Ever wondered what it takes to navigate the world of performance marketing amidst a global pandemic? Join us as we chat with Stefan Huß, Head of Performance Marketing at Lampenwelt, a mid-to-top market lighting brand and part of the Luqom Group. Learn how Stefan's fascinating career journey, which began with Aldi Süd and led him to the world of performance marketing, prepared him for the unique challenges and opportunities he encountered when he joined Lampenwelt just one month before COVID-19 struck.
In this episode, we uncover the ins and outs of online lighting retail and marketing, from Lampenwelt's diverse product range to their advertising strategies and efforts to branch out into the B2B space. Stefan shares how Lampenwelt quickly adapted to the Ecommerce boom, implementing significant changes to their ecosystem, ERP, and management team to ensure the future success of the business. Discover the critical role data plays in driving these decisions and shaping the company's future direction.
Lastly, Stefan provides valuable insights into data-driven marketing strategies, such as Marketing Mix Modeling and profit bidding for paid media. We discuss the importance of automation and artificial intelligence in determining the best investment opportunities and delve into the challenges of using Performance Max to optimize profits in the UK and France. Don't miss this enlightening conversation with Stefan Huß, where we cover everything from data-driven marketing to the future of performance marketing in Ecommerce.
Ever wondered what it takes to navigate the world of performance marketing amidst a global pandemic? Join us as we chat with Stefan Huß, Head of Performance Marketing at Lampenwelt, a mid-to-top market lighting brand and part of the Luqom Group. Learn how Stefan's fascinating career journey, which began with Aldi Süd and led him to the world of performance marketing, prepared him for the unique challenges and opportunities he encountered when he joined Lampenwelt just one month before COVID-19 struck.
In this episode, we uncover the ins and outs of online lighting retail and marketing, from Lampenwelt's diverse product range to their advertising strategies and efforts to branch out into the B2B space. Stefan shares how Lampenwelt quickly adapted to the Ecommerce boom, implementing significant changes to their ecosystem, ERP, and management team to ensure the future success of the business. Discover the critical role data plays in driving these decisions and shaping the company's future direction.
Lastly, Stefan provides valuable insights into data-driven marketing strategies, such as Marketing Mix Modeling and profit bidding for paid media. We discuss the importance of automation and artificial intelligence in determining the best investment opportunities and delve into the challenges of using Performance Max to optimize profits in the UK and France. Don't miss this enlightening conversation with Stefan Huß, where we cover everything from data-driven marketing to the future of performance marketing in Ecommerce.
Welcome to Growing Ecommerce. I'm your host, mike Ryan, of Smarter Ecommerce. Today, i'm joined by Stefan Huss, head of Performance Marketing at Lampenbilt, which is a mid-to-op market lighting brand and part of the Leucome Group. They offer lighting and smart home accessories across Europe. Stefan and I discussed what it was like to join Lampenbilt just one month before the pandemic erupted across Europe and the world And, more recently, what kind of projects he's completing after the e-commerce boom went bust. Those projects include multi-touch attribution marketing, mix modeling and profit bidding for paid media. All right, let's get into it. So, stefan, thanks so much for joining us.
Speaker 2:Thank you, nice to be here.
Speaker 1:Why don't you get us started with a quick introduction? What are your skills? What themes interest you?
Speaker 2:Sure, yeah, my name is Stefan Huss, based in Leipzig, germany, 37 years old, having a wife and a little boy who's three years old. Basically, yeah, my skills I'm head of Performance Marketing as of now. I've been in the marketing industry for more than eight years now And, yeah, i've kind of worked my way up to being head of Performance Marketing, but obviously there are some more topics besides marketing that I'm interested in. I think everyone during the pandemic kind of got into things He felt like, oh, probably I invest a bit more into stuff. Some went into crypto, so did me, but we also went into having a few side hustles and stuff like this, so building our own shop. So there's a lot of things that interest me. I like traveling a lot. I'm Mikey Note already I'm going on a holiday trip this afternoon. So, yeah, i'm looking forward to this. But yeah, there's just a lot of things I'm interested in. I feel like everyone else also has these things that they really like.
Speaker 1:Yeah, definitely, and thanks for joining me before your vacation. You'll need it. After this, we'll see So yeah, you mentioned it. Like you were, you were an artifact before, for almost five years. So what kind of work were you doing there? What was your career path like an artifact?
