Transcription
Hey folks, welcome to another episode of the e-commerce Playbook podcast. I'm your host Richard Gaffin, director of digital product strategy here at Common Thread Collective, and I'm joined today for a very special D2C index edition of this podcast. I'm joined by Steve Reekock, who is our head of data strategy here at Common Thread Collective. Is that right? Am I getting that right?
Director of data. Director of data. Director of data, that's right. Our director of data here at Common Thread Collective, and he joins us on occasion to share his observations from the data set that he's pouring over on a daily basis here at Common Thread. So, what we want to talk about today is obviously, well, I mean, we're near the end of April here, so Q1 has been wrapped for a while. But we thought the most interesting thing to kind of pull out from the data set that we've been reviewing over the last little while here is the year-over-year changes between Q1 2026 and Q1 2025. So, we're going to dig into that. Steve, why don't you give us a a brief overview of kind of the things that we're seeing in the data year-over-year for Q1?
Certainly, Richard, thanks for having me on again. We've seen a good amount of new total revenue increase. That customer revenue was up, total revenue was up like 13.6%, and more of it coming from returning customers than new customers. That's all better growth. But I think the real story that we've seen in the two major platforms that we spend a lot of in, Meta and Google, is that despite increases in spend, we in Meta, we haven't seen as much of a decrease in ROAS as we might expect. So, the platform looks more elastic than it did last year.
Able to spend more without efficiency declining as much. And in Google's case, we did increase spend there and actually saw an increase in ROAS. So, that's not something that we would normally expect. So, clearly, that market as well took had an increase in elasticity or spending power.
Right. Yeah, and I think that that's kind of the main headline here. Like the one, I mean, there's a couple data points here, but the one that really stood out is that the year-over-year in Q1, Facebook spend is up 25.28% year-over-year, which is a huge jump. Whereas while Meta ROAS, as you've alluded to, only degraded 3% year-over-year, which is pretty remarkable. And then again, Google ROAS saw a 12% jump. Am I reading that right?
Yes, 12% jump in Google ROAS with a 3.65% increase in spend.
Right. So, the spend being slightly less of a jump, but there's still a jump in efficiency despite the increase in spend, which is of course unusual. So, let's talk a little bit about, but I mean, I think still like the the jump in Meta spend versus ROAS is really interesting. So, let's dig into that. Like, why? You had mentioned elasticity. Mhm. Tell me a little bit more about like what you think is happening here.
Yeah, I think we think about AI is just necessarily something that we apply, but we have to keep in mind that these tech companies of Meta and Google are perhaps further ahead on the curve than us in making sure that your ads are shown to perhaps the best people to purchase from your company. So, I think they're getting better at that. We saw an increase in CPMs but a better convert, better click-through rate that we've seen consistently. And so, I think they're being shown to better consumers. And in that way, Meta has become more efficient for the same amount of money. We have, we see greater spending power, the ability to spend without efficiency declining as quickly. Mhm.
So, overall, like then your your take on this is just that the the platform has become better. Like, if you are doing the same things in 2026 you were doing in 2025, let's say, just as a hypothetical, then you are more likely to get a better result out of Meta in 2026 than you would have last year at the same time.
Yes. Now, this also could potentially be that we as an agency have gotten better at advertising on Meta.
I'd like to think so. Yeah. I'd like to think that's part of the equation too, and that we're we're delivering better ads and, you know, figuring out how to utilize Meta better as a platform. Including that is like incrementality and applying that correctly. So, pushing into Meta when we see greater incrementality than our benchmark of 120% and maybe perhaps pulling back on the accounts that see a lower incrementality factor.
Right. Interesting. And actually, that's maybe a good segue, not necessarily segue, but I think it would be good to step back and talk a little bit about like the data set that the D2C index pulls from. So, just for those of you who don't know, the D2C index is something we publish both on a weekly and monthly basis, which is a newsletter that Steve writes, which kind of breaks down the year-over-year changes over the past week. And we also have a monthly report that comes out as well, also covering consumer confidence, which we'll talk about a little bit later. But tell us a little bit about the D2C index's data set, cuz I don't think we've actually talked about that, but we should bring it in here.
