The Case for Media Mix Modeling: Correlation Beats Guesswork

[00:00:00] (teaser) ​

[00:00:00] Todd: 85% of Gen Z thinks that social platforms are gonna be their main shopping platform,and it can influence upwards of 80% of their shopping decisions.

[00:00:09] Todd: So how do the social platforms now compare, compete with an Amazon, right? Because you and I shop a lot on Amazon, but it might be that my daughter is obviously glued to TikTok shop or Instagram or these other things. So I think the question is, does this social make a big dent?

[00:00:27] (interview)

[00:00:53] Kelly: Hey everyone. Kelly McGuire with Fuji Day Digital. Excited to get into today's topic.

[00:00:57] Todd: Hello everybody. we're gonna talk about e-commerce today 'cause it's getting to be the e-commerce shopping season and. We were supposed to have Matt, our e-commerce specialist on the show today, but he couldn't make it, so we'll rebook him for another show. but I did have some e-commerce stuff Kelly, to talk to you about today as we start thinking about just e-commerce in general.

[00:01:18] Todd: But certainly as we get to the holiday season, it becomes more and more of a, like a big topic. And so, um.I thought it was weird that DHL came out with a e-commerce trends report, and I don't know if that is because they're responsible for shipping a lot of stuff. I'm not really sure why DHL put this report out.

[00:01:37] Todd: But anyway, so some of the stuff that I summarized out of that report is what we'll talk about. and so. One of the first things I pulled out was talking about shopping behaviors and habits. And so here's a couple of the, key facts, that I don't think are terribly surprising. But, I think the biggest one is the card abandonment one.

[00:01:55] Todd: So, so this report suggested that one and two shoppers, were buying online weekly. I don't think that's any big surprise. I think people buy all the time, probably daily. I was surprised that the report cited that nine out of 10 shoppers are shopping on mobile. I mean, I don't know if that surprises anybody else, but I,I didn't know it was that high on mobile.

[00:02:18] Todd: the one statistic that I thought was interesting is card abandonment. And I know with our e-commerce clients, we talk a lot about card abandonment and how to arrest that, and some of that we can cover in here. The report cited, 79% of e-comm shoppers will walk away if their preferred delivery option is not offered.

[00:02:38] Todd: So I thought that was interesting. I know in my own shopping experience, sometimes if I don't have, the thing that I'm most familiar with, I'm like, eh, but it doesn't usually prevent me from walking away. do you think delivery method, delivery speed. that kind of stuff is a heavy influencing factor on total cart abandonment.

[00:02:58] Todd: what do you think about that? Have you seen that?

[00:03:00] Kelly: I think psychologically it makes sense and I think it explains, you know, a lot of the challenge that I think we have to think through when we're expecting the behaviors that we want to influence on behalf of clients. So, I think it's one of the few things that maybe keeps the idea of brick and mortar still alive is we're still impulse creatures.

[00:03:21] Kelly: There's still. The psychological behaviors of, you know, I want something and I want it now versus a day from now or two days from now, or certainly seven to 10 days from now. I think that's very category specific. I think it's very product specific. we have a client that's in the chocolate space and I've always struggled with the idea around. When you have a craving for chocolate, it's something that you kind of have in the moment and you want it, it's kind of hard sometimes to be like, oh, I'm gonna want chocolate in two days from now at least as much. It's not impossible, but it, when you think about it that way, it starts to kind of put into perspective, like there are just certain things that are more conducive to the immediacy and the now of things versus the forward planning and that even comes down to all of the different things like the shipping.

[00:04:05] Kelly: Profiles and behaviors and the price and the tolerance for things that you'll have. you know, there are certain things in my mind where you'll wanna move faster and so you won't dive as deeply or scrutinize. Details as much. You'll say, okay, this meets my needs, I want it. Versus there are some things where a consumer will say, well, maybe there's something better.

[00:04:23] Kelly: Maybe I can find it cheaper. Maybe I can wait for this sale. Or, you know, those types of things. And so all of that's to say is what I find the most interesting when it comes to a car abandonment is when you really start to think of all of the variables that can go into how quickly someone makes a decision, why they make a decision, what presents a roadblock.

