Using AI To Create Your Ecommerce Ads with Daniel Maloney

Andy Splichal:

Welcome to the Make Each Click Count podcast. This is your host, Andy Splichal, and we are happy to welcome this week's guest to discuss today's topic, which is using AI to create your ecommerce ads. Today's guest is the CEO and co-founder of Tailwind, the leading visual marketing platform trusted by over 50,000 brands worldwide. Tailwind makes it easier to create, source, publish, track and promote your visual content on Instagram. And Instagram, big welcome to Danny Maloney. Hi, Danny.

Daniel Maloney:

Hey, Andy. How are you doing? Thanks for having me.

Andy Splichal:

Thanks for joining us. So let's get right into it. I mean, AI is huge and helps businesses really supercharge their businesses, but there's so many different ways that you can use it. We're just scratching the surface, I think, of what can be used, and so you guys are using it to create ads on Pinterest and Instagram, and in fact, create them, it says on your website in about five minutes. Can you tell us about.

Daniel Maloney:

Yeah, absolutely. These days, we're actually using a few different types of AI. Generative AI is a lot of what's been in the headlines and would be what's creating the ads, or even organic, social, creative and things of the like. But we also do some analytic and predictive AI as well. So at a high level, though, when it comes to running ads, our main goal was to make it as easy as possible for the small businesses that we serve to be able to run digital advertising, because a lot of them find it incredibly overwhelming and just a huge undertaking to actually learn about the different ad systems, how they work. We could be talking about years, literally, of on ramping, or they have to go find someone else who can help them. And that can be a challenge as well on a small business budget. So what we do is we've created a system where by answering just a few simple questions that are sort of everyday language that anyone could answer we do a lot of work in the background to actually go learn about the business in terms of what information is already available about it online, to learn what their voice is and other things like that.

Daniel Maloney:

And then we actually guide them through the process of setting up ad campaigns, simplifying it down to the point where they can basically say, okay, here's my monthly budget, here's my objective I'm aiming for. And then we create the ad creator for them, and they can review it, edit it however they like, create additional ads and set it live. But it's pretty amazing because it really does just take a few minutes from start to finish. And this is the type of thing that could take weeks of working time to actually iterate through in the past.

Andy Splichal:

So as a customer, you don't need to know how to run the Pinterest. Like, you don't have to be running Pinterest ads before you can just say, I want to try running Pinterest or run Instagram, and you don't really even have to learn how it works. Is that what you're.

Daniel Maloney:

Yeah, exactly. So, and the vast majority of small businesses really don't have that knowledge and don't necessarily have anyone on their team who has the knowledge. So, yeah, they don't need to learn it themselves. They don't need to be super familiar with it. But there's two sides to it. There's actually generating the ads and the ad campaigns, which is more of the generative AI side. And then there's more of what I think of as the math side of it, which is once you've given us your budget, you've identified what your objectives are, all the decisions around how budget should be allocated, whether it's to different creative, to different campaigns, or even across channels. That's where more of the analytical and predictive AI comes into play, of looking at the results that come back and making those decisions in real time throughout the day for you.

Daniel Maloney:

So you can be off running your business and you don't necessarily have to, one, learn about how the systems work, but two, spend your time actually monitoring and babysitting them.

Andy Splichal:

How do you set up the tracking for your clients? I mean, one of the things you're, I'm sure going to want to make sure as a small business that you're getting money back. You're getting a positive roas, you're spending money where it's generating new money. So how do you make sure that your clients properly are tracking sales and their spend?

Daniel Maloney:

Yeah, we guide them through that. And at the moment, we have some resources that just walk them through the process of actually setting up their pixels and then selecting which pixels they want to use. So when they're connecting their ad accounts, we can see what pixels they have available, and if they know what they want to use, they can just select the ones they want to use. Otherwise, we have team members who will walk through it with them live and can just hop on a call chat through it. If we see that things aren't working as expected, then generally we're going to be reaching out to try to help them figure this out proactively. But it really depends on the level of familiarity that someone has with online advertising as to whether they can do it in more of a self service way or if they might need that little bit of extra help.

Andy Splichal:

So you're using tracking pixels from Instagram and Pinterest. Are you doing anything with Google Analytics, Ga four? As far as the conversion tracking, not yet.

