Aistis 💡

direct response vs ecom: DR is about demand generation, ecom is about demand capture. With DR, you’re trying to move someone from “I’ve never heard of this product and wasn’t planning to buy anything today” to “I really need this product today and I guess I trust whoever this company is, at least enough to give them my money.” To this point - marketing is way more important than product, and here most DR companies put most of their time. Yes you’re still subject to the tides of the meta algo… and yes you need good creative… but there’s less retargeting, top/middle/bottom funnel creatives, etc. Just dial in an ad that gets the click, ratchets up intrigue, and let it rip. Upsell flow is crucial. You’re maximizing AOV asap, and the post-purchase window is when purchase intent is highest. That high AOV gets you first order profitable, or damn close to it. Since you’re generating demand, and Day 0 profitable, you’re not as subject to seasonality. You can drive mega volume when everyone else is taking their foot off the gas. The downsides are… 1 - lower brand value / enterprise value. The sales experience may be educational, but it’s not a high quality experience like, say, buying a set of stainless pans from Williams Sonoma*. DR is pushy, which annoys many people. 2 - your brand probably doesn’t reach escape velocity. people aren’t searching out your company except when you’re spending, so you’re stuck on the paid traffic hamster wheel. you’re only as good as your last best offer and your email list. 3 - word of mouth effect isn’t strong. who wants to tell their friend to sit through a 30 minute VSL and 4-step upsell gauntlet. if someone reviews the product, their comment is more likely to be “i saw the ad…” and not “i saw/heard people taking about it”. 4 - you’re cutting spend when brands are accelerating. when purchase intent is high ie bfcm, people want sales from their fave brands, not random new stuff. As for ecom… it’s more about tapping into existing purchase intent, and/or building that purchase intent over time exclusively for your brand. Success depends more on things like the product itself, meta/tiktok algorithm, brand affinity, etc. Product is most important. It’s leading the brand and repeat purchase. Ad creative is mega important, since creative is doing more heavy lifting to capture demand, and the PDP is trying to close the sale on the back of lots of creative exposure. In ecom model, customers need to feel a connection with the brand, too. the brand represents them and their aspirations. Search intent is higher and repeat purchase often comes from brand affinity. For a long time, first order profitable wasn’t as important as MRR or top line growth in this model, as there were a few shining stars who exited, and much VC money followed. That has changed with ZIRP gone and expensive CPMs. So these days, a company running this model has to have a war chest, a super sick and differentiated product, a big catalog, great word of mouth… basically excellence across the board. Finally - my impression is that ecom done well has a higher ceiling, or at least, more exit potential. But that’s often more a function of the product and/or positioning, vs. the acquisition model. all that said, I haven’t done customer acquisition in ecom. And seems like every day, some 20 year old is posting his shopify revenue screenshots in my For You feed, and you know he’s selling shitty dropshipped goods, so IDK, maybe I’m missing something. I’d welcome revisions / insights from others. ideally not speculative but based on their experience! In our business, we mix both models: direct response acquisition + awesome products + excellent post-purchase experience (after the upsell gauntlet of course) + big catalog + nice brand. Still working on improving quality across the board, but when you’re bootstrapped, profit has to come first, and pay for those quality touches as margins allow!