In this episode of The One to One Consumer Marketing Podcast, Ben Gibert, VP of Marketing at Spectrm, speaks with Kyle Webber, Director of Performance Marketing at Parachute Home. They discuss the changing environment of performance marketing, how Parachute uses incrementality testing to compare the effectiveness of different channels, the importance of collaboration between the brand, lifecycle, and performance marketing teams to increase customer LTV, and more!
- Kyle’s shift from SEO to performance to widen his horizons and understand more than just SEO to be a successful growth marketer
- How Kyle keeps up with the latest trends and tools to succeed in an always changing landscape
- Leveraging incrementality to measure the effectiveness of a marketing activity, how it can be used to compare across channels and identify which channels are driving incremental sales
- How Parachute Home uses geo holdouts to run lift tests and determine the incrementality of different channels
- The value of post-checkout surveys as a gut check to ensure their results align with their findings
- What Kyle sees for the future of consumer marketing and why there will be more blurred lines between influencer marketing, brand ambassadors, and creative development
- Why it’s critical that marketing teams work closely with the brand and lifecycle teams to increase customer lifetime value and make the business more efficient
- The most important things that have helped Kyle advance as a marketer
Director of Performance Marketing
- Marketing Director with over a decade of experience and a demonstrated history of working on complex performance marketing projects and challenges. From running a boutique digital agency to working in-house and consulting, I have personally managed teams in nearly all channels of marketing, and I have a unique ability to identify and optimize the greatest areas of opportunity, whatever and wherever they may be.
Parachute makes premium quality home essentials to enhance your life. We believe that high quality, smart design and personal comfort shouldn’t cost a fortune – and that above all – you should start and end your day feeling your very best.
Industry: retail | www.parachutehome.com
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Hey, everyone, and thanks for listening to The One to One Consumer Marketing Podcast. Today I’m speaking with Kyle Webber, who’s Director of Performance Marketing at Parachute Home, which makes premium quality home essentials. Kyle, thanks so much for joining the podcast and chatting with me today.
Yeah, thanks for having me.
Yeah, I’m looking forward to our chat. Before we dive into everything, why don’t you give everyone on the podcast a little background on who you are, kind of what you do, and how you got into your current role at Parachute Home.
Yeah, I mean, I’ve been in performance for over ten years now. I actually started building websites, and that’s when I kind of realized the power of organic, really, or SEO. From there, I jumped into an agency. I managed our enterprise accounts, mostly doing just that, SEO, and then I ended up helping start and run a boutique agency in Silicon Valley. A lot of, like, Fortune 500 clients, Tech Valley clients, again focusing on SEO and some paid search, and then went in-house to Y Combinator company. From there, ran marketing at another company in the Bay Area, then jumped into consulting, and then back to in-house at Parachute where I’ve been the last two years. I’ve always kind of been in growth and performance specifically.
Yeah, thanks for the overview. I think you have something that many marketers have, which is kind of that back and forth from agency to in-house. I guess you’ve seen both sides of the coin. I’m curious what got you excited to go more into performance? You have a background in SEO. Obviously, there’s a big performance element to that, but I think you’ve focused a lot, I’m sure you have many channels at Parachute Home. Can you tell me why you made that shift?
Yeah, I mean, I think I just didn’t want to limit myself too much, and I was acutely aware of the power of paid, right, and it’s an easier lever to pull. SEO is planting seeds that take time, and paid is quite the opposite. Right. You put money in, you get money out that day. I really wanted to be able to help any company grow, and I feel like you need to be able to understand performance as well in order to do that. SEO is just one part of growth. I just wanted to widen my horizons, and I definitely think paid is necessary if you want to be a strong growth performance marketer.
Yeah, I guess a natural step out of one of the domains into the broader category, as in your evolution as a marketer. How would you summarize the current state of digital marketing today?
I would say the current state is as it’s always been, at least as long as I’ve been in it where it’s always changing. More specifically, there’s always things like taken away from us, right? They’re taken away. If you go back over ten years ago focusing just on SEO. You could keyword stuff and buy links and get a website to rank in three days. Right, naturally. And then rightfully, that changed. There was like the wild west days of Facebook where you can probably build a business in a week and have it grow. Slowly we started losing our tracking and optimization capabilities post iOS 14. There’s new opportunities, but at the same rate, things were taken away. I feel like that’s kind of the environment that we’re in right now and we’ll probably continue to be in. That’s why it’s important for performance marketers to kind of look to the horizon at what’s coming and how to anticipate potential changes.
