Intentwise’s CEO Sreenath Reddy hosted Stephen Reagan from Macarta for an in-depth conversation about 2021 Black Friday and Cyber Monday.
About Stephen Reagan
Stephen Reagan is one of the founders of Macarta, a full-service Amazon agency. Macarta serves a number of large brands and Stephen’s primary function at Macarta is to arm his internal team of Amazon experts with the best-in-class agency service aptitude, and knowledge of the Amazon marketplace.
Topics Covered:
- Preparations for Turkey 5
- Handling inventory challenges
- Metrics comparison with 2020
- Expectations for the remainder of the holiday season
Checkout the full video below:
Full Transcript
[00:00] Sreenath: Hello, everybody. And welcome back to another episode of Intentwise’s Expert Connect. My guest today is Stephen Reagan. He’s one of the cofounders at MacArthur, which is a full-service Amazon agency, and he is here to share with us his experiences and observations with Black Friday and Cyber Monday.
[00:20] Sreenath: Steven, how are you?
[00:22] Stephen: I’m doing well, Sreenath. Thanks so much for having me. Happy Monday.
[00:26] Sreenath: Our pleasure. Thank you for taking the time with us. A little bit about Stephen -again, like I mentioned, he’s one of the founders of Macarta. Macarta is a full-service agency that started back in 2016. They’ve grown quite a bit, and they have a presence in the US, Mexico, and Latin America as well. And his primary role is really building and growing his team of Amazon experts. He also works very closely with a number of teams at Amazon as well. And let’s just say he has seen quite a bit of Black Friday and Cyber Mondays over the past few years.
[01:02] Sreenath: So we are going to be digging deep into that as to what happened in 2021. But before that, Stephen, do you want to take a moment to talk about Macarta?
[01:10] Stephen: Yeah. Thanks a lot. So I like to position Macarta as a global brand-first marketing agency for the Amazon marketplace. And I say a few of those things very specifically, brand-first being kind of the number one, and there’s no shortage of ways for businesses and otherwise entities to make money with Amazon in this crazy marketplace. But our philosophy when it comes to Amazon success really starts with the brand, and it’s taking steps beyond pretty looking ROAS or ACOS numbers on a spreadsheet. Really in the investment in long-term success on Amazon as a brand.
[01:48] Stephen: Now, of course, we do have some partners in the kind of third-party selling arena as well. But again, our core competency really lies in that brand-building element, which is a rapidly growing, sometimes underthought-of a way to kind of leverage Amazon.
[02:03] Sreenath: Awesome. And then we have had the pleasure of working with you as a client for quite a while now. So I certainly appreciate that. So let’s talk about – let’s dive in – talk about Turkey five. Have you and your team recovered? How’s it going?
[02:17] Stephen: As we kind of say, the light at the end of the tunnel is near. And I said this actually on Friday that including today, there are 15 working days here left in the year, which my intent was to present that in a positive way. But I think everybody has a little bit of nervous sweat knowing there’s still quite a bit of a road ahead of us between now and then. But no, I think we certainly get better every year about planning ahead. Two, four, and kind of this crazy shopping time of year starts for us really, in July, August, and so not immune to any surprises or kind of last-minute adjustments. That’s normal. But I think we were able to maneuver the long weekend very well and had a few people kind of on-call, if you will. But I think everyone was able to enjoy some nice time off with family and kind of rejuvenate and get back at it for another 15 – 14 and a half days.
[03:13] Sreenath: What is that typical cut-off day when everything kind of dies down? Is it the 21st or the 22nd? What day is that?
[03:21] Stephen: The 22nd is always kind of the date. I keep in mind, although I think we’ll talk about it a little bit later on, but you can’t forget about the remaining seven, eight, nine days of the year. Of course.
[03:34] Sreenath: Absolutely.
