[00:00:00] Social media is like it's the obvious place where you know I think people like

[00:00:05] discover products because it's super visual. The two biggest opportunities in search are on the social side where people are

[00:00:12] searching for things on TikTok and they want to see it like that visual aspect of it. I think there is this trend where we're

[00:00:18] moving back towards like indulgence like people want [ __ ] that tastes good. Yeah. When you have a good day on Tik Tok shop

[00:00:24] when something's going viral Google's doing better, Amazon's doing better, their DTC is converting better. like

[00:00:29] everything kind of works better. Would you ever launch a brand exclusively on Tik Tok shop? Yes.

[00:00:38] I I had a workout this morning. It's up at like 8:00 a.m. Wow. Yeah. I got to get I got to get

[00:00:43] like you. There's levels to it. My grandma's 100 today, which I have her

[00:00:49] uh birthday lunch right after this. Nice. So, I had to sneak in the pod. Yeah. Happy birthday, grandma.

[00:00:56] Mhm. Shout out to grandma. Shout out to grandma. Yeah, she's great. Um, so for those of you who don't know,

[00:01:03] Sam is the CEO of Spotlight Media. They're a Tik Tok shop agency.

[00:01:09] We've become really good friends. Um, I've been seeing what he's been doing on Tik Tok and within the Tik Tok

[00:01:15] ecosystem. And I think social commerce is the most exciting thing I know

[00:01:20] for me. Yeah. Right now in growth marketing and commerce. Yeah. But I also think like just for

[00:01:26] you, you're incredibly impressive. Like USC student, start an agency, remind me

[00:01:32] a lot of myself when I was at UNCC, but I think you focused very much on like where's the revenue coming from and

[00:01:39] then went deep on Tik Tok shop. Exactly. Tell me a little bit more about that. Yeah, the story is actually really funny

[00:01:45] because I don't know about like different schools, but like I feel like at a lot of like big schools like USC,

[00:01:50] like everyone thinks about entrepreneurship as like building the next Facebook and Uber and Airbnb. Like

[00:01:56] everyone's kind of obsessed with like that hyperrowth mega billion dollar

[00:02:01] business. And that's kind of what we were too. Uh but we realized we're like, okay, if we want to get into an industry, we we're like 18. We have no

[00:02:08] idea like what industry to get into. we don't know kind of like where to start. So like let's just start somewhere and

[00:02:14] like let's just try to generate some revenue and before that I used to make videos on TikTok myself and I used to

[00:02:21] resell sneakers. That's like a classic classic. Yeah, it's like a classic pathway to entrepreneurship. But uh my

[00:02:28] co-founder and I were reselling sneakers together. I was making videos, posting it on Tik Tok. This is like we started

[00:02:33] in 2020 which is like early Tik Tok where like everyone was like oh it's a dancing app and like they don't want to get on it. Uh, but I really saw a lot of

[00:02:40] potential because like everyone my age was on the app and when I was posting these sneaker videos, people would DM me

[00:02:47] and they'd be like, "Hey, can I buy this from you?" And that kind of sparked this interest of like I didn't know the term

[00:02:52] social commerce, but I was like, "There's something here where like you're posting on social media and like people want to shop from it." And we

[00:02:58] kind of looked into what was happening in China um with social commerce and it was booming there and we knew it was

[00:03:04] going to come here. So, we're like, "Okay, let's just go deep on Tik Tok. It seems like it's an extremely underutilized platform that has all this

[00:03:10] distribution, has all these users, but businesses don't really kind of like think about it on a business perspective. So, we were like, let's

[00:03:17] just learn everything there is to learn about Tik Tok. This is pre- Tik Tok shop in like 2020, 2021, 2022. So, for like

[00:03:23] two and a half years, we were just doing a bunch of things on Tik Tok. Um, influencer marketing, college ambassador

[00:03:28] program. Uh, I was begging my friends at USC to sign up and I would send it to brands and be like, "Hey, like I have

[00:03:34] all these like college kids I want to post for you. Do you want to like send those products?" And that

[00:03:40] offlimits email crushed. Yeah. Oh, yeah. We got to talk about that. Um, so we were just doing that. It

[00:03:46] was like two and a half years of just like getting rejected. Yeah. Um, cuz no one really wanted to touch

[00:03:52] TikTok with a 10-ft pole. It was just like dancing app. Um, and then eventually we kind of hit big with not

[00:03:58] big, but um, we came up with this influencer marketing strategy where we realized brands were paying creators a

[00:04:04] ton of money up front and they weren't making money back on their investment. So, we're like, let's just pay these

[00:04:09] creators based on their performance. But performance metrics are hard. Like attribution was really hard before Tik

[00:04:15] Tok shop on influencers. So, we're doing it based on view. So, CPM was our main KPI, but that doesn't really work for a

[00:04:22] smaller growth focused brand. So, we had like a churn problem there. And when Tik Tok shop launched, we were like, "Holy

[00:04:28] [ __ ] this literally fixed it." CPI is in like cost per impressions. CPM. Yeah. So, we were like, yeah, we were getting like sub $2 CPM on

[00:04:35] influencer marketing, which is really good. Because we were paying creators based on how many views they got. If you got more views, you would get paid more.

[00:04:40] If you got less views, you wouldn't get paid as much. So, it was kind of a um kind of like hedging or like kind of

[00:04:46] protecting the brands um in terms of how much upfront payment or upfront exposure they had. Um but it was just views. So,

[00:04:53] a brand would be like, "Hey, Sam, this is great. We got 10 million views, but how much money did we generate from this?" Like, "I have no idea." So, um

[00:05:00] there were like link in bio like uh super affiliate, social snowball, like using all those links, but it's just

[00:05:06] like friction. It's not perfect. It's not perfect. The creators weren't making money from it, so they wanted money based on some other metric.

[00:05:12] I also think it's just like a bad user experience. Like, if you see people on Instagram posting product and then they're like, you know, like link in bio

[00:05:19] or like use this code, it just feels it feels cheap in a way. Yeah. And it's just like you have to remember to go to

[00:05:24] that website, use that creator's code. Like there's just so many steps that have to be taken. Um that just like

[00:05:30] doesn't really doesn't really work. I mean it it could work to some extent. It's just like hard to know that exact

[00:05:36] attribution versus Tik Tok shop where like everything happens on that platform. Like you have the video,

[00:05:41] you have a closed loop ecosystem. You can track everything perfectly. I also think that like there's a couple things you said in there that were really

[00:05:47] interesting to me. It's like social media is like it's it's the it's

[00:05:53] the obvious place where you know I think people like discover products because it's super visual. Like you see people

[00:06:00] you get served a video you know organically. You don't know this individual but you like what they're wearing. You like what they're doing. It's like such a natural substrate to

[00:06:07] sell product right. Um but yeah I mean pre- Tik Tok

[00:06:14] shop I mean like Instagram shop didn't really work. There was like no way to just easily onetoone buy.

