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Edition 13: November 22, 2023‍

Demand creation and demand capture are two separate activities require separate metrics to measure their success.

Demand creation is about creating demand for your product to people who were not aware that you existed. Demand capture focuses on targeted activities to convert people who are already looking for a similar product or service.

Let’s look at how to measure them properly:

Demand Creation KPIs

1. Prospecting Traffic: In the world of demand creation, driving new traffic to your website or landing pages is the name of the game. But it's not just about quantity; quality matters, too. Are you attracting the right audience—people genuinely interested in your product or service? However, high traffic doesn’t automatically translate into success.

2. Key Engagements: Engagement is another crucial demand creation metric. Are your prospects engaging with your content, generating events? Tracking these interactions helps gauge whether you’re getting the right kind of traffic and prospecting your ideal leads.

3. Cost-Per-Visit: How much are you spending to attract each visitor to your site? A lower cost-per-visit indicates strong demand creation efforts and relevant content for the audience.

Demand Capture KPIs

In demand capture, the focus here is converting people who are interested into actual leads. Metrics like cost per result, pipeline conversion rates and lifetime value are important here. The question now is: are you effectively turning intent into revenue?

1. Cost per result: It’s an easy one. It measures how much you're spending in relation to the number of conversions or leads you're getting.

2. Pipeline Conversion Rates: The percentage of leads progressing through your sales pipeline is a critical demand capture metric. A high conversion rate indicates that your sales and marketing efforts are aligned and your leads smoothly transition from one stage to the next.

3. Lifetime Value (LTV): LTV is the total revenue a business can expect from a single customer throughout their relationship with the company. It's calculated by considering the average purchase value, frequency of purchase, and customer lifespan.

The Danger of Mixing Metrics

It's a common B2B marketing pitfall to apply demand creation metrics to demand capture activities, and vice versa. Why is this a recipe for disaster?

It’s a mistake to expect leads from high volume demand creation campaigns. As well as you should expect higher CPC and CPV from demand capture campaigns but it also leads to higer revenue.

Judging your demand creation based on demand capture metrics can lead to prematurely dismissing effectiveness of the campaign.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 12: November 14, 2023

While CAC:LTV remains a popular B2B growth governor, CAC Payback Period is more important, relevant, and actionable.

When every penny counts, we all need a “North Star” that actively guides our business decisions. This is where CAC Payback Period comes in, offering a clear metric that is actionable, adaptable, and insightful.

What exactly is CAC Payback Period?

CAC Payback Period is the number of months it takes to recoup the cost of acquiring a customer.

Moving Beyond CAC:LTV

While CAC:LTV ratio has been a traditional favorite, it’s time to acknowledge its limitations. Oftentimes, it can be difficult to understand LTV when a customer's lifetime can be in durations of many years or even decades long.

With CAC Payback Period, you’ll know more about when you’re breaking even, which means you can reinvest in your business faster - and wiser.

What is a good payback period? Courtesy of Lenny, a great author on the subject.

Source: lennysnewsletter.com

Why does this metric stand out so much to me? Here’s a quick rundown that might help you understand why it should be your new growth guide:

Direct Financial Impact: CAC Payback Period zeroes in on the return on investment, giving you a tangible timeline for when we can expect our marketing efforts to translate into revenue.

Ease of Understanding: There’s no complex formula here. It's a metric that’s as easy to understand as it is to explain, making it a go-to for clear communication across departments.

Encourages Efficiency: Focusing on how quickly we can turn around our CAC inherently drives you to refine your approaches to be more streamlined and effective.

Facilitates Decision-Making: Segmenting your marketing activities across channel / campaign, then calculating Payback Period, allows for better prioritization.  

We’ve always emphasized alignment between marketing and sales, which requires shared goals and metrics. CAC Payback Period is an example of a metric that reflects the contributions of both departments to the organization’s financial health.

Look into how CAC Payback Period can be integrated into your daily operations and decision-making processes. It’s not just about measuring—it’s about improving, iterating, and investing in strategies that will lead to sustainable growth.

As you know, a journey is only as successful as its guide. CAC Payback might be the North Star you didn’t know you needed.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 11: November 7, 2023

Marketing to sales is no longer a simple baton pass - it’s much more about collaboration and cooperation.

