NM Live: Surviving Tariffs, Meta Madness & Hexclad’s Super Bowl Play

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Welcome to Nerd Marketing, an original podcast for eCommerce operators and marketers looking to level up. Drew Sanocki and Michael Epstein will bring you actionable strategies from their decades of running eight and nine figure brands, along with interviews and insights from the leaders of some of the most successful brands in the world.

Drew Sanocki

Hey everybody, this is Drew Sanocki. Welcome to the Nerd Marketing Podcast Flu Edition, because I've been down with the flu. So good times. We cover a lot today. We talk about the tariffs and the impact on DTC. We talk about everybody dunking on meta. And we talk a lot about Hexclad and kind of what they've got going on going into their big Super Bowl ad and how they've been using direct mail. So hope you enjoy it. Really good episode. Everybody get some sleep and stay healthy.

Hey Mike, how you doing?

Michael Epstein

Good Drew, how are you this week? Getting over flu.

Drew Sanocki

Getting over a flu like I haven't had since I was a little kid. This was a big one, man. It took me down for like a week. My whole family's down, wife, kids. If you go into our house, you just hear puking and moaning in every bedroom. It's not a good scene. And I don't know. I feel like it's going around though because I've talked to a number of people who have just been laid out by this flu.

Michael Epstein

Oh yeah, seems like a ton of our contacts around the country are just all punching out of calls and meetings and everything because everyone's just down.

Drew Sanocki 

You might wonder where I am. I am not obviously in my house. I had to get out of there to record. So I came into the Summit offices today to do the podcast.

Michael Epstein

You left the Sanocki infirmary.

Drew Sanocki 

So we have a lot to talk about today, Mike. So usually, you know, we have to sort of poke around to figure out these trending topics in e-commerce. This week, it was sort of handed to us on a silver platter. Tariffs, right? The tariffs went into effect and then they didn't. And then they got rolled 30 days. But, you know, I think it's caused all of us here in e-commerce and DTC to rethink some things. I don't know if you've spent any time on social media, but there's stories of DTC brands taking like trucks north of the border to try to move all their inventory to the down south of the border, like within 48 hours, were you following any of us?

Michael Epstein

Yeah, that was what dominated my feeds this week for sure.

Drew Sanocki 

Yeah, I'm picturing like Bill D'Alessandro at the wheel, know, Shrey Joshi in the back, Nick Sharma hanging out one side. It's kind of like a movie, sort of like a cannonball run thing going on. Like everybody went up there, the Cody Plofkers, right? The Elis. They had to empty all their warehouses and drive all the inventory to the US, they had 48 hours to do it.

Michael Epstein

It would make for a good movie, direct to Twitter movie.

Drew Sanocki 

Anyway, you and I put our heads together and came up with five ways that these tariffs are impacting DTC brands, right? And sort of what they can do about them and five ways they're getting impacted. So you ready to roll with this?

Michael Epstein

Yeah, the first is this de minimis loophole. Drew, what is the de minimis loophole?

Drew Sanocki

I didn't know this, was a suspension, there was a $800 duty free sort of threshold below which I guess if you brought product into the U S you never had to a duty before. It enabled the Temus and the Sheins and all these like fly by night night drop ship operations to kind of ship things, small dollar order value items direct from Asia, direct from overseas to the US. So that loophole was closed as part of the new tariffs.

So anyway, that just the minimus loophole was closed. I don't know, it was a period a couple of days ago. It seemed like X everybody went kind of like a cry went up, like rejoicing that, you know, Temu was shut down or at least had to pay tariffs. So I didn't really realize Temu was that much of a threat to a lot of the DTC brands here. But hey, now they've got to go through the same tariffs that anybody else does coming into the country.

Michael Epstein

Amazon is psyched for this. Amazon was taking such a hit from the direct from China imports and I know they're happy with this change, but maybe not so much for some of our DTC brethren.

Drew Sanocki

Do you ever order from Temu?

Michael Epstein

I do not. I think my daughter has from Shien or something once or twice, but I do not. But, you know, I think I'm not that generation.

Drew Sanocki

I've ordered from Temu. I ordered like lawn furniture. I don't know. There was this arbitrage. Definitely you could find the brand in the US and search the brand on Temu. They didn't even like try to have to hide it. You search like Nike and it shows like the shoe. It doesn't say Nike on the listing, but it like pops up for the search results. And I don't know. I got some outdoor furniture. Amazingly cheap and amazingly quick off Temu. Shien, by the way, I pronounce it Sheen because I envisioned Steen would shop at Sheen, you know, have not ordered there.