Speaker 2:Yeah, sure, probably, step step. Also one step back, because my career path is kind of from left to the right, doing something totally different. I started a carrier with Aldi Aldi South this time Aldi Sud And we became basically, and then I went into the music business, became a DJ, became a promoter for DJs very well known DJs which is kind of marketing Still it is some sort of promoting artists to a venue or an event or something like this And after doing this for a couple of years I felt like, okay, let's put my energy somewhere else but use the knowledge that I already have in marketing artists and users. And I started with artifact, which was at that time made up people because they came, became artifact artifact a few years later. And I started an internship. So I really started from the scratch of online marketing, became an SCA manager and learned the basics of Google Ads basically, and obviously Microsoft Ads And you might know it from your agency as well. I mean, you had a lot of different clients, from travel to automotive, finance, fashion, retail and so on, and obviously you got to. You had a chance to look into a lot of industries and a lot of companies and how they work and how they approach their online marketing or their their complete marketing online to offline and so on. So it was quite quite interesting.
Speaker 2:My goal was always to kind of step to career ladder a bit more. So after becoming junior, i knew that I wanted to move forward and get in the higher position. So after two and a half years, i became team lead, leading a team of roughly 10 people plus minus and heading a lot of clients in my team. And, yeah, well, i'm actually was one of the clients that I cared for the longest time. So it started in 2016 when or actually in 2015, but in 2016, i was part of the project is still as a junior campaign manager doing SAA for for their countries, and it just became more and more.
Speaker 2:In 10 years I became the team lead. I traveled to them, to their place. We were in constant exchange. Like it is with an agency you know you have a partner on the other end and they have a task for you or they discuss with you and you just discuss the strategy. You meet somewhere, probably in your office or in their offices, and yeah, that's when the relationship became really, really close And in the end, before actually moving over to Londonville, i've probably spent 70 to 80% of my time working for Londonville, even though I had other clients in the team and Londonville became so big, so important for Artifact at least Artifact Germany that we spend a lot of time on that, on that line.
Speaker 1:Yeah, so let's talk about that. And just I want to couple notes for international listeners. You've heard Stefan mentioned SAA, which is an acronym that is quite popular in Germany or the German speaking part of Europe. I think it's seen it pop up in France and some other markets as well. But if you're listening from the US, you know this is like SEM, but it's search engine advertising, so it's referring to the paid search channels And personally I love that term. I like SEO plus SAA is SEM. you know the organic plus the paid is search engine marketing to me. But yeah, at any rate, i've gone on that rant before, on Twitter I think. But you mentioned Londonville and that's another note, that that trend. How would you translate that? like lamp world or lighting world?
Speaker 2:Yeah, like, like lighting world. I mean we probably a few more words to Londonville.
Speaker 1:Yeah, tell us about, about where so you you're at Luke home now, or tell us about Luke home and Londonville and how this comes together.
Speaker 2:So Luke home is kind of a holding and Londonville is the biggest player within this holding. There are a few other companies party specialized for B2B, other said to B2C and B2B business And they all come together under the Luke home group And there are a few mentioned them. There are from the Netherlands and from Denmark And we cover basically the whole bandwidth of lights. So you have some company or one company that represents more or less the entry level prices or something like this. So yeah, starting on a lower side, then we have Londonville sitting in the middle, being not not the cheapest one but having a sort man in that area and also having a span towards the more exclusive products, design products and something like this. And on the other end of the range you have Lampemester and the Danish company that they focus only on design lamps and premium lamps and something like this. And you you also distinguish between.
Speaker 2:On the entry level they mostly sell their very own brands. Londonville has own brands which are very strong, but we're also selling like the popular Artemida and Lewis Paulson and Philips Way or something like this. So on the other end again, lampemester and they only sell trade brands. We call them trade brands, so foreign brands, the most popular lamps in the market And they could be very expensive. So, man, if you look through our shop, i think the most expensive lamp that you will find is like around 47,000 euros or something like this. I think you need a castle or anything like this. Yeah, i, or so it's very interesting.
Speaker 1:That's wild. Yeah, you know, i used to work in lighting as well, and so I did. I was doing purchasing there And I mean, ironically, we didn't do any online advertising at all or very minimal.
Speaker 1:We did some like some co-sponsored ads with like vendor, with the vendors, and stuff like that, but it was definitely was mid top market. This lighting range, and I think it's a really interesting area to advertise though, because lighting is so fasted Like, you'll take a light and they'll typically be several finishes from, like you know, polished, nickel, satin finish, you know champagne, all kinds of finishes There'll be different, like a number of lights per lamp. There'll be different glasses There's, there's it's very combinatorial, there are all these facets and then it's very combinatorial. And then the other thing that I remember is that the catalog it's it is rather trend driven. So the catalogs, i think we're changing about quarterly or something like that. So not, like you know, not a heavy catalog turnover, like maybe less than fashion, but still some a decent amount of catalog turnover, from what I remember.