The old guard of B2B marketing will have you believe there’s a linear handoff between marketing and sales. You’ve probably heard this before: “Marketing generates leads, and sales takes over the rest.”

In other words, the marketing department owns lead generation, while the sales department is responsible for the entire sales cycle.

Not in 2023.

The new reality is that synergy between your marketing and sales department isn’t a “plus” - it’s an absolute necessity in the B2B world.

In a world where data is more relevant to B2B marketing than ever, working together means your sales and marketing teams can refine strategies and measure success more accurately.

The numbers don’t lie here: Linkedin research shows that 97% of sellers and marketers think bad alignment negatively impacts the customer.

But the same research also presents a massive problem: 9 in 10 sales and marketing professionals say they are misaligned across strategy, process, content, and culture.

Achieving marketing and sales alignment hinges on regular, meaningful interactions that encourage a transparent and unified approach. By setting shared goals and co-creating strategies, these departments can work cohesively towards mutual targets such as customer acquisition and retention.

Aligning on Key Performance Indicators (KPIs) is also vital, ensuring they reflect both the collaborative nature of their work and their collective impact on the company's success, encompassing metrics like lead conversion rates to marketing ROI.

Here are more tips to improve three different kinds of crucial marketing/sales alignments:

Measurement Alignment: Ensure marketing is held accountable not just for the quantity of leads but also for revenue, nudging their focus toward the entire sales pipeline. This means marketing's performance is tracked all the way through to the final sale, emphasizing their role in not just lead generation but also in contributing to the bottom line.

Targeting/Quality Alignment: It's important for marketing and sales teams to convene to examine inbound leads regularly. These reviews provide opportunities to assess lead quality rigorously and make real-time adjustments to targeting criteria if leads aren't meeting the mark. These sessions reinforce the commitment to quality over quantity, ensuring that the leads passed to sales are indeed primed for conversion.

Process Alignment: Process alignment involves defining clear procedures for how leads are managed post-generation. This includes establishing lead routing protocols, setting standard response times, outlining priority levels, and ensuring a smooth transfer of information.

An obvious example here would be the sales team gaining access to valuable marketing data associated with leads, such as understanding what website pages were viewed the most, and for how long.

Better marketing/sales alignment = better B2B marketing outcomes.

Different paths, sure - but the same destination.

Whether you're a marketing maven or a sales superstar, remember this: your synergy is the rocket fuel that propels your organization to new heights. This shift towards synergy isn’t a trend - it’s the new way.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 10: November 1, 2023

Demand drives business growth. But how exactly does demand work in the B2B space?

Marketing = demand creation + demand capture

Imagine B2B marketing as a coin. One side represents demand creation, the other demand capture. Both are essential to success at scale.

Demand Creation: Demand creation is about informing potential buyers. It's akin to drawing local pedestrians to window-shop at your store, igniting their interest in a new coat they hadn't considered buying.

Demand Capture: Demand capture focuses on pushing these potential buyers down your sales funnel. With our retail metaphor, it's comparable to setting up a specific section of your store in a way that nudges visitors to pick YOUR coat over your competitors.

In simpler terms:

Demand creation focuses on building awareness, while demand capture focuses on generating revenue. The former is earlier in the journey, and the latter is focused on converting that initial interest into a final purchase.

Modern demand creation might be a targeted social media strategy, podcast, or webinar addressing customer needs. It might also look like a well-researched pillar page optimized for SEO. Metrics? Focus on high quality new traffic, visibility, and engagement.

Demand capture targets the 1-5% of ready-to-buy customers. It could manifest as email campaigns, retargeting ads, or comparison reviews. This stage is about convincing prospects on platforms like G2, Capterra, and TrustRadius that your solution is the best. Key metrics include Cost per Results, Pipeline Conversion, Lifetime Value.

Ignoring one aspect for the other can be quite detrimental.

Overemphasizing demand creation might attract many viewers without substantial growth. Conversely, focusing solely on demand capture might yield high conversion rates without enough leads. Neither are outcomes you want.

B2B growth requires a balance between creating and capturing demand. B2B leaders should recognize the unique yet intertwined nature of both elements.

