How has the rise of hybrid channels impacted marketing?
My guest Jacob Ross is the CEO of PebblePost, the world’s leading digital direct mail marketing platform.
In this episode, he’ll share what marketing teams need to know about hybrid channels, including:
- Why diversifying channels puts marketers ahead of the crowd
- How to convince clients that marketing is worth investing in
- The effects of cookies disappearing on the industry
- And more
Mentioned in this episode:
Voiceover: This is Performance Delivered, Insider Secrets for Digital Marketing Success with Steffen Horst and Dave Antil.
Steffen Horst: Welcome to the Performance Delivered Insider Secrets for Digital Marketing Success podcast, where we talk with marketing and agency executives and learn how they build successful businesses and their personal brand. I’m your host, Steffen Horst. The topic for today’s episode is the rise of hybrid channels.
Here to speak with me as Jacob Ross, who is the CEO of PebblePost the world’s leading digital to direct mail marketing platform. Before joining PebblePost, Jacob was the Chief Product Officer at technology leader MediaMath. He also served as president and general manager at Adroit Digital, the leading data cooperative for retailers to market to consumers online.
Before that, Jacob served as Chief Revenue Officer at Metamarkets and next-gen, real-time analytics platform that was acquired by Snap. He further held senior roles at Criteo, Demand Media, and Right Media. So as you can tell, Jacob has been at quite a few places. So he brings a wealth of information to today’s podcast. Jacob, welcome to the show.
Jacob Ross: Thank you so much for having me.
Steffen: Now before we start talking about the rise of hybrid channels, Jacob, tell our listeners a little bit more about yourself. How did you get started in your career and what led you to PebblePost?
Jacob: Well, you did the blow by blow. And I don’t want to repeat that. But I fell into adtech and martech, like many of us do from other industry. I worked on Wall Street out of college and fell in love with markets. Fell in love with the technology, the powered markets. And when I heard about Right Media, which was then a startup that Mike Walrath and Brian O’Kelley and others had started to really disrupt and reinvent how digital marketing was run.
I got super excited because here was a solution that was doing more volume than all the world’s trading desks combined. All the world’s ad exchanges combined. And so how cool was it to go from Wall Street to Madison Avenue, as it were, and bring that technology and see that revolution? So that’s how I got started. And I’ve been hooked ever since. And it’s been a few years, I suppose.
Steffen: Well, digital advertising is still growing fast. Some estimates show it exceeding 400 billion in spend this year. It has been one continuous expansion, but rather a series of chapters. What part have you played, and what are you seeing going on today?
Jacob: That’s a great question. So, you know, one of the reasons why I was excited to talk to you is because it is, it does feel like we’re entering into a new chapter. And it’s something that you and I spoke about, we both got excited about it. And so you know, going back to Right Media, what we saw was, here was a moment where publishers, agencies and advertisers were trying to figure out how the heck to do this online advertising thing?
And how do you do it in a way that really takes advantage of all the benefits the Internet has to offer, and it’s so fundamentally different than print advertising, for example. And so it was really cool to see that evolution firsthand, and to help propel it forward. And since then, there have been a number of really interesting chapters in this revolution of, you know, Andreessen Horowitz calls it, you know, software eating the world.
And in a way, digital marketing has followed suit. Digital advertising has eaten a lot of the attention and budget allocation, etc, because that’s where we’re spending all of our time. So the cool thing that, you know, as you mentioned, it’s kind of hard to believe that digital advertising will see 400 billion plus of spend this year. It’s kind of amazing as an industry that we’ve gotten to that point. But the reality is a couple of things.
One is search and social dominate that. I think it’s about 50% of that total amount is search and social. And we know what that’s code for. Is Google, Facebook, Instagram, TikTok. You know, there are a few very large beneficiaries of that. So that’s great. Why? Because it works. It works really, really well. Search and social is highly effective. And a lot of our brands have built their businesses on those channels.
