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  • Writer's pictureLucas Bergmans

How one scale-up embraced TV advertising (Spoke London)

Updated: Jan 4

For a scale-up faced with the dilemma of whether or not to branch out into TV advertising, there’s an obvious decision.

As Simon Cowell might say: "it’s a ‘no’ from me."

Compared to the Marketing channels they’ve used up until this point (like paid search and paid social) TV looks very expensive, risky and hard to measure. Even if they can see the benefits of what it can bring in terms of reaching more customers and creating demand that makes performance marketing work harder, it can feel unattainable and inaccessible.

But the world has moved on and there are a number of options open to scale-ups who want to embrace testing out TV in a way that works for them. TV media owners - like ITV, Channel 4 and Sky - have adapted their offering to be much more accessible to those trying out their channels for the first time.

In the first article in this ‘Adventures in TV’ series, I had a chat with Ben Farren, CEO of Spoke – a start-up that sells top notch custom-fit men’s trousers to discerning gents (like me!).  We talked about his first steps into TV advertising and how a media-for-equity partnership with ITV helped his business step-change its growth.

Hi, Ben, thank you very much for joining. Let's start with you telling us a little bit about your career highlights and how you came up with the idea for Spoke.

I was a management consultant when I left university and I enjoyed it more than I anticipated. I bounced around lots of industries and lots of parts of the world and that was exciting. Until it wasn't, and I worried that I was being institutionalised, and I wondered if there was anything more to working life.

I jumped ship after six years in that world and started a FinTech business in West Africa which I worked on for three years and left earlier than I would liked to have. And it left me with this profound sense of unfinished business. So, I went back to consulting for a bit but with a very clear intention to get back into entrepreneurship. I had lots of ideas bouncing around, but I'd always thought that I'd be quite turned on by the process of building a consumer brand of some kind. I became increasingly preoccupied with some specific ideas around menswear.

"The brutal truth is that everybody's got some kind of hang up or some sort of physical limitation."

I thought that ‘fit’ is a massive issue in clothing. ‘Ready-to-wear’ really isn't ready to wear. It's incredibly compromised. And I thought that ecommerce - which was really starting to hit its stride - was an opportunity to fix that. Most people seem to be using smarter and more agile supply chains and digital distribution to serve more trends. And I thought we could use the same stuff to serve ‘fit’ and build a brand around that. And everything I knew about men and the way they shopped suggested to me that they'd be dead into that: the brand that was promising to finally solve your fit problems.

I think every guy thinks that they've got some sort of weird foible or idiosyncrasy or strange body part that explains why they find it such a nightmare to visit the fitting room. The brutal truth is that everybody's got some kind of hang up or some sort of physical limitation. ‘Thunder thighs’ or ‘skinny butt’ or big calves or whatever it is. And so I thought there was going to be a really large audience for somebody that was promising to banish these problems and banish the fitting room forever. And that was the genesis of the idea for Spoke, encouraged by plenty of direct-to-consumer digitally native apparel start-up brands popping up, especially in the US. I quite liked that idea of eliminating some of the business risks by importing an idea that seems to be doing well over there.

In theory, I sold the first pair of trousers almost 10 years ago in the summer of 2013. But in practice, that was a bit of a pilot and we didn't really start trading properly until 2014.

And give me an idea of the journey you've been on since then, since you sold your first pair of trousers over the last 9 or 10 years.

We started with a single product, a single marketing channel, a single geography and a chunky website coded by me.

And now we've got hundreds of products and a lot more marketing channels that we’re present in. The UK is still our main market, but we've got decent sized businesses in the US now and stuff going on in Europe, which has been undermined quite seriously by Brexit no doubt about that.

So, across every dimension: product, channel geography, there's been a lot of expansion. Everything except customer: we’re still focused on the same guy, largely. And by steadily opening up the degrees of freedom along each of those dimensions, we've been able to keep the growth train going.

In terms of challenges, the biggest one was when the growth train most definitely ground to a halt, which was our experience of COVID. I mean, it was terrible. We lost about 70% of our volume overnight at the start of COVID. And as it slowly clawed back, managing the re-inflation of the business and getting back to where we were after COVID has been as much of a challenge as managing the shock of the first lockdowns.

And talk me through your first few steps into advertising on TV in the UK.

We’re a digitally native business so what that means in marketing terms is that we started advertising through paid social channels. And I think you could describe these years between 2013 and 2015 as the ‘gogo’ days before a lot of the benefits of these channels have been competed away in the auction. If I'd known how it was at the time, I would probably have gone harder.