Daniel Maloney:

It's certainly something that we're watching. I mean, frankly, we've transitioned our own account over with the force migration, and to some extent, I'd say we're still observing and learning about GA four through that process. Right. So I think we need to see how it evolves a little bit more and determine whether or not, a, it'll be helpful and b, if it'll be necessary. But generally speaking, we're able to get reliable data. I mean, obviously there's a reason why there's a whole world of attribution tools out there to be able to augment what the platforms do natively. But for most small businesses, we find the data is good enough, it's solid enough, and if we try to add additional tools, it either gets too expensive or too complicated pretty quickly. So we're trying to keep it as simple as possible.

Andy Splichal:

So how did you create tailwind? I mean, AI, it's not really chat. GPT came out about a year ago. How did you create so quickly? How did you seize the opportunity to create this tool?

Daniel Maloney:

Yeah, I think the short answer is it hasn't been very quick. And I'll give you the brief history of tailwind. In a nutshell, I think we had two major chapters of Tailwind. The first chapter is what I think of as, and what we internally refer to now as our legacy product. Right. So we had more of a standard martech product that had nothing to do with AI and really was about scheduling and publishing of content. And that was where we got our start, where we became known. And that period, I'd say, went from like 2013 ish to about 2018.

Daniel Maloney:

In 2018, we began to see a trend that a lot of the small businesses who were using tailwind were having a challenge, bridging the gap from becoming single channel marketers to multichannel marketers. And the vast majority of our users were building their business almost entirely on Instagram or entirely on Pinterest. And it was kind of a surprise to us, honestly, because we built out a service for Pinterest and a service for Instagram that was very deep, and we thought users would naturally gravitate across both. And it really didn't happen very frequently. So we took a step back and said, okay, if we're going to help small businesses grow, we've got to solve these fundamental issues that are blocking them, which generally came down to knowledge of other channels and how to activate them, and the amount of time that they had in a day or a week for marketing versus the amount of time it would take to become multichannel marketers. And so for us, it was really back then, at this point, about five years ago, that we began focusing on the problem of how do we significantly automate different parts of small business marketing? And we began developing tech in house. We made a couple of acquisitions along the way as well, to accelerate the roadmap. But the tailwind that exists today really evolved over the last five years.

Daniel Maloney:

And as a result of that, I think that it seems really fast. But really what we've seen from our perspective is this past year isn't necessarily when we built everything, but it's when the market started becoming open to using this type of a solution. And now there are a lot more early adopters of AI than there were a year ago.

Andy Splichal:

So what type of retailers do the best on Pinterest and Instagram? Is there a certain vertical that performs better than others?

Daniel Maloney:

Yeah, I don't know if it comes down to one specific vertical, but for us, what we tend to see is that our customers are generally b to c. So all different b to c verticals. Frankly, there's just a huge long tail of different categories, but they all fall under b to c types of businesses. And the way that we break it down, if we think about our largest groups of users, ecommerce is sort of our number one segment that we think about. And there, there's a huge variety of selling anything from apparel to accessories and jewelry to health related products, digital and goods, as opposed to physical goods. But a very long tail, even within ecommerce. Then you've got local service providers who tend to, again, be more b to c, service providers. So a little bit less your accountants and lawyers and more your interior decorators, your travel specialists, your photographers, folks like that.

Daniel Maloney:

And then creators and local brick and mortar. Right? Like those four groups. Ultimately we see all of those in pretty significant numbers, but within each category, there are many different verticals represented.

Andy Splichal:

So I guess I'm thinking more Pinterest for ecommerce. Is there certain, I mean, peril probably does well where you see it, jewelry might. I mean, is it more items where it's, I guess, more of an impulse kind of buy that do well opposed to like mattress or furniture? I don't know.

Daniel Maloney:

Yeah, I mean, you actually see things like furniture companies and higher ticket items that have success. They may or may not be using Pinterest for bottom of funnel. Right. Often it's more of a mid funnel to top of funnel type of mentality for that type of a brand. But I think one of the ways Pinterest got pigeonholed early was that it was a platform just for women and sort of like women who were of parenting age. Right. And therefore there were certain verticals that should be on Pinterest. But I think Pinterest has grown and evolved a lot from those days.

Daniel Maloney:

And we see men's focused brands who are successful. Right. We see categories that wouldn't be obvious, especially when you start thinking about international audiences. Pinterest might actually have very different audience mixes in different countries, but at this point, it's an international platform. They're starting to see a lot of growth, from my understanding with Gen Z in particular, as like a new fertile audience for the platform. And the result of that is there's a lot of diversity. But of course, people still tend to think of it as coupled with verticals such as jewelry, apparel, beauty and wellness, and those types of categories.

