Ruslan Galba DTC Marketing

25 July 2023 07:11

Bye bye, birdie. We barely knew ye.

It’s a day of mixed emotions for Twitter users, as Elon Musk officially rebranded the company to X last night. The new X logo replaced the bird logo on the app, and was also displayed on the walls of the company HQ

Ruslan Galba DTC Marketing

24 July 2023 15:42

📝 Email copywriting tip:

Write like you talk.

Ruslan Galba DTC Marketing

23 July 2023 20:41

🔽Most important Email Marketing metrics from top to bottom:

- Delivery rate
- Open rate
- Clickthrough rate
- Conversion rate

Focus on improving these one step at a time.

Ruslan Galba DTC Marketing

23 July 2023 16:40

❗️Copywriting tip - don't use too many exclamation marks!

It sounds too “hyped up”.

If you use too many exclamation points, then you won’t be able to make it POP when you need a big one. Limit yourself to 1 per ad or email.

Ruslan Galba DTC Marketing

22 July 2023 19:44

✍️ The Rule of Copywriting: If you do not spark a dopamine hit in your prospect’s brain in the first 3 seconds of your message, you will not have a second 3 seconds.

Ruslan Galba DTC Marketing

22 July 2023 10:48

❓Anyone used Automatically Created Assets feature on Google ads for PMax campaigns?

How that one worked out for you?

Ruslan Galba DTC Marketing

21 July 2023 21:35

✅ The most important thing in marketing/advertising is telling your customer exactly what to do next

Ruslan Galba DTC Marketing

21 July 2023 15:33

💠 How to structure M&A deals for e-commerce or any other business model

Jay Vas was asked to do a brief talk on some of the basics of deal structuring. Attaching excerpts of the talk.

These are obviously summaries that can be unwrapped. But nevertheless will give you a pretty good understanding of how the companies can be acquired.

Intro on deal structuring:

• Structuring is great, it can align incentives for buyers/sellers
• As a buyer, it allows you to manage risk better, reduce upfront cash outlay required
• Sellers can generally get a higher valuation (and therefore more money for their biz) compared to just cash upfront
• That said, it generally does make an offer less attractive - if a deal is competitive, less structure
• Complexity can also be a deal killer

Let’s dive deeper into 3 main deal structures.

Earnout

What is it

• Consideration paid contingent on hitting specified objectives
• Objectives could be numerically based like future revenue, EBITDA, gross profits or they could be qualitative based like a client contracting renewing

Pros

• Shifts some risk of future business performance from buyer to seller
• Less cash upfront for the buyer
• Seller can end up making more cash with an earnout

Cons

• Earnouts are unattractive to sellers because they don’t have control of new business (so less control of hitting targets)
• Can lead to disputes between seller/buyer on whether earnouts were achieved

Tips

• Generally used to bridge a valuation gap, if you think biz is worth $10m on trailing numbers, and seller thinks its worth $15m on forward numbers, a $5m earnout might make sense
• The more objective the targets, the better. Objectivity starts to shrink as you go from revenue down to EBITDA/profits
• If the earnout is achieved, rather than paying it immediately all at once, convert earnout amount into a seller note and then pay it down over time (so the business doesn't get sucked of all its cash)

Seller note

What is it

• The seller becomes a lender and effectively lends you money to buy their business
• Usually its interest bearing, principal amortized over time, or in some cases, paid in a bullet at a future date

Pros

• Seller knows exactly what they will earn post-sale (compared to earnout), no ambiguity - interest-bearing seller note might be a great addition to their fixed income portfolio (think retirees)
• Allows buyer to obtain more leverage, juicing equity returns
• Generally, it’s cheaper cost of capital compared to many other forms of debt from external lenders

Cons

• As with any form of leverage/debt, more if it increases risk and reduces the flexibility of the business
• Might cross hairs with lenders, might cause some complexity if you had to borrow more money at a future date

Tips

• Ensure seller note is subordinate to any other lender (otherwise you will have a hard time getting loans)
• Include flexibility clauses, long grace periods for missed payments, steps for remedy if default, discuss with seller upfront
• Don’t offer personal guarantees for this note (usually sellers won't ask for it)

Seller equity rollover

What is it

• Seller takes some equity in your new entity instead of cash
• Not particularly common in SMB acquisitions (searchers, etc.) but very common in LMM private equity

Pros

• Aligns seller and buyer (both own the same go-forward biz, so vested in its success)
• Seller gets a second bite of the apple, another large payday (if your plan is to sell the biz in a reasonable timeframe)

Cons

• Your seller is now your business partner (may be a good or bad thing), accounting for the highly leveraged nature of SMB buyouts, even small amount of equity roll might mean meaningful equity stake - say you leverage 4:1 and rollover 10% of purchase price, seller will own 50% of the biz
• Particularly unattractive to sellers, especially if they’re older, low-risk tolerance, illiquid equity in an SMB is not valuable to them in retirement and may not want to wait for the next payday

Tips

Ruslan Galba DTC Marketing

21 July 2023 10:14

❓ What vanity metrics do you hate in DTC?

