Episode Summary

In this episode of the Free to Grow CFO podcast, Jon Blair and Karl O'Brien discuss the common misconceptions surrounding the profitability of advertising in e-commerce. They explore the importance of understanding unit economics, the distinction between new and returning customer profitability, and the critical role of customer lifetime value (LTV). The conversation highlights the traps brands often fall into when assessing profitability and offers strategies for brands that may not have meaningful LTV. Ultimately, the episode emphasizes the need for a profit-focused mindset in scaling e-commerce businesses.

Key Takeaways

-Many brands misjudge the profitability of their ads.

-Brands should aim for first order profitability based on their business model.

-Small operational changes can lead to significant profit improvements.

-Attribution models can distract from core unit economics.

Episode Links

Jon Blair - https://www.linkedin.com/in/jonathon-albert-blair/

Karl O’Brien - https://www.linkedin.com/in/karlobrien/

Free to Grow CFO - https://www.freetogrowcfo.com/

StoreHero - https://storehero.ai/

Transcript

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00:00 Introduction

03:03 Understanding Store Hero and Its Mission

05:52 Common Traps in Assessing Profitability

08:51 Analyzing Unit Economics for Growth

11:51 New vs Returning Customer Profitability

15:11 The Importance of Customer Lifetime Value

17:50 Should Brands Be First Order Profitable?

20:57 Strategies for Brands Without Meaningful LTV

23:55 The Role of Returning Customer Rate

26:46 Final Thoughts on E-commerce Profitability