Andy Splichal:

Do you see tailwind expanding to other marketing channels beyond Pinterest and Instagram?

Daniel Maloney:

Yeah, we've actually already started to. So thinking about the different major components of tailwind. So tailwind ads is one of the newer pieces that does sort of the automated ad campaign creation and setup. But the other major pieces of the platform, we have tailwind copilot, which generates marketing plans for people based on the specifics of their business and helps them figure out what to do. We've got Ghostwriter, which is the generative text and copywriting piece of the platform. We have Tailwind create, which is the visual design piece of the platform. And then we've got the distribution capabilities, which are publishing and scheduling for organic social. We added email to the platform.

Daniel Maloney:

And then there's the paid side with paid ads, which today is paid social only. But shortly we are in the process of bringing paid search as well. So we've already started expanding. I mean, ghostwriter by itself on the generative copy side, serves over 50 different types of marketing use cases. And so when I say use case, an example of a use case could be generate a caption for me on Instagram. But it can also be things like help me script a YouTube video, or help me write a long form article or piece of content, or help me brainstorm email subject lines for an email I'm sending. So through ghostwriter alone, we're covering all.

Andy Splichal:

The major organic why use your system opposed to just logging into a free Chat GPT account?

Daniel Maloney:

Yeah, we started out by integrating through Chat GPT, and since then we realized we needed to go beyond that. There were a few issues that were pretty prevalent, and one is just quality of output. And so what we've started doing on our end, we have our Nova LLM, which we're developing, and there we're training it specifically on marketing content and marketing data, and we're finding that that has a meaningful impact on quality of output. The second thing that it allows us to do is to actually train it on the individual voice of a user. And we have now built processes to actually identify a user's voice. If they don't know how to explain it, we can look at content that they've already created. We deduce what the voice is, and then we feed that back in so that the outputs are much more personalized and coming out in their voice. And then the third issue was, frankly just speed and reliability.

Daniel Maloney:

So working through OpenAI, it's kind of the problem of success. Like the Twitter fail back in the days, right? But because they were beginning to see so much load on their system, you hit places where it's like 45 seconds to a minute just for results to come back on a query. And frankly, most people don't have the patience for that, right? So we're able to generate much faster, despite the fact that it's much more tailored to the marketing use case and now getting into the realm of personalization of voice. So those were sort of the major problems we've been looking to solve so far on the generative text side, but expanding out from there. What we really do view as the bigger problem is not just generating text and generating images and generating marketing plans. It's the integration of those things in a workflow for the individual, where it all becomes tied together and it gets to the point where people can just execute their marketing much, much faster. Right? So, for example, coming up, what we're working on now, and beginning in Q one, is now that we have this capability that we call made for you, where we're drafting content for people before they even request it. Now we're working on bringing that to the mobile format in Q one so that we can actually ping someone.

Daniel Maloney:

Imagine you're a small business owner going through your day, and you get a text message or something that says, okay, we got three new drafts for you to review. You look at them, you say, yes, no, yes, no. Right? You go on with your day. Right. So I think that's the bigger problem here, and where a lot of more verticalized, tailored AI solutions are going to head is how do you transform the workflow of your target customer as opposed to just the LLM piece, which there's a lot of innovation on that side as well.

Andy Splichal:

So let me ask, how did you get so heavily involved with AI? Were you guys doing stuff before it all exploded last year? You said it's been a long process, or have you just really jumped in and immersed yourself here in 2023?

Daniel Maloney:

Yeah, I mean, we've been watching the development of AI tech for a long time. Let's see, I worked at Google and left Google in 2010, so we're talking 13 years ago. And I saw some of the AI work and early computer vision work that was going on specifically within the Google Maps and local team. That was just fascinating back then. So for me personally, I've been interested in it. It's been on my mind for well over a decade. At this point, the challenge should say even for Tailwind, we had in the early days, questions of, are there ways we can use computer vision technology to analyze the visual content that people were posting to Pinterest and Instagram, and make recommendations around how they can create better, more resonant visual content. Right.

Daniel Maloney:

The challenge up until recently is a lot of the tech wasn't ready to be easily used and scaled in real applications, and that all began to change at an accelerating pace, I think probably about three to four years ago. Right. For us, again, back in that 2018 to 2019 time frame, we were just trying to figure out how do we solve the fundamental problem of significant automating steps in the marketing process so that people can do more in the limited time they have. And that exploration led us to scan the market and say, okay, where are these various technologies today? And we developed a hypothesis at this point, that even if some of them weren't ready yet, they would be in the not too distant future. And that was when, in that time frame, we started developing tailwind create, which is our visual design and creation tool. That was one of the first pieces we put in place.

