based in Dallas, Texas. Welcome, Tommy.

 

TOMMY: Thanks so much for having me.

 

ROB: It’s awesome to have you. Why don’t you start off by telling us a little bit about Stripes and what the agency is great at?

 

TOMMY: Sure. Stripes is a social advertising agency. It’s really that advertising component that is a big distinction. Most social agencies approach it from a PR & comms perspective, and we really look at it more through a performance marketing mindset.

 

All of our campaigns are media-driven. We have a creative side of the house that works a lot on campaigns, but there’s also some campaigns where creatives in-house are handled by another agency and we’re strictly on the media side.

 

ROB: Got it. You mentioned in particular this distinction of being a social advertising agency. I think some people are starting to come around to that because the organic social side has not performed as well. But you’ve been around for 5 or 6 years now, is that about right?

 

TOMMY: Yeah.

 

ROB: When in the life of the company—or was it from Day 1—did you see the paid side of social as a meaningful opportunity?

 

TOMMY: I think probably 2 years ago it started to become a lot easier and there was a lot more inbound that came as a result. But early on, the beauty of paid was that if you were just operating from an organic mindset, there wasn’t a ton of predictability that came from that. When you leaned against a paid media strategy, you had some set of competence in knowing whether or not your programs could scale or not.

 

It’s been not too challenging to sell. But especially in the last 2 years, I’d say, with organic reach and a lot of these platforms plummeting, it’s definitely helped the business.

 

ROB: I think people always wanted to believe in this. It may have at some points been easier to sell than it was to perhaps deliver on that hope. What has changed—maybe tool-wise, maybe platform-wise, or just the drying up of organic—that’s made it easier to deliver on the promise of predictable results through paid?

 

TOMMY: People understanding the way that paid media works. I think for a lot of organizations who are more direct marketing or performance marketing minded, much outside of email and search was hard to get great results on. But all of a sudden, social has provided an opportunity for more performance marketing mindsets to see good results.

 

Facebook, also, and a lot of these platforms make it easy to get great results. The challenging part is doing it at scale. But yeah, it’s not super hard to run a campaign on paid social and see some decent results come out of it.

 

ROB: Are there any ways you would suggest that someone thinks about—what’s a strategy that works? Clearly even on Facebook, even though they make it easy to succeed, at least in your mind, there’s also a lot of ways to screw it up.

 

TOMMY: Totally.

 

ROB: How does someone make a plan to succeed? What are some of the key thoughts there?

 

TOMMY: The biggest thing that Facebook has really shown in a clear sense is that behaviors are a better indicator of someone’s likelihood to take some action than some demographic makeup that your organization comes up with.

 

I think every agency owner can think of a time in the not too distant past when they’d walk into their client’s office and there’s some cardboard cutout of their persona sitting in the corner and they have all these attributes that they have come up with.

 

Take Milk-Bone, for example. Their persona is a 40-year-old mom who goes to soccer games on the weekends and loves the Today Show. They have all these attributes. But the reality is, their customer is people who buy dog treats, and the reality is that we have the ability to target people who buy dog treats nowadays. Facebook has a tremendous amount of behavior data on us. Some of it’s going away.

 

But I think one of the biggest challenges and mistakes that people make when they set up their campaigns is they try to hyper-target this very, very clear picture of who they think their customer is. I think if people leveraged lookalikes a lot more, if they trusted the platform to find their customer, they’d be pretty surprised at how good it actually does.

 

ROB: I think that’s a wise takeaway. One thing I hear that you’re saying there is essentially, don’t make up a story to yourself of who your ideal customer is and then try to convince yourself with your ad strategy.

 

You mentioned that some things are going away. I’ve talked to some very email-focused agencies, and they’re of course very happy with anything going on in the Facebook ad ecosystem because they know that they’re still going to have email addresses and they’re still going to match to email addresses. You can still know if someone visits your website, that audience of people who have visited your website that you can target—and to your point, the lookalikes—that’s not going away.

 

You mentioned trusting the platform. Facebook has better data scientists than you or I do. That’s true for 99.99% of companies out there, and the other 0.01% are Google. [laughs]

 

But you mentioned what’s going away. Are things like some of the categories of, let’s say people who buy dog bones, is that going away?