So that was our first impact. The second way DTC brands in the States are getting impacted, rising costs, obviously. So whenever you, whenever the government slaps a tariff on something, the brands actually don't pay that tariff. mean, they just get passed on to the customer. So I think it essentially has increased the cost of anything that falls under the tariff. If you are a brand that's manufacturing overseas, your cost just went up. A lot of very vocal people in that situation. The team up at Lomi and up in Canada. So Matt Pertulli., very vocal about this. He manufactures in Canada and inventories up there. So I know he's been tweeting a lot about how they're looking into US production, but you know, that's the second biggest impact is the cogs are going to go up for a lot of these brands.

Michael Epstein

Yeah, they don't have the margins to support absorbing it, so inevitably customers pay.

Drew Sanocki

All right. Number three, third biggest impact to brands after the tariffs. Are that more and more brands are going to shift to U.S. based warehousing and domestic suppliers? So Mapper Tully, we just mentioned, talked a lot about he's looking into this for his brands. But, you know, I think this is going to be a boon to U.S. 3PLs and inventory and manufacturing. One of the issues I see a lot of people complaining about is really the unpredictable nature of these tariffs. So they sort of came out of nowhere. And as we all know, Trump can change his tactics very quickly and has given no indication of whether these are here to stay. I think that makes it harder to plan around for us brands. Obviously, if you're going to open up a new US facility, do more manufacturing in the US, that requires a significant investment. You're not going to put in that kind of investment unless you're sure that these tariffs are here to stay. So I guess we put an asterisk on number three, the shift to US fulfillment strategies. Because if the tariffs do stick around, it certainly makes them more attractive. But right now, that's anybody's guess.

Michael Epstein

Yeah, Aaron Rubin has been putting out some good content on this. He runs Ship Hero, which is one of the bigger 3PLs. And I know he's, he's got some good insights on making that move. And when it makes sense to your point, you can't just stand up US operation for either production or even fulfillment overnight. So, go in with your eyes open.

Drew Sanocki

Number four, increase in tariffs will lead to changed consumer behavior. So obviously supply curve and demand curves will shift, right? If you're going to change one of those things and prices go up 15%, 20%, consumers will buy less. We get to see that in the data. But certainly if it happens, consumer demand is going to be curtailed a little bit if the prices go up. Not necessarily such a bad thing, depending on the category. I think Trump has also signaled that he wants to offset the tariffs with cuts in income tax, which would then increase demand. So it's hard to get it exactly dollar for dollar on certain items. So I would guess that if goods are coming in from overseas and they get tariffed, you're going to see some consumer demand decrease.

All right then to wrap it up, the fifth way tariffs are going to impact brands are if you are exporting because a lot of our trading partners have also put tariffs on goods coming into their country, Canada, Mexico. If you are exporting to one of those countries, you'll just see the same, in many ways, the same impact, but on the flip side. So that's it. Five ways that the brands are going to be impacted by tariffs. Who knows if they're here to stay? I guess we're not going to find out for another 30 days. But so far they look like they are.

Drew Sanocki

New segment today. Getting a lot of questions around what's going on with Meta. I put out a post this week about, it just seemed to be the week to dunk on Meta, right? You had Ash from Obvi, you had Sean Frank, you had Cody Plofker, all three of them posting about how Meta sucks, has led them astray and sort of what to do about it. So if I had to sum up their argument, it's arbitrary. So this can mean everything from certain results one week and different results the next week, that level of arbitrary, there's also the just like I got locked out of it for, for now, and I can't get back in that level of arbitrary. So arbitrary nature is a big one.

Michael Epstein

Yeah, what was it last night? You see a bunch of posts going up that spend spiked well beyond some of my budget caps just out of nowhere for a random couple hours. That tends to happen sort of every week. You hear stories about that kind of stuff.

Drew Sanocki

And then you were also talking about like the changes recently regarding health products.

Michael Epstein 

But then you've got more systemic issues that have been really top of mind for folks. One being that health and wellness restrictions. So you're starting to see the effect of the new restrictions that Meadow's putting in place for health and wellness related brands as a result of FDA and I think FCC regulations around digital targeting of prospects or customers or people based on certain medical information that you may or may not know about them. And so now you've got the situation where they're basically pulling the rug out from under these brands when it comes to targeting and tracking. So losing visibility into who you can, know, relevant audiences and how you can target them, losing visibility into tracking. So the conversion metrics around them, can't, you can't target based on bottom of funnel events anymore. So a lot of changes coming in health and wellness. And then the rumor is where we're doing this on a Thursday and supposedly tomorrow big news is going to be breaking out of Meta. And the rumor is that they're going to be taking more control once again from advertisers by making you, requiring you to use more of their AI tools for managing campaigns and taking more and more of the controls out of the hands of marketers. And this is just the continuation of a trend we've seen over time.