Ruslan Galba DTC Marketing

20 July 2023 13:30

🕯 The authenticity of who you really are, as opposed to who you wish everyone thought you were, is what your audience is looking for.

- C. Robert Cargill

Ruslan Galba DTC Marketing

19 July 2023 20:51

❤️ Sales are like dating:

- Don't rush (Small talk)
- Be genuinely interested (Ask questions)
- Pay attention (Discover pain points)
- Talk about yourself (Present solution)
- Ask him/her on a second date (Close)

The same principles apply to DTC ads/funnels

Ruslan Galba DTC Marketing

19 July 2023 11:25

💳 If you're spending $10K+/month on Paid Ads without utilizing:

- Google Analytics
- Triple Whale

You're not making accurate optimization decisions.

Ruslan Galba DTC Marketing

18 July 2023 17:40

❓ Who's the Google Ads goat?

I want to further master PMax for DTC. DM.

Ruslan Galba DTC Marketing

17 July 2023 23:28

💬 Why tegra.co or any other agency is not the best fit for any e-commerce business?

There is a good explanation from advertising objectives perspective across the DTC community.

But I’ll try to expand on the topic of the stage where that e-commerce business in.

Hope this will become “the truth” post about internal team vs external agency approaches.

1. Just getting started: $0-$10,000 / month in revenue.

Don’t use agencies at all costs. Testing product-market fit with an agency is very expensive. And there is no guarantee that the brand will have a chance to succeed.

Find a good jack-of-all-trades marketing person with experience in DTC by referrals. Preferably CMO working for a DTC brand in the same niche.

Test lean and be ready to give up if your metrics are too far away from industry averages. That’s where the previous experience of that marketing person will be helpful.

2. Got some traction: $10,000-$100,000 / month in revenue.

This is where you need to decide - should you build an internal marketing team or go forward with the agency?

In both cases - use referrals for someone who worked in the same niche.

Building your own team takes time to pick the right people. And make them work together as a well-oiled mechanism. It’s also more expensive at this stage as you have to pay industry-average full-time salaries to each team member.

That’s easily $5,000-$10,000 per person. Don’t go cheap here as these people will spend 10s times more as your ad spend. You won’t give your sport for a drive to a newbie. It’s the same here.

Going with an agency is simpler. Also more cost-effective. You get the same level of commitment but for a fraction of the cost. Good marketing agencies already have systems and work as a team.

That’s $5,000-$10,000 for the whole team. Make sure your CMO is on a short leg with your agency. We’ve seen this to be a killer combo for the early stages of the brand. CMO is a core strategy/control and agency is top-notch execution.

3. Let’s scale it: $100,000-$1,000,000 / month revenue.

This is where it gets a bit tricky. Brands at this scale need quality talent. Otherwise, this high ad spend budget goes to waste.

And this is where agencies become expensive charging 5-15% of ad spend.

But this is true at first glance. Would you pay someone to make your ads 20-50% more efficient for 5-15% compensation?

Putting it like this makes total sense. But I’ve seen no brands happy to pay $20,000-$100,000 invoices to agencies.

“That’s a full-time salary for a team of 5+ people”. That’s true, but the right people need to be found and hired. Professionals like this often are already employed so you need to beat their current salaries/benefits.

Now you need to make them work together. Build the systems. Arrange a management team. To have connections in the industry to get UGC at scale. Have someone get in touch on Google, Meta, and Tiktok if your accounts get banned. Retain these people as others hunt for them.

This is agency business in a nutshell. Agencies sell well-glued teams and help with everything related. That’s where added value is coming from.

TLDR.

Obviously building an internal marketing team is more complicated and more expensive (especially in the beginning) way for e-commerce brands.

This investment pays off as the brand grows to 6-7-8 figures.

But not every brand wants to figure it out and spend time on it when you need to take care of:

- developing new products
- shipping
- customer support
- customer success
- retention
- chargebacks
- finances and cashflow
- M&A
- expanding to new markets
- and so on and so on

Hope that was helpful.

Please give it some love and share it with other brand owners to make an educated decision ❤️

Ruslan Galba DTC Marketing

17 July 2023 15:32

🕯 TikTok ads and organic impact on every other channel is insane.

Amazon, Google, Meta, Snapchat. The efficiency of every channel increases so dramatically once you scale and have success on Tiktok.