Speaker 2:Absolutely. I mean again taking a step back. We are pure online player. We don't have any branches. The company from the Netherlands, lampenlicht they're called Lampenlicht or QLF. They have some in the Netherlands. That's really just like a limited number, but basically we are pure online player. We were selling online And you mentioned this before. Obviously there are a lot of variants and materials, styles and something like this And they are changing. But nevertheless, lamps is a product you don't buy on a weekly or monthly basis, so the time span between buying a lamp and buying a new lamp is kind of long. So our CLV is probably once to 1.5 a year or something like this And it returns to our shop.
Speaker 2:So we are obviously we have to think about how we get enough new customers to our shop, because we need them. Because we don't have that frequent buyers, Can we extend into B2B because they might need more stuff from us on a regular basis? See, what can we put as an extra goods into our shop that people probably need light bulbs or cables or lamp shades or, as of now, I don't know how it is on your end, but it's not even 9 o'clock in the morning and it's 22 degrees. We are selling fans, which is quite interesting. It's not usually not the first thing you might connect to a shop that is selling lamps and lights. That you sell fans.
Speaker 2:But we have a very strong fan, a sold-in fan. It's quite interesting. Every summer you can call on especially the Netherlands. They are fans of buying fans like crazy. But in the Dachmarke and UK and France they're also very interested in buying fans.
Speaker 1:That's interesting. I think there's a connection from ceiling fans and fan lights and then into the fan space. I guess in the US the cliché probably a lot of people are using air conditioning in the US, so fans in the upmarket there's an overlap there between high-end buyers and then having air conditioner. But yeah, i think there's a very interesting insight about the audience. So, although there is kind of a seasonality to our trend basis to the catalogs, that's from the business perspective, but as a customer or on an audience perspective, you're looking at these like high average order value, low repeat kind of audiences. That's a really interesting insight there And I'd love to know if that you know. Anyway, that ties in.
Speaker 1:Let's just talk about timing here, because you joined in I don't know why I put this, but really you joined in February 2020, so like a month before lockdowns. I mean, it's great to see that you already had this kind of multi-year experience with the brand or with, you know, with Luko and with Lampe Belt. But what was that experience like? joining? What happened next? You joined right in time for the pandemic. What happened next?
Speaker 2:Yeah, it was crazy. I had my onboarding and at this time we were still allowed to travel. So I went to our headquarters and it was the second or the third day, or something like this off the onboarding And we all came together as a group and our CEO mentioned a couple of things and I said, oh, there's a thing going on in China. We actually don't know really what's happening. It might lead to unforeseen circumstances and stuff like this. And then he had some good news And this is really something that was very important for Lampe Belt, especially during the first year of the pandemic. We had ordered a lot of goods, and I mean really a lot of goods, and they were arriving just in time before everything was shut down. So we were in a very fortunate position, having a lot of stuff in our warehouse actual stuff, stuff that is trending at that time, and we were able to ship a lot of things. So, yes, it had an extreme impact into our work because we had to. Yeah, no one was in the office any longer. We switched to home office. We were super well prepared. Some people were already working remote. We had our laptops, we had our mobile phones. The companies sent monitor and keyboards and mouses to everyone who was working at home. So it was kind of like pulling a switch and from that day on everyone was working from home and it worked. It worked really well.
Speaker 2:We saw two very extremely good years. The pandemic for us was kind of I don't know, but it really kind of moved our business to another level and this was really really interesting. But obviously we had issues like anyone else In the long run. We had delivery chain issues, production issues, we had people being sick, we had the extreme hurdles that the ultimate goal was to keep the logistics running, because if something happens within your logistics or within your warehouse, you're obviously not going to be able to send the orders that came in to your customers. So that was the most important thing for the whole company. No one who doesn't need to go to the logistics went there. So it's only like a circle, a very close circle of people going there and doing their job. And yeah, we really really had, luckily, no issues at all in the warehouse and our logistics and we managed to ship most of the goods in a timely manner And this was a really good thing.
Speaker 1:Well, that's great to hear. Then, if we fast forward a bit, there's this kind of boom bust cycle with the pandemic that affected all of e-commerce, basically as a lot of traffic started shifting back offline or returning offline And I think ultimately it was just in year over year growth terms. Like e-commerce is still quite strong, but in terms of year on year it was a challenging time. Also, the next thing to come to Europe was war in Ukraine, and my understanding is this affected some costs in Germany particularly, so maybe you could tell us about that next phase and how this might have acted as a trigger for changes in the company.
Speaker 2:Yeah. So I think, like I mentioned before, two years roughly let's say from spring 2020 to spring 2022, we saw really good results. Growth was great, even year over year, and then you notice that there are some things changing. You mentioned the war in Ukraine. The sentiment of the people changed. They became more restrictive in buying goods And we saw that.