[00:04:42] Kelly: Do they want it now? Are they willing to wait? Do they want a sale? Is it, price that matters? Is it quality that matters? Is it reviews that matters? And it really starts to highlight just how many things have to be thought through and considered and factored in to really be able to understand what's possible to do in the market.

[00:05:00] Kelly: what are you asking people to do? What are you expecting them to do, and what are you servicing and making easier for them to do in that path? certainly shipping, I think, is one that's trained to be a major factor.

[00:05:10] Todd: Well, if the statistic is as high as this report, sites 79%, will abandon cart if their preferred delivery method isn't an option. Makes me think. That people are putting stuff in their cart and technically going to buy stuff that they don't really need or want all that bad. Because ultimately if the shipping option availability is why they walk away from a purchase, I mean maybe that's saying they're walking away from that purchase and they're going to another place to make that purchase that's got a better shipping or I've done that a couple times where I've found like the same product on a different.

[00:05:45] Todd: Marketplace or something where there's a better shipping option. But it does make me wonder, like, if it's that high, what's the alternative? Are people just not buying those products or are they going somewhere else? And then it makes me wonder, like, is shipping speed and sort of option and trust overriding price of a product, right?

[00:06:05] Todd: Like if you're like, I need a new toaster oven, huh? This is a great deal, but I'm not gonna buy it because it doesn't get shipped either next day or two day, or I've gotta pay for shipping, or it's being shipped some with some weird, shipper, like, I'm just gonna abandon cart and not buy it. Well, either you didn't need the toaster that bad, or you know you're gonna just go buy it somewhere else.

[00:06:26] Kelly: Yeah, that's needs versus. Wants shopping. Right. And I would say, if not backed up by statistics at all, but my gut tells me the vast majority of purchases are wants, not needs.

[00:06:37] Kelly: and I think, yeah, I think that fund that very deeply changes the behavior and the tolerance.

[00:06:41] Kelly: I mean, look, to me, the shipping thing, it's, you know, not to assign it in one place, but it's a bit of a problem that, Amazon created. we trained people to expect. day or two day shipping and free shipping, and once people sort of got used to that, it's hard. Anything else feels wrong or feels like not what you want.

[00:07:00] Kelly: I mean, honestly, it kind of, I liken it to the debate we have around the internet being free. I mean, people got used to the internet being free. The idea of it not being. It's almost impossible to ever get around. I kind of feel like the shipping thing is the same thing. People got so used to a certain thing that everything else just feels like a letdown or disappointment or an intolerance.

[00:07:18] Kelly: Because we were trained so fast and so early, that shipping doesn't cost anything and it happens really fast.

[00:07:26] Todd: Can you, off the top of your head, think about how often or what percentage of time you add something to cart and then abandon cart because the delivery or the delivery fees or the shipping options or whatever just didn't suit your needs. Like what percentage of cart abandonment do you think you have in your own personal experience with that?

[00:07:45] Todd: I would say mine's very low. That ever occurs where it forces me to abandon cart. I don't think it hap maybe one out of 10 times. but I don't know. I'm curious,

[00:07:56] Kelly: I'm more discerning about getting to the cart phase. Like I won't take the step of. Adding to a cart until I'm pretty, convinced and pretty like

[00:08:04] Todd: but how do you know what the shipping options are until you add to cart? How do you know?

[00:08:08] Kelly: Quite frankly, my expectation is what I just said basically free shipping.

[00:08:12] Kelly: I, there's almost nothing that. The idea of paying for shipping is not a hesitation of whether or not I'm willing to do it. And for me, I would just much rather the shipping be built into the price of the product. The idea of it being separate I think it's not an ideal way to do it.

[00:08:26] Kelly: I think it's too disruptive in the psyche of making that decision. So whether or I can't think of a lot of situations where I don't know what the shipping's gonna cost me unless I put something into a cart. I would very much not like that experience personally.

[00:08:40] Todd: so in your preference if Site A was selling a soccer ball for $40 plus $5 in shipping, or Site B was selling a soccer ball for $45 in free shipping, you would rather go to the $45 in free shipping option.

[00:08:53] Kelly: Yeah, absolutely. Not even a question.

[00:08:55] Todd: Isn't that a weird psychological thing?