[00:06:19] Yeah. Like the thing that Tik Tok shop did, they really created like they thought about it from every level. They

[00:06:25] thought about it from the user experience, the creator experience, the brand experience, even on the agency side, the agency experience. Like

[00:06:31] they've basically incentivized everyone in the correct way. And that affiliate

[00:06:37] sampling ecosystem that they've created, like you just can't do it without that. like it just doesn't work at scale

[00:06:43] without having everything on the app on the actual app through Tik Tok. Let's talk about that affiliate like

[00:06:48] network. How does it work within Tik Tok? So, back in the day, like it changes a lot. Like a year ago, a few months ago,

[00:06:56] all you had to do was just like send out a bunch of invites and like people would like respond and like request.

[00:07:02] Be more like the one like people who've never seen the back end of Tik Tok. So

[00:07:07] basically as a brand um obviously Tik Tok has all the data on the creators. So

[00:07:12] you can find exactly the type of creators that you want. So they have like all these filters like imagine like

[00:07:18] all your influencer marketing like SAS products that you use off platform like similar to that but even with more data.

[00:07:24] So you can know like what like this creator's follower uh how many followers they have or like what's the age

[00:07:30] demographic of their followers like all these things that you can play around with and then you can invite these people at scale to work with you. So you

[00:07:37] basically send them a message on the back end and it just blasts it to like thousands of people and these creators

[00:07:43] get it on their phone. It's like hey this brand wants to work with me. Um and then they get to choose if they want to

[00:07:48] request a sample to work with you. And when they request a sample, they have this really pretty CRM where it's like,

[00:07:54] hey, these are all the creators you have to review. Here's all the data about them, how much GMV they've made, their top performing videos, their user

[00:08:01] demographics. You can go really like you can get really nitty-gritty with it. Um, but usually like you have thousands of

[00:08:07] people come in, your team goes through each one of them, they select it, they ship it, it's connected automatically to

[00:08:12] your Shopify, the order gets generated, it gets shipped out to them. Then because the everything happens through

[00:08:19] the platform, they know exactly when that creator got the product. So the creator gets the product. Then on the CRM they get moved to like waiting to

[00:08:26] post. So now you know who are the creators that are waiting to post a video for you. Then from there you could like reach out to them, send them

[00:08:32] content guidelines, remind them to post a video, whatnot. Then when they post a video, it gets moved to the completed

[00:08:37] section where like now you have all these videos that people have posted for you. So, it's like a really clean

[00:08:43] dashboard where like you can see that creator journey on every step. And on the creator side too, it's very easy.

[00:08:49] Like brands are messaging you if you want to work with them. You request a sample. If they accept it, you get the product. You have two weeks to post a

[00:08:54] video. If you post a video, the commission is all set there. Um it's like they don't have to chase down the

[00:08:59] brand. Hey, pay me my commission. Tik Tok automatically knows exactly how much sales that video got. Um pay pays out

[00:09:06] the creator and then pays the remainder to the brand. So it's like a very closed loop ecosystem that makes it very easy

[00:09:12] to operate. Uh however, obviously there's a lot of challenges like on the brand side. It's how do you get these creators to want to work with you

[00:09:18] specifically because right now or probably forever the creators are going to be more scarce than the um brands

[00:09:25] like they're more in demand and there's less of them. So it all becomes from a brand and agency play. How do you get

[00:09:31] the good creators to want to work with you and make content about your products? On the creator side, it's

[00:09:37] about like how do you find the correct brands to partner with and how do you like build those relationships with them and how do you choose the products that

[00:09:43] actually resonate with like you as a person and you can promote them better. Um, so that creator brand fit or creator

[00:09:49] product fit I like to call it like creator product fit. That's uh that's a very important thing.

[00:09:55] How do you solve for that on on the brand side? Yeah. Um, I think what's happening right

[00:10:01] now, a lot of brands just do like a shotgun method where it's like they send out with like these like automated bots

[00:10:08] like thousands of messages and a lot of brands don't really think about that creator product fit. They just like it's

[00:10:14] like it's like a lazy way. It's just like yeah, it's like the KPI's number of samples we sent out. But that doesn't

[00:10:20] work. Like you could send a thousand samples and if those creators aren't the right fit for your brand, they don't know what to say. they're just going to

[00:10:26] make a really shitty video and just you're not going to get anything. So, a lot of it really becomes on that's where

[00:10:31] like it's very labor intensive. You have to go through these creators one by one, make sure that there's some level of fit

[00:10:37] either based on the GMV. So, obviously if someone made $500,000 last month, you want to send them your product if they

[00:10:42] requested it. But even the smaller creators, like let's say you're let's say you're a like a jewelry brand,

[00:10:48] right? Or like a fashion brand. If there's this like if there's this like creator who's like fit exactly your

[00:10:53] demographic, your demographic is like young 20 to 30 year old girls. If that creator doesn't have that much sales,

[00:10:59] you still want to send it to them because you want them to kind of like have a chance to work with your brand. So a lot of it is like finding that

[00:11:05] creator in the first place and sending it to the correct people. And then it's once you send that sample to them, how

[00:11:11] do you create those relationships with those creators? And that's kind of like a lot of our work kind of comes in is we

[00:11:17] basically build communities for each one of our brand partners. So like let's say you're that same jewelry brand. We when

[00:11:23] a creator works with you and they obviously it works like they generate sales or like they're very active. They're messaging you. You want to build

[00:11:29] that relationship with them and you want to continuously work with them. You want to send them more products. You want to give them higher commission. You want to

[00:11:35] run ads on their videos. You want to build that relationship with those creators because once those creators

[00:11:41] find the brand that they can sell, they also want to keep working with you cuz those creators are making videos for hundreds of brands every single day. So

[00:11:47] in their head when a brand works and when they generate GMV from one brand, they're automatically incentivized to want to work with you again. So it's

[00:11:53] like how do you hammer in that relationship after like you you find that creator brand fit. Um and that's

[00:11:59] where like a lot of the creator management part of the things come in. Yeah. And I think people underestimate

[00:12:05] just how much work goes into managing creator and affiliate programs at scale.

