Naked & Thriving

26X revenue growth over three years of working with us

Client
Naked & Thriving
Sector
Beauty
Services
Ads Management, Production, Post Production, Content Creators, Landing Pages, CRO
Client
Naked & Thriving
Sector
Beauty
Services
Ads Management, Production, Post Production, Content Creators, Landing Pages, CRO

Naked and Thriving is a direct-to-consumer skincare ecommerce brand based in New York, USA. They make organic, vegan, cruelty-free skincare products for the middle-aged market. Having scaled to 7 figures by themselves, the founder reached out to us with ambitious plans to grow further.

Before starting with us, the founder was managing the day to day media buying himself, which created a huge opportunity cost since he had little time to work on growing other areas of the business.

So we jumped in to help…

Media Buying

Attribution & Measurement

Evaluating the performance of any marketing channel has been a challenge for DTC brands post iOS14 and ATT (App Tracking Transparency). However, we were able to overcome this challenge and measure individual ad level performance with enough accuracy to spend up to $80K per day at a profitable margin.

The way we measured overall ad performance was by reviewing new customer MER (Market Efficiency Ratio). This is simply the revenue of new customers divided by the total media spend across channels. This helped us to account for secondary channels such as Google and TikTok giving us a holistic view of overall business profitability. However, we still needed ad level attribution to scale efficiently.

We got this by using first party data with server-side based tracking as the primary way to measure ad performance instead of the data provided by the Facebook pixel. Our tool of choice is Redtrack.io, from which we were able to track conversions from all users, including those who opted out after the iOS14 rollout, which our in-house team implemented for the client alongside their website development team.

As there is next to no reporting delay when using first-party data and server-to-server tracking, we were able to see sales performance in real-time, giving an accurate pulse on ad performance at all times. In comparison, we were only able to call on Facebook’s API on an hourly basis leading to a short delay in reporting.

Reducing lag on reporting became essential as we introduced automated ad scaling logic based on dynamic real-time input variables, which were calculated from the first-party data.

As Facebook Ads were the primary prospecting method for Naked & Thriving, we decided to measure results based on a first-click attribution with a 30-day lookback window. We opted for this attribution model as it was clear to us that the ads were the primary driver of the conversion.

Here’s why…

By default, Facebook uses last-click or last-view attribution, and Google Analytics uses last-click, both of which can lead to a misleading measurement of results for prospecting campaigns. Facebook positively skewed the performance of retargeting ads and under- credited prospecting ads, whilst Google Analytics positively skewed branded search terms and under-reported conversions from Facebook ads.

The iOS14 update also brought additional limitations, such as disabling breakdown reports on conversions by age, country, gender, device, and more. However, by tracking results with first-party data, we could view additional data points on each ad by passing tracking parameters through the URL.

For example, we were able to view the following breakdown for a specific transaction ID:

This is more powerful than using Facebook Ads Manager or Google Analytics alone because:

  • Accurate ad level attribution leads to greater efficiency in ad spend as we do not overspend on losing ads and can quickly scale the winning ads.

  • Conversions are reported in real-time, which feeds our automated ad buying systems.

  • We can see which ads are driving sales without over attribution of brand terms that would occur if we depended on data reported by Google Analytics.

  • We can view channel ROAS (Return On Advertising Spend) by country.

Diversifying Product Mix

In the early stages, we determined that growth was being driven by a winning SKU (Stock-Keeping Unit), which led to confirmation bias that made us focus on that single SKU. However, the overall growth started to plateau and we decided with the client that it would be wise to scale horizontally and focus on advertising multiple collections and SKUs.

As the % Gross Margin for all the products were within a small range of each other, we were able to increase ad spend agnostically of which SKU was performing, as long as the overall new customer MER (Market Efficiency Ratio) was in line with the client’s targets.

We initially started with face oils then moved on to face serums, followed by bundles and eventually incorporating eye creams into the advertised product mix.

By freeing up the Naked & Thriving team from managing advertising and customer acquisition, they were able to focus on creating, testing and launching new products, which enabled them to diversify their product range as the brand grew again.

Growing International Sales

After we took ownership of customer acquisition from end to end the client was more resourced to solidify their international logistics and switched from only shipping to the US to then shipping to 40+ countries.

After we took ownership of customer acquisition from end to end the client was more resourced to solidify their international logistics and switched from only shipping to the US to then shipping to 40+ countries.

In order to maintain profitability we factored in the variable shipping costs associated with each country to create country specific ROAS (Return On Advertising Spend) targets.

Each week we created a weighted average ROAS across all countries based on the proportion of revenue driven from each country and its individual ROAS target.

This is a critical step in order to maintain overall profitability when advertising budgets are liquid across countries.

We also monitored each country’s performance and excluded those which hurt profitability, regardless of if they were performing at above the worldwide weighted average ROAS target. Being able to scale across multiple countries enabled further growth in revenue and allowed for further optimisation of profit margins since the Facebook algorithm was able to find the most profitable placement at any given time, independent of country.

Logic Based Scaling

Maintaining a consistent $50,000 daily ad spend requires rules, cost caps, and clear reporting to control the budget and prevent overspending. We used an automation tool called Revealbot to automatically pause unprofitable ads and increase the budget for ads that were performing. The rules were fed by real time data from Google Analytics and Redtrack (not Facebook).

Whilst our Growth Strategists continuously fine tuned the ad buying process, it was important that we used automation to maintain profitability 24 hours a day.

Here are a couple of examples of the rules we used:

This was especially important during peak periods, where we could increase budgets intra-day if performance was strong in the morning, before peak US traffic time at 4-5 pm.