[00:08:57] Kelly: Because there's also the element of it of, I can't also think of all that many things where I'm buying one off things. I am usually a multi item cart person as well. Right. And so the idea of just being built in and into that. But I mean, I can understand, you know, the other way to it, but me personally, it's, it's interesting 'cause it makes me think more going down to a slightly different consumer behavior.

[00:09:18] Kelly: And this is where, you know, me my family members, you know, are very different in this where. For me, it's more the returns element and the casualness of completing a purchase. For me, if I buy something, there's almost no scenario in which I'm gonna return it. I mean, unless it is like broken and just not it, like I'll return it.

[00:09:37] Kelly: Whereas my wife, like, she'll buy and return like, I would say more things are returned than kept and it's just a very interesting behavioral thing on that Side of things as well. And then you get into the whole return shipping and costs and consideration. And for me, like I said, because I know that I'm pretty committed on a purchase, I do a lot more due diligence and consideration before kind of getting to that phase of going in.

[00:09:59] Kelly: But personally, I don't think I leave all that many things into carts. I'm also not a person that likes to have things sitting in carts. Like if I put something in a cart and I change my mind, I'll like delete the cart. I don't just leave it there.

[00:10:11] Todd: Funny. alright, let's talk about generational shopping differences. So I am Gen X, you're a millennial. I think you and I have a lot of similar shopping styles and preferences. We're pretty close, but Gen Z, so I'll think about like my young kids, my, 20-year-old daughter or 22-year-old son who are Gen Z.

[00:10:32] Todd: their shopping behaviors are different. So in this particular article, they cited that, seven in 10 shoppers, and Gen Z have purchased on social. and so we have another social entity starting ups, that, that gives us some insight into this. 85% of, of those expect, that those platforms will become their main shopping, sort of out outreach or place of discovery, in the next five to 10 years.

[00:10:58] Todd: and that even some of the viral nature of things that make their way into I, and this is obviously in the TikTok space for sure, in the TikTok shop. That's influencing upwards of 80 plus percent of their buying decisions. So if that were true, if seven in 10 shoppers are buying on social,if Gen Z, 85% of Gen Z thinks that social platforms are gonna be their main shopping platform,and it can influence upwards of 80% of their shopping decisions.

[00:11:25] Todd: So how do the social platforms now compare, compete with an Amazon, right? Because you and I shop a lot on Amazon, but it might be that my daughter is obviously glued to TikTok shop or Instagram or these other things. So I think the question is, does this social make a big dent?

[00:11:42] Todd: Generationally, like as we age out, is Amazon threatened by social shopping platforms? and I'll have a follow up question to that.

[00:11:51] Kelly: it's a really interesting topic for me because it crosses over something that is both very personally interesting to me as well as very professionally interesting to me. And it's something I actually spend a lot of time thinking about. ' cause I think there's a lot of opportunity in it and a lot of evolution in the idea of discovery and.

[00:12:12] Kelly: Brand discovery or product discovery, in a very fragmented and noisy world. I think about this a lot and I bring that up because social to me is so pivotal in the idea of discovery. for a younger generation and for a digital environment, to me it's kind of replaced what historically would've been more word of mouth or, as long as things have happened right there, you have to learn about something. Right? If you're going back to likethe Sears and Roba catalog, right? It was the idea of getting it, and that's how you learned that something even existed to want, and I don't wanna go too far down the rabbit hole, but the reason I think about this so much is it's really tapping into the human psychology.

[00:12:51] Kelly: I didn't know I wanted it until I knew it existed and then I wanted it, or why do I want it? Or keeping up with the Joneses and there's all these sayings and,and concepts because that idea of discovery and creating want and need and convenience and all of those things, that is the heart of consumerism and really the economy and why things move and it fascinates me in that way.

[00:13:11] Kelly: And so to bring that all back into where the role that social plays. That's where time is being spent, that's where eyeballs are being spent. That's where trusted opinion and voice and trial and exposure happens. And so that's why I think it becomes so interesting and so pivotal in the way that people discover things.

[00:13:29] Kelly: So it inherently makes sense to enter into where the discovery happens and making the transaction as close to that moment as you possibly can to remove all the friction and all the detours that can happen. From that point of discovery to actually making the purchase and as that gets more ingrained into behaviors and expectations and shipping gets free and all of those things, that's, I think what creates that experience.