Speaker 2:We started starting in spring or early summer last year And we went into a phase where we decided to a change of bit of our ecosystem because we felt like it's a good timing. As of now, we will have this war going on, we will have probably inflation or something like this, so we will have a time where people might refrain from buying too much stuff online or probably keeping the money together and keeping it home, and that's probably a good timing to change something in our ecosystem, to change the shop system. We changed our ERP. We also made a few decisions in our management team and the direction we want to go to And, just as of this week, our group CEO presented that we are likely opening up into a marketplace next year or something like this. So we took a few decisions, even though the times were not as good as compared to the pandemic, but we felt like it's a good timing now to do all these changes, to use this downtrend, so to speak, to be present and very strong when the trend is turning again and the market is moving upwards again. So, yeah, these are probably strong decisions and they had impact.
Speaker 2:If you change your back and your ERP, it had impacts on the whole business and obviously it took us some time to get it done, to get rid of all the minor errors that we had, but we fought our way through and now everything is working very smooth and it's easier for the teams.
Speaker 2:We have more data, and data, i think, is a good word. We also noticed in marketing that we need to understand better what is going on in the field of marketing within the channels or cross-channel or something like this. Because during the pandemic, of course, it was easy The customers were there, the goods were there, we were able to ship them, we were able to sell them, and as soon as this all changed a bit, we had to think about okay, how can we be more efficient or can we be more profitable? And we came across our confusion that we used, let's say, till mid of last year or end of last year was sort of limiting our view on data points and how we do marketing and We needed something else, and that's when we came across implementing an attribution model.
Speaker 1:Yeah, so so we're not talking here, then about like is the standard last-click attribution or even a Data-driven attribution from the platforms, but rather like a custom attribution model, right?
Speaker 2:Exactly So. In first place, we obviously we have platforms like Google ads or Meta, facebook and so on, and they all have their own attribution models, But they look at themselves, so there's no cross-channel attribution or something like this. Then we had our internal lumpen belt attribution model, which was a u-shaped model, but this was not taking every channel into account. It was not able to track anything where we don't have real touch points, but just like views or something like this, like YouTube or a display measure or something like this. So it was kind of limited and It was not real time, and That's right.
Speaker 2:When we really came across a thing, we needed some External help, external tool that is able to look into this. World gardens, get us data from Platforms where we are advertising on but don't have data yet. So yeah, that's. We needed a data-driven Attribution that's coming from the outside, giving us the opportunity to understand Where we can be more efficient, towards which channel we can shift budgets and so on and so on and And yeah, that's what we did Within the second half of last year.
Speaker 1:That's, and with that you mentioned a u-shaped attribution model. So you mean that it was like it was favoring the first touch and the last touch is.
Speaker 2:U-shape or whatever it's called.
Speaker 1:Yet So yeah, like How did that manifest itself? switching your attribution model, what? what were kind of some advantages That you got out of that? were there limitations toward that?
Speaker 2:I mean in first place, it's a lot of work. You have to reach out to every platform, to every partner that you're using, to every affiliate network, price comparison, obviously, to Google and META and so on. For some it's easier because you might have an API connection already and you get the data straightforward. For others, you have to think about how you can get the data costs and the revenues, and You probably need to implement new tags. You need to implement tracking parameters sometimes we still use CS V templates and something like this, or an ST and FTP server, so We needed to figure out how we can get the most out of all the channels and get all the state that we need. So there's a lot of work, that is, that needs to be in place before you can actually start with using an attribution model, this set.
Speaker 2:We've done this work and After we finished this and we had like a proof of concept With an implementation phase and the face, where we just looked at the data and evaluated the data, and Once we done that, we saw that we now had an immense amount of data that we never saw before, not in any of our internal tools, not in any of the channels, obviously, because they only look at themselves. So We saw that we have a lot of data and We had the chance to already with in these six months to to understand that we are over investing in some channels, under investing in other channels, seeing we are always working towards a Roas return on edge spend, seeing that in some channels or the Roas is really good even after Attribution, data-driven attribution, so we are able to push over there, or We see that other channels and this is likely Pmax. You know you know our love hate to Pmax. You see that Pmax is as of now, because Google is not allowing too much insights into Pmax, we're still Don't really know where the traffic is going to and that's when Pmax loses in an attribution model That's looking at clicks only. It might be different if we will we are in a beta now with this tool provider And we will get views for Pmax as well Then we probably understand that a lot of views go to YouTube and display or whatever, and then it might change for Pmax within this attribution tool as well that the Roas is getting better because views are Agiputed towards this campaign and then the conversion is Agiputed towards the view, so to speak.
