Hello Q4! 👋

Crazy to think we’re actually a whole week into Q4. Thoughts and prayers go out to anyone in Hurricane Milton’s path, stay safe! Fortunately it looks to be missing Miami, but I know a bunch of people who live right in the path of this one. Sounds like it will be a pretty dire situation. I was supposed to speak in Tampa early next week at the Shark Tank reunion event, but that already got cancelled.

Quick Hits:

• Shopify CEO, Tobi Lutke, is about to realize 2.5x gains on his $10M investment in $SHOP stock from May 2022 when it was down 80% from its all-time high. He began an asset sale program of 2.5M Shopify shares to unload over the course of the next year through end of 2025. More here.

• Just Published a “Driving Influence” Podcast Episode ft. CEO of GuruNanda, one of the Top TikTok Shops in the 🌎, & a TTS Affiliate w/ $250k+ in GMV. Interesting insights hearing DIRECTLY from one of the best brands and affiliates in the TikTok Shop world, often a tale of 2 worlds.

  Check it out on Avenue Z’s YouTube channel HERE ⤵️

Onto this week’s content…

1. Shopify Audiences gets a MAJOR update!

Shopify launched a new Audiences segment: EXISTING CUSTOMERS

➡️ This is now THE GOLD STANDARD for your Meta Ads "Existing Customers" segment.

Shopify has rich 1st-party data to properly identify even more of your existing customers on Meta, TikTok, Google, Pinterest, etc.

Through the data co-op that precludes Shopify Audiences, Shopify is able to match more of your existing customers to users on social media platforms than ANY other solution.

Ex: Customer bought from 20 Shopify brands. Customer provided SMS on one of the other brands, but not on yours. Shopify enriches the data file with their SMS number. This can lead to now matching this customer on Meta. Now they can be included in your existing customer segment.

Prior to this update to Audiences, it was best practice to have all-time purchasers from Klaviyo Audiences as the dynamic source of truth. This essentially replaces the need to sync your Klaviyo audience to the platform since Shopify will ALWAYS have higher audience match rates due to the aforementioned.

⭐️ Synced this Audience for a brand and saw a 78% lift on existing customers identified in Meta alone when compared to the Klaviyo lifetime purchaser audience ⭐️

This is huge for 2 reasons:

1. More accurate exclusions on your ASC campaigns means you have more confidence running ASC for new customer acquisition. Previously, you'd cap ASC existing customer budget at 0%, yet somehow you'd find in your 3rd party attribution software that existing customers were still getting targeted.

2. You’re now giving the ad platforms more signal to optimize from. If you're expanding existing customer identification significantly, algorithms will theoretically get a lift.

The audience is dynamic so no need to worry about exporting and re-uploading anything. It syncs weekly.

If you’re eligible (Shopify Plus accounts), drop what you’re doing and sync this new audience to your social platforms and use this audience for your Existing Customer definition.

Now I’m just waiting for Shopify to launch an “engaged customer” segment that we can sync to Meta for that segment as well. I like using website visitors who haven’t purchased as that group. Right now the only way to do that is via web pixel…but as we know that has MANY flaws in the post-iOS14.5 world we now live in.

2. Q3 on Meta was BRUTAL for CPMs… & Performance

Q3 on Meta was great for Meta, not so great for Advertisers.

Just pulled some Q3 numbers from our portfolio at Avenue Z.

CPMs & Cost per purchase SKYROCKETED from July to August and the climb continued in September.

Despite lesser performance, ad spend continues to rise MoM and YoY.

JULY '24:

• CPMs: Flat MoM, UP 11% YoY

• Cost per purchase: Up 13% MoM, Up 21% YoY

• Spend: Up 25% MoM, Up 3% YoY

AUGUST '24:

• CPMs: Up 22% MoM, Up 33% YoY

• Cost per purchase: Up 6% MoM, Up 26% YoY

• Spend: Up 4% MoM, Up 6% YoY

SEPT '24:

• CPMs: Up 9% MoM, Up 38% YoY

• Cost per purchase: Flat MoM, Up 38% YoY

• Spend: Down 7% MoM, Up 2% YoY

TLDR; Since the start of Q3:

➡️ CPMs and Cost Per Purchase are up considerably

➡️ Advertisers are still increasing spend

➡️ CPMs and Ad performance seem to have correlation

➡️ CPM spike is mostly due to election

➡️ I'm concerned this will impact performance as we head closer to BFCM season

Thinking about starting that Black November sale early again this year? Some brands are activating in October! Getting an early start on your sales will probably coincide when political budgets (and CPMs) are at their highest!

There's no way around it --- this WILL impact performance.

Not saying don't launch early sales w/ elevated ad budgets, but keep in mind this macro factor in play. This is an odd year for Q4 given election uncertainty, macro questions still in the fold, and geopolitical tension.

💰 For $META investors, this is mostly good news.

Cost per ad placement and ad spend seem to be quite favorable for Meta’s ad revenue. Wouldn’t be surprised to see $META blow it out of the water on Q3 Earnings Report.

3. Ecommerce Price Index (EPI): the new metric brands should be tracking

INFLATION: the hottest word of the past 3 years. It's measured by Consumer Price Index (CPI); but includes things like food, gas, etc.

Ever wonder how has it impacted ecom specifically? That data is now available and free to use with Particl’s "Ecommerce Price Index" (EPI).

You can now view YoY inflation on:

• ecommerce at large

• specific product categories (apparel/accessories, food/bev, etc)

• specific product types (clothing, handbags, jewelry, etc)

Particl's massive data set contains over 1m products & over 1k brands.

You'd be surprised to find out that inflation in each product category varies widely.

Ecommerce Price Index is also drastically outpacing CPI... 2-3x higher.

Online shopping is 8-10% more expensive in 2024 vs 2023.

Here’s the comparison of CPI vs EPI:

Why is everything online so much more expensive now? Well- b/c of inflation. Here's what happened: COGS, cost of labor, rent/overhead, and cost to acquire customers have all increased. This compressed brands' margins...

As a result, brands had to raise prices to be able to retain profitability. The end result: more pressure on the consumer.

Good news is that the Federal Reserve just pivoted its financial policy & cut interest rates by 0.5%, this will relieve pressure on both consumers & brands.

We expect the Fed to continue to cut interest rates for the next couple years.

This will hopefully allow:

• brands to unwind some of these price increases

• for a stronger consumer w/ newly gained buying power to stimulate the economy

Tools like these are critical to navigate the digital landscape: for brands & advertisers alike.

⭐️ Particl's tool is FREE to use, check it out here.

Is AppLovin ($APP) the next big paid media platform for DTC brands?

AppLovin just launched its ecommerce ads vertical a few weeks ago.

It’s been crushing mobile game ads and has been one of the fastest growing digital ad platforms in the world. This is reflected in its stock ($APP) price:

• Up 250% in past year 

• Up 650% last 2 years

AppLovin is offering eligible ecommerce brands some aggressive risk-free, no commitment ad credits if they’re already spending significantly on Meta.

I’m hearing some crazy things like brands spending tens of thousands per day already, with performance similar to that of Meta. Where there’s smoke, there’s usually fire.

We will be testing media out on AppLovin.

💥 If you’re a brand that’s spending ~$10k+ per day on digital media already, reach out to me if you’d like some ad credits and entry into the AppLovin ecommerce beta.

What I’m Listening to 🎧

Beats of the Week: Terranova’s Cala Jondal (Ibiza) Boat Party

Greattt mix of high energy beats. Good dose of energy for that post-lunch lull. Give it a listen!

I welcome all feedback. Good, bad, everything in between.

Hit reply, and let’s hear it! 👂

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