Jane: Good morning, Wunder.

Audience: Good morning.

Jane: Okay. Guys, who had a wonderful night's sleep last night? Yeah. I woke up this morning and the Wunderkind team put me in a room overlooking Lake Travis, and the sun was shining, and I took a deep breath and I was like, " Whoa, I needed this." And I think we all needed this because marketing hasn't had an easy year this year. It feels like a constant annual thing that we say at this point, but it's been a year of change. It's been a year of adaptation and some of those changes have felt a little bit radical. We have... Let's see, what do we have? Profitability, the chase for profitability. This is a year of AI. We had a really good conversation about that yesterday. We are facing rising acquisition costs. We were talking about that with a few folks last night. Budgets are shrinking, expectations are ballooning. And what are we to make of all of this? And that is what our amazing panel of experts are here to talk to us about today. And before we get started, let's actually do some introductions. So, I would love to hear from you, guys, maybe a little bit of a journey with how you got to your role today. And let's start with Ben.

Ben Harris: Sure. So, Ben Harris, Chief Commercial Officer for Rag& Bone. Been with Rag& Bone for about five years. Previous to Rag& Bone, always been in the fashion industry, lifestyle apparel brands, John Varvatos, Ralph Lauren, mainly founder- led brands. I come from a store background, so I spent most of my career working in retail stores. I was a salesperson, a stock person, a regional manager, did all of the jobs that you could do in a retail store, and learned digital a little bit later on in my career. So, I think it's given me a unique perspective on the digital landscape, marketing landscape. I'm not a CMO, full disclosure. I'm a CCO that runs marketing. So, I think it also puts me in a unique position when it comes to looking at how we run our marketing strategy.

Jane: Awesome. I'm excited to get your expertise here. All right. And Jay?

Jay Nigrelli: Very good. Maddie told me this is a fantasy football panel. Is that the case?

Jane: In that case, I'm the wrong moderator, my friend.

Jay Nigrelli: I have a really good draft this weekend.

Ben Harris: I can't participate either.

Jay Nigrelli: I can talk marketing too. So, I'm Jay Nigrelli. I'm the SVP of eCommerce for Perry Ellis International. We have a portfolio of brands including Perry Ellis, Original Penguin, Cubavera. We license Callaway golf apparel, PGA TOUR and Rafaella. And I have been overseeing direct-to- consumer eCommerce for over 15 years now. Started out as a direct marketer like many people my age now with catalog circulation and then evolved into eCommerce as eCommerce grew. In my role, I oversee platform performance marketing, third party tech stack, and customer service, online merchandising as well, so a good perspective of everything. I work very closely with brand marketing. Clearly, we have to work effectively together across the funnel.

Jane: Awesome. Thanks, Jay. And Richard, last but not least.

Richard Jones: Yeah. My journey to being the CRO of Wunderkind came through an entrepreneurial route. So, I did a startup building a SaaS platform that was helping brands build Facebook apps and generate likes. And then, Mark Zuckerberg went and shut all that down, switched Facebook to an ad platform. And then, I spent a decade re- pivoting the business to build sweepstakes and quizzes and various other data capture capabilities that brands could deploy on their website. Sold that to Cheetah Digital, spent three and a half years there as CMO, and then joined Wunderkind.

Jane: Awesome. Well, brand side perspectives with folks who run a lot of different parts of the show. And then, Richard, your experience with Wunderkind, and technology, and all the changes, and evolutions in marketing as well, so super exciting. Let me introduce myself as well. My name is Jane. I am representing Industry Dive today. We are industry- focused news business. We send, I think most of you, some of you, daily newsletters, retail dive, grocery dive, food dive, C- Store Dive, fashion dive. Our audience is over 14 mil at this point across our 38 different publications, and over a mil for folks that are related to retail. I've spent the last 10 years building our marketing services advisory, our content studio. So, I'm on the dark side. I work to turn a lot of the expertise that we have at Industry Dive about these niche audiences to insights that we can use as brands to do more effective marketing. And we've been so excited to partner with Wunderkind on the state of the union here, and let's get into it and share some insights and get some perspectives here. All right, let's have the annual conversation about changing consumer expectations here. This year, 60% of respondents said that changing consumer expectations is still their biggest concern. And Ben, I want to start with you here, at Rag& Bone, what are you seeing in terms of changing consumer expectations? And maybe share some insights with the audience on tactics that you guys are using to actually deal with that.