Speaker 2:But as of now, mostly Pmax is losing And other channels are are gaining, especially affiliate. We had no cookie switch in place before and We use this attribution tool as a cookie switch and it helped us save a lot of money. I can recommend all If you, if you think about something like this and you, you, you are not using a cookie freeze or a cookie switch for affiliate, you will save a lot of money just by having this information. It's really great. Obviously, the networks were not so happy with that, but yeah, that's yeah, they have to deal with it.
Speaker 1:Yeah, well, good, good tip. And then more recently, you've been working on MMM or Marketing mix modeling, media mix modeling, whichever you want to call it. So how does that compare to the data-driven attribution, multi-touch attribution that you were using before, and what kind of decisions does this marketing mix modeling inform?
Speaker 2:Well, i'm not sure if we are ready at this stage. We are right, we're entering the stage, to be honest, because, like mentioned before, we have, we have the data now that we never had before. Or it was like a bit. Like You understand, you have a basic understanding of how much you're spending within a channel, what is the average raw as you're having in this channel and What is the Like the outcome in terms of revenue in this channel, and then you move around numbers a bit and play a bit.
Speaker 2:It was like For us, on on our end, it was a bit like axle magic, you know, thinking about where can we invest a bit more, where we need to save this, invest, how will those have an influence on the revenue, and then the raws and something like this.
Speaker 2:So We, we, we never That's my, my feeling we never really used a sophisticated automation or Artificial intelligence or something like this to determine where to spend the money. It was based on our experience over the years and lump, that is, in the market for more than 20 years now, so there's obviously a lot of experience. But it was based on this experience, on a bit on on the human factor or something like this, and now We're really getting into a stage where we have the data, we see the effects, we see the cross effects, because you can Compare customer journeys in the tool. You see all the numbers, you see the flow and this makes us really, yeah, making smarter decisions based on data and not so much on human guesswork. So this is this is a real improvement to the situation before.
Speaker 1:And Like that, that's a very exciting prospect ahead of you to get deeper into into this technology and this approach. I'm wondering to what extent you see that as kind of securing you against the coquillus future or protecting you like. Do you see marketing mix modeling as Highly important here or just nice to have?
Speaker 2:Well, it depends on How big as a company you are. If you're just doing sea and probably with social and you're not advertising anywhere else, you probably don't need to have such kind of a tool or use mmm or something like this, because you're only focusing on one, two marketing channels and You're totally fine. You understand the numbers over there. You don't need that.
Speaker 2:The bigger you become, the more channels you sort of use for marketing, the more Internal departments on both, the more decision makers on world, and I think it's very helpful to have some such kind of a tool to get rid of the silos, to make decisions based on data, and On on actual data and not just based on next file or something like this, because you can do, you can make these decisions real time.
Speaker 2:So, yes, i think it is an advantage, advantage during these times and probably also an advantage Compared to other companies that don't use such a model, because you are able to make smarter decisions, probably Not investing so much into Google ads, because you see there's a potential and I don't know retargeting or in display or something like this, and you proactively Decrease your budgets and end one channel To increase it somewhere else where you see better returns, see less competition and something like this. So It's not for everyone, but if you become a certain size, i think you should consider something like this. The work is getting so complex. You have P max, you have Facebook with What was called advanced plus.
Speaker 1:I think Yeah vintage plus drop-on campaigns.
Speaker 2:Yeah, so you're giving away control to, towards a big companies like Google, like Mita, and, with having such a tool on your end, you're getting control back. and you mentioned third For party cookies and the cookie thing in general. Yes, it also has, because you It's usually we're doing this via redirect or we're using our first party data, so all we get from these clicks they go through the attribution tool and this is all first party data, so we can use this data wherever we want. We have the ownership of this data and obviously this is super important in the next coming years with all the decision made in terms of cookies.
Speaker 1:Yeah, absolutely, and you mentioned it advantage plus a moment ago, pmax This is just going to be the trends. Every advertising platform. If they can do this, they will do this. No one's going to go build the next Google AdWords the way that ads used to be back in the days, and I think at this point, probably Amazon is almost the closest to that, has some parts of it that are the closest to that, but I'm hearing TikTok, pinterest, snap.
Speaker 1:They're all going in this direction of these sort of like old funnel or black box campaigns however you might want to call them If you want to put a more positive or negative spin on that, but they're all going in the direction of these highly automated campaign types. And so, between that level of automation, the walled gardens that we think of, where, as you mentioned, like the platform having ownership of the data rather than you, if we look at this cookie topic, the threats to tracking and measurement coming from privacy regulation, i think altogether it forms a picture where we really do need to take matters into our own hands a bit, and it sounds like you're doing a great job at that so far.