I do know the common buzzwords now, and important ones are incrementality and attribution and Parachute looks at those as two separate paths to get to the same answer. We tend to focus more on incrementality, and I briefly shared a story with you that I wouldn’t mind repeating because I think it provides good context around what incrementality is and how to simplify it, right. At least the understanding of it. This is a story I heard a while ago, and it was about a pizza place, and the owner decided to hire three sales reps to pass out coupons, right? They gave one rep green coupons, one rep red, one rep blue, right. At the end of the month, just so they could see who’s driving more sales. It was like 20% off their next order or something like that. At the end of the month, the owner had a stack of coupons and 85% to 90% of them were green. She’s like, this is great, look at all the business this is driving. Her account came up to her and he said, yeah, that’s great, but our sales are down 10% this month. She was thinking like, oh, how can that be?
She decided to follow these sales reps who were handing out these coupons, and the employee that was handing out the red coupons was across town and in front of a mall, handing out to people leaving the mall. The one handing out the blue coupons was six blocks away in front of another competitor, another pizza joint, right? And then, much to her surprise, the rep handing out the green coupons was like right around the corner and basically handing these coupons to people already walking into the pizza place, right? It wasn’t driving new sales, it was cannibalizing their sales, really.
A lot of what we do at Parachute is we try and identify what channels are those, like green, red, and blue channels, right? Not only that, we try to quantify that. If we identify one channel as green, how much of that is incremental? How many of these people are going to walk into our pizza place anyway, right? We use that and that allows us to kind of compare across channels. I know a lot of marketers, performance marketers in particular have been in situations where they might be reporting to the exec team and the exec team might say, hey, brand search, this has like a 25 ROAS. Let’s scale this. This is the best channel, right? You can mention incrementality, but it’s tough to quantify. So that’s kind of what we do. How we get there is we run a lot of lift tests. There’s different lift tests you can run. You could run scale tests or PSA tests. We tend to prioritize like geo holdouts. I’ll give you an example of how that works and how that allows us to compare across channels. Let’s say we have paid search, brand paid search, and let’s say it’s a 25 ROAS, right? We might do a lift test and find that 90% of those people are going to convert anyway, right? So it’s only 10% incremental. We take that 10%, apply it to the 25 that Google is reporting, and we call it a 2.5. We can look at Facebook, maybe Facebook is a four ROAS, but it’s 70% incremental, which we’ve determined through a lift test.
That’s a 2.8, right, which is actually better than the branded search of a 2.5, right. That’s an oversimplified version of how we look at it. That’s why we look at incrementality, because it allows us to compare across those channels and determine what’s really moving the needle.
Yeah, thank you for that story, I think analogies are always powerful to get sometimes things that are hard to explain across. For anyone here that was listening that doesn’t know about incrementality, I think that’s easy-in to it. I mean, you touch on something that is so key for so many brands in the digital space, right, you have such a huge mix of channels available to you and it’s very easy for platforms to also overreport return so you’re not seeing the whole picture. I know there’s a lot of tools out there that help with this situation. At the same time, I think taking incrementality as kind of the core of your program and how you’re evaluating things is obviously key to understanding, like you said before, not cannibalizing where your customers are most likely to. Convert anyway and probably prioritizing your spend and your attention into channels that can really drive more incremental revenue, which is better for the company as a whole.
Thank you for those examples. I think you mentioned a few types of incrementality in terms of and you say that you choose geo holdouts as your approach. Can you explain why you chose that one as your approach versus PSA or some of the other ones that you’ve mentioned?
Yeah, good question. PSA test, we do run it at times, but there’s costs associated with that, for one, and there’s just can. Let’s say you’re running streaming or online video, right? Instead of holding out certain DMAs, what you can do is you can run an ad that’s not advertising your business, and then you show those to the same audience and you see how they convert.
It’s just a way you’re basically paying for tracking in that sense. So that’s how a PSA is structured.
A scale test is kind of similar to a geo, but you have to spend a lot, right, in order to kind of move that needle and notice any change to baseline. The only real cost associated with the geo holdout is that opportunity cost of not running media in those DMAs. It’s not as much of an inherent cost as there would be with like a PSA or scale test where you have to spend more. This is just holding out certain areas. Right, and there is obviously that opportunity cost of doing that, but we just find that the most effective way to run a lift test. We’ll do a mix too, and sometimes we’ll run a PSA and a geo hold out to see if our PSA is lining up with the results from a geo hold out and then maybe we can run that later on.