[03:35] Stephen: But that kind of date is really based on the kind of pre-Christmas shipping window. You certainly have no shortage of last-minute shoppers like myself. So there is definitely a softening of the craziness and the beauty and also the challenge of that time of year is there’s not a whole lot you can really do at that time of year. So you kind of have to trust in the planning and what you’ve done to that point. And like I said, that’s really where we focus each time around – each year around that earlier, earlier, earlier planning.
[04:09] Sreenath: Got it. Yeah. So let’s talk a little bit about what it feels like within Macarta during Black Friday Cyber Monday. For us, it is let’s not make any changes to the platform, and let’s be there to answer any questions all the time. So that’s kind of our focus. But what is it like within Macarta?
[04:31] Stephen: Yeah. I’d say it’s pretty similar again. Like I mentioned, the planning phase really heats up kind of end of July August time frame, and the ultimate goal is to have Plan A, plan B, and then contingency plan C-D-E. So on and so forth. And really throughout the event itself. It’s kind of a matter of maintenance and making sure that we are very active in checking on campaigns and daily budgets and things of that nature. And of course, we have to always account for the biggest kind of component there is – client’s budget, and regardless of the opportunity to spend money, we can’t always just spend, spend, spend.
[05:11] Stephen: So it’s really about the intentional deployment of any budget, whether it’s $1,000 or $200,000. But yeah, I think it really was kind of maintenance and working through our progression of those plans and contingency plans that we’ve kind of laid out had signed off with our brand partner months in advance and holding on for dear life a little bit.
[05:32] Sreenath: Yeah. And it’s interesting. I think the entire ecosystem probably went into this 35 with a little bit of a muted expectation compared to, let’s say, last year. Right. And for me, it started off with Amazon’s last earnings call with their guidance for Q four was 4% to 12%. Let me bring up a little snippet from their earnings – here it is. So 4% to 12% of growth on net sales. And if you look at any of their previous quarters going back three, four, five years, it’s certainly been on the low side.
[06:09] Sreenath: A couple of reasons were kind of known and obvious. One, you’re comping a crazy quarter from 2022. You don’t have prime day. Prime day was in Q four last year; if you remember, those are reasons. But there are many more. And I’m curious to know from what you have seen what felt different. What was different about 2021 for you?
[06:33] Stephen: Yeah. I think you kind of touched on the biggest ones, and I think sort of those muted expectations is a great way to put it. It’s difficult to sort of look backward and plan ahead on Amazon in any year. It has been the case for a good decade, at least in my world. But then, like you said, you kind of layer in all these other implications. And the elephant in the room obviously is COVID, and everybody is still kind of reeling and navigating maneuvering their way through that.
[07:03] Stephen: Obviously, inventory and supply chain has been completely dismantled this year. And then, with no prime day this year, it was, I guess, more similar to 2019 or previous. But I think one of the biggest observations was a little softer. I think across the board, my kind of speculation is really thinking about the pandemic, and people are just more budget-conscious as they have very good reasons to be. And I think just being more intentional about that purchase decision when it comes to holidays and maybe looking out for deals more so than they otherwise would.
[07:41] Stephen: Our partner’s performance was a little bit sporadic, kind of depending on the budget, of course, with all the strategy and whether they’re running deals or not running deals. But in general, I think it was pretty soft compared to expectations.
[07:55] Sreenath: Got you. You mentioned inventory. So talk about that a little bit. What have you experienced? What did your teams do to mitigate the known inventory challenges that currently are impacting most folks in this space?
[08:10] Stephen: Yeah. So as you know, we have partners kind of on both sides of the coin there as far as vendor central and one P versus seller central, three P selling. So on the one P side, things are not to say easier, but maybe less complex, because primarily, a lot of those decisions are out of your control directly. On the three P side, that’s really an area that is probably the most challenging, certainly, and even more challenging than it was last year, with the introduction of the IPI score that they were using a kind of throttle inventory flowing through Amazon fulfillment centers.
