Member Exclusive   //   August 9, 2022

DTC Briefing: How attribution became the hot new battleground for e-commerce startups

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. To receive it in your inbox every week, sign up here.

While e-commerce startups are still struggling with the fallout from last year’s iOS14 update, it’s been a boom for attribution vendors, who are increasingly finding themselves in demand. 

In particular, two early-stage attribution startups — Triple Whale and Northbeam — have commandeered a lot of interest from younger brands. These companies essentially help e-commerce companies that run ads in multiple places — like Facebook, TikTok and Google — determine which of these ads actually resulted in a customer buying from the company. 

They, along with more established multitouch attribution vendors like Rockerbox, which released an attribution solution in 2018, say that they’ve seen an uptick in new clients last year. These companies all offer different solutions meant to address a similar problem for e-commerce startups. But which of these vendors is better for e-commerce startups has also become a hotly debated topic on Twitter, with various founders chiming in periodically on which solution they think is best. 

The newness of these startups helps partially explain why attribution software is suddenly being much more hotly debated: Northbeam was founded in 2019, while Triple Whale was founded just last year. But their rising popularity also speaks to how much more complicated marketing has gotten for e-commerce startups; they are desperate to find not just any attribution provider, but the so-called right one that can help them figure out how to much to invest in YouTube or direct mail. However, founders and marketers warn that these attribution vendors aren’t a perfect solution to startups’ marketing woes but rather, just one viewpoint that startups may want to take into consideration when crafting their marketing strategies.

The past year has been a “boom” for Rockerbox, which mostly works with mid-market businesses, the company’s CEO Ron Jacobson told me. Rockerbox’s revenue has more than doubled year-over-year. Meanwhile Triple Whale, which works mostly with small to medium-sized brands, has grown to about 4,500 clients since publicly launching in May 2021 and raised $27.7 million in funding earlier this year. 

“We’ve really just been growing by word of mouth at this point. And we haven’t done any real outbound effort at this point, but that’s going to change in the near future,” Northbeam CEO Austin Harrison told me. 

“Brands are being dropped in the middle of the desert”
Attribution is nothing new. For years, marketers have sought to figure out with as much certainty as possible, figure out exactly how many sales each of their advertising campaigns have been responsible for. It’s a bit of a Sisyphean task, but one that is often demanded by c-suite executives who want easily replicable growth tactics 

That task was made a lot easier, however, by the ascendance of Meta (formerly known as Facebook). Thanks to its wide variety of analytics features, like lookalike audiences or a variety of attribution tools, many e-commerce brands like Warby Parker or Bombas were able to build multi-million dollars businesses by building the vast majority of their marketing campaigns on Faceboook. Then, they would using Meta’s in-house tools to constantly optimize these campaigns, in search of one trick or ad format that could cut CPMs in half or bring in a few thousand more dollars. 

“You have an entire generation of marketers who have been brought up that marketing is a science,” Orchid Bertelsen, COO of Common Thread Collective, told me. 

But then, due to a variety of factors, marketing got a lot more complicated for e-commerce brands. That was largely due to Apple’s iOS14 update last year which made apps like Facebook and Instagram to ask people for their permission first before tracking their activity across the web. That, in turn, made it more difficult for Meta to spit back data indicating how many people bought something after viewing an ad — especially if they did so after viewing 50 other websites. 

Bertelsen said that there are other factors at play that have made attribution more difficult — startups are more likely to run ads across multiple apps earlier than they used to. In the past, they may have just advertised solely on Facebook and Google for their first three years in business. 

Put together, all of these changes have made marketing much harder for early-stage direct-to-consumer brands. Matt Mullenax, co-founder of body care brand Huron, said in an email that finding an attribution vendor became a “top priority” for him following the iOS14 update, and started using Triple Whale earlier this year.

Previously, an early-stage startup like Huron — which is three years old — may have relied on the in-house analytics tools from platforms like Meta or Google Analytics to measure attribution. They may not have paid for an attribution vendor until they started investing in larger marketing channels like TV or billboards. 