We should, cuz that's the data we're referring to when we talk about performance year-over-year. And this is the stores that are in Statlas that have consistent performance and reporting over time, that that we have consistent revenue from the brand for at least two years and consistent ad spend in at least Meta and Google. Some brands are constraining themselves and not necessarily spending on one of the platforms or the other. So, I want to see consistent data from them in order to include those in our data sets. We have, I believe, close to 300 stores in that data set that we're considering, and then we can break it out by vertical as well in our D2C index data that we provide.
So, it's a, it's not a, it's not 30,000 brands, but it is a fairly rich look into 300 brands because Statlas goes so in depth and we have years of data there. So, but of course, like the one, just the caveat then being, as you mentioned before, like that data set is unusually able to be affected by our performance here at Common Thread Collective, kind of the way that we're approaching things. Obviously, we've taken a new tack over the last few months, as everybody who's listening to the podcast knows. So, we may be seeing some results of that. We're just getting better at overall at at winning on Facebook. Now, I think obviously that doesn't explain the whole picture. Like, clearly, there's something to do with this elasticity piece as well that's worth considering. But then, then of course, like the other thing here is that is the imbalance, I guess, I mean, not really, but like returning customer revenue is stronger growth year-over-year than new customer revenue. Anything in that trend that's worth digging up?
Well, I kind of expect this as brands mature. So, they're they're capturing more of their total available market of new customers, but then you have a larger existing customer file to go off of. So, I would expect returning customer, hopefully your returning customer revenue can increase over the years, as long as you have a product that is not a massive one-time purchase. I don't expect multiple customers to return purchase on saunas or or wallets in the Ridge example. Um, but with anything in fashion, apparel, or consumables like cosmetics and beauty category, or supplements or health in the health and wellness space, or food and beverage, we have the opportunity to grow that existing customer file, and then I expect that returning revenue to kind of be better than new customer revenue in the long run.
Quick word from ChargeFlow. The average chargeback takes hours to dispute manually. Evidence collection, portal submissions, back and forth with the processors. Most teams just don't bother. ChargeFlow automates all of it. Evidence submission, recovery, no manual work, no tools to manage. You only pay when disputes are successfully recovered. Head to chargeflow.io to get started. Use code CF30, that's CF30, for 30 days free.
Right. So, this could just be an effect, again, of our data set maturing, not necessarily pointing to an overall trend.
Yes, I think it it's probably a factor that probably most brands hopefully experience, and that they rather existing customer file, the returning customer revenue starts to make up a greater percentage of the revenue.
Right. Okay. So, then I think one thing I want to jump to is if there are sort of two headlines, I guess, that have come out of looking at the year-over-year performance here in Q1. One, of course, was the increase in spend versus the sort of minimal drop in MER or rather ROAS. But then the other thing is sort of thinking about the way that consumer confidence has shifted. So, we also have something part of the D2C index called the D2C CI, which is the direct-to-consumer confidence index. For those of you who do or don't know the consumer confidence index, it is, I mean, actually Steve, you're probably better equipped to tell us a little bit about what the consumer confidence index is and how the D2CCI kind of varies from it.
Yeah, so that is a partnership that we have with No Commerce that provides a post-purchase consumer survey of five particular questions about what they think about the economy. Either what they think about the economy, what they think about their current purchases, future purchases, do they enjoy spending or saving, and do you typically purchase on a .com, the brand's website, or a marketplace like Amazon. Mhm. And those questions give us insight to what consumers are thinking about, how they think the economy will be in the future, but more importantly, how they think their their purchasing habits will be in the future.
Got you. So, let's talk then about a couple. So, there's two. Obviously, there's five questions, but like the two kind of things that we report on the most are future purchase sentiment, which is like you're saying, this is how likely do you think you're going to be to make X purchases or whatever in the future. And then two being like, how do you feel about the economy right now. So, two different ways to kind of think about how people are approaching purchasing. And so, let's talk a little bit about the way those two metrics have changed year-over-year. So, for instance, for future purchase sentiment, what does that look like?