[00:13:56] Kelly: And I think that will only get more and more and more sophisticated. I mean, it kind of blending the last topic around shipping with this, one of the most fascinating things that I heard not that long ago, and I don't remember all the details to it, but just the concept of it piqued my interest is, you know, I heard somewhere that.

[00:14:11] Kelly: There are instances where you could be looking at a product on Amazon. You may not buy it, but simply there's an algorithm that runs in Amazon that can predict the likelihood of which you will purchase that item either right away or eventually, and they will start to move the product to a closer warehouse to you before you even bought it, because they can calculate the likelihood that you will buy it, and that makes it that much more likely for your buy.

[00:14:36] Kelly: And so that predictiveness and the idea of AI and. Almost knowing people's behaviors and tendencies in advance. I don't know exactly how far advance that is, but I can only imagine it's gonna get more and more. That's where that it starts to get really bigger picture around the power of digital and social and I would imagine a big piece of what informs that predictability, how likely you are to eventually make that purchase is based on your social circle and the engagement profiles that you have and what others that look like you and do.

[00:15:06] Kelly: And consume similar products to you, and it's, everything's just being powered by data in that way. And that's all driven by discovery and social and interactions and signals that you volunteer. What do you like? What do you share? What do you talk about? That's the power of vigils. That's all a signal that gets levered.

[00:15:21] Todd: Yeah, I think it's interesting. One of the things that I was reading in this study was, you know, whether or not brands should be reliant or really heavily focused on social commerce and influencers and things like that. Or is there a space for them to sort of start to build their own, I don't know. I guess, how would I describe this?

[00:15:40] Todd: Imagine. When you're on TikTok and you see somebody talking about a product on TikTok, well, it's typically an influencer, right? it's a creator who's getting paid to talk about that product for the most part. Or maybe they just love the product, but they're probably getting paid to talk about the product.

[00:15:55] Todd: Do you see a future where if I am, I don't know, Nike, that Nike the brand, could have the same level of. Influence as a brand. And keep in mind, gen Z and a lot of the younger generations seem to like what an influencer has to say about something, maybe more so than the brand does, right? Do they trust the brand?

[00:16:20] Todd: Is it the brand just being salesy? But imagine if you were Nike and your TikTok, or part of your TikTok shop strategy was a Nike product manager talking about. The tech innovation that's going into the latest shoe or wearable or whatever they're, you know, running short or pant or whatever that they're producing.

[00:16:42] Todd: I wonder if that would have a better impact or not as strong of an impact. Do you think a brand could have as strong of an impact in social commerce than a non-brand entity promoting something in social commerce?

[00:16:56] Kelly: I hate always giving sort of vacillated answers, but I, you know, I think it's one of those that is a bit dependent. But I would say taking that the nuance away, my overarching sentiment is that social is driven by the personalities and the creators based on authenticity and credibility. And that a lot of times is hopefully you're in theory based on neutrality.

[00:17:18] Kelly: Now, this is actually a big reason why we dove into the waters of the social commerce platform that, that we're working on because this is an area that I saw a lot of sort of gray area in the neutrality and the authenticity of representation of brands and products by, creator voices. Because, I don't know where this is gonna ultimately go because, you know, creators need to make money for the time and energy and effort that they put in and brands.

[00:17:43] Kelly: Just like they're the ones that pay for advertising that powers the internet. They're the ones that power that. So, but how much choice does a creator have? Do they have to take the brands that are offering the most money, whether they believe in it or not, do they have the option and path to pick what they truly believe in to make it more neutral and believable?

[00:18:02] Kelly: I think it's, it lies somewhere in the middle. All of that comes around to say, in a perfect world, I believe it is very creator driven because that is the endorsement, that is the experience, that is the unbiased. Representation of is the product living up to its hype? Does it believe, is it worthwhile? A brand is obviously always going to be self-serving, and so it's always gonna come with that caveat of they're gonna always say the best thing to sell.

[00:18:30] Kelly: And so the idea of a creator is to try and take that neutrality in place and be able to say, okay, they have less of a dog in the fight, hopefully. That I can trust what they're saying in believing more than the brand who's gonna make the grandiose promise. Of course they are. and again, that's idealistic.