Bertelsen said that she thinks the iOS14 update is taking marketing back to being more of an “art and a science” – that is, something that can’t always be perfectly optimized 100% of the time. 

“What used to ‘just work’ now requires a lot of intentional focus for these early stage brands,” Jacbson said. 

Jacobson likened the conundrum brands face right now to, “being dropped in the middle of the desert, and they need to be able to look around and know where to go.” 

Juicing word of mouth
Given the growing amount of marketing headaches, these startups have crafted a pitch that almost mirrors that of support group leaders, ushering marketers into a space where they’re not alone in their struggles to come up with a strategy that ensures revenue is always going up and to the right. “Understanding attribution after the iOS 14.5 update was a nightmare,” reads one testimonial on Northbeam’s website. Marketers can even buy an “I survived iOS14.5” shirt from Triple Whale to poke fun at their miseries over the past year. 

As Alexa Kilroy, head of brand at Triple Whale put it, she used to be the marketer who was tasked with trying to figure out where a sudden sales spike worth tens of thousands of dollars was coming from before she joined Triple Whale. “As someone who has tried to live without an attribution tool…I wouldn’t recommend it.” 

She described Triple Whale’s marketing strategy as promoting the company “as more than just an app that you open. It’s about being part of a community of entrepreneurs.” In turn, Triple Whale invests in a variety of content marketing efforts, such as a podcast called “You are not your ROAS,” as well as sponsoring industry conferences and hosting dinners for e-commerce founders. Triple Whale’s employees are now noticeable participants Twitter threads thanks to the bright blue whale emoji many of them have chosen to add to their user name.

It’s also not just e-commerce founders who are getting in on the attribution debate; while Rockerbox works exclusively with e-commerce companies, Northbeam and Triple Whale also work with marketing agencies — who get a bonus based on how many clients they refer to Triple Whale or Northbeam. 

Consultants and founders say that, ultimately, startups should evaluate attribution solutions just like any other software product — and dig into exactly how these startups calculate certain metrics, and what data sources they pull from.

Bertelsen said that her “cynical take” on attribution solutions is that marketers sometimes assign blame on a piece of software if a marketing investment doesn’t pan out like they thought it would. 

“They will say, oh well you know, based on what this model told me, my next dollars should be spent here. And that didn’t work — but it shouldn’t be my fault, because that’s what the model told me.” 

“I think a lot of software, especially business-to-business stuff, tends to be a black box,” Bertelsen added. “I think when you’re evaluating those tools, just having a healthy understanding of how those numbers are calculated is helpful.”

Mullenax said that “any new marketing partner has to fill a void within our stack. We want to avoid needing tools to manage the tools, or said differently, too many outsourced agencies/tools/trackers, etc.” 

But ultimately, regardless of which solution brands rely on, all of them will have their own limitations.

“There really hasn’t been, in my experience, one technology to solve all of your problems,” Bertelsen said.

What I’m reading

  • Shopify is continuing to back some of the biggest startups in its app store, announcing a $100 million strategic investment in marketing automation startup Klaviyo last week. 
  • Meanwhile, other Shopify employees expressed frustration to Insider about the e-commerce giant approving what they viewed as unnecessary expenses, including team offsites, weeks before laying off 1,000 employees
  • Resale provider ThredUp hired its first chief marketing officer in roughly four years: Noelle Sadler, who was formerly the CMO at women’s apparel brand Lulus. 

What we’ve covered 

  • Aperitif brand Haus is winding down operations and trying to sell off its assets in an ABC after a Series A round failed to pan out.
  • Glossier had another round of job cuts last week, laying off about two dozen employees as the company shifts its focus to hiring for retail, wholesale and supply chain-related roles. 
  • Sparkling water brand Aura Bora took a page from the In-N-Out playbook and tested out a secret menu concept, releasing through new flavors that were only accessible by password. 

This article has been updated to clarify that although Rockerbox has been in business for nine years, it only just launched an attribution product in 2018.