Ben Harris: Yeah, sure. So, at Rag& Bone, we have an eCommerce business of course, but then we also have retail store business. We've got 40 retail stores, one here in Austin, actually, in South Congress. If you get a chance, check it out, shameless plug. So, it's been really interesting, of course, over the last three, four years to see what's happened because of course, during COVID, retail store business went to basically zero and everybody shifted to eComm. When that happened, we saw an explosion in terms of revenue, investment and technology. All of our focus and attention really shifted to our eCommerce business and rolled that way for a long time. And in retail stores, we were just focused on opening, closing the doors, keeping the lights on. But really in the last year, retail stores have exploded. And what we've seen is a tightening of spend on eComm with the customer. So, the customer is way more value driven, way more discount- sensitive than they ever have been on eCommerce. But it's the opposite in retail stores where our customer shopping at retail stores is really driven by emotion, and impulse, and this longing for social interaction that results somehow in a sale. So, in retail stores, we've seen really high AOVs, really good customer retention. It's our number one acquisition channel right now, retail stores over eComm, if you can believe it. Where in eComm, we're much more focused on customer retention and reengagement. So, we're putting a lot of resource and energy into retail stores as acquisition and marketing vehicles. And we're way more focused in eComm about how we retain and focus in the lower part of the funnel, but then gain some good insights about how we acquire customers on eComm. So, we've shifted our focus pretty dramatically from eComm to retail stores in the last 18 months or so.

Jane: Wow, it's a little bit of a game of ping pong over the last three, four years.

Ben Harris: Yeah, for sure.

Jane: What's in 2024? What do you think?

Ben Harris: First, we'll have that conversation.

Jane: Yeah, exactly. Perfect. Jay, what about you? What are you seeing at Perry Ellis?

Jay Nigrelli: Yeah. We're definitely seeing a customer focus and expectation on value and we're partly to blame for it. Last year with supply chain, we couldn't keep product in stock. We couldn't get product in stock. And so, going into this year, our buyers bought very aggressively, like many retailers, and it ended up being a surplus in inventory across the board with our competitors and ourselves. And so, we have high weeks of supply, we've got to sell through, we train the customer on discount. And then, that in turn turns into lower margins, which obviously, none of us want. So, we have a P& L. I manage P& L. I need to hit a certain EBITDA rate. So, you have to look at other areas when your gross margin's lower to hit that EBITDA. And so, we focus a lot on optimization of operations. We've looked at things and executed things like shipped to third- party locations like Walgreens, UPS Store. We get rid of the residential surcharge. So, that saves us a couple points there. We're moving our 3PL to a more cost- effective 3PL. So, those are the types of actions that we have to take to make sure we stay profitable.

Jane: Makes a lot of sense. And Richard, you have a unique perspective across the landscape here. What do you think about this?

Richard Jones: Interesting, what you're saying about the value- conscious consumer, we did some consumer research recently and 57% of consumers were saying they were more likely in the coming year to compare prices, look for deals. Heading into 2024, I think inflation will probably stay stubbornly high in a lot of markets. And so, I think the consumer looking for value is going to continue. I would say that further out than that, I think we have now just embarked in a landscape with the largest deflationary pressure the world has ever seen, which is AI. The cost of goods and services when advancements in science happen tend to go down. The cost of the TV has gone down by 98% since 1997. So, it will be temporary. But this time last year at Wunder, what we heard from many of our customers was, " Look, it is a tighter economy. We are under a bit more pressure looking for profitable growth. You're great at acquisition and conversion, but how can you actually help us across the customer lifecycle?" So, one of the things we've been developing over the last year is our loyalty module so that we can basically help customers not just build their signups or email lists, but actually also drive signups for their loyalty programs, where that search for value, and for rewards, and discounts can often be delivered through loyalty programs. And then, we can use that loyalty data to also further personalize the triggered email messages. So, some of the things we've been up to.