What’s great about digital media is that it's measurable and controllable. You can tell if it's working or not, you get that really clear validation. And if it's not, you can turn it off overnight. Those two things, if you've got a tiny budget, are the only place to start. The other thing is, when you're very small and new, any absolute volume of growth is good growth. It's better than nothing. And you've got plenty of low hanging fruit and plenty of early adopters to pick off. And so, crude bottom-of-the-funnel marketing - instructing people to buy this thing now because it's cool, and it has features, really basic product-based marketing - is a completely legitimate place to start and indeed stay for a long time.

"The most generous £CAC that I could calculate for that TV campaign, was somewhere in the order of three to four times higher on what I was paying in any other channel."

If that was our background, it should come as no surprise that our first foray into TV attempted to replicate a lot of that. We were always going to lose a bit of control because it's really hard to play in TV without committing quite a lot of money up front, not the least of which is in the creative copy production. You’ve spent £100k before you’ve even begun.

And then even when it comes to the media, you're committed to a sensible test. So there's another £100k - £150k, so you have already lost control relative to what goes on in performance channels. But I still wanted quick validation and I was persuaded by some folk that I could get that. We could treat it like a performance channel, we could see a direct response that we could measure. We could calculate a CAC (customer acquisition cost). So, we ran TV advertising on the long tail of Sky and my reflection on that experience was that it fell between a rock and a hard place. It didn't really wash its face in performance terms.

The most generous CAC that I could calculate for that campaign, with a pretty optimistic attribution methodology, was somewhere in the order of three to four times higher on what I was paying in any other channel. But I’d made a direct response ad that had a discount code at the end of it and very definitely invited you to ‘buy this thing now’.

I wasn't trying to really build brand equity. It wasn't meant to make the viewer feel anything in particular. It was a reasonably funny ad, but it wasn't conceived of as an ad to drive awareness or brand equity and build future demand, it was meant to do the job now. But I don't think it did that side of things, either. I felt like it wasn't helping me in terms of brand equity.

One of the ways that expressed itself, was in the parts of the schedule that we got pushed to. If you really are determined to get a measurable return on investment here and a CAC that you can tolerate, what you find quickly tends to happen is that you will get chucked to those parts of the schedule that have this awful remnant inventory that was basically free. And when the denominator is virtually zero, you can make anything look like it’s got a decent return on investment. So you find yourself on Discovery Channel 3 at 2am and that is a little bit brand dilutive rather than accretive. If you're going to get slotted into the terrible parts of the schedule, you're not doing anything to build brand equity.

So I just felt like it wasn’t one thing or the other. I felt like these were interesting experiments and I certainly felt like I learned something. But I didn't feel like I wanted to plough half a £million into doing lots more of it.

And so that was at the end of 2019. And then came COVID which was a raging inferno. But as we came out of it and were recovering on the other side, I did become increasingly preoccupied with the thought that I've been doing this Facebook/Instagram thing for a very long time now. And it feels like an incredibly shallow marketing model to have only that in the mix. I was ignoring what I would now characterise as the emerging orthodoxy, which is to say it's fine to do your bottom-of-the-funnel, direct response performance stuff, but for God's sake, make sure you're looking after the top at the same time. I just wasn’t doing that and I felt like I needed some sort of forcing mechanism to rebalance quickly.

"This presented an opportunity to use TV in the way that it’s better used or better intended."

And into that context insert ITV. I thought they were making a reasonably compelling offer in terms of the media-for-equity deal. But, more importantly, I felt like that structure, that device, of avoiding - or putting back - the day that you have to write the check was actually a really clever way of allowing myself to commit to what was really quite large sums of money. And it was always going to require a lot of commitment and patience before I'd see a return, but this presented an opportunity to use TV in the way that perhaps it’s better used or better intended.

In other words, if you’re going to run a 30 second TV spot, use them to make people feel something, and to remember you and make you more salient, and build future demand in a way that may not show an immediate return but will pay back over time. The media-for-equity model gives you the space to have some patience. And that's why we really wanted to explore this. We briefed the creative copy with that in mind, so it was a little less ‘buy this thing now’ a little bit more characterful. So we did the deal with ITV a while ago now. We started airing on TV a year and a half ago.

More recently, we’ve developed a bit more confidence about occupying certain parts of the schedule where we really know our customer will be. And we’re prepared to pay a slightly higher ticket to be on the Six Nations or the Grand National or whatever it is. Because we think it genuinely drives awareness and gets to penetration of a group that we really care about in a way that a lot of TV does.

And what was your approach to measurement and has that changed as you've gone into more broadcast linear TV?

Initially we used TVSquared to show a return on marketing investment. And because we're a D2C brand, we tend to think in terms of £CAC most of the time. So, when we first ran TV in 2019, we tried to do that and we were disappointed with the results. I think you’ve got to go in with both feet. If you believe that what you're trying to do is build brand equity for the long term and demand that can't be measured in a month, you just have to take a deep breath and tell yourself you're going to measure in other, less direct ways. We do periodic dips to measure our performance through the marketing funnel, as you might expect. The results have been really strong so far, in a way that was super encouraging.