[00:12:10] Mh. Like all the things that you said, but it's also a continuous process of making sure you can identify and keep people

[00:12:16] incentivized. Yeah. The other thing I think on the brand side, such a misconception on launching on Tik Tok

[00:12:22] shop like, oh, I can go out, leverage the platform, work with tons of

[00:12:27] influencers and get millions of impressions for my brand. But the economics of the platform break down if

[00:12:34] there isn't that creator market fit or creator product fit. Yeah. Because if you're not generating GMV,

[00:12:39] people don't want to work with you anymore. And for the creators, there's an opportunity cost in terms of working. That's the hardest part with coldstar

[00:12:46] brands. So, we kind of specialize. I don't know if it's like the harder thing to do, but we kind of fell into it

[00:12:52] because we became really good at cold starting brands. So, a brand comes to us, a lot of our clients are bigger brands outside of Tik Tok and they come

[00:12:59] to us like, "Hey, let's scale this program here." But the challenge is no matter how big of a brand you are outside of Tik Tok.

[00:13:06] If you don't have virality and sales on Tik Tok shop, it's hard to get the big creators because for those creators that

[00:13:11] are already generating sales, they want to hop on the trend, right? If a if like a product's already going viral, if they

[00:13:17] make a video about it, they have a way higher chance of making GMV than making a video for a brand that has zero sales.

[00:13:23] And that's where like that creator relationship on the agency side also becomes very important. And that's why we can cold start brands a lot easier

[00:13:29] than if you're just a brand yourself because we have those creator relationships. So, we're like, hey, we worked with you on X, Y, and Z deals.

[00:13:36] This is a great fit for your brand, for your platform and who you are as a person. Like, you're a mom. You're a

[00:13:41] nutritionist. this is a supplement brand targeted towards moms or this is a supplement supplement brand that's like perfect for you and like it's similar to

[00:13:48] the other brand that we've worked together make a video for it. So, it becomes a lot about convincing these creators, especially in the early days

[00:13:54] on the cold start. And we can get into that a little bit more with like there's a lot of like retainer deals going around and like a lot of like other ways

[00:14:00] to incentivize the creators in the beginning, but it's very important to kind of know that Tik Tok shop is not

[00:14:05] this magical sales channel that like you just come on and send. Honestly, I think it's the o it's really

[00:14:10] the opposite of that. It's like one of I think the uh hardest platforms to grow

[00:14:17] on and to honestly to build a profitable business probably the hardest platform to grow on. Yeah.

[00:14:22] Um but I think it's one of those things where like if you get it right the juice is worth the squeeze because of how it

[00:14:29] u affects the other parts of the business, right? And that's like anecdotally we

[00:14:35] hear that everywhere. It's like you have an Amazon or DDC brand and they start going viral on Tik Tok. Like they see

[00:14:41] the effects in so many different parts of their business. And I do think be that's because Tik Tok and organic

[00:14:47] social are like the scaled out version of word of mouth word of mouth marketing.

[00:14:52] Yeah. Um and people don't really understand that. But I mean let's talk about the economics of

[00:14:57] Tik Tok shop because I think that's probably one of the biggest hurdles for brands to get around.

[00:15:02] Yeah. It's um that's what I've been spending most of my time recently because like it's one of those things

[00:15:08] where obviously it's like the new hot thing so everyone wants to get on and like it's actually very interesting.

[00:15:13] People actually only start caring in my experience about their P&Ls once things actually start to work out because

[00:15:19] you're generating that topline GMV and that's where like what everyone cares about. But when you start to look into all the expenses that go into it, you're

[00:15:25] like [ __ ] this is really hard to scale profitably. And my advice usually to brands is like obviously I don't want to

[00:15:32] make anyone lose money but as long as we can get to a break even point like that's the sweet spot that you want to

[00:15:37] be at and scale massively at that point because as you said like we see it like every single one of our clients I don't

[00:15:44] have the data on the Amazon side which is kind of annoying but on the Amazon side um every single one of our clients

[00:15:49] is like dude like we're seeing such a huge spike on Amazon uh obviously retail and everything's a little bit more delayed but they all see this scale like

[00:15:56] uh this halo effect that comes across everywhere. Like when when you have a good day on Tik Tok shop, when

[00:16:01] something's going viral, Google's doing better, Amazon's doing better, their DTC is converting better. Like everything

[00:16:06] kind of works better. And like it's kind of like once they once they get a little bit of that, they want more of it. So they want to scale. And it's very

[00:16:12] important to look into all these like different expenses that go into it. And I can break them down a little bit. Let's let's break it down. Yeah. Um I

[00:16:20] think one more point just on like like I think the other channels like Amazon,

[00:16:25] DTOC, Amazon's also one of those pieces where it's like a closed loop ecosystem. So because you have you know perfect

[00:16:32] attribution with search advertising on Amazon even DSP which is like their more

[00:16:38] top offunnel off Amazon on Amazon like media network offering you do have so

[00:16:44] much intent data because people are shopping on prime and on Amazon

[00:16:49] but like a lot of the like let's just take Google search and Amazon

[00:16:54] search those are demand capture platforms so they're really overinflated like when you when it when when it comes

[00:16:59] to like taking credit because a lot of the demand is being generated off the platform. Yeah.

[00:17:05] So I think like when we see struggling programs on DTOC or on Amazon, it's like

[00:17:10] well what are you doing to generate brand awareness? Yeah. And I think one of the best ways brands generate

[00:17:16] brand awareness today is on Tik Tok. Yeah. But let's talk about Yeah. Like I guess the implications because everyone wants

[00:17:22] to be profitable on their sales channels. So, Tik Tok is a marketing channel, but it's also a sales channel.