Jane: Absolutely, it's something we're hearing a lot across our clients as well, this focus on loyalty and retention more than anything this year. So, lots of different pressures and different changes. Question for you guys, every year so many things need to change about our business in order for us to stay ahead. What makes your team capable of that change? Sorry, not a planned question, I'm just curious.

Ben Harris: No, sometimes we're not. We're all just trying to figure it out. I think we're trying to react to the external pressures and I think, of course, the team is everything and we can have the best technology. We've seen that we've invested in incredible technology, but if you don't have an adoption from the team, if you don't have the right experience and skill within your team, it doesn't do what you need it to do. It doesn't live up to its promise. So, we've had some of that, we've installed technology, and then certain key members of the team have left or moved on, and then new team members come on and they're not really bought into the technology as much. And so, we've suffered from some of those challenges over the last few years, and I think it's a constant challenge how you pivot, how you make sure that you can stay ahead of the curve, especially as things change so dramatically.

Jane: Yeah, absolutely.

Ben Harris: The environment is so dynamic.

Jane: Yeah. The technology power and the agility that we need as organizations frame. Okay. Thanks. Let's keep going and talk a little bit about the years' long slow death of the cookie, but specifically wanted to get some brand insights. What are we doing, Jay, at Perry Ellis to combat this to change our approach given that the third- party cookie is on its way out?

Jay Nigrelli: Yeah. I think first- party data is so critical now and will just continue to be more and more critical. We've seen over the past couple years a shift in return from social to search. And part of that is because of the lack of first- party data that's feeding the model. And at the end of the day, companies like Wunderkind will increase the customer experience, will increase the conversion rate. And conversion rate and average order value lower funnel are critical because it really is going to increase your ROAS across any marketing channel that you use. And if you want to grow, you need to increase the conversion rate because it becomes a self- fulfilling prophecy. If conversion rate goes down and/ or average order value go down, your ROAS goes down. And when your ROAS goes down, you have a target, your spend goes down. And so, you have to find ways to elevate the customer experience to improve conversion rate. And Wunderkind does a great job at that. Did I say that correctly?

Ben Harris: And you've just paid for your time.

Richard Jones: I'll get the wallets out later.

Jane: Jay actually let me know yesterday that he is a Wunder lifer. He has been at this event for six years, so brand loyalty.

Richard Jones: Yeah. Seven years, you get a golden pen.

Jay Nigrelli: Do I get to pick next year where we're going?

Richard Jones: Yeah, you get to pick where we're going.

Jay Nigrelli: All right, yeah.

Jane: Ben, how are you guys dealing with this?

Ben Harris: A lot of the same stuff that Jay said. Whenever the environment gets tight, it always makes sense to push all of your effort further down the funnel, focus on the conversion rate. We've also invested into search, but we're also getting, I would say, smarter about how we're measuring our efficacy of marketing. So, we found that we've done ourselves a disservice by really just focusing on a 14- day lookback window, last click ROAS. And that's a really rigorous imperfect measure, especially as you put a lot of attention and focus further down the funnel because there's intent there anyway. So, we've actually moved to a more incrementality testing. We've onboarded a new platform that's helping us figure that out called Measured. We're moving to a lifetime value model rather than last click ROAS. So, it's taking some retraining, especially with the CFO isn't quite familiar with all those KPIs. So, it's definitely a little bit of an education moving forward, but we're trying to figure out the right mix with a new set of KPIs to be able to run a full funnel marketing strategy in the most effective way possible, and not waste our dollars further down the funnel when there's intent there anyway.

Jay Nigrelli: I would say attribution's never perfect, right? So, we like to look at first click and last click, and the answer is somewhere in the middle. That's really the approach to it. You got to be consistent too.

Ben Harris: So, none of us know.

Jane: Absolutely, absolutely. And Jay, you mentioned the first- party data strategy at Perry Ellis, and I think that's an ongoing conversation for this conference as well. And our respondents, there's a little bit of a juxtaposition here. Folks know that having a really strong first- party data strategy is important, but it doesn't seem like every single company really has that unlock yet. So, wondering if, and maybe Richard, we can start with you here, what's the right approach here? Any insights to share with folks here?