But the thing that’s exciting to me and the reason why I’m so thrilled to be at PebblePost doing, what we’re doing, is that there are some incredibly fast growing channels that I would call hybrid channels. They’re reinventions, or reimaginings of traditional advertising channels. So CTV is an obvious example of that connected TV. That’s, you know, let’s call it $27 billion of spend this year, and digital out of home is another fantastic category.
Retail media is a new one that’s a little different than the traditional channel that is a fantastic way to allocate budget for brands. And that’s projected to be almost $50 billion of advertising this year. So it’s incredible. So all these new solutions are emerging while we’re seeing that cookies are, it’s the long goodbye for cookies.
You know, they are going away eventually, right? Cookies are going away, Apple has shut down some targeting capabilities that Facebook relied on. And so we’re seeing the need to innovate. And that’s where I think this industry is at its best when dynamics shift, new solutions are required.
We have a lot of really smart people here and solutions like these along with what PebblePost does, which is programmatic direct mail, reimagining how direct mail works, are really starting to gain ascendancy and get a much larger share of marketer attention and budget, because it really works. So that’s the longer answer for you know, where the new chapters are I think that we’re starting to see today.
Steffen: Yeah, interesting what you’re talking about, because I remember probably 10 years ago, working at Universal McCann, we talked about how budget will go away from TV, for example, and from all offline media, because people are, you know, they’re online. That’s where they are. And what has happened over the years is like, instead of these solutions completely disappearing, as you said, they just reinvented themselves, right?
They use, they use the information available, data that has been collected, to shape that solution and make it relevant again. Because let’s be realistic, when you answered on social, it’s busy in those channels. It really is busy. There’s a lot of noise there. And everyone is trying to shout louder to stand out and get their little share of that audience that they’re after.
But finding solutions that can be added on to those that help kind of recall what they might have seen online and kind of strengthen that, I think is something that in the future will help to be more successful with your advertising activities.
Jacob: Yeah, I agree. I agree. I mean, our team, as we’ve done research on all these other channels and these different behaviors is the metric that surfaced that was the weirdest and most surprising metric that I have still seen in a while, is that you and I are exposed to 10,000 ads per day. Which I’ve heard mentioned a lot of different places, but it’s always shocking to me to really like think about what that means.
And if you think about what of those touches, of those exposures, you can actually recall as a consumer, it’s not even fair to say it’s a minority. It’s a fraction of a fraction. And so how in this world, can we create meaningful connections between consumers and brands in a way that benefits both, and doesn’t just hammer consumers with messages.
And I think that’s where these kind of so called hybrid or reimagined channels can really be impactful because they bring very high impact, very powerful sight, sound and motion or physical tactile experiences into the digital world. And I think that’s what makes it really cool and fun.
Steffen: Yeah, I totally agree with what you just said, because what stands out when you are online or even outside, right, you recognize the things that you know. It’s a brand that you know, that you will recognize, or it’s a product that consciously provides a solution to a problem that you have. That’s what you basically, you know, recognize. But everything else around that you just don’t recognize, because I think we have learned to blend out all the other stuff, because it’s so distracting.
And in for new brands or for brand has a new product, to break through that noise, you have to find other ways to kind of start that initial awareness phase, you know, where people start to recognize that solution, that service, that brand. And then you can follow up with them online or through other channels. So just to be clear, I don’t think it’s about either or it’s about a more complex media plan. And I think, again, I’m a performance marketer.
And I quite often tell our clients like yes, we do performance marketing, but we also need to do awareness because if you just scrape the bottom of the barrel at some point, there’s nothing to scrape there. You know, you need to bring in new people. And that’s why you need a much more complex approach and not just saying oh, we just do search and we do a little bit of social for retargeting, and that should be it.
Jacob: Yeah, yeah, I think that’s a great point. You know, it’s interesting. We always like to look forward as an industry. But the reality is, you know, direct mail, traditional direct mail is a $40 billion channel. Still linear TV will still outspend CTV or ATV. And so it’s how do you combine all these things together in a way that’s impactful? And so I think that’s where the fun happens,
Steffen: Now us talking about this means that we kind of recognize that just kind of focusing on one or two channels is probably not enough to be successful. Right. What have you seen when talking to other marketers? Are they recognizing the situation? Do they make room in their media plans for solutions, like Pebblepost, like CTV, etc, to expand their activities?