[08:48] Stephen: And so I think the biggest learning I’d say from for us this year on the three P side is — I guess I sound like a broken record — but having Plan B, and it’s kind of diversifying your fulfillment options. In particular, if it’s in a seasonal segment like toys and games, for example, where you might have a totally new brand coming live or new products, and with zero history, because you have a container that’s been sitting at La Port for months and months, it’s just infinitely more difficult to gauge demand.
[09:17] Stephen: And also for Amazon to understand how much inventory will they allot for you. And so that’s really where that kind of drop shipping or fulfillment by merchant alternative fulfillment option was really a lifesaver for some of our partners and kind of that arena.
[09:32] Sreenath: Got you. So diversification of fulfillment, especially for three P, and it looks like on the One P side, Amazon has made some moves to make their lives a little bit easier. Is that a fair assessment?
[09:44] Stephen: I’d say that’s a very good assessment across many different areas of the One P business.
[09:51] Sreenath: I think they’ve been investing more and more in owning the entering logistics. Right. So I’m sure that has helped quite a bit. So let’s talk about some specific metrics. Can you draw some comparisons whether it’s ad spends or CPCs this year versus last year or this year versus earlier in the year? Any info you can share?
[10:12] Stephen: Yeah. Absolutely. So again, we have partners kind of running the gamut in terms of size, but also category. And I will say we’re very active in the sort of soft lines, apparel, and footwear space as well as the kind of beauty and CPG area skincare — so kind of thinking with a lens on those particular segments. I think, in aggregate, our spend was up about maybe 20% compared to the sort of Turkey five 2020. Sales were slightly up by about 2% kind of an aggregate, and our impression volume was pretty flat.
[10:47] Stephen: Kind of the biggest standout metric that I love to see and sort of jumped out at most was the click volume as well as the clickthrough rate. And so I like to take some credit for that. And for our team anyways, in a more intentional delivery of that budget, really trying to find a more relevant audience over time. And that’s certainly a big kind of shout-out to Intentwise and the tool — our tool that we use — to kind of highlight those really relevant consumers from a keyword perspective or otherwise audiences and things of that nature.
[11:22] Stephen: So yeah, I think that’s a pretty good description of what we saw across the board. It was certainly heavier spend – no question. Sales either grew, but not at the same sort of rate as our investment, or they were actually down compared to last year. But that intentional sort of delivery. The quality of that audience in those clicks, I’d say, was better, which is not so much a seasonal or year-over-year trend. It’s more of us getting better and better as well as finding the great software and tools to use.
[11:54] Sreenath: And I think from what we saw, CPCs have been going up throughout the year, and I think we certainly have seen kind of increased CPC even during Turkey 5. Are you seeing a similar pattern as well on the CPCs?
[12:12] Stephen: Yes, pretty much across every space, every category. It’s starting to level off a little bit here in the sort of the wake of Turkey 5. But I certainly anticipate that to not fall the way back down to kind of October numbers. It will stay at an elevated sort of cost really, throughout the rest of the year.
[12:33] Sreenath: Got you. And then, as you look forward for the remainder of the 14-15 days left, what are your expectations during that time frame? Certainly, again, as you draw comparisons in terms of what you saw last year because I think the primary buying is probably for gift giving from here on out. So just curious to hear your perspective on how you see the next few days play out.
[12:59] Stephen: Yeah. So I think in the last maybe six kind of seven, eight weeks, even we’ve been in the traditional marketing sort of funnel – the consideration phase. It’s really getting a lot of window shoppers and sort of again, thinking about the brand and really trying to make this really excellent brand presentation on Amazon and creating this destination on Amazon for people to consume brand information and also start to consider that purchase decision for Turkey Five and certainly the next few weeks where people start moving further down the purchase journey into that making a purchase kind of pulling the trigger now.
[13:34] Stephen: So as far as what that means to me and from expectations, I certainly anticipate a sustained increase in competition. I do think the sort of overall volume of ad generated revenues will continue to climb, really, until like I said, probably the 22 December time frame and then take a little break there for the holidays, and then it will sort of rebound once we have gift card redeemers and also any brands that are kind of pushing the ‘New Year, New You’ type of messaging or any new product introductions for the new year.