Richard Jones: Yeah. I feel like I'm in a Back to the Future movie. When Zuckerberg totally messed up my startup with shutting down the Facebook Pay, I'll never forgive him for that. You can't repivot and go, right, we're going to help brands build their own database of their own customers and learn lots of information about them, the whole kind of zero party data thing, ask loads of questions, build out those data points, and then use that for more efficient communication. But it was almost like running against the tide because I remember thinking, I don't even know whether we can actually make this work because I was having senior level conversations with customer. I remember going seeing SVP of Unilever, talking to them about everything our platform does and all the data it can capture. She looked me straight in the eye and she said, " Look, this is redundant tech. I don't need this. Facebook and its coterie of third- party data providers can give me everything I need to know about a consumer. I can microtarget down to the nth degree. Why do I need to know who my customers are?" And you're like, " What? Where's the laws of gravity of marketing, are they upside down?" So, it's great to see that coming back into play and I welcome some of the pressures around privacy to enter that in this world again. But I think in terms of Wunderkind, we continue to invest in our ID tech. The more of the site visitors that are identified, the bigger your reach is. If we go through our email and text capture technologies, if we can capture as much of those site visitors into your opt- in email lists and understand better what they do, triggered messages can drive them into converted customers quicker. And that means you're not so reliant on the second, third, fourth ad to drive them back to the site to convert. So, we'll continue to double down on that.

Jane: Yeah, absolutely. Did you call her? Like, " Told you so?" No?

Richard Jones: No.

Jane: And Ben, what about you guys? Are you guys adopting a strong first- party data strategy already? How are you guys on that journey?

Ben Harris: Yeah. Like everybody else in the world, we're definitely focused on it. I mentioned earlier retail stores have actually been a big source of customer acquisition. So, we're really focused on capturing customer information in retail stores as well as in eComm because the retail stores are so important in that regard. But yeah, we're really leaning on our own channels, utilizing our first- party data to drive a lot of revenue. And of course, that'll pay for my time here, Wunderkind is helping us with that. But we're focused on it across the entire ecosystem, even when it comes to our wholesale business and dropship. And being able to have a relationship with customers even outside of our direct consumer business is an opportunity for us when it comes to major department stores. So, first- party data and own channels is like priority number one.

Jane: Got it, makes a lot of sense. Let's shift to talking about advertising. So, respondents are challenged by the efficacy of paid advertising this year. A lot of them said that paid advertising channels aren't getting the right returns in terms of customer knowledge, in terms of the increasing brand loyalty. And I'm curious, how are you guys seeing advertising, which channels are working, what are our strengths and weaknesses that we're seeing? And Jay, maybe we can start with you here.

Jay Nigrelli: Yeah, sure. Like I mentioned before, we've shifted some of our spend from social to search. Email penetration has increased significantly over the past couple years for us both behavioral and batch type emails this year with being more promotional and fortunately, our affiliate channel has increased in penetration. I see that coming down over the next couple years. But just getting back to the first- party data, I think for us that driving that channel, that first- party data channel, specifically email SMS, is going to be critical for us. And like Ben and Rag& Bone, we're really pushing hard to collect that first- party data both in store and online. In fact, we're making a change to our email program. When somebody signs up for email, they're automatically going to be logged into our loyalty program. Then, we'll tell them a bit more about the program, and we restructured our program to lower the threshold in terms of getting a reward because we want to get that frequency.

Jane: Absolutely. What are we doing at Rag& Bone? What best performing channels, worst shifts?

Ben Harris: Yeah. Best performing channel search, and again, best performing is subjective depending on your KPIs. We look at LTV and we look at incrementality. It's actually social at the moment. It's performing better than search. So, we've been really obsessing over what is the right content for the right audiences in the right channels. And what does our customer expect from us as a brand, and how do we make sure that we show up to them in a way that really connects with them emotionally. One of the challenges that we've had is because we're running so many different ad sets in so many different places, it can start to feel a little bit fragmented and a little detached. So, we've really been working hard to put all of our content together and make sure that the way that we're showing up across the entire funnel, regardless of where we're showing up, is really cohesive and reflective of the brand. And reflective of the brand in a way that is also reflective of what the customer expects from us, and what they identify with the brand for. So, we've really been focused on content matched with audience matched with brand in a way that all lines up, and it's actually probably the most difficult thing that we've undertaken this past year.

