With all the changes in how marketers track their digital marketing spend, we wanted to know how B2B marketers are dealing with this issue.

In this episode, we speak with Dan Stepchew, the Digital Marketing Director at Zest Dental Solutions, about how he’s shifting his digital spend and how he’s changed how he tracks the efficacy of his campaigns.

— 

Brian Beck: Welcome to Friday 15 with Master B2B. My name is Brian Beck. I’m here with my partner Andy Hoar. Andy, welcome to Friday 15. We have got a great episode today. Lots to talk about. How’s your Friday Andy?

Andy Hoar: Good. Got football coming up this weekend.

Brian: My team is so far out of it at this point. Oh boy. My poor Rutgers Scarlet Knights. We started strong and died quick. Hopefully we’ll at least get to a bowl game. Anyhow folks, we’ve got a great series that we’re going to be talking about today. In fact, we’ve got so much packed here. We’re going skip our breaking news this week and go straight into the topic, which is how do B2B e-commerce executives manage marketing tracking challenges? Andy, this is a huge deal. We’re talking about companies that have taken away the ability for marketers to effectively track what their marketing is actually doing. They’re advertising. So let’s define the issue first. Andy, you pulled together some good information and background on this. Why don’t we go ahead and dive in and explain what the issue is that marketers are dealing with?

Andy: So this is all about privacy. And it’s really critical to understand the foundation, which is this difference between first party cookies and third party cookies. So first party cookies are cookies that enhance their experience on a single website. And this is going to come into play here a moment. Third party cookies allow you to track activities across multiple websites. The Google ad network, for example, was predicated on this idea of third party tracking because there you can, as an advertiser, you can follow people across various websites. So just keep this in mind that Google is really predicated on this. Their entire business model is based on third party cookie tracking. And not just them, but others. But what got us thinking about this was this article we saw in the Wall Street Journal saying that Facebook was scheduled to lose $10 billion because of a single decision that Apple made – to change the privacy settings and allow people to opt out. This you had to opt in to it. And so in a heartbeat, it changed the entire scenario. So all of a sudden, all these people on iPhones were opting out of sharing their privacy information. And as a result, third party cookie tracking was rendered useless. So Facebook, people are paying Facebook to show these ads to people on their Apple devices. And when they made this decision, the advertiser could no longer see if that person actually viewed the ad right in a nutshell. That’s the cookie thing. And if they wanted to, there are people who had opted in, but they were a lot more expensive. So it caused two problems. One is the price of tracking people went up significantly. And the number of people went down significantly. They told a story about somebody who’s in the article whose cost of acquisition tripled or quadrupled overnight to find the same customer. So that was one story. The other story was the Google story, which is Google has gone back and forth on this one. They were going to disable cookie settings because a lot of GDPR in Europe has had an impact on this California privacy settings. There’s been a trend toward this and Apple made its big decision. So there’s a lot of pressure on Google to get rid of third party cookie tracking as well. And so they said, yes, we’re going to do it. And they announced this long lead time and then just kept changing their mind, especially after Apple made their decision because all those people advertising on Apple suddenly shifted over to Google. So Google says, not only are we on the fence about doing this, but all of a sudden we’ve got all this new demand coming to us. So what did they do? They changed their mind again. So they’ve gone back and forth and back and forth and back and forth. They finally decided to postpone the decision. They took the greatest decision to do absolutely nothing. So that’s where we were. So what is this sort of lead to? Well, one of the conclusions you can draw, and this has been an interesting one, is that there’s been a shift toward first party cookie spending, meaning spending money on closed networks, not these networks where you can view people across everything.