Creating demand has a longer payoff, but it builds trust and credibility. Capturing demand can be costly, and there’s a low barrier to entry - but it will drive profits.

Misunderstanding this balance - including misattributing metrics from one side to the other - can be fatal. Understanding the balance means consistent marketing and recurring revenue.

And isn’t that what we’re all here for?

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 9: October 12, 2023

A collection of recent marketing thoughts, in no particular order

1. Marketing is the language that connects product with people.

2. Marketing starts with market, something commonly overlooked.

3. Content is the atomic unit of marketing.

4. Product market fit is not a one-time achievement, it is a sliding scale.

5. Growth is a way of thinking at its core.

6. Insight = Data / Time, Decision = Insight * Process, Growth = (Decision)^Speed.

7. Growth happens cross-functionally.

8. The difficulty of earned media is often underestimated due to visibility bias.

9. The biggest difference between B2C and B2B is that in B2B you’re selling to groups of people instead of one person, and it’s not their money.

10. Better aligning sales and marketing teams in B2B sales-led orgs is one of the biggest growth levers available, and it’s free.

11. Often, the best attribution model is to just ask.

12. Bad positioning is a silent root cause of most startup failures.

13. Statistical principles should be a requirement for modern marketers.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 8: September 12th, 2023

The 9 Immutable Laws of B2B Demand Generation

// An accumulation of my 8 years leading and advising 10+ B2B marketing departments. Stay tuned and forward to a friend for deep dives on each one in the coming weeks.

--- [ 1 ] ---

Demand generation = demand creation + demand capture

• Demand Creation: Broadcast activities that make people who were not looking for your product interested in you. Has long payback periods & unlimited inventory.

• Demand Capture: Targeted activities that make people who were already looking for something similar to your product talk to you instead of another company. Has short payback periods & limited inventory.

Bottom line: Conflating the two is bad for the program

--- [ 2 ] ---

Demand creation and demand capture have different success metrics

• Demand Creation KPIs: Prospecting Traffic + Quality, Cost-per-visit
• Demand Capture KPIs: Conversions and Contacts, Pipeline Conversion Rate

Bottom line: Applying Demand Creation metrics to Demand Capture activities (and vice versa) leads to disaster.

--- [ 3 ] ---

Build investment zones not funnels

• Opportunity Zone: Demand Creation for the unaware.
• Category Intent Zone: 3rd Party Intent + 1st Party Prospecting.
• Brand Intent Zone: 1st Party Intent.

Bottom line: Old funnels are linear; the real world isn't.

--- [ 4 ] ---

Buying decisions are made in groups, not individually

• In B2B, your target audience is never just 'Heads of [Blank Function]' making decisions.

Bottom line: Decision-making is a group project involving various key stakeholders within a company.

--- [ 5 ] ---

Marketing and sales alignment is the crux of revenue efficiency

• Old Way: Linear handoff of leads from Marketing to Sales.
• New Reality: Teams operate in parallel.

Bottom line: more intentional team alignment is needed than ever.

--- [ 6 ] ---

CAC payback must be your north star

• Drop CAC:LTV, focus instead on CAC-Payback Period

Bottom line: When LTV recoupment can be 5+ years, CAC:LTV becomes a dangerous governor to use. Know when you'll break even and reinvest faster.

--- [ 7 ] ---

Attribution data is implicit, not explicit

• MTA Attribution is Good for Demand Capture; not ideal for Demand Creation.

Bottom line: Use attribution data inferentially, not deterministically.

--- [ 8 ] ---

The buyer journey starts earlier than expected

• Trace back far enough and you might just find that interns owned the first step in the buying process.

Bottom line: Don't overlook building early touchpoints.

--- [ 9 ] ---

Real growth happens cross-functionally

• Growth happens at the intersection of Product, Marketing, and Sales.

Bottom line: Look holistically, and avoid having growth be owned by one function.

---

If you enjoyed this, forward to a friend for them to subscribe below. Stay tuned for a deep dive of each of these in the coming weeks

Thanks for tuning in,

Kenneth Shen

CEO, Half Past Nine

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Edition 7: August 24, 2023‍

Growth is a cross-functional exercise

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The function of growth is often misunderstood in startups.

Not surprising, considering how many three-letter acronyms we apply to the domain.