Jane: Right, right. That makes a lot of sense. Know your audience, serve them the right content in the right places at the right time. Ben, I wonder, can you give a specific anecdote or example of how you guys have done that at Rag& Bone?

Ben Harris: Yeah, sure. Well, we learned actually that our number one acquisition product for Rag& Bone, can anybody guess what it is? Jeans. Yes, exactly. Number one acquisition product is jeans. Rag& Bone is known for... We have Rag& Bone fans over here. All right. Thank you. So, number one acquisition product is jeans. Then, we also learned that our number one retention product is a collection of products actually that we call icons, which is like foundational product, really quintessential Rag& Bone things that... wardrobe staples, let's call them. So, that's a big retention product for us. So, we actually are running denim ads and icons ads specifically against acquisition and retention audiences, but in a way that feels totally connected. So, it's not a different look or feel between the denim and the icons. It's one look and feel, but a product- specific ad that's targeted to specific audiences for a specific commercial purpose. And that's worked pretty well for us so far.

Jane: I love that. Richard, what's the Wunderkind perspective here on advertising?

Richard Jones: Yeah. So, aside from helping with eComm brands with the collection first- party data which we'll then use for retargeting, and then working with people like Trade Desk to support UID to across all of our supply. Ultimately, our perspective on ads is that one of the problems that's out there in the ad ecosystem is that ads on the whole are fairly disruptive. They're interrupting the consumer in a content experience. And so, we've been pioneering our kind ads capability, which is really looking for those moments when a consumer is on a... We've got 200 plus premium publishers, it's on those publishing sites, and they've actually finished, they're disengaged with their content experience, and then we're serving an immersive ad in that moment. We've got really, really great engagement and tension to stats around our ads because we're delivering it in a more respectful way to the consumer. We see that growing. And Jesse, raise your hand. If anyone wants to talk about ads, go chat to Jesse, he runs that for Wunderkind.

Jane: Love that. Perfect. Let's shift our attention to I think a question that all of us have to deal with on the day- to- day, budgets. What I'm hearing a lot and what our respondents are saying is that we don't have enough budget to do the things that we need to do, or sometimes it's actually hard to get the alignment across C- suite or with our CFO to actually get the right budgets. And want to ask Ben here, what is your advice for folks? How do you justify budget and what is the right process for looking at budgets for next year?

Ben Harris: Sure. I don't know that I have the answer to that.

Jane: Yeah, fair.

Ben Harris: I don't know that there ever feels there's enough budget. I think it also depends on where you are in your company's life. And where Rag& Bone is currently, we're a 20- year- old brand. We've been in the business for a while probably. We're not in startup mode, we're not in VC mode, we're established. So, we care about top- line growth, but we also care about profitability. And so, that means that we need to balance our investment against our return and make sure that we're always finally calibrating that. Like I said at the top of the presentation, I'm a chief commercial officer that does marketing. I'm not a CMO. So, I might have a unique relationship with the CFO based on that because I'm also responsible for the commercial results and the P& L. So, for me, I think it's about constantly calibrating top line expectations against efficiency, and profitability, and making sure that you've got your finger on the pulse of what's happening in the business at all times so you can course correct quickly before it gets away from you.

Jane: Yeah, absolutely. And what is your planning cycle like? What does the budget cycle process look like at Rag& Bone?

Ben Harris: We're insane. We do it every week, every two weeks. We're really close to what's happening in the business. I think some of that comes from the fact that we're a contemporary brand. So, we're not luxury, we're not a high street brand. We're in the middle, and it means that there's a lot of sensitivity in our business from competition both below and above us. So, we have to be very agile when it comes to budgeting and when it comes to reading and reacting to our business. We do it a lot.

Jane: Yeah, makes sense.

Ben Harris: More frequently than I would advise.

Jane: Jay, what about at Perry Ellis? What advice do you have for folks who need to convince their CFOs to loosen their purse strings here?

Jay Nigrelli: Yeah. I think you really should be on the same page as your CFO. Based on your maturation as a company, you should have a target cost to sales ratio mix, both brand and performance marketing, that makes sense for where you want to be profitably. And there really shouldn't be a dollar budget. There should be a percent guide. And our jobs as marketers are how can we find effective marketing and scale that marketing while keeping that ratio in line, and that's how you win.