Jacob: Yeah, that’s a great question. So I think first of all, it’s important to kind of acknowledge that the last three years have been very tough to be a marketer. I know I’m stating the obvious here, but it’s been tough. And we’ve seen the impact there. You know, COVID, change consumer behavior dramatically. I know everybody’s sick of talking about COVID. But, you know, the effects are still being felt.
Supply chain has changed dramatically. And then the industry changes in terms of privacy, consumer expectation, regulation, I mean, we’re maturing as an industry in the midst of all these things happening. So what we’ve seen to bring it back to the marketers, is marketers that are diversified in how they allocate their budget, have been outpacing, in terms of success, market share, sales, we’ve seen them outpacing by a head and shoulders, marketers who are overly concentrated in one or two channels.
And so a lot of the marketers we talk to, are thinking about, okay, how do I think one or two steps ahead? I can’t think 10 steps ahead, because I just don’t have the mental bandwidth. I’m slammed. My team is very lean. My CFOs, you know, breathing down my neck, I have to show results. But I need to diversify. And so a lot of what we’re talking to them about is not so much how do I augment what I’m already doing?
But how might I actually find some fundamental ways to replace what I’m doing, knowing that some of the ways I’m marketing today may not work in a year or two. So we’re seeing everybody, sort of everybody, all the leading brands that we work with, are leaning in to test and learn to trying new channels.
Programmatic direct mail is definitely one of those channels. And it really helps to be really clear with them about what the value we can drive, where we really work, where we don’t work. And I think they’re trying to shift how they think about their media mix in the New World Order.
Steffen: Interesting. Now, let’s talk a bit more about Pebblepost. I mean, as we’re recording this, market situation is a little bit interesting. Let’s use that word, right. We talked about it before we jumped on the podcast recording. We’ve seen brands pull back on spend. Talking to other agencies, they’ve seen the same thing too.
You know, businesses are softening as relates to leads and sales, etc. And they’re kind of reacting usually with starting to pull back on marketing. How has that been for Pebblepost, and are you guys doing something different that basically makes you a little bit more immune to the usual reaction that companies have when they see kind of a downturn?
Jacob: Yeah, that’s a great question. So Pebblepost is at the heart of it. We’re a leader in what we call programmatic direct mail. And so we take the best in digital and direct mail and we pull those things together. And what that means is that we have a very good real time understanding of what consumers are interested in. And because of that, we can help brands market to them at home via their mailbox in a way that is much more relevant than a lot of their traditional direct mail tactics.
Because we actually know what consumers are in the market for at a given time for a given brand. And so, that is really powerful. And what that means is that the core of our value proposition for a brand is performance. We can drive performance and not only performance, but we can drive incremental performance for their brands, which is something that brands especially in uncertain or soft markets, treat as table stakes.
So when we work with you know, head of marketing, head of digital marketing, head of acquisition retention, what have you, we are projecting and then delivering on an incremental lift and top line return on ad spend or CPA metric, that then the brand can judge and compare with their other channels. And the benefit that we have, and this channel has in this kind of market is you have very, very accurate and measurable results that allow you to say this is working, so I’m going to invest x in it, in order to get y back out.
And that I think is a very important equation for a lot of marketers these days who are being asked to show an impact. So that’s been helpful. Now, we have some of the marketers in our portfolio are seeing softer sales, depending on what sector they’re in. Especially at the beginning of the year. And when that happens, we usually have a conversation with them about what do they still need to drive to continue to drive growth. And we talked to them about the school of thought.
There’s pros and cons. It’s a natural knee jerk reaction to pull back on marketing. But there’s been study, after study, after study, were actually investing selectively in high impact marketing initiatives means that when the market turns, and it always does, eventually, you end up as the leader with more market share and more success and more momentum, as opposed to people who have pulled back so much that they’re starting from a cold start.