So what has happened, and you and I weren’t even terribly familiar with this, is the emergence of retail media networks, which by the way, this is coming to a B2B e-commerce site near you. But what are these things? Well, you show in the next slide, we’ve seen the emergence of things like Walmart Connect, which enables an advertiser, let’s call it a Procter & Gamble, to spend money on Walmart in a variety of different ways. They were always be able to do so with shopper marketing in store. But now it’s sponsored search on the website. It’s online display advertising, it’s offline media, in-store stuff we mentioned, you know, brand shop and shelf sort of stuff, at the point of purchase. And they recently about a year ago acquired Vizio, the guys who make TVs. They want to be able to advertise on Vizio through connected television smart TV networks. And sor Walmart decided to get stories about this. And you can see they advertise on their website that you can reach 145 million customers through Walmart Connect. And in fact, it’s led to the point where a lot of the brand advertisers are shifting money away from actual advertising to this, because Walmart’s a closed community. They can tell you – they don’t have to track people across multiple websites. There’s one website. Walmart. So that’s B2C. And as we know, everything starts in B2C and migrates to B2B. On the right side of the screen here’s o that neither you nor I had even heard of – Orange Apron Media. And I wish we could do a poll and ask people what that is. It’s Home Depot. So Home Depot now has a retail media network. And if you see at the bottom, it says Home Depot advertising means reaching 198 million individual customers online in our 2340 stores and they attract on the website 3.5 billion visits each year. So companies like Black and Decker, for example, are now looking at spending money with Home Depot. This is a direct result of what happened with Meta/Facebook and Google. And so this is where dollars are going. And we’re going to have a guest on here in a moment. He’s going to talk to something about this. So just to put some context around it, we’re talking about $20 billion inn B2B digital ad spending going to like 23 billion by 2026. These numbers are going to be higher than that. So it’s $20 billion. And there have been some early winners here. So LinkedIn has been a big winner here and Meta. So between the two of them, according to eMarketer, they’re going to dominate almost 50% of digital ad spending is going through LinkedIn and Meta. And so and then of course, these retail media networks are going to see spending there. But a couple of interesting things – LinkedIn, according to eMarketer is going to be almost 50% of B2B digital ads, which is video, etc. on LinkedIn. I always think about this – what did Microsoft buy them for a billion dollars? What a steal that was. I mean, how much of LinkedIn was spun off? How much would it be worth? Not a billion dollars. Probably a half a trillion. And Meta is doing a third of all B2B social ad spending. And then of course, no discussion about any of this is complete without talking about Amazon. And this surprises a little bit. I thought actually the number was even bigger. But Amazon’s B2B ad revenue this year are projected to be about a billion, which was shocking that it wasn’t actually larger than that.

Brian: Yeah, the number feels small to me. I think maybe it’s because it’s B2B specifically, right? If you look at their overall ad spend, it’s tremendous and they’re growing. And it’s the same thing. They are closed network, right? So just like the others, and so marketers are dealing with this. It’s a real challenge. And we have a special guest that we want to introduce to you today, Mr. Dan Stepchew, digital marketing director at Zest Dental Solutions. Dan, you are kind enough to join us today to talk about this impact on your business. Zest is a B2B company. Tell us, tell us a little more about Zest.

Dan Stephchew: Sure. Hey guys. As Andy said, everything that’s B2C eventually migrates to B2B and I did the same. So I’m also part of that. I came from a B2C background. Joined Zest about a year ago. So Zest Dental Solutions is a company. It’s a medical manufacturer, dental manufacturer that’s been based in San Diego County for at least 50 years. Big player in over dentures, specifically the attachments that go onto your implants. So whatever you need to do, they attach an implant to the denture. So you have an over denture. This is what they’re known for. About five years ago, we shifted to direct. So it was a traditional wholesale model, retail. The shift to direct occurred and they brought me in to take some of those B2C methodologies and apply them to the direct model.

Brian: Interesting. So you’re not, you’re not selling these products to consumers. You’re selling these to dentists. I mean, this isn’t a DIY product. I’m not putting that mouth.

Dan: Not yet. If I had it my way, it would be. There’s some regulatory concerns, but you’d be surprised. A lot of customers actually do shop for these things on Amazon.

Brian: So tell us, Dan, I mean, you dealt with this directly, this issue, right? What impact has it had – these changes that have been happening in marketing and tracking?

Dan: Well, this goes back to my B2C days when working with Meta or when it was Facebook, you’d be able to see incredible results that when iOS, I forget the version. When that was released, we saw that, like you said, Andy, the cost of acquisition sort. And that’s come down quite a bit. I think Facebook or Meta has been able to sort of figure out a way around that, especially using some of their new ad tools. But nevertheless, we had to get creative with how we spent our dollars and then of course, the pandemic hit. And it was sort of a one-two punch. And then a third punch hit when new privacy concerns, GDPR got involved. So these are all good things, by the way. I’m not against privacy, of course. I remember being able to see all the companies that were tracking you across the internet. And it was scary. It was alarming. But as a marketer, it’s concerning now that we don’t have all the tools that we used to have. And so we have to figure out how to get creative here.

Brian: You said your traffic in GA4 drop to Google Analytics, went through the freaking floor when this happened.

Dan: So in an effort to again, the best of intentions, we attempted to add GDPR privacy controls, allowed people to opt out of cookie tracking beyond the essentials on our site. And in doing so, most people decided not to allow cookies, including Google’s ad tracker. And yeah, our traffic numbers in Google Analytics, what we used to report up to leadership, went down by half. So we were faced with a conundrum there.