Andy Splichal:

So what AI system are you based on? Is it OpenAI?

Daniel Maloney:

Not an easy answer because most of what we do is built in house, and it's not necessarily one system. It's actually kind of a system of systems at this point. We do use OpenAI in some places, and where we mostly use OpenAI was specifically in our ghostwriter product for text generation. But as I mentioned earlier with our Nova LLM, we've started the process of moving away from dependency on OpenAI so that we can deliver those additional benefits. Does that mean we're going to move entirely off of OpenAI? Probably not. There's probably long tail use cases that make sense for that. It doesn't make sense for us to custom build on. And there will be sort of certain things you want to do really quickly and prototype quickly where it's easier to use it that way.

Daniel Maloney:

On the ad side in particular, we acquired a company last year called Nectar Nine, who had built their own systems, specifically around things like automatically generating the ad placements as well as allocation of ad budget. Right. And so that's an entirely self built in house system that was first developed by Nectar Nine and now has been integrated into tailwind, and now we're expanding it as one team together. But, yeah, I'd say the vast majority is really our tech, but there will be some places here and there where we tap into partners like OpenAI.

Andy Splichal:

So let me ask you one of my favorite questions. I ask every guest that comes on, but as you've grown tailwind, have there been any business books out there that you can attribute to your success as an entrepreneur?

Daniel Maloney:

Yeah, there's two that I like to recommend. One that's a classic and one that sounds really scary. So the classic is good to great. It was an eye opening read for me, especially when I first read it, which I think might have been like in my. It's been around a while, but one of the things I loved about that book, and there are many things to love, was these specific research that addressed that the best leaders are often people who don't seek out the spotlight, who aren't necessarily trying to be front and center, and often are people who are more humble and just focus on enabling others, enabling the organization, and trying to do the work at hand. For me, at that stage in my life, at that stage in my career, that was an aha moment where I was like, that sounds awesome. I like that vision of leadership. I don't love the vision of leadership where leaders need to be attention seeking and attention grabbing.

Daniel Maloney:

It just doesn't fit with me. So that's one. Another one that kind of has a scary title is necessary endings. And I made the mistake that when I was first reading it, of leaving it out on my desk, and I'm told that it kind of freaked some people out at the time, but necessary endings. One of the basic premises of the book is that endings are natural to life. All different types of endings are natural to life, and they have to be natural in the life of any business. And the way businesses get stronger over time is by pruning the things that are not working. Using the example of pruning in a garden where you need to trim away dead branches and leaves so that they don't damage the others and you let your strongest thrive.

Daniel Maloney:

The same thing has to happen in companies with projects, with ideas, with products, with business models. Interesting over time, but yeah, it's a really good read. And that one I probably came across five years ago ish. And again, it was a message that hit me at the right moment when I needed to hear it and needed to learn it. And I think it has a lot of potential for folks.

Andy Splichal:

So let me ask you, getting back to Tailwind, what is one of your favorite success stories of a client? How they've been able to utilize your service and grow?

Daniel Maloney:

My very favorite, honestly, is a pretty old one, but it was one of the ones that, in the early days of building the company, made that connection to why the work we do matters so real for me. But there was a guy named Vincent who was one of our earlier users that I got to meet at a conference. And he was just a wonderful guy, wonderful, wonderful person. But I got to meet him, and he came up to me and thanked me. Because of our solution, he was able to schedule out content for weeks in advance for him and his clients, which gave him the time to be able to travel to visit his future in laws and ask them for permission to propose to their daughter. Right. And it was like such a human moment when you realized, why do we really do all this? It's not just about ROI and making more money all the time. A lot of times it's about the ROI in our life, and that's where we hear stories like that.

Daniel Maloney:

I think about a more recent one with ghostwriter where I didn't hear it firsthand, but I saw the video of a user interview where one of our users got pretty emotional because they're not a native english speaker, and they have to constantly create content in English for their clients. And so the ability that ghostwriter gave them to have greater confidence in what they were writing, what they were producing, to do it much faster, was really life changing for them. Right. So I personally love those types of stories. It's fun to talk ROI and Roas, so obviously that's a big part of the equation that needs to be there as well. But those human moments tend to get me more.