Yeah, so those each of those influence each other, but the not necessarily in the way that you think. I think a lot of brands get into the habit of thinking, "Oh, everyone's excited about the economy, they're going to spend more." We saw actually the opposite of that last year. Last January, we saw expectation of the future economy hitting an all-time high in January 2025. At the same time, we saw future purchase sentiment hit an all-time low. So, people were thinking, "Oh, the economy's going to be great. I'm going to wait until it's great to spend my money."
Interesting. Yeah, and and part of that might be a hangover from Black Friday, Cyber Monday, and the holiday season of 2024 being so great. I think that was a really good time for a lot of the brands that we had. So, we probably saw somewhat of a hangover from people in in that time, as well as hope that in the future, we're going to see a better economy, I'm going to have more money available, I'm going to be able to spend more of that.
Right. So, and and actually, I should just make sure to clarify, because I think I misspoke earlier. Like, both both metrics are how do you feel vis-à-vis the future? Mhm. One is how I feel about what I'm going to do with my money, and then two is my overall sentiment about the economy. So, just make that clear. Okay. So, talk then about obviously if last year there was, let's say, a lot of anticipation, well, still like some sense like they they weren't actually going to spend, then what does that look like year-over-year? How's that shifted in 2026?
So, future purchase sentiment consistently this year has been better than last year. We even saw that spike up. I think consumers were really hopeful at the beginning of March. And we've seen the conflict in the Middle East take its toll on oil prices and stocks, and that has percolated down to future purchase sentiment. And consumers kind of dropped off a little bit toward the end of March. We've since seen that recover a little bit. I think the promise of that conflict potentially ending and oil prices returning to normal levels and and consumer prices not necessarily lifting as much as led to the last couple weeks we've seen an increase in that future purchase sentiment and as well as the hope for the economy. So, those have kind of moved in tandem the last few weeks.
Got you. Okay. So, one thing that I think would be useful to talk about here is what I'm curious about is the way these two metrics map onto any other sort of trend, like whether that's in revenue or efficiency or something like that. So, we have this huge data set of of basically, yeah, we've built our own consumer confidence index across tons and tons of purchases. We have like a very clear sense of what people think they're going to do. How does that map to what people actually do and how they actually behave and like how should we intake this information and then take action on it?
Right. So, all those metrics of the five questions. So, those two probably weigh a little bit more. Also, the the other one of spender versus saver. Do you enjoy spending your money versus do you enjoy saving your money? When that kind of trends a little bit more toward the spending side, that's that's a significant metric to keep an eye on. So, the five metrics combined with our CTC data set from the 200 and or or 300 so stores that we have, we combine to calculate the DTCCI, and it normally projects uh pretty well about the spending power. How much can you spend without AOV decreasing as swiftly. So, it's kind of an elasticity measure for the entire new customer acquisition process. And for April, we saw it around similar to what we had last year. I don't think April was as rough in 2025 as, say, January and February. January and February were certainly struggles, and we saw that kind of in that consumer confidence index.
Okay. So, I think that kind of covers our bases here. Let's Let's quickly talk about where, Steve, where can people find the D2C index and the D2CCI?
Yeah, so we have a few different sources. On Common Thread Collective itself, we have our D2C index where we update it weekly with the data points from, you know, up to the last 2 years of data, so you can kind of see how brands are doing year-over-year for on a daily basis or weekly basis. We do write a newsletter on the D2C index. That's a partnership with No Commerce that we're writing a monthly newsletter that, as Richard mentioned. And then dtcci.co is where I publish the composite consumer confidence index about what I think the elasticity is going to be for the next month. And combined all these different factors that we've talked.
Yeah, so if you want to get sort of more of that type of insight, check those out. Now, obviously, like we got some, we got to work on the naming conventions over here on our side of the coin, but go to commonthreadco.com, check out D2C index, and also D2C dtcci.co if you're interested in some of our consumer confidence data as well. But all right, I think that's going to do it for us. Thank you, Steve, for joining us. Thank you once again for an enlightening update on what's going on in the world of e-commerce data. And yeah, that's going to do it for us. We'll see you all next time. Take care.
Thanks for having me on. Bam.
[music]