Here’s what growth means to me:

And why the growth function is one more often built wrong than right.

The most important thing to understand is that the growth function is a cross-functional department.

Growth happens at the intersection of Product, Marketing, and Sales.

Breaking down revenue as a north star metric: we have acquisition, retention, and expansion revenue.

Say for a simple example your target is to grow revenue 100% YoY, and marketing owns acquisition. Product owns retention and sales owns expansion.

All too often we see growth wholly owned by Marketing, or by Sales. This is ineffective as growth needs to be able to work the entire experience.

If your organization is too early to have a dedicated cross-functional growth team or growth PMs, then the next best option is to ensure your Marketing, Sales, and Product functions understand *and collaborate* on growth as a shared responsibility.

———

Because more MQLs is not the solution if there’s a broken sales pipeline

And more sales prospecting is not the solution if positioning and messaging are off.

And more top-of-funnel is not the answer if product churns like a leaky bucket.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 6: April 21, 2023

The shift to multi-ecosystem in media buying and marketing.

As more and more advanced algorithms and models present in our lives, the role of many functions are changing—one in particular is media buying.

Over the last 18 months, most major digital advertisers have launched ad buying formats that rely more on ML models and less on individual inputs from a media buyer.

These ‘AI’ tools aim to deliver one promise — trust us with your controls, and we’ll get you the best performance. Essentially, they deliver your media to the people they think will give you the best return - based on their wealth of data (which is a problem).

Sometimes, they work well — other times, they do things you don’t want, like over-index on branded spend (without you knowing). All in the name of maximizing immediate, short-term ROAS.

This means that the role of single-ecosystem functions, like Paid Search Buying, is changing because the amount of control on advertising platforms is decreasing.

And so here we are, seeing a rise in black-box decision making algorithms—all trained on their own platform data.

This means that the advertising landscape is becoming increasingly controlled by algorithms which operate within their own channel vacuums - operating as walled gardens that optimize for the best return inside their garden, never able to see beyond their walls.

These ecosystems don’t talk to each other because the incentive systems don’t allow for it. Every platform wants you to spend the most amount of money with them - so data models and attribution are all skewed to over-index on their individual results.

This means that the entire media buying function will need to shift upwards to solve new challenges — maximization of the multi-ecosystem.

The future lies with those who can orchestrate the symphony of channels the best.

And in order to do that, you need data.

Not platform data - because those are skewed to shout from the rooftops that they’re the best. But an actual data model that looks across these walled gardens to tell connected stories to your customer across all channels.

The multi-ecosystem orchestrator will thrive and their success will be underpinned by the data models that connect these walled gardens together.

As automation permeates through the media landscape, the human function moves upstream to bridge the gap between systems to build truth in advertising metrics, and ensure that the story stays coordinated, connected, and human.

Because the buyer journey still belongs with us.

Best,

Kenneth Shen

CEO, Half Past Nine

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Edition 5: March 23, 2023
Making the difficult leap from go-to-market to market relevant.

There’s a valley of death between early go-to-market (GTM) growth and a mainstream scale-up.

The ability to traverse it by building market relevance is how brands achieve real scale.

The GTM phase is often the first five years of a startup’s life. It’s the discovery stage of product-market fit. The phase of tweaking everything to find what clicks.

When your existing customers rave about you, engagement is super high, and you’ve gotten your product just right - then it’s time to focus on reaching the wider market.

In the GTM phase, you’ll hopefully achieve sizable penetration into the early adopters in your market. But then growth often reaches a ceiling. Pipeline value might be growing but conversion rates often slow.

If your business growth has reached this metaphorical valley of death, it’s time for a strategy overhaul.

Traversing The Valley of Growth Death

Many founders think they need to drive more top-of-funnel. That’s definitely part of it, but it’s not the whole story.

What’s more likely happening is that you’ve reached a certain level of penetration in your serviceable addressable market, and a point of diminishing returns on your GTM efforts.

In other words, you’ve reached saturation on the early adopters most open to trying your product.

The next step? Igniting the mainstream.

Here’s how.

Product-Market Fit

It’s time to take a look at your product.

Yes, you have product-market fit. But, how well does your product satisfy the needs of the mainstream market as opposed to your early adopters?