 

TOMMY: You have third party data providers that exist—Axiom, Oracle—that have historically had a rev share agreement with Facebook in which you can leverage that data in the platform and it gets marked into your ad spend, and then they cut Oracle a check. That is going away.

 

I think a lot of it comes from the fact that who Axiom and Oracle are sourcing their data from in all reality sometimes aren’t the most trustworthy and respectable organizations. With that rev share agreement in place, I think there is a certain element of we’re too close to bad data.

 

So third party data is going away. That said, there’s still ways you can get it onto the platform; it’s just not through partner categories anymore.

 

And there are a lot of targeting options that have started to disappear from the platform that were there a year ago, just from a privacy perspective. That said, I kind of think that’s a good thing because it does force advertisers to rely on behavior data and Pixel data and lookalikes, which typically perform a lot better than your demographic profile that you make up of someone.

 

ROB: Right. You pressure marketers to own their strategy, to understand why they’re doing it, to use data they’ve acquired themselves legitimately. They may be able to run their own data through maybe something like—is LiveRamp still going to be a helpful piece of this puzzle?

 

TOMMY: I think that’ll be the in-between for groups, yeah.

 

ROB: LiveRamp, for people who are listening and don’t know, lets you transfer audiences between different platforms and understand maybe who somebody is on Facebook from somebody that doesn’t really connect to Facebook.

 

If we go back in time a little bit, Tommy, what is the superhero origin story of the company? How did you get started?

 

TOMMY: My first real job was working in social up in Chicago, doing work with the Tribune companies. In publishing, social is very attributable. For every visit I send, there’s a certain number of impressions that are delivered, so the ROI is really clear.

 

After that I went to work at a nonprofit fundraising agency, and although nonprofits get a bad rap sometimes—from lacking in innovation and from a technology perspective—which there is some truth to that—the one thing that they do really well is operate their organizations in a very 1:1 manner. If I give you a dollar, how many dollars are you going to give me back?

 

I was operating in these verticals in which performance was really clear and demanded to a certain extent, but I kept hearing in the commercial space, “what’s the ROI on social?” It didn’t compute in my head. I was like, that’s an opportunity. If you combine paid social with a great content strategy, you create a very attributable social program.

 

So that’s what we set out to do, and it’s been fun so far.

 

ROB: What were some of the key points over the past 5 or 6 years? What are some of the inflection points? You mentioned 2 years ago maybe some perceptions started to change around paid social. What are some other key moments, whether that’s something you learned, somebody you added to the team, a strategic change, that helped you moving forward?

 

TOMMY: I think we had a great opportunity to grow really early on, which was a blessing and a curse. It was a blessing in that we got the opportunity to work with some really great organizations and get some traction and learn early. But then the reality of growing a service business too quickly and not being thoughtful about who you on-board in terms of clients and staff became pretty clear really early on.

 

So, just starting to understand the fundamentals of an agency and a service business, recognizing that your talent and how you bring them together is one of the most important things, was really crucial.

 

And then we’ve had a few opportunities over the years that have been really big for us. We had the opportunity to work on a presidential campaign. That was really fun. That opened us up to get a lot more of a conversation going with the platforms just because we were working on such a high-profile campaign.

 

So now we have a really good relationship with the platforms, and that’s been a really crucial part of our story.

 

ROB: Which election was that?

 

TOMMY: The last presidential election.

 

ROB: Very cool. Anything more you can tell us about that, or do we need to keep it on the down-low?

 

TOMMY: A few things that started to come out in that campaign that I think has already impacted brand marketing in a pretty clear way, but will impact future elections, is brand lift studies. Brand lift studies are trying to measure the impact of your campaigns from more of a perception, intent, favorability, choice type perspective than it is one of dollars or leads.

 

The way it works is similar to that of a pharmaceutical study. You have a group that represents your target audience. You pull out a group from that audience from seeing your ads, you expose the other segment, and then you survey both of them and ask: “Who do you intend to vote for? What is your favorability of this candidate?”

 

You can start to see, “when I run this ad, it has this point lift in voter intent for my candidate.” Then you can, because Facebook has all of this data, start to do subgroup analysis of “it not only makes a this-point difference overall, it makes a this-point difference in 45+ female who lives in this part of Georgia.” You can start to tailor your creative to audiences in the future.