Drew Sanocki

Interesting. You know, and I've long thought that Meta takes just way too much credit for acquiring new customers when it's essentially doing a lot of retargeting and remarketing to existing ones. Yeah.

Michael Epstein

We hear a lot about that too, brands digging into the data and saying a higher and higher percentage of our conversions seem to be getting attributed to existing customers when we thought that these were prospecting campaigns and we even had our exclusion lists in our audiences.

Drew Sanocki

Right. And so everybody's dunking on Meta. I kind of dogfiled on it, put out some content around like, hey, if you're just, what did I say? If you're just buying Facebook ads, you're a media buyer, you're not a marketer. Let's talk about the four ways we came up with to sort of get out of the Metta madness and reestablish yourself as a marketer. You know, what are the skillsets that are going to be required going forward if you don't want to be beholden to this one channel that's relatively arbitrary. And the first one was that marketers should be really good at brand strategies. So what do we mean by that?

Michael Epstein

I think it goes back to what is really a marketer. And you've mentioned this before, Drew, heads of marketing in a lot of cases have really become just head media buyers and they lose the elegance and essence of marketing with true brand marketing, brand strategy, brand positioning. How do we differentiate ourselves? How do we create an experience and advertising materials that don't just scream like buy now and get that, and feed that into Facebook's algorithm to serve it, but bring people into the market and create awareness and memorable touch points for people who are not ready to buy your product right now. I think there's a lot of content that's been put out. Less than 5% of your target customer base is in market for your product at any given time. How do you do marketing so that you are top of mind for the 95 % that aren't in market today? so when the time comes if they are ready to buy, they remember and choose you. And that's marketing, not just media.

Drew Sanocki

It's marketing with a capital.

Michael Epstein

I like it.

Drew Sanocki

Yeah. And it feeds really nicely into our second thing that marketers need to do, which is be really good at creative direction. And I'm, I think of Hexclad and their Super Bowl commercial, which is just like, that's the kind of marketing that's going to win. It's when you're being creative with your meta campaigns, it's not just like, let's AB test one word in this copy or a 15 % offer versus a 20 % offer and obsess about the incrementality.

It's like, no, you really need to step back, put your creative hats on and come up with whole new storylines and campaigns about how your ideal customers experience your products and how they win. Right. And tell that brand story in a very creative way. and then develop the ad copy for all these. But I think that sort of that creative process has been missing largely in the world of media buying. And I think the brands are going to win going forward. The marketers that will win are the ones that can get back to that creative source and iterate and come up with all the new storylines and creative and ad copy. More so than those that have mastered a channel and know how to iterate out 50,000 ads and tweak the bids.

Michael Epstein

I think that's such an important point, Drew, because the first element that you described, the let's tweak the ad copy, let's tweak the creative a little bit, that's completely commoditized now. AI has made it so that you can create 50,000 variations of an ad in you know, 10 minutes or whatever it is. So if that's what you're doing is trying to manually think through, let's create version A and a slightly different version B and a slightly different version C, you're missing the plot. What you described is exactly right. What is the plot? What are you trying, what's the story that you're trying to tell? Cause I don't know that AI is going to come up with the story. They're just going to come up with 50, 50,000 ways to tell this story.

Drew Sanocki

Yep. Right. And so the third thing we think brands really need to do, understand consumer psychology. So this is like, I think of the old school marketing, the four P's, know, your product, how you're going to price it and package it up, you know, how you're going to distribute it, how you're going to position it. What is the messaging? Like that all requires a really strong knowledge of customer and why he or she buys. I don't know, I know a lot of Facebook ad buyers and in my sense is they're just, still seem like separated from the core customer. Like marketers that are going to win are going to go out there. They're going to go into the user groups. They're going to go out there and find who's buying your product, talk to them, listen to them. And then that's going to inform their creative process. So I think to win going forward, gotta, you gotta be really good at consumer psychology and building out marketing campaigns that really identify what the customer wants.