Hopefully you recognize that expanding into new markets involves product innovation too. Your product needs to evolve because your audience is evolving.

They’re going from the people interested in trying something new and exciting, to the mainstream realists that are much slower at moving. They would also likely prefer a more complete solution over a visionary point solution.

Product-centric companies have a direct line of communication with customers and prospects that your competitors never see. (Something that separates the best from the rest.)

Message-Market Fit

Rethink your message-market-fit for how well your brand and positioning resonates with your next segment of customers.

The mainstream customer will require more convincing than your early adopters. The mainstream is more hesitant. Counterbalance this by leveraging your successes to tell an incredible story.

One of the best ways to move the mass market is to convince them they’re already late. Switch from, “Here’s why our product is better,” to “Here’s why everyone else is using this, and you are missing out.”

Work consistently to stack your credibility layers with social proof. This might take shape in a variety of ways, from case studies, partnerships, testimonials, showreels, awards, or media hits.

Channel-Market Fit

Next is distribution. Or, what I call, channel-market fit.

Young brands often bias heavily towards measurable, bottom-of-the-funnel  channels like Search and Retargeting where revenue is directly attributable.

They’re super measurable, but they won’t win you the mainstream market. Why? They center around demand capture, over-indexing on the latter half of the buyer journey where people have already decided to buy something.

To really achieve relevance you need to scale reach strategically, because this is where missteps can waste millions. You’ll need to create demand, not just capture it. And most painfully, you’ll need to overhaul your measurement strategy to account for the ‘unmeasurable’.

Equipped with a product that's suited for mass market and a story that resonates, the only thing left is to cascade your story to the world. Break out of your brand echo chamber and start telling your story to a much broader audience.

It’s the difference between a Google Ad and an influencer sponsorship. Or a Facebook ad and a billboard in Times Square (A data partner, like us, can help you better understand how these types of investments are working).

Nail these three, and you’ll go from idea > ignited > iconic.

Best,
Kenneth Shen CEO,
Half Past Nine

Edition 4: February 21 2023
The Consumerization of B2B SaaS; Why B2B is Becoming More Like B2C

Over the last 5 years especially, we’ve seen a radical consumerization of B2B SaaS products. A trend that will continue to expand throughout other B2B markets.

As B2B SaaS products become more mature and players become ubiquitous, the power is shifting from the enterprise buyer to the end users. Buying power is becoming democratized over organizations' user bases.

The Old way? Customers are enterprise buyers:

• Buying decisions are made top-down.
• A small number of people following checklists make decisions for a larger number of end users.
• SaaS products are centered around the enterprise org, with required training, archaic UI, long + high-friction sales cycles.

New way? The power shifts toward the end user:

• Buying decisions are made bottoms-up.
• The demand and preference from internal users highly influences the decision.
• SaaS products are built for the end user, with modern UIs, freemium/self-serve models, and a focus on UX/CX.

The result?

UX + CX is the modern B2B brand’s secret weapon.

End users are more and more used to having a say in the enterprise tools they’re using AND simultaneously having less and less tolerance for poorly designed products with bad user experiences.

The young workforce has grown up in the Apple era of user experience and the baseline expectation for amazing experiences rises day by day.

For example, I have zero patience for DocuSign’s MFA requiring you to click on the text box in order to enter your code when it's the only thing on the screen. Or LastPass having 3 different settings menus. Wtf?

(Two SaaS products surviving entirely on inertia, if you ask me.)

Give me something that looks and feels like the products I’m used to in B2B SaaS (Slack, Notion, Miro) and B2C SaaS (Airbnb, Instagram, Amazon etc…).

This expands upstream into the buying experience too.

Your prospects don’t want to fill out gated forms for materials. Sometimes they are a necessary evil, but gating everything is extremely nonproductive. If the intent is there and your brand/content/marketing is good enough, 9 times out of 10 they’ll contact you first.

The focus needs to be on the prospect during the sales process, otherwise they’ll quickly lose patience and go somewhere else.

Your prospects want a demo on the first call (or the second only if you’re selling something customized) without being endlessly BANT qualified or waiting multiple days for a sales rep’s response.