[00:18:48] Kelly: It obviously doesn't work exact that way, but that would be the perfect state if it could work in that way, in which case it would always be driven more by the neutral kind of creator and opinion that's created versus the biased associated affiliated with the brand aspect.

[00:19:04] Todd: So challenge, doesn't the fact that the influencer getting paid by the brand to sling their product make them the same culpability as the brand?

[00:19:13] Kelly: Certainly and In a perfect world, a creator would only accept that relationship. If it was in fact representative of them and what they believed in, and not just because it was the highest bidder that was willing to pay them, I know that again, is idealistic.

[00:19:29] Kelly: The only way that you create more ability to believe in the likelihood of that is if the creator is in more control and has more options to choose from to find the best fit for them. Because if a creator's sitting there and they're saying, I would love to pitch Nike shoes, but. Puma's, the one offering me money, not Nike, I'm gonna go for what's offering me money.

[00:19:50] Kelly: But if I have access to both and I personally like Nike better, I can believe that I made that choice better. So that's where the open access and the ability to have the creator make choice amongst what believes versus having to take what comes to them. That is in theory, what would open that up.

[00:20:06] Kelly: But yes, absolutely. One of the problems is you will see a lot of mismatched endorsements or things that are clearly, Pay to play and pay to talk about it. That inherently undermines the credibility of what the creator endorsement, what you still get from it. The reason a brand will still do that, despite that is because whether there's credibility or authenticity to it or not, there are eyeballs on it.

[00:20:27] Kelly: And, you know, no presses bad press kind of thing comes into play to a certain degree where there's just large m like even a bad Super Bowl commercial still gets a hundred million people seeing it.

[00:20:36] Todd: Yeah. But in that case, I don't know. I'll just pick something that came to top of mind. if the commercial or the influencer is Matthew McConaughey driving a Lincoln, are you that much more impressed to go buy a Lincoln because the influence of Matthew McConaughey driving that Lincoln is why you're gonna go buy it?

[00:20:52] Todd: I mean, everybody knows, oh, that's. That's just a celebrity endorsement. It's not a, you know, it's no big deal. Like, why is it any different than somebody on TikTok slinging a Lincoln?

[00:21:01] Kelly: and it's not if it goes in that environment, but to kind of take it over. If you saw Matthew McConaughey personally driving a Toyota, that is clearly not the car that you know would go into it. You, again, it's not a perfect example, right? if he wasn't paid to. He was just driving it and you went through, you'd be like, oh, that must actually be a really good car.

[00:21:21] Kelly: 'cause that's what he's chosen amongst any choice that he has. Right? And so that's the hard thing to pick between is the motivation the fact that the person is being paid to endorse it, or is the person a believer in it? They just happen to be being paid because they're Libra. That's really hard to discern.

[00:21:40] Kelly: But what makes it more believable is if you know that, the creator had choice and that's what they chose amongst other options, it could have been a fit versus it was just a one-to-one and there wasn't another choice. it's not always as crystal clear as that, but all in a perfect world, that's how it would be driven.

[00:21:56] Kelly: It would be. I'm talking about the things. I liken it back to the word of mouth. Example, right? If I'm out in the world and I'm wearing the outfit that I'm wearing, that's my endorsement. That's what I chose to represent myself in. If I have a giant billboard saying, you know, that's clearly like I was paid to wear it, that's gonna undermine it.

[00:22:12] Kelly: But this is a digital version of just, oh, you chose to wear those shoes because you think they're cool shoes. And so now you're influencing me to think, okay, those are also cool shoes. So there's a lot of, again, noise and fragmentation and discernment that has to be done, which again, creates a less than idealistic scenario of what social commerce can be, and that makes it hard.

[00:22:33] Todd: It makes it really hard. So on that point, just to wrap up, If you were head of e-commerce for a brand today,this might not be an answerable question, but if there's a specific area, social commerce, marketplaces, a AI driven voice shopping or sustainability and packaging, like, are there any things that you've sort of.

[00:22:57] Todd: I heard over the last 12 months that if you were in charge of an e-commerce brand today, like what would you be doubling down on? what would you be really hyperfocused on? Man, I gotta get this right in the next six to 12 months because this trend or this innovation, or this. Whatever is gonna start taking shopping by storm for a particular, maybe in general or by particular generation.