And I think a lot of our marketers are trying to make that balance. And it’s impossible, there’s no one right answer. But it’s a trade off that we have to work with each marketer on. I know, given our previous conversations, you guys are deep in those conversations, too.
Steffen: Now, usually the financial lead within a company or the CEO will make the decision to cut budget in areas and as I said, as we talked about it. Marketing is usually one of the areas that has to give. How are you guys helping your counterparts at agencies or brands have a strong argument for not cutting? Because I get it, and probably the listeners get it too.
Like, you shouldn’t cut marketing, right. You should focus on really what has good impact. But that might still not be enough to satisfy the board. That might not be enough to satisfy the CEO, the CFO. Are there specific ways how you engage with your clients that help them make that argument?
Jacob: Yeah, I mean, and like you said, we look at it more as a toolbox of conversations, as opposed to one answer that we try to drive with everybody. So we look at just like you, we look at all of our brands as partners who we want to build long term relationships with through the good times and the bad times. And there are both always. So I think a couple things that we do. One is every marketing program we start with a brand, we do a KPI projection.
So before they spend $1, we actually go through, we look at their site volume, their conversion rates, and all sorts of other metrics. And we’ll actually deliver back to them, this is what we think we can achieve for you from a return on ad spend basis, from a CPA basis. Will this meet your threshold of what you require to continue to invest?
And that is something that it wasn’t an easy thing to develop, it took a fair amount of data science and engineering effort to make sure that we got it to the point where what we projected is what we could deliver. But we’ve gotten pretty good at it. And so I think that’s one thing that helps. The second thing is the nature of our channel is that everything is measured on a unique address basis.
So it’s very, very attributable. We can see exactly which household received a piece of mail, we can see exactly which household converted on an offer. We can see when they did that. And then we can build holdout groups so that we can see of the households that we also thought were valuable, but we didn’t send mail to, how did they convert? And then we compare those two conversion rates.
And that’s how we calculate our lift for brands. And so at every step of the way, we really try to show brands the quantitative sort of benefit of what we’re doing, so that they have something they can bring back to their internal stakeholders. Sometimes that means they say, great, but I can spend half as much as I could last quarter because sales are soft.
And we say, okay. Sometimes we can surface insights that actually show them where we can help them double down on segments that are working really well. And so I think in every case, there’s not a one size fits all, but those are some of the tools, the projections, the measurement, the lift, that helps us understand kind of what they’re looking for.
Steffen: Yeah, yeah. So your solution sends an offline. So based on data that you collect on a client’s website, your solution sends out an offline mail. So normal mail comes from USPS or whoever delivers it, you have an offer on it. The conversion happens online. Or are there differences?
Jacob: Yeah, so it’s, it’s actually maybe I should have started with this. The philosophy of the company and the data that we capture are actually the same. So the philosophy is, we should help marketers understand what consumers are interested in, where they’re located, and what they purchase. And so that intent, postal address and transaction data, that is the data that each brand shares with us so that we can perform our services to them.
So we figure out what a consumer is interested in, we send them a relevant piece of mail. And then in terms of how the transaction happens, the beauty of the channel is, it can happen online, it can happen offline, it can be a call in center, if it’s a nonprofit, it can be a mailing, it can be in store. As long as the brand can record the transaction and then share that with us, then we will use that to build the measurement attribution reporting that we have.
Brands also will do, you know, custom QR codes, coupons offers. And that’s a nice kind of icing on the measurement cake. But the fundamental value prop is for every single transaction that you generate, while we work with you, we will tell you how and whether we attribute a conversion to it.
And then, if a brand doesn’t want us to do it, we’ll integrate with a third party measurement provider who can do it for them. We work with folks like rocker box and Newstar and measured and others depending on who the brand is working with. We’ll integrate with them.
Steffen: Interesting. Are you guys also doing A/B tests to identify what potential offers do better?
Jacob: Yeah, you know, it was funny. Coming from digital, I’m sure you’ve experienced this. The beauty of digital, social and social in particular, and search too, is that testing is relatively cheap. So you can send 10 million ad exposures out there to generate 10 million impressions. And you can instantly see across 1000s of variables, how things are performing. Programmatic direct mail is expensive.