[14:06] Stephen: So I think a lot more of the same — barring the crazy volatility of Turkey Five — I think it’s going to be a steady sort of climb from the competition level as well as overall investment in ad revenue to kind of close out the year.
[14:20] Sreenath: Got you. Any advice for the brands and sellers for the remainder of the season here, Steven?
[14:31] Stephen: Yeah, I think one of the biggest recommendations I have and this is not necessarily unique to Q4, but I think there’s a few, very few givens or knowns when it comes to Amazon, and we do know that competition will continue to increase, barring some craziness from Amazon. So I think with that, dollars are finite no matter who you are. And so what we’ve been really focusing on specifically in this time of year is conversion rate. And so our whole creative team is really working to think, rethink and optimize that brand presentation and perception on Amazon and really honing in on sort of the comparative value proposition that our brand partner might have against our competition or against kind of the category in mass, and really focusing on the quality of that visit to your detail page as opposed to volume per se.
[15:24] Sreenath: Got you. Any specifics you want to share in terms of conversion enhancement strategies on those detailed pages that you’re going through right now. Anything can share there.
[15:36] Stephen: Yeah. So at a very high level, certainly the more complete a detailed page can be, the better. And that, of course, includes all of the media opportunities. A plus is a must-have. Video content, in my opinion, is a must-have. And then you start to think about some of the more fun things like Amazon posts. And really how are you optimizing that brand store experience and sort of the tie in a lot of the new things Amazon has been introducing for customers. Kind of understand, like, hey, there is a brand store, first of all.
[16:06] Stephen: And what are these posts? How do they work and sort of tying those together? So I think really, I always say to the team, there should never be a dull moment. You can never be bored on Amazon. There’s always something you can test to try and not to say that this is a good time of year to be trying a bunch of crazy new things, but really just letting data dictate what works and what doesn’t. And then wherever you possibly can follow that data and how that applies specifically in the content, kind of copy SEO arena. At the end of the day, it’s really about relevancy and ads are a tool to get there.
[16:41] Stephen: Your content strategy is a tool to get there. All of your media and sort of that visual presentation is just a tool to build relevancy. So, exhausting any and every sort of creative opportunity that Amazon has, as well as any new data new tool that they’re kind of providing us to kind of measure brand store engagement. For example, where are people spending their time and money within your brand store? And how do you leverage that, expose that, and then compound it?
[17:06] Sreenath: If I were to quickly summarize some of the things I heard from you, Stephen. One, ad spend is up compared to last year, but sales up but not as much as ad spend. CPCs have definitely gone up. It sounds like you have focused on delivery flexibility as a strategy to mitigate inventory issues on the three P side. And you’re heavily focused right now on conversion rates and relevance of products to shoppers because of all of the other issues that are going on as well. And then another thing you mentioned is things don’t stop on December 22. January arrives quickly, and having a strategy that will extend beyond this holiday season going into next year is actually a critical component as well.
[17:53] Stephen: Absolutely. And I think one thing to add in there is just because Q4 is over; we’ve got a fully kind of bespoke Q1 game plan. That’s another thing we’ve been working on here for the last several weeks. Start thinking about back into that sort of consideration and awareness component of the funnel. We run a lot of programmatic budget through Amazon DSP, and depending on the partner and sort of what’s going on in their business, we’re back in planning phase, looking at Q1 and sort of what are we going to do in April?
[18:24] Sreenath: Well, Stephen, this has been great. Thank you for taking the time. Clearly, you’re in the thick of the action. I wish you the very best for the remainder of the season. And for those of you that want to get in touch with Stephen, get his contact information. And again, thanks for your time, Stephen.
[18:41] Stephen: Thanks so much, Sreenath. And good luck to you in the next 14 days here.
[18:44] Sreenath: Yes, sir. Same to you. We’ll be in touch.