It’s the same way Amazon Prime made 5-7 day shipping feel like an eternity. Expectations have changed. Sleek and user-centric B2B brands have made fresh, sexy experiences the norm.

And to legacy B2B products that don’t shift? Head’s up, new customer-centric B2B products are coming to eat your lunch.

Wrapping up:

• Influence is shifting from enterprise buyer groups to users.
• Focusing and prioritizing the end user is a non-negotiable in 2023.
• The new generation of users (myself included) are accustomed to Apple, Slack, Notion, Miro or Trello UX as default
• Remove friction from your sales process, damn it.

Best,
Kenneth Shen CEO,
Half Past Nine

Edition 3: February 24, 2023
What’s really going on with the Google Antitrust suit?

Last month, the DOJ launched a fresh antitrust suit against Google.

It accuses Google of monopolistic behavior in the digital AdTech market through anticompetitive acquisitions, forcing adoption of Google tools, and auction manipulation.

This suit only targets Google’s ad network business, which is ~12% of Google’s Revenue ($33B in 2022,) of which ~70% is passed on to publishers.

Simply speaking, Google’s AdTech business is a network of technologies that connects the supply and demand side of the digital display advertising space.

It comprises:

• Supply-Side Platform (AdSense), an
• Ad exchange (Google AdExchange), and
• Demand-Side Platforms (Google Ads + Display & Video 360).

To better understand what’s going on, the history is key…

In Google’s early days, its first business model (and arguably still the only successful one besides Cloud) was Search Ads.

However, the value of the display ads market couldn’t be ignored. It sold third-party website inventory to advertisers - aka those banner ads you see on websites. DoubleClick was a leading platform with expertise serving display ads, owning many key relationships with both publishers and advertisers.

Not capitalizing on this was viewed as an existential risk, so Google began aggressively acquiring their way into the market. The acquisition of DoubleClick (2007) was the most pivotal moment. The acquisition allowed Google to connect their network of advertisers (the largest at the time) with DoubleClick’s vast network of publishers.

Overnight, Google became the most powerful digital advertising intermediary and marketplace.

It then networked supply and demand through a real-time auction platform, allowing for advertisers to bid for ad placements on publishers' websites. The auction model was revolutionary, accomplishing two things:

• Improved access and pricing for publishers (through real-time advertiser competition at scale).
• Improved ad quality for users (ads ranked lower by quality metrics require a higher bid).

The end result is a market-leading Google AdTech stack spanning from demand to supply, with their own exchange in-between.

The key to Google’s success seems mostly attributable to:

• They pay publishers the most (~70%, compared to previous models of 50/50 or less).
• They’ve built the best applied data models to serve effective, quality advertising.

Although ultimately, publishers and advertisers do still have plenty of options elsewhere, including other ad exchanges.

So what’s the issue?

Google’s rampant success. It owns an estimated 90% market share in sell-side inventory, 50% in ad exchanges, 80% in demand side ad networks, and 40% market share in demand side platforms.

And the DoJ appears to see Google’s 10+ year old acquisitions as part of the problem.

What would happen if Google’s AdTech was broken up?

Two opposing scenarios:

• The DoJ’s hope // Reducing Google’s position would encourage more competition between exchanges and AdTech tools, incentivizing greater efficiencies through more innovation.
• Our take // Publishers will make less money, and user experience will drop. A break up would actually lead to a worse outcome for everyone. Google connects the most advertisers with the most publishers by providing the best network experience. And they maintain the position by providing the best cost model to publishers. Is this monopolistic behavior, or, is it just simply having a better product with better network effects?

And there's a secondary question here, of whether the DOJ should be able to rollback 15-year-old acquisitions?

Don’t get me wrong, I do think there’s plenty of antitrust regulation that needs to happen in the sector. For example:

• Anticompetitive practices from big tech involving bundling (and really, market dumping) of B2B SaaS clones (looking at you, MSFT).
• Apple's 30% app store fee perhaps being the definition of unfair monopolistic rents.

At any rate, Google currently faces challenges on multiple fronts.

An earlier DOJ suit against its all-important Search business is also still ongoing, and the explosion of ChatGPT creates pressure to keep up as Search is set to be revolutionized.

Interesting times ahead.