Michael Epstein

Totally, and a couple of people that I really like on this topic, Seth Godin, Purple Cow talks a lot about product positioning, differentiation, things like that. Robert Cialdini, I'm probably, I always get the pronunciation wrong. One of my favorite books ever was Psychology of Persuasion, I think is the title of it. There's so much.

Drew Sanocki

Psychology of Influence.

Michael Epstein

Yes, so great content on truly understanding what motivates your customers or your target customers. Highly would recommend going and reading some of their material.

Drew Sanocki

Yep. Both, yeah, awesome books. Probably my favorite business book to come out of business school was Caldini. And then the last, the last point there, number four, channel, be really good at channel orchestration. And by this we meant, you know, obviously don't go all in on one channel because especially one that's as arbitrary as Meta, you'll get burned.

Get really good at orchestrating your marketing message across every channel. Right. And the classic example we love is, we see a lot of brands, they drop a catalog that tells the brand story that shows the products in the right, you know, way that they want to show the products with the right copy. And then they mirror that creative through their Facebook campaigns, through their retargeting campaigns and their email campaigns on site and they've orchestrated all these channels together. The results work really well, better than anyone in isolation.

Michael Epstein

Right, the halo effect is real. You have to understand that you might sacrifice a little bit of efficiency, but you will accelerate your overall growth and you'll be able to scale faster if you do that. Because having multiple touch points makes all of those touch points work better together. So again, great example of that that you mentioned. you know, I guarantee you that when HexClad Launch puts up their Super Bowl commercial that's gonna, you know, it's eight million bucks or however much it is this year. Are they gonna get a direct response ROI on that? I don't know, probably not. And I don't think they're thinking about it that way, but will you bet that their meta efficiency is gonna improve in the following weeks of that Super Bowl commercial airing? You bet it will.

Drew Sanocki

Yep. I look forward to seeing just how they do that. So anyway, those are four ways we think of overcoming meta and, you know, fun to dunk on, but here we are. We've dunked and we got to move on with our business. Those are the four ways we came up with to sort of counteract meta. I don't like how I said that. You want to wrap it up?

What would you say about it?

Michael Epstein

Look, we can duck on Meta all day long, every day, Drew, they give us probably a new reason too, but I think this was good talking about what are some things brand marketers should be thinking about long-term. If you're not thinking about it now, it's only going to become more important over time.

Drew Sanocki

All right, Mike, we want to talk about one of our favorite customers today. And really just, they're going to be front and center over the next week because they're doing a massive Super Bowl ad, HexClad. And, you know, this is a brand that has just been growing like gangbusters. They're a beast. I mean, they're one of, if not the biggest Shopify store out there. We've got a little bit of inside Intel because we've got a great case study on the site about how they drove three million in revenue over a few months at a 12X ROAS using direct mail. So I think that's what we want to deep dive on today.

Michael Epstein

Yeah, so definitely newsworthy because yeah, they are airing a Super Bowl commercial and I saw it. It's online now. It is awesome. They did such an amazing job on this thing. Got Gordon Ramsey, of course, and a guest appearance by Pete Davidson. It's funny. It's sort of news Jackie. So the fact that they turn this around and produce such a high quality asset is amazing. Credit to that whole team. They are a sharp crew over there. I give them a ton of credit for what they've built and it seems like it's only getting started and it speaks to just generally HexClad is in this spot that we're finding more and more of these larger brands to be in which is they need to find new channels that can get them some scale because it's just not worth it when you're at that size. That's why they're doing a Super Bowl commercial. They got to deploy their marketing funds in a place that's going to generate real impact, real eyeballs. They can't go, you know AppLovin, if AppLovin can only spend 5,000 bucks for them. It's just not worth it. So one of these channels that they've been able to really unlock successfully is Direct Mail and it started conservatively, you know, modestly in the early days, a couple of years ago, where they're testing into some retention segments, seeing some strong results there, especially over Black Friday, a couple of years ago, they got really strong returns and helped prove out the efficacy of the channel. And then they started moving up the funnel. So targeting folks that had signed up for their email list, never converted. Think about these HexClad hands. These sets are five, $600 plus. They're not necessarily impulse buy. So starting to move up the funnel into retargeting of warmer prospects is a great strategy for brands like that because they have to keep educating and nurturing those prospects until they buy. They found a lot of success again with targeting people who subscribe to email, went through their welcome sequence, sat on their email list for days, months, even years in some cases, and ultimately we were able to convert them by getting them a really effective mailer. And then they moved up into acquisition. Again, it's a great fit, a great category. Strong AOV is a really good factor when it comes to prospecting and direct mail and they have a strong AOV. A baseline level of brand awareness is really helpful. So you get that effect of, yeah, I've heard about these guys before. Just never really spent the time to investigate or never really got, you know, ready to pull the trigger, but this got me to buy. They put together a beautiful mini catalog. I'm holding it for those watching on video. Just kills it. They've got great creative, great social proof, a great assortment of products that goes beyond pans into knives and aprons and pizza steels and a bunch of stuff. All the ingredients for a successful program are there and they've just seen it continue to scale and scale and scale along with their incredible growth that they've seen throughout the company and has become a significant program for them now and a great way to reach new eyeballs that aren't just seeing their Facebook ads. That's why they went to the Super Bowl because at some point everyone on Facebook has kind of seen your ads a few times. Where are you going to find new sources of customers, new traffic, and new awareness?