 

We were one of the first that got to run those studies in elections. I think brand marketing has been really hard to measure for a long time, and brand lift studies really give an opportunity for brand marketers to say “here’s our actual impact.”

 

ROB: How big do you have to be, in the modern stage now, to be able to close the loop on a brand lift study? If we’re thinking about budgets, if we’re thinking about the size of the brand and the level of commitment, where does that become accessible now? And is that changing?

 

TOMMY: It was pretty expensive. I think even today it sits around $225,000 for a 6-week campaign. For most businesses that’s completely unattainable.

 

But there are some things that you can do. YouTube’s a great testing ground for this. Their studies are a lot more affordable. I think their brand lift studies on ad recall are $7,000. If you want to look at more customized questions, it’s $30,000.

 

I think that price will come down over time as well, but that’s around where it sits right now.

 

ROB: Sure, and that’s also coming from the perspective of a brand marketer. You mentioned earlier how micro-targeted you really can be.

 

One thing I’ve been sharing with some friends lately—and feel free to push me on this—but if you’re in B-to-B software sales and you have your inbox, you’ve been at this for a while, you’ve got some good contacts in there, there’s almost no downside to syncing that audience over to Facebook, to anybody who will let you retarget on email and run a low-frequency awareness campaign. It’s going to cost you nothing. It seems like a very underutilized opportunity.

 

If you have a small brand and you need to just be that brand to a small audience, the spend to be a brand marketer really isn’t very much. You can surround people with helpful information pretty easily, I think.

 

TOMMY: Totally. This applies to even traditional type marketing programs. We’ve got a few clients where we’ve run a similar type strategy in even direct mail. They’ll cut up their house file into different segments, you on-board those through Axiom into Facebook, and run, like you said, some brand content in front of there. You can see the performance lift on the direct mail campaigns as a result of that in such a clear way.

 

To your point, the actual cost to do that is so insignificant in comparison to the potential return you can get from it. So I’m totally with you.

 

ROB: Right on. Tommy, what are some other things that you’ve learned building Stripes that you would do differently if you were starting from scratch this year?

 

TOMMY: I think that first one was a big one. Being thoughtful of the types of clients you on-board and the types of staff you on-board.

 

The reality is that when you’re bringing on new clients, the way that they come in, from my perspective, is really important. When they come in through a referral, the likelihood of that client trusting you Day 1 exists a lot higher than if they came in through a lead through a form.

 

We’ve seen over time that being really thoughtful and curating your client roster to make sure that you’re only bringing on clients that you know you can absolutely kill it for is just a great way to scale and grow your agency. And honestly, that learning just came as a result of, early on, not being as thoughtful on that front.

 

So I’d say that’s a big one. I think the agency dynamic is also really interesting right now and something I’m trying to—this is probably an active learning.

 

The agency landscape is changing quite a bit right now. You’ve got a lot of big brands moving from big holding firms to consultancies. Some industries are consolidating agencies; others are going to more specialists. I had this perspective early on that we only work with brands, that we don’t work through agencies.

 

I think we’re becoming a little bit more open to that and realizing that the space is evolving a lot right now, and maybe we shouldn’t hold true to some rules that we put in place at the very beginning because markets change, and I think it’s definitely happening in this world.

 

ROB: Interesting. There’s this pendulum. There’s all sorts of pendulums between doing stuff in-house versus agency side. We see that in Atlanta with some of the brands that people love to call on here.

 

But also, what are the holding companies doing? I don’t recall whether it’s Accenture or Deloitte or both of them or all of them that have been acquiring tools and agencies.

 

TOMMY: Totally.

 

ROB: So that’s on your radar.

 

TOMMY: Big consulting firms present a really legitimate threat to big ad agencies at this point. I think it’s because they’re talking to the CEO and they’re focused on business outcomes and not winning awards. I think it’s really forcing ad agencies to rethink their positioning and how they serve clients.

 

ROB: That may also be a natural reaction to some of the consolidation at the holding company level as well. When there’s fewer big fish, the consulting companies are like “if you need to pitch an executive on a strategic initiative, we know how to do that but we might need to buy some execution.” Is that kind of what they’re doing?

 

TOMMY: Definitely. I think that plays a role for sure.

 

ROB: Interesting. You talked about what was happened so far; what is coming up, either for Stripes Agency or for marketing in general, that you are excited about? What do you think is changing next? What are you preparing for that you see coming down the pipe?