[00:17:29] Exactly. It's like killing two birds with one stone is kind of how I like to pitch it to people and get them to spend

[00:17:34] more on the platform. So, Tik Tok shop 101 though, like what does the P&L look like? How many slices

[00:17:41] of profitability are there? Like what are the different what what are the cost layers? Yeah, it can go really deep. Um

[00:17:48] I mean breaking it down on a very high level, you have obviously your GMV, so that's the very top level. Then usually

[00:17:53] the things you want to subtract immediat and GMV is is revenue, gross merchandise value. Yeah. It's basically like revenue

[00:17:58] total. Exactly. So it's basically your revenue. Um a very big the the biggest portions

[00:18:04] of it is the affiliate commission that comes into play. So you usually want to have a program that has between

[00:18:10] depending on your price point, but like 15 to 20 something% in commission that

[00:18:15] you offer to creators. One way that we use that commission to leverage, we use that commission to leverage

[00:18:21] relationships with creators, like if your open collaboration is 15%. Open collaboration is like anyone can make a

[00:18:27] video for you and they get that commission. You want to be like, "Hey, we have an open club at 15, but we have our VIP at like 20." And then you use

[00:18:34] that to like work with those better, the better creators or the people who are in your network that you're like, "Yo, you're going to crush this."

[00:18:39] Yeah. So like on the P&L level like you usually average out around like 18% something around that in commissions

[00:18:46] that you give out to creators then shipping is like a huge next point and like we see that a lot with like smaller

[00:18:52] brands like smaller AOV products where like shipping really breaks that math because if you're selling a product for

[00:18:58] 10 bucks and your shipping is like another five bucks like it becomes a very tricky thing because you have to

[00:19:04] offer free shipping on the platform. It's like really hard to convert without free shipping especially in the early days. Uh there are like place to like

[00:19:10] ways to play around with that to make that work too. But so basically you have like five bucks shipping shipping. So that could be 50%

[00:19:17] of your Exactly. It could be like 50%. So then you have 20% to creators give or take. And then Tik Tok takes 6%. Um and then

[00:19:25] does Shopify take a rip like No. Tik Tok doing payment processing everything. Yeah. No, they um that was like we can

[00:19:32] get into that a little bit, but I know and Amazon like people talk about this too. They're like Yeah. you know, how are these brand how

[00:19:38] are these other platforms getting involved? Yeah. Um, well, all that sales, that's the beauty of it. Like all the sales and

[00:19:44] like all the money happens like everything happens, the transactions on Tik Tok. So, they manage like all that

[00:19:49] transaction fees and everything. So, you don't pay extra to like Amazon. I mean, Amazon's not even connected to anything

[00:19:55] here. On Shopify, the only thing that happens is your order basically flows through there. Um, I think they had like

[00:20:02] a like back in the day and that's why like the connection is still very broken. Like one of the biggest things

[00:20:07] we struggle with with our brands is like actually making that connection work when an order comes on Tik Tok shop it

[00:20:12] flows correctly to Shopify. That whole process is so messy because I think Tik Tok and Shopify couldn't really come to

[00:20:18] an agreement because Shopify was asking about like getting it cut basically and they were saying no. Uh, I think that's

[00:20:24] why that connection is still very broken to this day. Uh but on the P&L level you have your GMV shipping um then the

[00:20:32] creator commission then the um then obviously your cogs play like a very big

[00:20:37] role and like that's been like a very big part of us as an agency like working with our brands on their P&Ls. Um a lot

[00:20:43] of brands like to actually include that cogs in that P&L as well which kind of makes sense. Um then you have your agency fees. So most agencies do a

[00:20:50] retainer plus commission. Um, so you got to like basically bake that into like that whole like if you're doing it on a

[00:20:56] monthly level on a monthly piano, you have another 5% rip. So you have 20 for creators, 50 for shipping, five for

[00:21:02] your agency plus a base fee. So it might be like 7%. Yeah. And then 6% to Tik Tok. So like it

[00:21:08] really starts to like eat into that GMV and you're suddenly like we generated 50k this month

[00:21:13] plus ad spend. The ad spend. Oh my god. That's a huge part. And we can talk about like GMV max and everything like it's making

[00:21:19] also samples too, right? Yeah. So samples that you send out the what what is that usually as a percentage of GMV?

[00:21:25] Um well it really depends on your scale right like if you're a fresh brand with zero that's the hardest part. It's like

[00:21:31] your first three months you are bleeding out. Like when I talk to brands it's like if you really want to make this

[00:21:36] program work you should be ready to spend like back of the envelope math like 50k in the first like 3 four months

[00:21:42] uh with the ad spend with the sampling. Uh there's ways to like it's probably more than that though right?

[00:21:48] It's like that's like the minimum I would say. Yeah. like the because I mean they all kind of scale together. Like we're not going to start spending $1,000

[00:21:54] on ads a day when we have no content, right? So like it like your month one most of your expenses you don't really

[00:22:00] have any ads expense but you have a lot more on the sampling and like the creator stuff, right? But then by month

[00:22:06] two now you don't really have to like you have the content so like most of that budget needs to go to ads, right? So a lot of it is like that's where it

[00:22:13] becomes hard on the agency side too. It's like each brand is so different and they start at such different spots and they scale at such different paces. Uh

[00:22:19] depending on their brand recognition obviously if you're a bigger brand it's easier to scale it um depending on the

[00:22:24] product like that product selection becomes very important. So like a lot of our time basically gets spent working with each brand on an individual level

[00:22:31] and understanding like where should we spend the money on the next month like should we spend more on ads. Um like

[00:22:36] with one of our one of our clients we had a meeting at Tik Tok and we're looking at like other um like similar

[00:22:42] brands in that category. They were telling us that we're sending a lot less samples than the bigger brands but we're

[00:22:48] spending a lot more on ads. So a lot of our budget was basically going to ads to subsidize for the lack of sampling. And

[00:22:54] the reason for that was it's a smaller brand. they don't have that much inventory to send out samples. So, um we

[00:23:00] we got to figure it out like they finally got inventory and we finally started sampling. So, it really becomes understanding like each brand's uh

[00:23:07] individual challenges and how to like utilize their internal budgets on like the best things. Like maybe for a

[00:23:12] struggling brand, hey, we sent out 500 samples, but it's really hard for us to get creators because creators don't know your brand. Let's set aside, we can get

[00:23:20] into this, like the math actually gets very interesting. Instead of sending 500 samples out, right, for the next month,

[00:23:26] at the bare minimum, it cost you 10 to 15 bucks on the sampling, right? You have your product cost and your shipping. 500 times 10, that's five

[00:23:33] grand. Instead of spending five grand on sampling, let's take that five grand and let's create like a competition or like

[00:23:39] let's target very specific creators. We do this a lot in skincare because in skincare it's very important for that