That’s also something easier to always have on, because geo test, we only run in like six week sprints. So, yeah, we tend to do all three, but we prefer geo holdouts. I would suggest if you’re doing any of it, that’s great.
Yeah, I think that’s a good enough reason to do anything, right? There’s not an immediate cost and there isn’t a lot of scale required to do a geo hold out. It’s probably why it’s the most common. Like you said, opportunity cost is a part of it, but there’s probably so many places you could be spending your money that opportunity cost will get recouped relatively quickly. I mean, you mentioned incrementality is kind of your main measure. You walked through an example of how you kind of apply the return that you’re getting from that a channel is reporting with the lift that you’re seeing and then create almost like a coefficient. Can you explain that a little more? Like, how do you use that coefficient to make decisions? How does that guide your whole strategy?
Yeah, so what guides our whole strategy is what we call iROAS. I’m sure most listeners are familiar with ROAS. Your return on ads, IROAS is just your incremental ROAS. I’ll provide an example. Going back to that paid search example, let’s say we run a lift test on branded search, and it’s only 10% incremental, right? Meaning only 10% of those people actually would have bought without that campaign or that ad. That’s the coefficient we use, and we use that coefficient, and we apply that to the platform ROAS. Again, if Google is claiming a 25 ROAS, we’re only going to count 10% of that because only 10% we determine to be incremental and that we then end up with a 2.5 IROAS, right? We compare those IROAS across all channels to figure out where we should spend more. Where we should spend less.
Because if you just look at platform, it’s not going to be that telling, right, because the incrementality changes so much across different platforms. That being said, we also do look at attribution right, almost as a gut check. We’ll look at attribution we’ll look at like post checkout surveys, and we’ll make sure that it kind of aligns with the learnings that we’re seeing with the incrementality. I think it’s important to do that, too. We also kind of change those incrementalities almost on a weekly cadence. If one platform has an increase in click through rather than view through conversions, for example, we might scale up or scale back that incrementality estimate. Because once you have a learning, once you have an incrementality learning from a lift test, that’s static, right? You have no idea. I mean, platforms change, seasonality changes, all these things change. You kind of have to do your best to estimate how your incrementality is changing throughout the seasons, right?
And so much can change. Like, Facebook can start going after less incremental users, or they could start taking platforms, could start taking more credit, right, or their seasonality changes to your business or you’re launching a sale. A lot of the work we do is trying to fill those gaps in between lift tests to see how the incrementality changes.
Yeah, thank you for that explanation. I’m assuming that you have that IROAS. You have this measure of efficiency, which I know you say is obviously in flux. It’s never a static measure, but obviously the different channels that you’re also operating on have different scales and different kind of ability to push money through in order to scale that channel.
Like, you made the example with branded search. That’s obviously something you can’t really just scale branded search. You can scale a Facebook campaign. Can you walk through how that factors in your decision making? Like, is scale a part of it? Once you have the IROAS, how do you make the decision in terms of spend? Do you think about the ceilings there and how do you kind of make your perfect mix?
Yeah, that’s a super relevant question, and that’s a problem we’re trying to solve for right now. It really ties into marginal ROAS expectations. Right, because you could scale and as you scale, you shouldn’t expect the exact same performance.
Some platforms like Google actually provide marginal ROAS assumptions based on different increments of spend. In house, we basically work out marginal ROAS calculations per channel. It’s just based on what we’ve spent in the past. We’re currently looking to kind of onboard maybe some new partners that will help kind of solve that problem. Because that’s a big unknown, right? Because just because you’re getting a four ROAS on Facebook right now, if you triple your spend, you’re likely not going to get that.
But how do you calculate that? There’s a couple of ways. You can look at almost like an MMM model and your previous performance to see how ROAS changes with spend. You can do those calculations yourself. You can onboard some of these partners like Rockerbox or Leavened or Recast to help supplement that. Yeah, it’s something that’s always top of mind. It’s quite challenging too, because you’re diving into the unknown.
Yeah, I feel like that’s what a lot of digital marketers feel like. There’s so many tools at our disposal. There’s the ability to track so much, but then so much also gets taken away. I mean, at the very start of this, you mentioned iOS 14. Some of the changes that you’ve seen there in terms of tracking and attribution. Can you walk through how that’s impacted your approach to incrementality? Is that khat kind of what has defined it to a large extent, or kind of, how is it affecting your mix and your decision making?