Speaker 2:We trust you. I mean, yeah, it's better to do the first steps, even if you're not perfect. You don't have to be perfect from the first step on, But as you start to work, you start to learn And sometimes you might fall. But the longer you work, the more understanding you have about your data, where the data is coming from and where you want to have the data. And I think the sooner you start with thinking about this and using whatever measures, whatever tools you feel like are the white ones, the better it is to, yeah, became, or to master the circumstances that we have with all the walled gardens and developments we have with campaign management and so on. So I think, yeah, the answer is definitely rather start now than wait too long and look what happens, because you mentioned it All the tools. They will move towards this direction. You will give away control And what you have to do now is try to gain back as much insights and control as possible.
Speaker 1:Yeah, that makes a ton of sense And, as you said, like kind of progress over perfection or there are a lot of things really great as the enemy of good. just get started. I think that's great advice. So another project that you've worked on you've been integrating a profit data pipeline. Could you tell us about that?
Speaker 2:Yeah, exactly Something we actually implemented last week and we are very curious how this develops. So we've had this attribution model in place. We always knew that we wanted to use profit or margin data and we want to give the attribution tool the information on SKU or on order level. Now we do improve both. We're sending order information and SKU information and we wanted to give, based on that, let's say, order. We want to send back to the attribution tool the profit on that order and then have the attribution tool attribute data driven based on the touch points and then returning the attributed profit, so to speak, to the different interfaces or different channels.
Speaker 2:We're doing this on Google Ads now. So, to be a bit more precise, someone orders on Google Ads. We are sending the information to our data warehouse and to our backend. We enrich the order with the profit information, send the information towards the attribution tool. The attribution tool will use the data driven attribution to give Google Ads the value of the touch point and then return the information from the attribution tool to Google Ads And obviously then you have a new information in Google Ads, which is the attributed profit, and we changed the whole Google Ads bidding strategies or whatever towards that new goal which is attributed profit, which is lowered, and what Google Ads is measuring. Obviously, because Google Ads is only looking at itself again. But it's very interesting and we're very curious what's happening now with the overall profit in our company, and this is basically what we are doing as of now.
Speaker 1:Yeah, i mean a lot of important stuff there because, as you mentioned, Google Ads very likely overestimating its own effectiveness and even on that basis, it's optimizing typically on a revenue basis, rather than actually knowing about the profit of the gross margin.
Speaker 1:So, very interesting project and I think also what I really like about it is that it's based on this data driven attribution, because that is a tricky thing when you build one of these pipelines that you might not think of, as you have to care for the attribution, and the easiest way to do that is to then just fall back on a last click attribution.
Speaker 1:This will highly favor the channel and, yeah, so it seems like a very rounded, realistic picture that you're working toward here, as far as possible within the current constraints of the platforms. I'm wondering because I think there's some interesting questions that arise there, like when you talk about goal setting at that point when you're bidding on profit, because, hypothetically, if you're tracking profit and you would instead you do the maximum conversion value strategy, this would by default sort of become a maximized profit strategy. Or there's also this whole poise idea out there which is like profit on ad spend instead of return on ad spend. I don't really like the acronym, but the point is that rather than looking at the ratio of revenue to ad spend, you're looking at the ratio of profit to ad spend. I'm just wondering, like I know it's early days for you, you just got this implemented, but how do you view goal setting through this new lens that you've got on the data?
Speaker 2:So actually, you mentioned the two things we are doing and this is absolute, pure testing We have. We're testing in two countries which are one of our bigger countries it's UK and France and in one country we're testing the POAS strategy, so to speak. So we are changing from, or we change the standard columns for Google ads to profit and then, instead of giving the campaigns and it's a PMAX campaign, so it's a bit tricky in addition to having a normal campaign, but again we changed the ROAS target into a POAS target and the campaign is now optimizing towards a POAS target. That's what we do in one country and in the other country we are trying to maximize conversion value, which is, in the end you mentioned it maximize profit, and so we are in parallel now testing what works better for us. Where do we see an absolute growth of profit, of GMP or something like this? and we know that it's going to take time.
Speaker 2:We had to start new campaigns for this test, because if you implement data into Google ads and you change the standard columns, it will still use old values that you had before, like the regular conversion, the Google ads conversion. We had to create new campaigns and they need to learn now, and you know, with PMAX it might take up to four weeks to learn. So we give us a lot of time to first understand, or first give the system time to calibrate, to get out of the learning period, and then we see what happened to the numbers. As of now, i can tell you there's nothing exploding. So it looks like we did the job good. I'd say There's no cost explosion, there's no click explosion. We are not missing traffic. It looks like we are gaining a bit more traffic, a bit more efficient traffic. This looks good, but it's like only a week or something into the test. I think we started last Wednesday and it's too early to understand anything.