[00:23:44] creator that creator product fit becomes even more important because if I'm promoting a skincare product one I either need to have an authority in the

[00:23:51] space like I'm a dermatologist I'm like someone that has very good skin or I struggled with that specific skin

[00:23:56] problem like if I if it's acne product you want to find someone who has acne. If it's a eczema product you want to find someone that has eczema and like

[00:24:03] use that 5k budget find these specific people work with them on a very high like one-on-one level. Give them content

[00:24:09] guidelines. pay them for their time, pay them for their content, kind of a more traditional influencer marketing, and

[00:24:14] then get those 20 30 pieces of content, run ads on them, and that'll basically kickstart your like it'll kickstart your

[00:24:21] Tik Tok shop. So, there's many ways to approach. And the calculus for that is like if you can get a very organic quality piece of

[00:24:28] content that speaks to the product, it will it will perform almost like an organic viral piece. Yeah. And like the thing is like once it

[00:24:34] performs you it also creates this like inbound of other affiliates like a lot of it is like oh

[00:24:40] I've seen you I've seen this. Yeah. I want to work with you. Yeah. And like if if you have a really good creator promoting your product

[00:24:46] let's say it's a skincare product and you're working with like a doctor or like a a skin not a skincare celebrity

[00:24:52] but someone that posts a lot of skincare products uh videos. A lot of the people that follow them or a lot of people that

[00:24:57] that content lands on their for you page, the creators will also be like, "Hey, this creator is promoting this, so this is going to blow up. Let me also

[00:25:03] request a sample." This is why I think what you just said is literally why the every brand should be paying attention

[00:25:08] to this platform. Maybe if it's not necessarily Tik Tok shop because it's not the best, they need to be showing up in some way

[00:25:14] organically because even the brands that aren't on shop, but they have great dialed Tik Tok organic strategies, like

[00:25:20] you're able to build brand awareness in six months. Yeah. Like some of these startups like that everyone knows,

[00:25:25] they're really not that big from a revenue perspective just because they're posting videos consistently. Exactly. We all know about them. Yeah.

[00:25:31] Because we all know about them. We want to work with them. Yeah. Just doors open. I know. That's like um like there's a

[00:25:37] huge opportunity to like like there's an education piece to brands, right? And like as the

[00:25:42] And I'm actually just sorry to interrupt like that's why I think a lot of Tik Tok shop agencies, they're like, "Wow, this is actually a great path to

[00:25:49] just scaling a brand, right? because you're like, I could just generate awareness and grow.

[00:25:54] This is I mean I'm pretty young so like I don't know too much about like the history of like the whole industry but

[00:26:00] like from what I've seen this is the fastest way to grow a brand to a million dollars. Like there's no other platform

[00:26:06] that gives you this leverage that you can I I know people and I know brands that it's like they literally started

[00:26:11] less than a year ago and they're doing millions of dollars in GMV. Yeah. All right. So let's actually let's actually change a segment and talk about

[00:26:16] like cold start new brand. Yeah. If you're exclusive on Tik Tok shop, where do you go from there? But

[00:26:22] yeah, I honestly thought we were talking about some interesting stuff. Like we were getting into Tik Tok being like

[00:26:28] it's the best place to scale a brand. Probably highest amount of friction in terms of getting it right, but like if

[00:26:34] you see a path like it can go pretty crazy. Yeah. I mean, I was talking to like Tik

[00:26:40] Tok about this literally like a week ago. It's a very hard platform to scale and they're they're very aware of it too

[00:26:46] and it's like a challenge that they have because like the harder they make it the obviously the less money they're going to make because people can't scale and

[00:26:52] that's why like you're seeing these a lot of platform changes happen where like they're trying to automate the process to like not to help brands to be

[00:27:01] able to do it themselves right like the media buying aspect is a huge part where it's becoming fully automated with GMV Max where like okay at least we can take

[00:27:08] that off the plate right and explain GMVX yeah So um trying to think the best way

[00:27:15] to explain it. So it's it's if it's tacos total advertising cost scale.

[00:27:20] Exactly. So it's like it helps you understand or it doesn't people really hate it because it

[00:27:27] combines your organic and your um first let me explain how it actually works. So

[00:27:32] Tik Tok on Tik Tok shop you get thousands of videos at scale and that makes the media buying process extremely difficult. Like there's no human can

[00:27:38] that can go like you need a huge team of people reviewing videos every single day, rotating them in and out and like

[00:27:44] you're dealing with literally thousands of videos because of that affiliate system and a lot of things fall through the cracks because it's like you have so

[00:27:50] many videos coming in it's really hard to test. What GMVAX does is that it automatically basically tests every

[00:27:56] single video that comes in and it automates that entire testing process for you. Now, the reason brands hate it

[00:28:03] is because it doesn't give you a lot of the metrics that your traditional media buying gives you. And the main metric

[00:28:09] that it gives you is ROI. It's not rorowaz, it's ROI. So, it's like you're spending a dollar on TikTok, you're

[00:28:16] making $5 back. What that accounts, it counts the ads, the the organic sales. Affiliate a like it's like the shop

[00:28:23] sales, the entire shop sales basically. So, it could be your affiliate sales. It could be people searching for your product and buying it from the shop tab.

[00:28:29] It could be an organic sale. It could be a ad sale. So, it combines everything and it gives you a channel ROI, which

[00:28:35] honestly they're going to change that. Yeah, they're probably going to change it because everyone hates it. But it makes the agency side a little easier

[00:28:41] because now you're dealing with ROI versus like, you know, like, hey, like they should just do what Amazon did

[00:28:47] where you have a cost and tacos. Tacos is total advertising cost of sale. If you invert it, it's just ROI. Yeah.

[00:28:54] And then you have a cost, which is advertising cost of sale. If you invert it, it's your rorowaz on on the advertising side.

[00:29:00] Yeah, they um Okay. Like everyone's talking about it, but I like they they're saying it's a

[00:29:07] little confidential, but everyone knows like they're getting rid of like your traditional media buying, like your the

[00:29:13] VSA they call it shopping, and it's only going to GMV Max. So now it's like you won't even have a choice if you want to

[00:29:19] do your own media buying. Well, within GMV Max, they've added a lot of features where like you can remove videos that

[00:29:24] you don't want to promote. You can add in specific videos. They have this thing called max delivery because on GMV Max,

[00:29:29] you basically set a target ROI. You're like, "Hey, your daily budget is 100 bucks and your target ROI is like five.