[00:23:21] Todd: Right. Maybe it's, I'm a youth brand and I wanna sell to Gen Z, so I've gotta really double down on, you know, specific thing or I'm a mature brand and my audience is older, and so I have to look away. I'm not gonna be on TikTok, right. I'm gonna be somewhere else. Like, is there anything that you sort of have.

[00:23:38] Todd: that's maybe stuck with you in the last few months that you've seen that if you were in charge of an e-commerce brand, you'd be, you would say, man, don't miss this.

[00:23:46] Kelly: I'll answer broadly, but then I. Answer more specifically from a broad perspective. My answer, is back to what we talked about, which is I would really focus on the process between discovery and conversion and streamlining it. again, I just, this is what we consult our clients on and the first thing I think about when we are in a new business pitch or thinking about a brand or a product is.

[00:24:07] Kelly: what are the obstacles being faced by this brand? And that can be everything from reviews and reputation and competition and ease of understanding and endorsement, all of these types of things. And I think it's trying to figure out how to navigate that discovery to that belief, to that conversion, and then matching it to who the ideal customer is and all of that. And so that's my broad question, is trying to really think about what I'm expecting people to do, how they're gonna find out about me, how they're gonna believe in me, and how they're gonna convert. That could be on a marketplace, that could be on a website, that could be anywhere else. And streamlining that the place where I am seeing that incredibly opportunistic to get even better.

[00:24:48] Kelly: And there's more open lanes, I would say, is in social commerce. If you can nail that just right, if you can get a good journey. You can get good content, the mechanisms that support that and the virality or the expandability or whatever you wanna call it, the opportunity to get dollar for dollar returns if you really get those things right, I think is the most open.

[00:25:12] Kelly: If you can really get the right voices and the right materials in front of highly targeted people, you can jet fuel that with ads and the conversion cycle, if you get that right, can be really short. So. I think that is, there's a lot of opportunity there that is very controllable if you're very smart and kind of tolerant and have that thinking in there.

[00:25:32] Kelly: It's one small piece. I mean, I would obviously touch on everything, but I would think that is an area where there's just a lot of really cool things that can be done, that can be leveraged that not everyone's doing in a great way, and there's more innovation and more rapidness there. I think that, as you said, that's gonna have longevity to it.

[00:25:48] Kelly: 'cause it's just gonna get doubled down and go further and further. So if you get that right now, I think it's gonna carry out versus there's some other things you could do now that next year AI could go and break and change everything to, you know, pretty easily. So I think that has probably the most open lane and the most longevity and really the most ability to, if you're really smart and good, you can get some really good gains there.

[00:26:08] Todd: I don't disagree. So, unfortunately there's nothing here contrary to the popular opinion that I have to debate or disagree on. social platforms are, definitely prime to continue to drive commerce and, if I was an e-commerce brand, I would make sure that I had a really good strategy for social commerce selling.

[00:26:26] Kelly: I think, I mean, the biggest thing that it really highlights to me is I just, I do think that even more so than ever any company has to just have so much dedication to controlling their own destiny. I feel like there's so many products and brands that sort of.

[00:26:40] Kelly: Catch a wave or kind of get lucky or have some organic momentum, and they just believe that will last forever. And then they wait too long to be like Uhoh, like growth slowed down, or this thing changed. Now I have to address it when the right time to do it is when everything's going well, to learn from it and to double down on it and grow on it, and then, capitalize on it and have the right team and the right minds and the right forward thinking.

[00:27:07] Kelly: approach to things. I feel like too many times it's, don't fix it till it's a problem, versus have a strategy that you control and take advantage of the opportunities while they're there because. it is just so much easier when you're moving in the right direction. You have opportunities.

[00:27:20] Kelly: You can do so much more testing and you can be more tolerant on things that don't work versus when you wait till everything's broken. It's every test has to work and I have to hit this ROI and my cash flow, and it just creates so much more stress, on everything that can be avoided.

[00:27:33] Kelly: When those, those kind of pockets of opportunity.

[00:27:35] Todd: Agree. I can't disagree this time. So, I'll pick a topic that maybe I can disagree with you on next time. all right, thanks. Talk to you in the next show.

[00:27:43] Kelly: Sounds good. Thanks everyone.