Andy Splichal:

So how does the fee structure work with Tailwind?

Daniel Maloney:

Yeah, so most of the solution is kind of your typical monthly or annual subscription pricing. We have different levels, starting at free. So there is a totally free account, not just a free trial, but there's a free account that a lot of people use and continue to use. And then as they want to consume more AI credits per month, so generate more content through us as they want to connect more accounts, more channels, have more collaborators, things like that. They might then move from a free account to a paid account and up to higher level paid accounts. The other element that's newer that we've added with Tailwind ads is specifically how we charge for the ad management component. And to keep it simple, we've done a 10% of ad budget managed fee. That'll probably evolve as we get deeper with that product and as we grow, I would imagine we probably end up scaling down the percentage at higher budgets and stuff like that.

Daniel Maloney:

But to keep it easy up front, we've just said, okay, 10% of budget managed. It's easy for people to do that math in their head and determine that it's affordable, and that way there's good alignment.

Andy Splichal:

Sarah, is there a minimum on that?

Daniel Maloney:

Honestly, we're experimenting with it right now. Right now, we're recommending a minimum of $500 a month of ad budget. But frankly, it depends on what type of campaign someone's running. And so one thing we are just in the process of adding to the platform right now is moving in the direction of more dedicated retargeting campaigns as an option. With retargeting campaigns, you can serve lower budgets effectively because you're generally going to have smaller, very highly converting audiences. And for a lot of these businesses, those audiences won't be very large, and so they might not be able to spend $500 a month on a purely retargeting focused campaign. But then, for certain, top of funnel campaigns, you might actually want to be spending more than that in order to generate audience and build your data set if you don't have that data set already. So I think that's something that we're evaluating as we go to market with this product.

Daniel Maloney:

And we'll probably end up moving more in the direction of recommended minimums. Right. So for different types of campaigns, we recommend this amount or more with an explanation as to here's why. But that's something that in the early days of launching the product, we just tried to keep pretty simple.

Andy Splichal:

Now, what is the ideal client? We had mentioned b to c, but what are all the verticals out there that if somebody's running one of those kind of companies, they should contact you?

Daniel Maloney:

Yeah. So for the ads component in particular, we're really focused on ecommerce out of the gate. And I would say it's ecommerce verticals where you don't have a super high price point. Right. So if you're selling two, three, $5,000 items, the system is probably not ready for you yet, and you also don't have a super low price point. If your average cart is like $10 or less, it's going to be hard for you to get roas on ads. Right. But what we see works really well are sort of jewelry and accessories is a good category that's working really well for us.

Daniel Maloney:

We see sort of like mid to lower, high end range apparel. So average order values of maybe $100 to $500 in that range works pretty well there. I'd say those are the two I'd call out out of the gate where we're seeing a good number of people coming to us, but we'll learn more, and I'm sure that'll evolve as we go.

Andy Splichal:

And how can an interested listener learn more about working with you guys?

Daniel Maloney:

Yeah, absolutely. So we're tailwindapp.com ta ilwindapp.com. So that's the most direct way is go to the website, you can create a free account, check us out, and start learning the system pretty quickly. It's built to be self serve, but of course, we've got an amazing customer service team if you need help and want a little bit more guidance.

Andy Splichal:

Well, this has been great. Is there anything else you'd like to add before we wrap it up today?

Daniel Maloney:

I think just wishing everyone happy holidays. Wishing you happy holidays. I guess I don't know when this will air, but maybe the holidays will be passed by then.

Andy Splichal:

Holidays will be passed. This is airing here. Be the first week of January. So happy new year.

Daniel Maloney:

Yeah, say happy new year. And a very prosperous 2024 that people find whatever it is they're looking for out of the year.

Andy Splichal:

That's great, Will. Thank you for joining us again today.

Daniel Maloney:

Thank you, Andy. Appreciate you having me.

Andy Splichal:

For listeners, remember, if you like this episode, please go to Apple Podcasts and leave us an honest review. And if you're looking for more information regarding tailwind or connecting with Danny, you'll find the links in the show notes below. In addition, if you're looking for more information on growing your business, check out our podcast resource center, available at podcast makeeachclickliccount.com. We have compiled all of our different past guests by show topic and include each of their contact information in case you would like more information in any of the services I have discussed during previous episodes. Well, that's it for today. Remember to stay safe, keep healthy, and happy marketing, and I'll talk to you in the next episode.