[00:29:36] So, as long as it's hitting that target ROI, it spends." But G&V Max is a huge spending problem, especially in the cold

[00:29:42] start days where it's like it's not spending money because it can't hit that ROI. And I mean, that's that's normal,

[00:29:47] right? like when you're first starting on the platform, even when you were doing your your own media buying, you

[00:29:52] weren't going to get those specific targets that you wanted in the early days. Um, so they have these like different features that comes in like

[00:29:57] max delivery, which is make sure you spend that $100 even if you're not hitting that five ROI. Um, or like

[00:30:04] here's this specific video that I want you to like max deliver on. So there's like all these like features that they're adding on and by the time they

[00:30:10] sunset the traditional media buying, they should be adding a lot of these other features and a lot of these other metrics uh to help brands. Like one big

[00:30:17] product feedback that we gave them was like um customer segmentation like being able to target new customers versus

[00:30:24] existing customers. Like a lot of our brands utilize Tik Tok as a u customer acquisition channel. So they don't want

[00:30:30] their dollars to be spent on people that already know about the brand and are already shopping from the brand. So they want to be able to target new customers.

[00:30:36] Um so all these like that like that wasn't a feature. I don't think they've launched I think they just launched it. Um, but it's like all these like little

[00:30:43] things that kind of play a big role are being added to the to the functionalities of GM Max.

[00:30:49] Okay. So, going back to like your cold start brand, it's your brand. Would you ever launch a brand exclusively on Tik

[00:30:55] Tok shop? Yes. Like that's something that if I had more time, I definitely would want to do right now.

[00:31:00] Yeah. Let's walk through how you how would you do that? So, what I've learned in the past year

[00:31:06] or so, like past like two years, the product selection is probably the most important. Like we work with some really

[00:31:12] really big brands like brands that you can find like at any retail store but it's hard to generate GMV for them

[00:31:18] because their product could just not it's not a content friendly product right um we can get into that a little bit more too but the product itself is

[00:31:25] so important and if you can come up with a specific type of product that has that like content friendliness

[00:31:31] as designed for content creation. Exactly. And you can do that with like any category. Like I'm talking to some

[00:31:37] like beauty brands where like they've really thought about the product development through a content lens. Like okay, how does it look like when I like

[00:31:44] like if it's a moisturizer, right? Like how does it look like if I'm pumping it out of the package? Is it just a boring

[00:31:49] tube or does it have this like really cool functionality that like that like looks weird on camera? Or like when I

[00:31:54] put it on my skin, what's the color of it? Or like how much can I like play around with it? So there's like all these different things that you can do

[00:32:00] on every level even like on every category. Um, obviously some work better than the others, but that product

[00:32:06] selection is extremely important. And if you can find something that is easy to make content for, we call it like quote

[00:32:12] unquote content friendly. So, if you can have a content friendly product, it'll just it'll just make your job so much

[00:32:19] easier because the creators will know how to make videos for it without you having to educate them. Uh, when they make a video, it's already is if the

[00:32:25] product is cool, the the video is going to be cool, right? So, it just makes everyone's life so much easier. For me, it's like just the evolution of

[00:32:32] packaging and brand design. So, traditionally, you would have brand designers who were like, "Okay, how is

[00:32:37] this going to show up at retail?" Like, "How do I want the identity to to to stand out on shelves?" Like, this was

[00:32:43] a huge part of packaging design, right? And like form factor. The really famous examples of this are like Graza for

[00:32:50] olive oil, just like Yeah. innovative way to look at olive oil, just different. Yeah. Um or I mean I talk about saws

[00:32:59] because you know uh that was one of the things that we thought about when we were designing the labels to stand out amongst tomato

[00:33:06] sauce but now I think you have like another permutation and evolution of that which is like how is this going to look through short

[00:33:11] form content? Yeah. Do you have any examples of a brand that has I mean I guess road the phone case

[00:33:18] is probably like one of the best ones. Yeah. I mean, one of the ones like Grun's um green gummies, like that in

[00:33:25] and it of itself is so content friendly. Like people can just like talk about it, right? Um it's like obviously the

[00:33:32] packaging and the product itself is important, but like the way that it looks like in Grun's case, it's like a

[00:33:37] gummy bear, but it's like good for you. So that like makes it easier. But on the actual product level or like Breeze when

[00:33:42] we're working with them on the lion's mane side, it's like lion's mane itself was like an interesting category that

[00:33:48] was like growing on the platform. So people are like talking about it. So you got to think about it both on like the actual product like people talking about

[00:33:55] the product and then the way that you can present it. Um I will say that's not with every category. Like jewelry for

[00:34:02] example, it doesn't like a lot of it just becomes the packaging. Like we literally have videos of like a creator

[00:34:07] just like showing their ear like this and the video does like 10k in sales, right? Versus you can never do that in a

[00:34:13] supplement. It's like very visual products and very educational. fashion accessories are just they're a different beast because it's like with clothing

[00:34:20] it's like how does the garment hang like on your body? It's just like something very very difficult to

[00:34:26] very different but like um I'm trying to think of like good examples um that have like blown up. I mean

[00:34:32] creating gummies was like a big thing. Um like I think we're okay. I think there's like Okay, but there's like

[00:34:38] form factors that I think are trending. gummies. I think we're kind of we might be at the end of that cycle.

[00:34:45] Yeah. Like I really think it's been it's been had. Yeah. Um what else? Like uh

[00:34:52] I think uh then there are like product categories that like are growing because

[00:34:58] you know there are trends just within you know the consumer landscape in the United States like longevity is really

[00:35:03] big. Yeah. Uh I guess creatine. Yeah. like GLP1 is probably going to

[00:35:09] have a moment soon on Tik Tok shop. Um like with supp again, one thing that's

[00:35:16] also very interesting is like all this all these conversations that we're having, they're also very different for

[00:35:21] each category. Like the way to scale a supplement brand is a lot different than scaling a jewelry brand, which is a lot

[00:35:26] different than scaling a skincare brand. Like they all require different thought process and a different approach. And I

[00:35:32] think that's where a lot of people miss it because you have like all these people online talking about Tik Tok shop. Hey, just sample your product, right? that might work for some

[00:35:38] products, but it really it the strategy should really differentiate based on the category and the product level. Um, so

[00:35:45] that's kind of like a caveat I want to throw in like if there's a specific category that we want to talk about, we can go a little bit more into it. Um,

[00:35:52] but yeah, they um, okay, so let's actually use I want to hear your take on this like and we can use it as a case study. So, you know, I

[00:35:59] I just recently bought off limits. Yeah. Buying that bringing that business back. It's not going to come back as serial. I

[00:36:04] think cereal is is very difficult for a number of reasons. But I want to I want to

[00:36:10] like I want to do this thought exercise where we're triangulating what the right

[00:36:15] product category is to bring it back as like from offlimits the brand to a product that would scale

[00:36:21] really well on Tik Tok and Amazon from a margin perspective but also from a visual content perspective.