Drew Sanocki

I really like that catalog. Hold up the catalog again.

Michael Epstein

Yeah, this is actually their mini catalog and they've done cartel logs as well. But this is a 16 page book that highlights, you know, all their products, recipes, social proof, different categories, best sellers, gift items. they, if they were sending it out over the holidays, they've got this great assortment and they can tell that whole story through a catalog. And this costs, Drew, you won't believe this. It costs less than a Facebook click. 

Drew Sanocki 

Yeah. You can tell that's where I was going with this was I really liked the idea of telling the whole brand story on what, you can use that as top of the funnel. Somebody gets that to read up on, you know, you can read the testimonials, you read why it's like, it's essentially the old school direct marketing, you know, one page sales letter, but they like have taken that apart and put it in a catalog format with a lot of visuals. And direct response has worked really well in this category for years. I don't remember growing up like, Ginsu knives and things were sold with like, one page sales letters that were very similar to that in terms of all the points they, you know, the pain points they hit on the testimonials they put in there. And it's just really interesting to see how HexClad has sort of reinvented that, that legacy approach.

Michael Epstein

Totally, I was thinking about them last night as I was going to sleep as a matter of fact, and I was thinking about this concept that we touched on earlier about being a marketer and telling the brand story. This is, to your point, this is a great example of that and something that I think more brands should be leaning into. It's how do you get your whole brand story into the hands of your prospective customers? It might not be a totally direct response. You want to see some ROI, of course, but think beyond all direct response, quick hit Facebook ads, things like that. How do I start getting, really telling that story and educating people about our brand and our products and getting them into your funnel and then do it in a way that's memorable beyond just scrolling through your ad. And again, I think they're doing it with the Super Bowl ad as well. It's a memorable ad. This is gonna be something that sticks with people for months and a year down the road from now. They're gonna be walking in Costco or they're gonna see some ads somewhere else or they're gonna get a direct mail piece. They're gonna be like, yeah, that's that. That's those guys. That's marketing.

Time for our weekly trends, Drew. Where we take a deep dive into the Shopify ecosystem, looking at our massive data set and pulling out some insights on how things are trending. What are you seeing this week?

Drew Sanocki

We gotta, I think we gotta go to Fiverr and get like a theme song for our, know, like something about benchmarks. What I'm seeing is year over year growth up 13%, you know, and so that pulled back two weeks ago or last week we were what, down year over year 7 % and over the past week up. So pulled back from a down year and that's being driven largely by the bigger brands. So 50 million and up. If I look at the smaller brands, Mike doing under 10 million a year, they are actually down the past week, but the bigger brands are pulling up the average.

Michael Epstein

Yeah, I don't know. I'm curious if the threat of tariffs had anything to do with that bounce back this week where people thought maybe prices are going up. But either way, good to see that there was a bounce back after a couple of softer weeks and we're seeing it heavy in apparel, sporting goods, pet supplies, some of the standout categories that we're seeing lead the pack in pulling that number up.

Drew Sanocki

Right. Electronics, office supplies, not so much in toys, and vehicle parts, down, furniture down. So yeah, we'll keep an eye on it. Keep checking the benchmarks. If you want to see yours in real time, add the PostPilot app. It's free, and it will populate within a day or so and show you how you stack up against your own category benchmarks.

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Thanks for listening to Nerd Marketing. Don't forget to check out all of the other great episodes, some of which include interviews with ecommerce marketing masters working with Mr. Beast and Joe Rogan, plus Drew and Michael's experiences in private equity, advice from VC firms on what they look for in investments, and so much more. Like, share, subscribe, and tune in every week for a new episode.

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