Andy: Didn’t you say, too, that it changed your KPIs? What you were reporting to the C-suite, and he says about website sessions, you don’t even report those anymore?

Dan: Yeah, I don’t even dive into it. What I’m trying to do is focus on revenue at this point. Whatever I can control.

Brian: So what has been the result of this? You just said you don’t track these things anymore. You don’t report on them anymore. What has been the impact in terms of your own ability to get an even investment for dollars to invest in this stuff?

Dan: Yeah, a great question. And that’s been the biggest struggle for me here is understanding how to get creative and the one way that we’re doing it is like Andy mentioned, these closed systems are able to report the data that they’re able to collect. So what we need to do then is we look at what I call in-platform statistics. So Meta, for instance, is still collecting the same data they were collecting before. So we measure what they give us against the previous period, and I report data. And again, that’s fine. It shows progress, but it’s a black box, right? It’s their data. It’s not ours. And that’s a big shift. And so I have to use all these different in-platform data points to paint the picture that we’re showing progress and additional investment is necessary.

Brian: So, B2B companies have historically invested in old school marketing – events and trade publications and things like that. How has this dynamic kind of shifted where your marketing dollars that you have are going as you look across your business? Will you go back to old school now because this tracking is not available?

Dan: Not if I can help it, but certainly there’s a lot of pressure from commercial teams across the board to reinvest those dollars back into, like you said, traditional platforms like sponsoring events at conferences, taking out, you know, media ads on their emails, for instance. And because those things used to work 20 years ago, that was the name of the game and then digital marketing sort of progressed forward. So now they’re able to punch holes in some of the reporting that we’re getting back from the ad campaigns that we’re investing in across all the different networks. So it’s, yeah, it’s been a struggle. I need to figure out a way to show when a customer clicks on an ad in Facebook or Google, they purchase. And I need to just unify that data in one place and that’s been a difficult uphill battle here.

Andy: But I’ve got to ask, your compatriots on the other side who are making arguments for what we used to call measured media, right? I always thought it was funny, but the trade shows, et cetera, they have the same standard of demonstration of ROI. So it feels like there’s still a double standard when you became slightly less able to establish the connections. They’ve never been able to establish the connection.

Dan: Never. Right. Yeah. And that’s my defense. And then we end up in a stalemate, right?

Brian: Well, you developed an interesting framework, Dan, that I’ll just share here real quick on the screen. You don’t have to go into all the details on this for time. But tell us how have you kind of worked around this? How are you making cases? What’s this framework?

Dan: So this all comes down to – how do we measure incrementality? So for every dollar that we put in… there’s a sales team here at Zest. They’re doing great work on the ground. But if we’re not measuring what they’re doing apples to apples, against what we’re doing digitally, then there’s no way to show incrementality with the dollars that we’re spending digitally. So what I tried to do here is to, is to get around that and use sort of directional points. So in platform revenue, what we can track online, are we growing? What’s the contribution margin? Traditional KPIs? And you know, this definitely helps. But, there’s still ways to poke holes in thesedata points.

Brian: Well, that’s the challenge here. And I don’t know if we have a solution, but certainly, looking at these kinds of metrics can be helpful. Have you shifted more of those sort of closed networks? Like we talked about earlier, have you put more into that versus into the Meta’s and other tools?

Dan: It’s interesting. We are looking at those. We just began investing heavily into Meta here. Traditionally, we weren’t even doing that. So, we’re just establishing the foundation into other networks beyond just the traditional sort of Google sponsored content. We’re an e-commerce site as well, right? So we spend a lot of money in Google shopping. So anything, in addition to that is brand new here.

Andy: So Dan, I have to ask a question about this. And I think we have to move to the next slide of this. But you said Meta and you said that this is mostly targeted at dentists, right? You said you have maybe a consumer component of people. Who are you targeting on Meta? Are you targeting my dentist on Meta?

Dan: Absolutely. Yeah, definitely. It’s scary that they’re probably on their phones looking at Instagram in between appointments, but they are.

Brian: So so we asked our audience about this: are privacy policies making ad tracking more difficult (like Apple’)s reducing or preventing your company’s use of digital marketing. Wow. 67% said they’re reducing their use of digital marketing and 17% said they’re preventing use of digital marketing. That’s 83% guys that say, hey, this stuff is preventing me from investing in or reducing my investments in digital marketing. Dan reaction instant reaction. What do you think?

Dan: Yeah, it’s a tragedy. It’s a huge opportunity for a business that can figure this out for us. If it’s not Google, it’s going to be someone else.