 

TOMMY: The agency dynamic is one, figuring out how we fit into that. A more performance-oriented mindset as it relates to social. I think even the PR & comms side of social is becoming a little bit more attributable.

 

Typically what we see when we walk into a brand is that the organic side of social is handled by one department—maybe it’s PR & communications or brand marketing—and the paid side of it is handled by the digital side or the media side or performance side. The performance side is saying “How can I get great creative?” and the PR & comms side is saying “My organic reach is dying; how do I prove my worth?”

 

I think there’s going to be some convergence that really starts to materialize in the coming years.

 

To go into that bit about organic becoming more attributable, even things like Facebook Analytics offer some really clear insight that I don’t think marketers are looking at right now. Today, if you’ve got a Facebook Pixel integrated into your website, maybe tracking different goals or offline data that’s integrated into Facebook, you can go into Facebook Analytics and you can see, of people who’ve engaged with my Facebook page in the last 90 days, how much did they buy? Or how many leads came from those people?

 

You can all of a sudden start to see in a pretty clear way, maybe not cause and effect, but at least that the people that are engaging with my content are also transacting in some way that’s beneficial for the business and starts to answer that question of “what’s the ROI on social?” in a pretty clear and meaningful way.

 

ROB: If you’re hitting a crystal ball and trying to predict, let’s say in 18 months, which paid social platforms are delivering better ROIs than they are today and which ones are doing less well, where are you betting?

 

TOMMY: I probably have a boring answer to this: I think Instagram presents a great opportunity for marketers, and I think Facebook over time will present a little bit less.

 

I do think although Snap gets a lot of negative press, they are introducing some tools that are pretty interesting. Even like auto-filled lead forms, just like Facebook and Instagram have with lead ads. Those are starting to get rolled out. So I think there could be something there as well.

 

This isn’t to say that there’s a ton of innovation happening on this front, but on the Twitter side of things, there’s not a significant amount of competition that exists there.

 

While every marketer who’s throwing their money at Facebook right now is seeing CPMs month over month go up, there’s other platforms that aren’t as competitive. While they might not be as great from a performance side head-to-head against Facebook, the CPMs are low enough on them right now that they actually can compete in some circumstances.

 

ROB: And they’re different animals, right? If you’re in an event marketing world in the right demos, Snap can be pretty interesting.

 

What they’re doing on the tooling side, they’re probably working harder than maybe they have to on the tools and what you can do to make an animated lens just because you felt like it. I made my 6- and 8-year-old daughters Snap lenses on Valentine’s Day because it cost me $10 bucks to target my house.

 

It was fascinating. I wasn’t even sure that you could do that, but for $10 bucks, it’s more fun than a lot of other things you could do. They don’t use Snap on their own; they use it with me or their mom. [laughs] But still pretty interesting.

 

TOMMY: Yeah. They’ve got even some cool technology acquisitions they’ve made. They bought Placed about 6 to 9 months ago, and Placed is a mobile location data provider that specifically is leveraged for measuring foot traffic for retailers.

 

Snap bought them, and it’ll be a pretty great way for retailers to start to measure the impact of our media on driving actual foot traffic to the store. So I think they’re making some good acquisitions, too.

 

ROB: Absolutely. Don’t sleep on Snap, because they’re still ever-evolving. Tommy, when someone wants to get in touch with you and with Stripes Agency, how should they find you?

 

TOMMY: You can definitely go to our website, stripesagency.com, or feel free to email me directly: tommy@stripesagency.com. I would love to chat.

 

ROB: Awesome. Tommy, thank you for your time. Great to talk to you. I think you’ve got super deep insight because you’ve been doing this paid social thing longer than an awful lot of people

 

I would like to give a special thanks to Eddy Badrina from BuzzShift for this introduction. We love great introductions for guests, and this has been no exception. Thank you again for your time, Tommy. It’s been great to talk to you.

 

TOMMY: Absolutely. Thanks.

 

ROB: Have a great one. Bye.

Thank you for listening. The Marketing Agency Leadership Podcast is presented by Converge. Converge helps digital marketing agencies and brands automate their reporting so they can be more profitable, accurate, and responsive. To learn more about how Converge can automate your marketing reporting, email info@convergehq.com, or visit us on the web at convergehq.com.

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