It definitely made it more important, I would say, specifically for the channels most impacted, like Facebook. I think one reason why is because Facebook in particular kept changing, right? Like, they started taking credit for less and then more conversions. Your performance might have been the same, but your platform performance might have been doing this.
So how do you trust that? That was definitely a catalyst for us to not only start testing in Facebook, but testing as quickly as possible and as often as possible. We would do that with a geo test, we would do that with Facebook’s version of testing. But, yeah, what you described is just a reason why testing is so important and a reason why you have to look at incrementality and you have to look at attribution and anything else you can get your hands on, whether it’s MMM or whatever it may be.
Yeah. Maybe taking a slightly different tack, thanks for walking us through incrementality and how you’re using it at Parachute. What about your team structure? You mentioned different channels. How do you structure your team in order to kind of operate all these levers and kind of fine tune your channel mix using incrementality as your measure?
Yeah, we’re pretty lean right now, the performance team, so it’s comprised of agency and media buyers. We do have quite a bit of agency support on the affiliate side on page search, and I will say we’re fortunate to have a really strong affiliate portfolio. Probably 85% of it is driven by content partners, which is like your New York Times, Good Housekeeping of the world and only like 10% are our loyalty partners, like your Rakutens, your less incremental affiliate partners of the world. We have an agency who helps drive that. A lot of it’s almost like the PR side of agency, like building new relationships. We manage Facebook in house, we manage audio in house, direct mail, another fairly big channel for us. We have a lifecycle team comprised of, I think there’s only three people in the lifecycle team now. There’s a separate brand team who manages organic, social influencers and brand ambassadors.
They do a really good job with content and blog. In particular, our organic traffic is up 50% year over year, largely driven by blog content. Also on the brand team, that’s where PR sits. PR does an exceptional job. We have probably, I would say, on the daily, new write ups. We can also leverage a lot of those relationships on the affiliate side. It’s probably a strong reason why our affiliate, specifically our content affiliates, are so strong. Yeah, the larger marketing umbrella is comprised of brand, lifecycle, and performance. But we’re fairly lean at this point.
Yeah, thanks for the overview. And you mentioned brand, lifecycle, and performance. How do you see those acting together? Because I think brand obviously plays a huge role in contributing to performance. Performance contributes to brand like lifecycle, and increasing customer lifetime value is such an important part of making the business efficient. Can you walk through how you work with those teams?
Yeah, starting with lifecycle, we work fairly closely. Forecasting is really important to us. Lifecycle does a really good job forecasting LTV and repeat rates of our different cohorts.
They do a really good job at that. Sometimes if certain ones are struggling, that’s where performance can kind of pick up the slack and maybe target cohorts that are not meeting forecast. Lifecycle is also a really good arena to test creatives that we can later leverage in performance. I would say those two things we work closely with lifecycle. Brand, I feel like Parachute is pretty unique, at least I think we’re pretty unique where we have just a really strong brand and therefore we have a large brand team. That kind of the brand is definitely their baby, right? I think we lean with that we’re not too direct response focused.
That does create challenges on the performance side because we’re basically leveraging creatives that the brand team creates and we want to make sure that we’re not dirtying the brand by acting too much in a direct response way. And we run two sales a year. That’s it. So we don’t discount or offer promos.
Not necessarily the performance team’s idea, but it’s worked for us so far and I think there’s a lot of just brand trust and integrity and I think that’s been developed by the brand team because they pay such close attention to it and they care so much about it. I think we started definitely brand first, right. You can notice that in our loyalty in our community and just the integrity behind our brand.
Yeah, I think that’s a story that kind of many D2C startups have taken too of being really brand focused first because also you operate in such a competitive market where brand and differentiation is going to be so key to actually win more market share. I can see why that was the approach that was taken. I mean, you mentioned lifecycle and kind of forecasting that they have really good understanding of LTV and repeat purchase rate, that thing.
I’m assuming then as you work with them, they’re the ones that are providing essentially the number like what you can spend to acquire a customer. What’s that conversation like?
Not necessarily. Potentially if we are, let’s say, targeting a certain cohort or marketing a particular product where we know the repeat rate or we know the AOV or LTV for that product, but more often than not we’re operating, I guess depending on the climate, we’re operating on more on like a break even IROAS.
We take into account, like, average product margins and repeat rates and return rates to figure out what IROAS we can achieve on the aggregate where we’re not losing money right away. We try to hit first order break even. As soon as we extend that, as soon as we get a little more aggressive, if we want to potentially spend more, be a little more liberal in those targets, then we might look to lifecycle to provide. What does a six month or one year repeat rate, how does that affect our break even ROAS? So it just depends. Generally we’re not really working with them in regards to paid targets unless we’re doing very specific campaigns around certain products where we know have a certain repeat rate or we’re targeting a certain cohort and we know the value of them.