Ruslan Galba DTC Marketing

25 July 2023 03:05

#midjourney kitchen designs inspired by famous fictional characters: Mario, Barbie, Wednesday Addams, R2D2

Guess which is which before you tap

Ruslan Galba DTC Marketing

24 July 2023 11:20

🕯 The hard truth for many - social media is free because you’re the product getting sold.

That's what we pay ads $ for.

Ruslan Galba DTC Marketing

23 July 2023 17:35

Love it how Microsoft is getting AI injected in all their products. Smart.

Skype now has an AI assist as well.

Ruslan Galba DTC Marketing

23 July 2023 10:01

✅ The 5 types of products people buy:

1. This solves my pain
2. This connects me to the community
3. This makes my life easier
4. This feels luxurious
5. This will make me more money

That's it.

Ruslan Galba DTC Marketing

22 July 2023 13:24

💡Marketing is a humbling profession.

Sometimes the idea you’re certain is going to work doesn’t work. Or the idea you know definitely won’t work for some reason does work. Or the thing that used to work stops working.

You need to continuously learn, re-learn, and unlearn.

Ruslan Galba DTC Marketing

22 July 2023 10:30

🕯 Most ad agencies will leave you disappointed (including us) if your product has a bad product market fit. Test in-house if at all possible.

Ad agencies are for scaling, but expensive for testing.

Ruslan Galba DTC Marketing

21 July 2023 15:33

• Ensure rolled-over equity is common equity without voting rights, and outside equity raised is prefeed equity with voting rights. Preferred equity gets (at least) 1x liquidation preference, so they get their money back first in the event of a sale
• Communicate to seller what you plan to do with biz so they know what to expect as an equity holder (sell in 5 years? Hold for dividends?)
• Use in cases where seller can add significant value post-close (complex transitions, expertise in expansion and or other value-add initiatives where seller can be crucial for execution)

Conclusion

• So there you have it, 3 of the most common forms of deal structuring
• Always remember to consult with your deal lawyer/CPA to ensure everything is done correctly
• Hope this helps, structuring is just another tool to your deal toolkit


What are some non-vanilla creative deal structures you've used or heard about?

Ruslan Galba DTC Marketing

21 July 2023 15:19

🕯 For every brand I own I create a document of power words that convert & rally my audience.

Words that my audience uses in their everyday speech.

I continuously add to it. This is a powerful conversion booster.

Ruslan Galba DTC Marketing

20 July 2023 17:50

💬 Mercedes sells status, not cars.

Budweiser sells good times, not beer.

Coca Cola sells happiness, not soft drinks.

The best marketers sell emotions, not items.

Ruslan Galba DTC Marketing

20 July 2023 11:08

📧 Email Marketing Fact:

Segmented email campaigns show 50% higher CTR than unsegmented ones.

Some segments you can use for your list:

- New subscriber
- Buyer
- Repeated buyer
- Abandoned cart & checkout but never purchased
- VIP

Send different emails for each segment.

Ruslan Galba DTC Marketing

19 July 2023 15:25

📌 Fix your Klaviyo email open rate in 7 steps:

1) Segment your email list
2) Lead with curiosity + benefit
3) Add urgency (if possible)
4) Personalize your subject line
5) Avoid buzz/spammy words
6) Remove unnecessary words
7) Send to engaged subs only

Repeat for every campaign

Ruslan Galba DTC Marketing

18 July 2023 21:24

💬 I’ve learned more from my competitors than from any other source.

The best way to do this:

• Google ads transparency tool
• Meta/ Tiktok ads library
• Subscribe to their email list
• Buy their products

Study what they do to learn from their mistakes.

Ruslan Galba DTC Marketing

18 July 2023 09:57

🔝 Google Click-Through Rates:

Position 1: 39.6% 🥇
Position 2: 18.4% 🥈
Position 3: 10.1% 🥉
Position 4: 7.6%
Position 5: 5.1%
Position 6: 4.7%
Position 7: 3.5%
Position 8: 2.9%
Position 9: 2.2%
Position 10: 2.1%

And that's why you need Google ads to be in top 3

Ruslan Galba DTC Marketing

17 July 2023 21:16

💲My current marketing budget split for most of our DTC stores:

35% Meta ads
15% TikTok ads
50% Google ads

In Q4 I’m going to go a little heavier TOF on Meta/Tiktok Ads. It right away brings more volume through Brand keywords on Google.

What's your split look like?

Ruslan Galba DTC Marketing

17 July 2023 11:18

💬 TikTok Organic strategy for Shopify stores:

1. Pin 3 selling videos
2. Shoot 30 viral videos with intriguing CTA
3. Start making $30,000+ per month organically

I wouldn't say it's that simple if I hadn't seen this result many times.