[00:36:27] How would you think about that? Um it's a great question. Um, do you know

[00:36:34] like do you still want to stay in like consumables? 100%. Yeah. Um, consumables are also very

[00:36:41] interesting on Tik Tok. Um, they're actually like one of the easier not the easier ones, but it's like there's

[00:36:47] there's challenges with it. Like it's easier to sample it because a lot of people like want to try it. So like if

[00:36:52] you think about it from a creator point of view, like sampling consumables is pretty easy because anyone can get it,

[00:36:58] right? Like you don't need to find niche creators. like you can really target like a very wide range of people and

[00:37:03] that usually makes the job a lot easier. The more people you can target and the more people that can talk about your product, the easier it is. Um I don't

[00:37:10] know. I think you got to help me a little bit here. Like I don't know where your head is at with the product. Like I I think crowdsource I want to

[00:37:17] crowdsource it. I thought gummies I was like listen gummies could be interesting and you have like different because

[00:37:22] right now it's like very much segmented. You have Grun who's doing like basically AG1

[00:37:27] and then you have like creatine gummies. you don't have a unified one. I'm not sure why, but

[00:37:32] I think that could be interesting. Like a brand that just like owns that form factor. Yeah. So, when it comes to the form

[00:37:38] factors, that's something that like I really take into consideration when working with clients. Yeah. Um like

[00:37:45] the reason I brought up like the supplement thing, like even in consumables, like let's say you're like matcha, right? If you're just a matcha

[00:37:52] product, there's only so much you can say about it on TikTok, like as a creator point of view. But like now you add like creatine and protein to it.

[00:37:58] It's like it's a little cringe, but it's like now it's like people can actually say something about the product, right? They could be like, "Oh my god, like do

[00:38:04] you love matcha? This matcha has protein and creatine and like I don't know like nicotine in it, right?" So it's like

[00:38:09] dude, nicotine is is Nick is huge right now. Put nicotine in everything. That's what like unfortunately you can't

[00:38:15] sell that on Tik Tok shop. If you could uh Yeah. Like like just like making it easy for people to talk about. That's

[00:38:21] like the biggest thing that you got to like you got to throw your creators a lob, you know? Like it's like, hey, it's

[00:38:26] easy to talk about this product. This product sells itself, right? Like it really reminds me of like Oliver and

[00:38:31] like Taps chocolate, right? Like this is pre- Tik Tok shop. He wouldn't be able to sell it on Tik Tok shop, but it's like

[00:38:37] all those creators were just able to easily use crazy hooks, right? It's like the easier you can make it for those

[00:38:43] creators. Yeah. The more you're going to sell. The more you're going to sell. Yeah. Um I think for offlimits like but even on a

[00:38:50] product level like I think the way in the next few years the two biggest opportunities in kind of like search are

[00:38:57] on the social side where people are searching for things on TikTok and they want to see it like that visual aspect of it healthy but

[00:39:04] I don't think it's all like prebiotic soda that's like you know making you feel incredible. Yeah.

[00:39:10] So, I think the offlimits brand, it needs to be something that feels like

[00:39:16] like indulgent when you eat it or consume it, but it has like some peel back that's

[00:39:21] good for you. So, if that's the case, it's like I will say price point becomes very important in um consumables. Like Tik Tok shop at

[00:39:29] the core is a discovery platform, right? Like no one's really going on there and searching for like a specific thing.

[00:39:35] Like if I want to go if I want to have a search experience, I still Amazon is always going to win, right? Tik Tok shop

[00:39:41] is like I'm scrolling, I'm watching these funny videos and boom, like I see this like really crazy product, right?

[00:39:47] I do think so. I was talking to the Amazon team. Yeah. I think the fact that they don't have a

[00:39:52] I mean they have some incredible parts of their ecosystem and competitive advantage in their logistics network

[00:39:57] like just like hits so hard. But you can see where Tik Tok's trying to take this. They're going to launch subscription in September.

[00:40:04] We already they already have it for some um like some of our brands are in the beta. It's small, but like they have like 200 subscribers, which is

[00:40:10] But it's like if you're going to subscribe, you want something that ex is expedient. Yeah. And like Amazon wins on that right now.

[00:40:18] But like you can see Tik Tok's trying to build out their fulfillment network. Yeah. And they're trying to compete and then

[00:40:24] it's like okay, you have this closed loop ecosystem where you can push product, you can generate demand, you

[00:40:29] can work with affiliates, you can search for products, too. I think right now it

[00:40:34] is very much discovery based, but I think I could quickly see it moving to a place where you have higher

[00:40:41] price point products and it also has a much larger assortment. Yeah, it's um the way that I see it and the way that the reason I'm very bullish

[00:40:48] in it, I think about it from like my point of view and like my generation like as Gen Z starts to get purchasing

[00:40:54] power, people search for [ __ ] on TikTok. Like if I'm like you can take it on any

[00:40:59] level. Like I was just in Dallas. Like I don't know where to eat. So I search on Tik Tok best places to eat in Dallas,

[00:41:04] right? I want to see things. I don't want to read a 10-page article on like the best restaurants. Same thing with

[00:41:10] like let's say your thing like if I want to find a healthier yummy cereal, right?