The most striking uplift was three months after we first started running the ad on ITV, aided awareness leapt by about 40- 50%. Quite a lot and in a very short space of time. We even started registering some unaided awareness. Before then, despite feeling like we've come a long way and had decent revenues and thousands of customers, you'd be amazed how many people you have to ask ‘name a trouser brand’ before people mentioned Spoke. That was until we were on ITV, and now you can definitely measure some baseline activity on that front, which is encouraging. Everything through the funnel improved - consideration and the rest. And we could feel some tailwinds in terms of our repeats – which has always been very strong - that were probably explained by TV.  There are some other things we've done on the side like share of search which is a popular emerging way of thinking about whether your awareness driving activity is working for you. And it's one of those nice measures that makes the brand team and the performance teams happy, if it's heading in the right direction.

So the brand guys are happy about their salience and the fact that people are typing in your brand name to a search bar. And the performance guys are gratified by the fact that search puts you a very short distance away from a purchase, because you're about to land on the website. And those numbers against whatever peer set we choose have trended very positively in the right direction.

Broadly speaking I’m feeling pretty good about it. And the best macro measure is that we are spending more than we've ever spent on social media advertising long after the point that plenty of other people seem to have hit the wall. Our £CACs in the last six months have been at the levels they were at in 2018-2019 and we are a much bigger business now. The fact that we're putting much more budget at the same £CAC is a sign that something good is happening.

"The performance marketing wall is real and I'm pretty sure the only way to avoid it is to build a bit of brand equity."

And could give me one or two top tips for scale-ups based on your experience?

Firstly, start early. Start moving up the funnel early and building huge demand through above-the-line awareness activities probably before you think you need to or you will run into the well-documented performance marketing wall. It is real. I've seen plenty of people do it. And I'm pretty sure the only way to avoid it is to build a bit of brand equity or to do something remarkable with your product. And those two things are intimately connected.

Secondly, is the importance of repeats. I think the economics of ecommerce are underpinned by decent retention. And that's a real cliché, right? Everybody from Warren Buffett down will tell you it’s easier to make a pound from an existing customer than from a new one. And yes, I've read Byron Sharp and I know it’s all about penetration and loyalty is overrated, fine, but I'll tell you as a business owner, a baseline of retention revenue gives you the confidence and the money to invest in acquisition and penetration. It's very easy to be blasé about that, especially when you're thinking about big corporates that have steady cash flows. But as a start-up or scale-up, retention is the lifeblood of the business, and it gives you the opportunity to invest in penetration and awareness later.

One of the biggest drivers of repeats is often participation choices - the customers you sell to and the category that you play in. It really, really helps that we sell trousers to guys because once they find one they like, they stick with it. he other thing that drives repeats is products and having great products and having new products. People put slightly too much emphasis on clever CRM when they're describing how to drive repeats. This incredibly sophisticated segmentation of customers and hitting them at just the right moment when they're about to lapse. But actually, that's much harder to make work than it sounds even with funky CRM martech because the truth is, when people are lapsing, they’ve just stopped listening and cutting through, and getting them to pay attention without offering them a swingeing, brand-diluting discount is actually really difficult. So, I think retention is really important, and the way to drive it is by picking the right category to be in in the first place. And great products and keep presenting great products. That's how you do it.

"I just think you’ve got to get comfortable with the idea that you need to make a leap of faith. Mostly, it's about taking a deep breath and jumping in."

And do you have any advice on what scale-ups should avoid?

I'll finish with a watch out that definitely pertains to TV as much as anything else. I feel really strongly about this and my own personal perspective is don't seek salvation in attribution models. Don’t think that the way that you're going to liberate yourself to invest in TV, is by coming up with last click attribution or, worse still, paying for it from some clever martech company that tells you you can slice and dice every journey and come up with a multi-part attribution for every last customer that makes perfect sense. A lot of it isn't real. And when you try and make decisions on the basis of it, you're often disappointed with the outcome. I just think you’ve got to get comfortable with the idea that you need to make a leap of faith. When I talk about investing in building future demand and moving up the funnel and driving awareness before you think you need to, mostly that's just about taking a deep breath and jumping in.

Rather than convincing yourself in a way that will make that feel more doable. This instrumentation is just not there, it's not that meaningful. People will try to make themselves feel better about TV by trying to instrument around it and the measurement approach I described I think is the best we've got at the moment. I suspect if you've got loads of money, you would just do some econometrics and some media mix modelling, but it's a bit difficult for small scale-ups to justify in terms of its cost.

That’s fascinating thanks Ben. And it's just amazing to hear the journey you've been on. I think it's pretty unique so far, but I'm hoping there'll be more and more people that do a similar shift in approach to you at Spoke!

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