Jane: Absolutely. And same question for you, what does the planning and budgeting cycle look like at Perry Ellis?

Jay Nigrelli: Yeah. So, we start our budgeting in July for the following year. We usually tweak it up until the end of the fiscal year. That gets locked in, and then we're constantly re- forecasting throughout the year. Try to be as agile as possible.

Jane: Yeah, makes sense. Richard, I know we serve marketers here, but what's your perspective on the CFO piece here?

Richard Jones: Well, it's interesting because over the last six months or so, typically, you think in our new sales outreach, we'd just be trying to talk to CMOs. But actually, we've started targeting CFOs as well. And the reason why we've started doing that is because we believe that they have an important contribution when you're having a conversation around the efficiency of spend. And so, we continually find brands out there that become prospects that are still way over too reliant on spend through Google and Facebook. And the level of spend and the return they're getting through those channels is maybe because it's the muscle memory, it's the dumb thing, and they're not necessarily the most optimal spend with a level of spend that they're having on those channels. So, we find those brands and actually, the CFO can be a great inroad to having that conversation around efficiency spend across channels. So, it's actually been going pretty well this year.

Jane: Absolutely.

Richard Jones: Although, I have to say sometimes. Some of the best things I've done in my career, I can't imagine having a one- to- one conversation with the CFO to get it improved. I remember being at Cheetah Digital, the brand was a little bit tired and old technology, and we couldn't rebrand, and we were middle of COVID. We're having to do a virtual conference and we were like, " Right, let's go and spend 50, 000 hiring Tommy Lee from Motley Crew," who has got pretty dodgy history and background. We're going to go to his house, middle of COVID, film a bunch of adverts where he's pretending that his rock career is washed up and he wants to be a digital marketer. And then, we're going to jump out of a plane after having a conversation with Tommy Lee, get filmed all the way going down free fall, land in a field, walk over to some desks and kick off the live conference. It's like, there's no way I could have had that conversation.

Jay Nigrelli: That sounds awesome.

Richard Jones: We just hit it and did it, and it was great. It really worked.

Jane: Yeah, I love it. That's great advice. Hit it and did it. Yeah, perfect. Really good advice. And I think just seeing those insights on how you plan is helpful for folks as well. Okay. Last question here, we had a great conversation yesterday about the balance between performance marketing and brand marketing. And our respondents this year, 44% of them said that they're actually anticipating increases in performance marketing budget this year, which is more than any other category that we asked about. So, Jay, let's start with you here. What's the distribution of your budget's going to look like for next year? How does performance marketing play into that?

Jay Nigrelli: Yeah. I think when times are tough, you're going to shift down funnel and we probably will be doing the same thing. We're just going through budgeting right now, finalizing that, but my expectation is that we're going to keep our ratios the same and we want to get a little bit more effective with the lower funnel marketing, that performance marketing.

Jane: Definitely. And Ben, same question for you.

Ben Harris: So, we've actually put our performance and our brand marketing budgets together. We squished them together and made it totally fluid throughout. So, we're deploying resources against every part of the funnel as necessary. So, based on some of the things I was saying earlier, the LTV and the incrementality testing that we're doing, we're doing that measurement not just in performance marketing, but we're also doing it at brand. So, we're looking at the same KPIs across the entire funnel and measuring acquisition just a little bit differently at the top of the funnel. So, we're changing our strategy on a week- to- week basis and deploying more or less resources into performance, out of brand, into brand, out of performance as we see the performance change from week to week. So, I think it's going to continue to be super dynamic. And so far, we feel pretty good that this was the right move to put all that stuff together and not treat them as separately as we have internally in the past.

Jane: Absolutely. And that really aligns with the conversation yesterday about how there's not a mutual exclusivity around those two buckets too. Thank you. Thank you for amazing insights here, and this was a great conversation, and thank you to our audience. And special thanks to our Wunderkind team here for throwing a great conference. So, grab these guys later, and ask some more questions, and thanks everyone and we're done.

Ben Harris: Thank you.

Jay Nigrelli: Thank you.