Best,
Kenneth Shen CEO,
Half Past Nine

Edition 2: February 9, 2023
A Problem With Aggregated Metrics

As a marketer in 2023, you likely spend a lot of time looking at data.

Here’s how to avoid a common analytics mistake; Simpson’s Paradox.

Simpson’s Paradox occurs when the trending direction of an aggregated metric is reversed if the supporting data is separated out into segments.

Here’s a simple example.

You check your website’s average session duration on your website in a month-over-month view. You see a +33% increase. Looking good!

However, you double-click to breakdown desktop vs. mobile as audience segments. When you compare the average session duration for February against January, both desktop and mobile engagement decreased. It’s the opposite of what the previous table showed. What happened?

Hidden variables, such as the sample size or quality of grouped data sets, can be distorting.

Pulling in session count as an additional dimension reveals that sessions reapportioned in February. This created a weighted-average distortion that’s easy to miss, especially since metrics like avg. session duration are not often viewed with volume metrics like session count.

This phenomenon highlights the importance of good data intuition; data is often simplified into dimensional representations of a much more complex situation.

Common reporting tools like the Google Analytics reports contain entirely aggregated data, and are susceptible to fallacies like this one.

The solution:

• Use your intuition, and double-click into your data-sets if something feels off.
• When running multi-variate tests, don’t stop a test until you have a high-degree of statistical confidence and a low margin of error.
• Don’t generalize a test result without first exploring the dynamics and audience segments affecting behavior.
• Build your own data systems that allow you to use event-level data and reduce situations like these.

Continue to get to know your data better, because mining it might hold the keys to your most pressing growth challenges.

Best,
Kenneth Shen CEO,
Half Past Nine

Foreword

Welcome to the first edition of Half Past Nine’s newsletter.

You’re receiving this because you’re either a client, a friend, or you subscribed on our website.

You’ll hear from us every other Tuesday at, you guessed it, 9:30am. We’ll be sharing a direct line to what’s top of mind for Half Past Nine at the intersection of growth marketing, paid media and data disciplines.

To loop you in on our process here, our north star KPI for the success of this newsletter is opens per open (total opens / unique opens). This metric shows that our emails are being reread, and more importantly, being forwarded on.

So, if you’d like to let us know you’re enjoying it, forward it to a friend!

Edition 1: January 10 ‘23
Recession: A Crucible Moment

Whatever 2023 has to bring, the future always belongs to brave, long-term thinkers. Knowing how to strategically navigate periods of challenge and uncertainty is a necessity.

Brands that grow through recession do so by innovative value creation at the intersection of improved profitability and deeper relationships with valuable customer segments.

Now is the time to double down on creativity, leveraging richer experiences to pivot appropriately and draw distance from your competition.

Our recommendations:

• Invest in retention – Have a churn problem? Now is the time to fix it. With demand contraction, it’s critical to maximize net revenue retention. It’s almost always cheaper to retain customers than it is to acquire new ones. Now is the time to really understand and double down on what drives loyalty and advocacy.
• Expand customer value – Extract more incremental customer revenue. Again, it’s cheaper than acquiring new customers. Invest in cross-sells and up-sell systems to connect more deeply to customers and maximize LTV.
• Invest in data and analytics – As capital becomes more expensive, it’s wise to harness technology that allows you to make better investment decisions. We’re talking omnichannel attribution, end-to-end analytics, experimentation platforms. When done right, the total ROI on your media and tech stack investments will be higher than just media alone.
• Improve your working-dollar efficiency – If you’re being pressured to scale back, trim the fat first. You may be spending in areas that matter less right now, like over-indexing branded campaigns. Or to the contrary, over-indexing top-of-funnel without the right nurture journeys to harvest a meaningful return. Align your working dollars to the new playbook.
• Cut advertising as a last resort – During a recession, advertising demand drops, resulting in cheaper ad supply. Brands that don’t divest get more bang for their buck, gaining share of voice and often more market share. Conversely, ground lost on brand recognition will cost more to rebuild later.

There’s more in our latest insight article on how to grow during a recession. But over the next few weeks, we’ll share more on how to sidestep recession rhetoric and smash growth expectations.

Cheers to success and happiness in 2023.

Best,
‍Kenneth Shen CEO,
Half Past Nine