So you know, let’s say a postcard is costs, you know, first class mail is almost 30 cents, just for the postage. So how do you look at testing that way? What we do is we really focus on the boulders as opposed to the pebbles. That’s nothing to do with our name, PebblePost, but still, it’s a good, it’s a good analogy. And we really try to help a brand understand the impact of personalization in the creative.
But we don’t do the level of dynamic creative optimization that a digital channel would do. Just because it’s not cost effective. Unless the brand is willing to spend millions of dollars in testing, which some do. We don’t do that at scale. But we will look at A/B testing different offers. And oftentimes we see counterintuitive results, which means the testing was a good idea.
Steffen: Interesting. Now what industry benefits more from a solution like Pebblepost?
Jacob: Yeah. So the nature of marketing to consumers at home, not digitally, is that you need time for the offer to get there. So any consideration cycle that is, you know, less than a day, it doesn’t really make sense to work with us because by that time the consumer has decided what they want to do unless you’re thinking about loyalty marketing and retention marketing, things like that, which we do.
So we generally look to brands that have relatively high services or products, a relatively considered purchase. And so what does that mean? So retail. More than half of my businesses retail. Travel, financial services, nonprofits, technology. So all those kinds of direct response oriented, but considered purchases work incredibly well with programmatic direct mail.
Steffen: Is it more b2c play or is there also room for b2b?
Jacob: So we really focus on b2c. I think there’s an enormous opportunity in b2b, especially now. And I think the lines are blurring. Talk about hybrid, b2c and b2b. You know, we’re both, I mean, I’m at home, I don’t know where you are. But the opportunity there is great, but we’ve really focused on b2c. But it’s something we’re thinking about, you know, in the future, how do we support more b2b offers?
Steffen: Perfect. Now, how does your solution work with and we talked about it really early on, when we came onto the podcast, with cookies disappearing? Is that something that you’re worried about? Have you future proofed the solution in a way that you don’t have to worry about that? Talk about that a little bit?
Jacob: Yeah, so at the heart of our solution is data asset, which we call the Pebblepost graph. And the PebblePost graph is, combines those three data elements we were talking about before. Consumer intent, postal address and transaction data. And so what we do is we actually work with the brand, the brands that we work with, participate in this graph. And we’ve created it’s now 500 brands that have participated in this graph.
We’ve created a very large data asset that allows us to run our services very effectively. We cover 130 million, almost 130 million residential households, which is pretty much every household in the US. And we see billions of data points every month across all of those households. And we track purchase behavior in aggregate, of course, anonymized across all of those households.
And so that allows us to understand and connect a browsing event to a postal address to a purchase in a privacy compliant way that isn’t reliant on cookies. So you know, who’s not going to get hurt by cookies going away from an industry standpoint is going to be folks that have very robust data assets that aren’t exposed to cookies as a necessary mechanism.
And so I think that’s something that we talk to marketers everyday about, but it’s something that we are going to make big investments on continue to make big investments on going forward because I think that is a critical solution that industry is going to need.
Steffen: Perfect. Now, Jacob unfortunately, we’ve come to the end of today’s podcast episode. Thank you so much for joining me on the Performance Delivered podcast and sharing your thoughts on the rise of hybrid channels. Now if people want to find out more about you, about Pebblepost, how can they get in touch?
Jacob: So you can either email us at email@example.com. You can go to our website at www.pebblepost.com. Check us out on the socials or maybe we’ll show up in your mailbox. Thank you for having me so much. It was a pleasure
Steffen: Of course. As always we’ll leave that information in the show notes. Thanks everyone for listening. If you like the Performance Delivered podcast, please subscribe to us and leave us a review on iTunes or your favorite podcast application. If you want to find out more about Symphonic Digital you can visit us at symphonicdigital.com or follow us on Twitter at Symphonic HQ. Thanks again and see you next time.
Voiceover: Performance Delivered is sponsored by Symphonic Digital. Discover audience-focused and data-driven digital marketing solutions for small and medium businesses at symphonicdigital.com.