Warby Parker's IPO filing last week was another sign that direct-to consumer (DTC), is a powerful e-commerce trend. MuteSix, a LA-based performance marketing agency, didn't wait long to start its business around scaling DTC brands.
MuteSix was founded in 2014 and purchased by Dentsu by 2019, according to Rhoda Ullmann (VP Consumer at Sense), a Boston-based startup that makes a home energy monitor. They have the best expertise in Facebook and Google's paid advertising platforms. She also wrote that they have a smart, efficient approach to creative design which was crucial to our scaling. Please fill out this survey if you know of growth marketing agencies or freelancers that we should recommend.
MuteSix's clients, past and present, include brands such as Adidas and Petco. It also provides a wide range of marketing services to these companies, including high-quality direct response videos. We think that no matter your budget, you will learn valuable lessons from Greg Gillman, their chief operating officer. What is the key takeaway? Content and data are the kings in today's highly competitive advertising environment.
Editor's Note: This interview has been edited to be more concise and clear.
What can you tell us more about MuteSix?
Greg Gillman: We've been in business for nine years. We began as a Facebook advertising agency. Unlike many agencies who claim they can do all, we chose to concentrate on what we are best at. It was doing Facebook media purchasing for e-commerce businesses at the time. Primarily in LA, which is the hub for these companies, but also across the country. The organization grew slowly over time.
We now have a little more than 400 employees and manage over $500 million in Facebook and Google spend, Instagram, YouTube, and Google Plus. Our goal is to be a one-stop-shop for DTC ecommerce companies. We manage all channels required by DTC brands. We are a performance agency. Everything we do is based upon results. We help people to increase their e-commerce revenue.
What makes you believe that DTC is a good fit for performance marketing?
DTC entrepreneurs focus more on immediate impact because they don't have to sell product. DTC marketing requires that you be more focused on performance. Agencies that work with large brands often focus more on impression buying than performance buying. You can tell them, "I ran a reach campaign today to reach 10 million eyeballs. And whatever happens, because you told us to do 10,000,000 impressions." This is different from working with a team like us, which is trying to optimize each piece of the funnel and being responsible for the entire funnel in order to drive as many sales or revenue.
Which clients are you most comfortable working with?
We work with a majority of digitally native DTC companies. Because we are good at what we do, we have mainly stayed in this lane. We work with startups of all sizes, established companies, and large corporations that need to revamp their media buying strategies and creative.
My role includes sales, marketing, partnerships and the overall management of MuteSix. We are looking for high-growth brands we can scale. Over the years, we have learned that cool products with great user value are what work well.
We have worked with many startups, at various stages of the funnel. From the ground up, we have helped them through several rounds of funding and then assisted in their acquisitions, which included two by unicorns. Ground up is much more difficult these days. They should have proof of concept. Putting in $10,000 to $15,000 per month on Facebook, or $5,000 to 10,000 on Google often shows me that it has some life. If it's a great idea, I don't want to restrict us. Many people return to me after they have proven the idea a bit.
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These clients are not the right fit for you.
If there is no unique value proposition for the product, it won't work. A consultant may be able to set up Facebook ads for a smaller company if it is a regular business. However, we want high-growth businesses.
Campaign managers get paid based on the campaign performance. If I bring too many campaigns that don't work, there will be a lot of unhappy media buyers asking Greg: Greg, why would you take on this brand? This business model has helped us attract top talent but we must ensure that we only bring brands that we believe can scale.
It's easier than ever now to start a business, but it's harder to scale it beyond the $2 million to $3 million mark. I keep going back to founders to ask them: What are the five reasons people want to purchase your product? What are the five reasons they don't? It won't work if the entrepreneur can't answer this question. They won't be able to tell someone why their business is great.
What makes MuteSix different than other agencies?
The main difference I would say is that we have an in-house video team of 70 people. They are great at shooting and creating performance content. Video that sells product is not just great content.
We also have a data science team integrated with our media purchasing team. This helps companies navigate issues like signal loss and attribution due to the iOS14 update. This means that we are focusing on the whole picture and not just one channel, and are working on mix-modelingattribution.
What are the main areas of focus for your data team?
Brands have a lot of problems with attribution. This is how to continue spending money even though there may be less signal. Facebook can skew too heavily and Google is always on the last click, which can sometimes make it seem like everything is never working. To help companies make informed business decisions, we are building statistical models that show information at higher-than-the-platform level.
We are also creating better segments of customer profiles to help clients understand their core audience and also helps us create predictive audiences for new people.
We are also trying to address the issue of incrementality. We work with large brands with a strong social following. They ask us: Why should I spend more money when I could have acquired these users anyway? So, we have done incrementality testing for brands who spend a lot on other channels than Facebook or Google. We assisted them in creating different ways to view the data so they can continue to spend on those channels. They also know the incremental gains they are getting.
One other thing I believe is extremely important, but it's often overlooked: first party data. We work with brands in order to acquire as much first-party data possible, segment it, and then use it. Because that is what they would be left with if Facebook were to shut down tomorrow.
How can you adapt to changes in your marketing environment?
We have many senior leaders at each level of the channel because we work with so many brands. We regularly meet across departments to share our insights. Data science also creates very robust reporting. We strive to keep up with our brands and be ahead-thinking when it comes to any issues that could impact the agency. We are constantly looking for ways to hack things such as the content that works and what will scale.
This is how we approach it every day. Each major change in our business was made to meet the needs of the brands we were working with. There is a data side of our business, and it is more important than ever to utilize that. Facebook was once a place where you could do anything and get a return of 4x to 5x. When you're literally making money from Facebook, no one will ask about your data. This happens only when margins are tight. Facebook was becoming more popular, as well as Google. Google had more advertisers, a higher CPM, and a more competitive market. We had to become more smart about what we were doing so we created our data team.
There are two levers we can pull now: the data and the creative. We are a performance marketing agency that focuses on all of the levers. Platforms like Facebook will only become more competitive and we will lose more traffic. The more agile agencies need to think beyond what they are doing on these platforms. We will continue to generate money at the top of the funnel by increasing our incremental revenue through SMS, influencer marketing, and organic content.
Your content arm is as important as a lever.
Our media buyers work directly with our video editors, producers and video editors to create an integrated solution. This allows us to be flexible and fast because content is the king. We optimize around things such as the thumbs up rate for Facebook three-second videos views. If I hold someone for this long in their newsfeed I could potentially get them into the flow. YouTube is the same. We also do this programmatically, as the goal of programmatic is to get people in the funnel and help them through it. We used both our data science and creative teams to optimize the front end around these metrics that quickly move things along.
A content arm that is as strong as ours in SMB agencies is unbeatable. One of our greatest levers is to leverage our content team to create performance content. Facebook told us three and a half year ago that if you don't build video content and if your newsfeed doesn't prioritize video, it won't work. We leaned in hard, especially in Los Angeles, and the pain of growing an entire creative team of 70 people was real. It allowed us to scale up our agency.