[00:41:15] I'm going to search for it on TikTok and I want to see people talk about it. Like that visual aspect and like seeing

[00:41:21] people talk about it is a huge thing that it's going to I think it's social proof seeing his believing. I

[00:41:26] mean for a restaurant it makes so much sense. You see the you see the you see the stuff that's getting getting like

[00:41:32] actually delivered and like I see so many of these viral videos like it's kind of like being overdone

[00:41:37] now but it's like my dad like quit his job and like built this restaurant and no one's coming

[00:41:42] please support and you see the video has like 10 million views and like you search a restaurant on Google and has like 10,000 reviews cuz like people are

[00:41:49] like supporting the business like that's like a whole different thing but even on a product level like I think the way in

[00:41:55] the next few years the two biggest opportunities in kind of like search are

[00:42:00] on the social side where people are searching for things on Tik Tok and they want to see it like that visual aspect of it and also we talked about this on

[00:42:07] like the large language model where like you're talking to chat GBT like hey chat GBT like what protein should I take and

[00:42:13] like if you can combine those two things together even like on an individual level I think those are where like I

[00:42:18] really see the future of like search going into but as of right now kind of going back to your early like thought

[00:42:23] exercise like people are still using Tik Tok shop as discovery platform and that's why like price point is like

[00:42:29] still a very huge problem on Tik Tok. It's hard to you you want to make it an impulse purchase, right? Like there's a

[00:42:34] lot of things that kind of go into it's like you need to have free shipping even if you're not discounting it like do a high low pricing where like you price

[00:42:40] the item higher and run like sales. You need to make it direct respon. This is why the content is so important, too, because it's like you need to make it so

[00:42:46] compelling that people want to buy it right then, immediately right then and there, which isn't like a natural thing for people to do when they're just like

[00:42:53] on social. Like I think Meta was kind of the first rendition of this and how you see it on Tik Tok, but like that's why I

[00:42:59] think for brands like when you're growing a Tik Tok shop program, you need to contextualize how

[00:43:06] important it is for your other channels that you're running. Yeah. Yeah. Like you need to be able to have that connective tissue to Amazon

[00:43:12] or to D TOC. Yeah. Because otherwise you're just going to view it as a profit like a lossmaking channel.

[00:43:17] Yeah. It's um I think like for every one of our clients like the biggest thing that we like the thought exercise that

[00:43:23] we work with them through is like the day we sign you want to have at least a 30 69 day plan. It usually always

[00:43:30] changes after day 30 cuz like Tik Tok shop changes so rapidly that like if you're not changing your strategy all

[00:43:36] the time you're not doing it correctly in my opinion. So just having like a vision of where we want to be in like 3

[00:43:41] months and like working towards that but keeping in mind that like once this hits

[00:43:47] like even if you're investing 50k in this platform if it hits it's going to really change your business like

[00:43:52] forever. Like that halo effect and like that growth it's just like a very hard push but once you actually get through

[00:43:57] it it's like it's game over. Like you're you're going to turn your brand around like overnight. Um it is hard to keep

[00:44:04] that virality though. Like I've seen a lot of brands like go up and down like that. There's a huge cycle and like in

[00:44:09] your offlimits exercise too. It's like that's a huge challenge in one product shops where you see like that product really blow up. Supplements.

[00:44:15] Yeah. How do you keep that going? How do you keep that going? And it's like it's really hard cuz like you really do hit like a platform fatigue

[00:44:21] where it's like Yeah. You have like a flash in the pan and like how do I keep people engaged and interested? Like your top creators have already made

[00:44:26] videos for you. It's hard to keep your creators engaged cuz like how many times can that one person make videos about that same product, right? Like it just

[00:44:33] it doesn't really work. So how do you think about that? Um well it's usually like most of our

[00:44:38] brands have multiple products and like we actually utilize that um we basically think through that the creator like that

[00:44:45] creator relationship is very important because of that reason where it's like hey let's find your top brand product like your top seller blow it up work

[00:44:53] with these creators but use that product to then channel those creators to your other products and really scale a shop.

[00:44:59] don't scale that product, right? Like you start with one product, but you need to have that long-term vision of like, okay, once that product scales, how can

[00:45:06] we utilize the hype around this product to get the other ones? If your brand doesn't have more products, there's nothing I can do to help there. Like

[00:45:12] just you got to develop more products, but most brands have at least like multiple SKs. So, it's like choose your

[00:45:18] top one, scale it, use those creators, use that hype to then scale your other ones. And that's how you build a very

[00:45:23] healthy shop. Like I've seen so many brands that come to me and they're like, "Hey, we used to do $200,000 a month.

[00:45:29] Now they're doing nothing." Is because you see they only focused on that one product and when that hype died, they

[00:45:35] never funneled that creator system or that whole like ecosystem of creators that they already had engaged with them

[00:45:41] to their other products. And now you have to start from zero again because those creators forgot about your brand. No one really knows about your brand

[00:45:46] anymore. So it's like really dig deep once you find that. Um, what's your what's your favorite

[00:45:51] category on Tik Tok shop? You're like, "Oh, I can crush this." So, I think about I kind of break them

[00:45:57] down into two categories. Visual products and like educational products. Yeah. Um, visual kind of what we talked about

[00:46:02] jewelry, fashion. I really love that category because like it just like you just find the right creators, send them

[00:46:08] the product. You don't really need to focus on like working with those creators on a one-on-one level, handholding, cuz on a jewelry product,

[00:46:14] if you have something that looks good and if you have creators that look good with it, that's it. like that's the that's what you have to do. Uh and also

[00:46:21] makes your job a lot easier on other things. We can talk about that too. It's like we're talking about affiliate but Tik Tok shop has like live like uh doing

[00:46:28] live streams and your own brand account. So there's like all these like other uh avenues they can generate revenue from on the platform. So those visual

[00:46:35] products are just very easy because like on the live stream they also look better, right? Then on the educational side I still like them a lot. Like we do

[00:46:42] a lot of work in skincare because it's just a different strategy but we've kind of figured it out. It's a lot more

[00:46:47] finding the right creator, working with those creators on a one-on-one level, building those relationships with them for like that one hero product, then

[00:46:54] scaling the other products with them. So, both of them work really well. We do a lot in skincare and jewelry and

[00:47:01] supplements. I would say those are like the top three. Home equipment too. Home is like really amazing, too, because

[00:47:06] home like kitchen products, right? Like you can make easy affiliate products. It has a huge TAM like every creator can make

[00:47:12] videos about it. Um on live stream they do really good because you can do like a cooking live stream right like if you

[00:47:18] have like an egg cooker you can literally cook the eggs on live right uh on the brand account side it becomes interesting because you can easily like

[00:47:25] make content about like the u about the products and post on the brand account so there's a lot of good categories um

[00:47:32] some easier some harder but we've kind of like figured out the strategy around most of them. Nice Sam thanks so much for your time

[00:47:38] man. Yeah. Is that it? Yeah that's it. That went by really quickly. I appreciate it bro. Yeah.