That’s great though. I love that in its simplicity, in the sense that, hey, we need to break even on first order. We’re going to look at blended IROAS, however you do that. And there’s this simplicity in that. It’s powerful because it gives you less dependency on other teams, less kind of back and forth, but then it just allows you to run and have a very clear goal, which I think is very important. Yeah.
I mean, it’s more challenging for a break even, but you don’t need to, I guess, equate payback periods.
Yeah. That’s not to say your job is easy. I’m sure it’s hard to hit those targets. In terms of that simplicity of a goal, I think it makes it, where you’re trying to head is valuable. Speaking of knowing where you want to head, what are some of the most important things that you’ve learned over the course of your career that have helped you advance as a marketer or maybe some things that you wish you knew at the start of your career that now?
I would say just not to take things at face value on the agency side or whether I’ve been in house. I’ve heard, and I’m sure this might sound familiar, but I’ve heard like, oh, this channel doesn’t work for us yet. Or this channel doesn’t work for us.
I don’t find that to be the case. More often than not, it doesn’t work for us yet. A good example of that would be I was consulting for a company and they brought me in to run just paid social. I had never been solely dedicated to that channel. Before me they had two people in that position who were just paid social specialists.
I just took the first probably month just diving deep into the data, into the targeting, into the creative, and we turned that around to be the most profitable channel.
When I got to parachute, there were certain channels that I thought were going to do really well because they did really well at previous companies I was at and they didn’t right off the bat. It took a long time to optimize and to be profitable.
I guess I would say not taking things at face value and always understanding that there’s a potential unlock there.
Yeah. It sounds like part of what you’re saying is also every business will also be unique. You can’t just apply the same playbooks across channels and expect everything to work. You need to fully understand that business and its customers. I think that’s a great that and at the same time, not just throwing the baby out with the bathwater and looking at a channel and being like, hey, I can still make this work. That’s definitely some great advice. Looking forward five years from now what is the future of consumer marketing look like to you?
Yeah, that’s a good and tough question. I think that there’ll definitely be more like blurred lines between influencer, like brand ambassadors and creative development. I was reading just last week, I feel like there are some companies that are hiring influencers and brand ambassadors to run their creative departments.
For us, we’ve noticed whitelisting and third party reviews, that thing that just takes off and does really well. Because customers don’t want to just hear from you, they want to hear from others. And so I don’t see that changing. I think that’s going to feed into relationships I think that’s going to feed into just the relationships that companies have with brand ambassadors and influencers to be that much more important to scale and also to learn from. In addition to that, I think AI being another buzzword. I think a lot of things that maybe that we’re working on right now might be more automated, whether that’s like MMM or incrementality or forecasting.
Forecasting is another difficult one. I think AI might be able to help substantially with that. That’s just going to kind of free up the time for marketers to work more on again, like storytelling and personalization. It’s almost kind of reverting back to how marketing was a long time ago. Right. But yeah, we’ll see. One thing I know is to expect the unexpected.
Yeah, I love that with the pace of change in new technologies like AI changing so much of what we do, we like to think it’s completely overhauling everything and digital marketing changes all the time. I agree with you, all that means is what’s going to matter is the story.
What doesn’t change is human nature and why we buy, why we know, like and trust brands and why we choose to go there over other places. I think you’re right, the story will always be paramount. I think there’s a lot of people saying that AI can write stories, but AI can’t write unique and new stories. It just kind of spits out what everyone has already said. It will definitely be a place for marketers to tell good stories in the future. Kyle, thanks so much for coming on today. It’s been really interesting hearing about Incrementality. How you’re using it as your main measure of channel efficiency, like how that’s guiding your decision making. Before we wrap up, if people want to follow you and your journey and kind of hear more about what you’re doing, where should they go?
Yeah, they can just follow me on LinkedIn. Kyle Webber I’m not too active. Even though I manage a lot of social media, I’m not too personally active on there other than LinkedIn. So they can follow me on there.
Yeah. Well, thanks again for coming on the podcast and if people want to find out more about we do at Spectrm, check us out on LinkedIn as well. Spectrm.io to learn more about conversational marketing on messaging channels. And thanks for listening today, Kyle. It’s been a pleasure. Yeah.
Thanks, Ben. Thanks for having me.