Wednesday digestible - why you should discount

Hey everyone, 

Thanks for stopping by for another bite to chew on. 

We know you’re busy planning for Black Friday and the holiday shopping season. 

So we decided to switch it up today. 

Instead of a deep dive into strategy or tactics, we want to share some of the stuff that has caught our attention and made us think recently. 

Here are two quick snacks and a meal…

On the menu

• Should I discount? (pricing strategy debate)

• The agency pricing model fight (is % of ad spend dead?)

• A copywriting masterclass (our summary)

• BONUS BITE - Get your ad account audited by experts…

To discount or not to discount…

Mehtab highlights a running debate in DTC:  

• On the one hand, profit and margin are hard to come by. And frequent discounting can teach customers to just wait for the next sale or offer. 

• On the other hand, strategic discounting can have a huge (positive) impact on conversions, sales volume, and CAC, if done right. 

That’s especially true this year. A lot of brands have seen massive uptake around known sale periods like Amazon Prime Day ion 2024. 

That means shoppers seem to be waiting for sales this year more than ever, but then spending heavily when they happen. 

At Obvi, we have leveraged discounting forever, but we’ve gotten smarter about it over time → 

• We make sure to tie our offers to our COGS and contribution margin goals. 

• Obvi discounts are strategically aimed at upping order volume or purchase intent, and not just giving free money to someone who is going to buy anyway. 

So as with most things, the answer to the discounting question is…it depends. 

You spend more so I make more 

The “% of media spend” model is one of the oldest in the agency game. Remember Mad Men? That’s how Sterling Cooper made their money. 

As margins get compressed in DTC it can be a tough model to sell to brands, though. 

You either have to be very small (meaning a % of your ad spend is nominal) or very big (so your budgets/profit can absorb the hit) to make it work. 

For a lot of us in the middle, a percentage of spend can be a tough pill to swallow. 

Adding another $20k of agency costs on top of a $200,000 monthly spend:

• Might not be viable from a profit perspective

• Means you could probably hire your own internal team for that same cost

Cody also notes the misaligned incentive problem here. 

An agency that is motivated by increasing ad spend isn’t necessarily focused on helping you add to your bottom line. 

Learn copywriting in 76 minutes 3 bullet points

We really like this masterclass on copywriting from David Perrell and Harry Dry. We recommend sitting down and watching the whole thing. 

Buuuttt… if you don’t have 76 minutes, here are the 3 main insights we pulled from it:

• Three Rules for Effective Copy: Harry has three rules for every sentence: "Can I visualize it? Can I falsify it? Can nobody else say this?" If a piece of copy gets three "yeses," it's likely strong and unique. 

  • Example: New Balance's "worn by supermodels in London and dads in Ohio" 

• Concrete, Visual Language Stands Out: If people can see it, they'll remember it. 

  • Example: “It’s a nice day out” vs “the sun is shining and there isn’t a cloud in the bright blue sky.”

• Focus on Simplicity and Specificity: Be clear and simple rather than abstract. Specificity adds credibility and makes the writing more memorable. 

  • Example: instead of saying someone is "intelligent," say "he reads on the train," which gives a more tangible detail and paints a picture.

Like we said, the whole thing is great. If you’re struggling with messaging or copywriting, it’s a must-watch.

This resonated for us because it dovetails with a couple of our recent newsletters:

• The value of simplicity in your business in general (but also advertising in particular).

• Why your customers are your best copywriters (and how to mine feedback for gold).

Check them out if you missed them the first time. 

BONUS Don’t miss this → Get a live audit of your Meta ad account

We’re teaming up with Alex Song, CEO of Proxima, and Caleb Madsen, VP of Growth for Win Brands Group, on Nov. 5th to share advanced Meta media buying strategies. 

We’re also offering to perform an audit of your Meta account during the webinar (for brands with 6-figure monthly Meta spend).

👻 Scary? Maybe.

🤓 Super insightful? Absolutely. 

Click here to grab your free seat and find out how to submit your account for an audit. 

All the best, 

Ron & Ash