We used a high daily budget on the campaign level and used cost caps to control the ad spend. Our cost caps were set at approximately twice the target CPA (Cost per action), as Facebook reported around half of actual revenue due to signal loss caused by ATT (App tracking transparency). Each week we checked the percentage of revenue underreported by Facebook to determine if these cost caps were still correct as we found a degree of variability in the amount of underreporting.

Creative Strategy

Creative Testing Process

One of the biggest levers in growing Naked & Thriving was to consistent creative testing.

At the time of this case study, we had tested 8,676 creatives in order to scale up revenue whilst maintaining profitability. Our creative strategy is centred around Beta Typing our creatives, where we start by testing wide concepts and distilling the winning elements of the creative to produce iterations that have an increased chance of success.

As we were continuously producing ads we would always have new ads ready to go when performance on the control creative declined. We would focus on iterating previously winning concepts, whilst also introducing a reasonable proportion of new concepts. Getting the ratio of iterations to new concepts right was a constant balancing act and why it was so important for our Growth Strategist and Creative Strategist to work together in tandem.

Video & Photoshoots

Having control and input over the production of raw images and videos gave us the ability to create winning ads faster and with a higher degree of confidence.

Our Production Team works closely with our Growth Strategists, Creative Strategists and our clients which enables them to gain insights on what is working in an ad account to then brief and shoot new ad creative every week.

The ability to produce and test creatives quickly is essential to scaling on paid social. Using our in-house team we were able to go from an idea to creative in the ad account within 14 days on a consistent basis.

By shooting the content in-house, our creatives were produced with Performance Creative best practices in mind, and we also reduced dependency on turnaround times from the client or their external creative agencies to supply assets. This removed a major bottleneck in our ability to scale the brand.

For example, when our Creative Strategist found out that a specific model was performing well in the ad account, with other variables being mostly equal, they were able to immediately brief the Production Team on a second shoot where we re-cast the same model back into the studio to shoot variants of the initial advert.

We can break the Creative Production process down into the various steps involved as follows:

STEP01
Evaluate test results from the prior 2 week sprint
STEP02
Propose a hypothesis as to why a creative is performing, and decide what we should test next
STEP03
Create a Production Brief that would produce assets allowing us to complete the test
STEP04
Cast models to shoot from our in-house studio or on location
STEP05
Source a location and props or build a set suitable for the Production Brief
STEP 06
The Client approves on models, UGC creators, set design, outfits, location and the visual ‘dos and don’ts’
STEP07
The shoot happens!
STEP08
Our Creative Strategists brief our post-production team on creating the next round of ads utilising the new raw assets and insights from prior creative testing
STEP09
The Client approves on the final ad creative
STEP11
Ads are launched
STEP12
Start over at step 1!

Brand Guidelines vs Performance Creative

We understand the importance of maintaining a strong brand image to tie together marketing efforts across channels, and make a lasting imprint on a potential customer’s mind.

Performance Creative can involve quick transitions and direct response sales techniques which can conflict with a client’s expectations of their brand’s image. In addition, we often need to test concepts quickly which can sometimes require bending the rules on branding a little.

To find a happy middle ground between maintaining brand and performance creative we worked with the client to develop our own version of the brand guidelines specific to paid social ad creative. An example of this was finding secondary fonts to make captions easy to read instead of using the brand’s main font, and building branded graphic design overlays for top text, bottom text, offer badges, icons, reviews and many more aspects of the ads.

Influencer Whitelisting

Whitelisting (or dark posting) is the process of running ad campaigns directly through an influencer or content creator's page on behalf of a brand. This makes the ad look more like a post from a person which creates trust with a potential customer.

See Meta’s own article about Leveraging Creators for Direct Response where they heavily promote the use of whitelisting.

Over our engagement we worked with over 20 content creators on a regular basis, initially producing content their content into ads which we ran from the Naked & Thriving page. We then approached a handful of the top creators that we had already tested through the brand’s page and negotiated deals to whitelist ads from their pages. In a number of split tests we found that the same ad ran from the content creator’s page outperformed the ad ran from the brand’s page.

Conversion Rate Optimisation

When driving a high volume of traffic to an eCommerce store it becomes important to work on improving the conversion rate of the site and minimizing drop-off rates between each step in the conversion funnel.

At the time of writing this case study we performed a total of 89 A/B tests.

This is am ongoing process, where we continuously test to maximize profitability from our marketing budget. Sometimes even a 0.1% lift in conversion rate can help us to achieve the overall CPA targets and optimise the performance of our campaigns.

Here’s an example of a CRO test we did that produced an additional $161,599 revenue in the first month, and continued to yield a lift in conversions going forward.

Hypothesis

If we give the visitor a choice between two offers and make it clear how to claim one of them on the home page, we will increase conversion rate and profitability.

Reasoning

We noticed on Hotjar (our visitor recording and heatmap tool), that the initial banner on the website was causing confusion and a significant portion of the website visitors weren't taking advantage of the coupon code. So we thought that changing the position of the offer on the banner would increase its visibility. By offering a choice of offers, it creates a “yes vs yes” option in the consumer’s mind as opposed to a “yes vs no”.

Test Evaluation

The tests above produced an estimated additional $161,599 per month in future revenue by achieving an overall 2.15% lift in Conversion Rate on the website.

Quality, well-thought-out CRO tests produce incremental sales and ensured we got the most bang for our buck on our advertising dollars. Since the number of statistically significant CRO tests a DTC brand can do will be limited by their visitor count - we advise prioritising testing key needle movers which would be product, price, offer, product page design and checkout design.

Venture Beyond helped grow my skincare brand over 20x by scaling up our advertising. With their expertise I have been able to maintain a small team while fueling growth. Their extensive testing and solution-oriented mindsets make them a great partner. This is why I’ve trusted them with my marketing budget for the last 2.5 years.

gregory kimball

Founder, Naked & Thriving

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