Speaker 1:Well, i'm going to have to bring you back on in like six months and ask you how it's going to go. But yeah, it's a very cool project and I like too that you mentioned. I mean, i like a lot of things about how you've done this. I like that you mentioned you're kind of aware of both the margin at the SKU level and also at the order level. I think that's really important too, because another thing that happens in any of these channels it could be Facebook, it could be Google ads is that there's going to be this clicked versus bought effect, where you're able to, to a certain extent, depend on the platform. You're able to target audiences. And then you're the other main entity that you have to work with, even if it's keyword advertising, like.
Speaker 1:Ultimately you're going to be able to push products, but the consumer might not. They're going to click on a product type ad or category ad, but let's say they're clicking on product ad, they might buy a different product, or if they click on a category ad, they might buy from a different category. You know their transaction. They're not going to look the way that you can target. You can't. There's this chaos factor in there. You can't predict that. So it's really important to kind of come at it from both sides so that you know what's how your product profit is and how the health looks and ultimately they're going to receive. Like, if you're in Google ads, a click is going to get attributed somehow back to a product. If you're in like shopping, for example, or Pmax, the shopping part of Pmax, let's say but then on the other hand the order values will will reflect the different reality. So it's important to kind of navigate the balance between those.
Speaker 2:Absolutely. That's why we decided we want to have both levels to have the chance of understanding. What are we advertising? what is actually sold in the end? Can we move products into pockets? Do we see this as an entry product, but something else is bought, so do we probably need to push these products that are an entry into our shop a bit more? So there's so many things we still need to understand and still need to learn. But again I come back to what I said before we started walking. We are testing and obviously in six months would be great to speak to you again and to look back on what happens in Stan. And was it a project that is worth spending time on or did we need to change something? I don't know as of now, but I'm really looking forward to working on these things.
Speaker 1:Yeah, it's a very exciting time in the company. I've just got you for a few more minutes. Earlier you mentioned Pmax Love, Hate Relationship. Maybe let's just talk a few last minutes about performance, Max, What do you love, What do you hate? And I'm also wondering do you feel better using it now that you've taken these steps or it's too early to say perhaps but you feel better using Pmax if you know that it's maybe not getting overattributed or if you know that it's going to cover your baseline profitability. Maybe you can talk to us about Pmax for a bit.
Speaker 2:Sure. So, yeah, i mentioned the Love Hate Relationship. You mentioned it too. I think there's no way around. As of now, the companies developing this direction, you have to use it, and we started very early January last year so 2022, when Pmax was still kind of in a beta phase We already switched first countries completely from smart shopping to Pmax. We tested a bit and we felt like it is the way these companies are going. So why would you go another way and go back to standard shopping or something like this?
Speaker 2:It can be useful to use standard shopping and we use it for certain occasions or for special topics or something like this. But in general, we put I am not sure if I want to say trust, but it is kind of trust We put our major spendings into Pmax and actively giving away the control. But we have to say in general and I'm speaking about, let's say, the Pareto principle, like 80-20, in general we see good results, also because we have in most countries, we have a decent size, we have enough data points And I think our share for shopping, share for Pmax, is quite high, around 80-90% or something like this. So it is kind of easy for Google and we have branded traffic not excluded. So it is kind of easy to work for Google with Pmax. But what we see and we see this occasionally we see very extreme behavior of Pmax campaigns, like certain spikes or certain drops in performance, even if you did not change anything or you changed just like a target from, let's say, 500% to 510% or something like this. And we are very, very careful with changing targets because we saw that even such small changes could have an extreme impact on the performance.
Speaker 2:And this is where I think the hate comes in. We learned in the past that doing these small changes and for us it's usually doing ROAS changes, not so much the budget, because we work with open budgets usually, but if we change the ROAS targets, we notice these extremes. And there's no, there's. We don't have data, we don't have insights, so we can't explain why this extreme was happening. And that's when it's starting to get ugly.
Speaker 2:You have to explain it to your C or C or why the performance is dropping suddenly And we know we are highly overspending. Of course we have to explain this. And you can't explain because you don't have the insights. And this is the bad thing about PMAX. Everyone is trying to use scripts and use reports and use any data information that is available just to get a few more insights into PMAX and so hard. And I've been to a couple of Google meetings and recent weeks and days where it's online. Or I've been in Berlin last week speaking to product managers of PMAX with other companies like Adidas and Zilando and they are all struggling same issues not having any insights. Yeah, as long as people are not giving away these insights.
Speaker 1:Yeah, i mean. Well, i think it's great that companies like yours are giving this feedback to Google. I think that they need to hear it, and I also discovered last week that. So Microsoft will also release their version of performance max, and I discovered that this will have additional metrics, and they do this purposely to differentiate a bit from Google performance max. But it's just, you know, it's another reminder that it would be possible to offer these things and it is a deliberate choice from Google. I think the philosophy is that if they show all this extra stuff, then people will want to make changes that they don't want us to make. Yeah, and yeah, i don't know, they are improving the campaign type over time. It still is a new technology. It's only, you know, i guess, about 18 months old. It's been in development longer, but it's from the. Yeah, it's still rather fresh technology, so let's see.
Speaker 2:Absolutely. I said you have to use this. I guess There's no way around this. We try to keep it as simple as possible. We basically mirrored our search strategy. So the search campaigns, which is very condensed way of we are working, we have only, like, top navigation and second level navigation. So the campaigns are top level navigation and within the campaigns you have the ad groups or asset groups, which is second level navigation. We cover a lot of traffic and are really efficient with that small setup. And this is I always tell people. I mean PMAX, the idea of PMAX and of holistic and Haka, coor and how everyone call all these strategies that Google has, or the campaign types They all say use as less campaigns as possible to get as much data points as possible for this campaign campaigns, which will help the, the algorithm, to understand better what's going on, and You will have more data points for your Bit strategies. So that's the way we are approaching this, keeping it as small as possible, and I think this is helping us to be efficient.
Speaker 1:I I Don't know, maybe we're getting too much, too much detail here, but I I wonder about it because I, my my understanding is that the algorithm, in Pmax at least, is learning at, like, the conversion action level, which In theory, you should be able to have quite a bit of segmentation without really disturbing the algorithm. But the way I see it is even a bit So. So for Pmax, i don't worry about it too much from the algorithm learning standpoint. I view it at this other level, arguably more arguably more strategic level, where It's like okay, but why am I segmenting? It needs to benefit the business somehow, or there needs to be a reason why, like is there a meaningful difference In this segment? if you can't explain why a segment exists, then it's over segmented, like Segment segmentation and modern search.
Speaker 1:Yeah, it doesn't have a right to exist. It needs to be justified every, every segment. So you know, is there a different difference in audience? if I'm looking on more the campaign side or the external side, or internally, is there, is there a difference in These products from from our kind of back-end standpoint or our operations standpoint, or there's got to be a meaningful difference or reason why. And Yeah, that's, that's definitely the way I see it. So I agree with you. It's good to segment less or use these more consolidated builds, buy-in-large these days, absolutely use segmentation that fits to your business.
Speaker 2:That's the recommendation, that's what Google is also saying, but For us it's working. We followed that advice and it's working here, and that doesn't mean that we have 20 campaigns. We'll have like five to ten campaigns per country PMAX campaigns and it's working and they have a purpose of this. Obviously, we have a seasonality. You mentioned this indoor, outdoor, for example. So that's that's where you want to segment, obviously, because you want to have different targets at different times of the year. But other than that, what else is useful to segment? I don't know if there's so much else and you have to think about this for your own business. What? what is the real tribe for your business, where you have different, different goals, different targets that you want to achieve, and this is your segmentation.
Speaker 1:Yeah, that's right, and I mean I've kept you over time, so Let's just Well we'll wrap this up. I want to thank you a lot for joining us, particularly before your vacation. I think it's well deserved, and I was, yeah, just wondering if there's any any last words you have, or any Projects, companies, people you you'd like to shout. You mentioned you have Kind of a side hustle from the pandemic. Maybe you want to give us a shout out.
Speaker 2:Yeah, thanks for mentioning that. First of all, i want to thank all the people at lump that are super flexible and then giving us a chance to to test things like this, and We are two heads of performance marketing and I want to mention Thomas, which is my partner. We are really focusing on this topics and working great together and it's really fun to Deep dive in due to this topics and work on them, and obviously I want to thank the team because they are doing a great chance, giving us the time to think about these more advanced steps. So this is really important as well. So, thanks, team. And, other than that, the site.
Speaker 2:I don't think I want to mention too much about side hustle. We're doing a fancy thing with fancy fanny packs or hip-packs or whatever you wanted to call them in German, bauchtaschen and They are super customized. We are like almost 200 different designs. It's an all over print, which this dingers us from a lot of other sellers that sell fanny packs and, yeah, it's a nice little thing to To learn on a small scale compared to working at a great come a big company. This is a small thing and you have to be very careful where you're in West and what you're doing, and I really like tiktok. So if you want to give me a follow on tiktok, probably I send Ryan the link to it and he can add it to the notes.
Speaker 1:Yeah, yeah yeah, i'll give you, i'll give you a follow. And and you know what I've heard it said that it's that it's harder to manage Small accounts than big accounts. I think there's probably some truth in that.
Speaker 2:Absolutely. You missed the data. I don't know what to do.
Speaker 1:Yeah, yeah, totally well. Thanks again so much for joining us today, stefan, and Wishing you a really nice vacation.
Speaker 2:No, thanks for having me. It was a great time, it was a pleasure and, yeah, speak to you soon.
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