#63: Drew Kraemer (Code3)

-- AI-Generated --

Drew Kraemer (Code3) [00:00:00]:
You know, if you think about the world that that is transpiring in front of us is there are countless ways that brands can connect with their audiences now more than ever. But the most important part of this is not that they connect with with with different channels. It's the it's the availability that brands have to connect with with their audience at any level.

Jeffrey Stern [00:00:24]:
Let's discover the Cleveland entrepreneurial ecosystem. We are telling the stories of its entrepreneurs and those supporting them. Welcome to the Lay of the Land podcast, where we are exploring what people are building in Cleveland. I am your host, Jeffrey Stern. And today, I had the pleasure of speaking with Drew Kramer. Drew is the CEO of Code 3, a digital performance marketing agency that serves some of the largest digital advertisers around the world. With over 250 employees and offices based here in Cleveland and in other cities around the country, Code 3's mission is to be the best growth partner to brands by running advanced high scale data driven and efficient digital media campaigns across the most important paid media platforms, including search, social, programmatic, marketplaces, and emerging channels, many of which we will discuss in our conversation here today. At code 3, Drew oversees the strategic direction for the agency and its primary services across media, creative, and commerce.

Jeffrey Stern [00:01:29]:
Additionally, he focuses on company culture, corporate strategy, and key clients such as Anheuser Busch, LVMH, Gap, Chipotle, and Fox Bet, just to name a few. Prior to code 3, Drew founded and led marketplace strategy, which was ultimately acquired by SocialCode, which has since rebranded to Code 3, where Drew is currently steering the ship, a journey which we also cover in this conversation. I hope you all enjoy my conversation with Drew Cramer. I'd love to spend, I think, the bulk of our conversation here exploring the work you've done and are currently doing at code 3 and how all of that really came to be. But as we work our way towards that, I'd love if you can share just a little bit about yourself. What drew you to the world of entrepreneurship and inspired your interest in in marketing and in advertisement.

Drew Kraemer (Code3) [00:02:27]:
Yeah. Absolutely. And and first off, Jeffrey, thanks for having me. You know, for me, entrepreneurship was something that's sort of built over time. And looking back, my experiences, you know, growing up and and through high school and and undergrad sort of led me to the path of of really falling in love with entrepreneurship. And, you know, I like to I like to say it's really started with, you know, with washing windows. And let me explain. And I had a job growing up, and it was to wash windows.

Drew Kraemer (Code3) [00:02:58]:
And for the first time, I was exposed to a job that I could control, meaning, you know, how we were paid was basically by job. And this was a high school and college job. And I worked for a guy who really showed me how the business worked. And for me, it was it was a very simple and basic business, but it taught me the fundamentals that really started me really to think about entrepreneurship as, you know, as a career and as something that I I really enjoyed. So so learning about how a business is run, how it's operated, how the money flows through a business, the basics. And and so, you know, it's experiences like that. And then, you know, after, after college, I I worked for a company, a local company here in Northeast Ohio called Hermes. It was a sports management company.

Drew Kraemer (Code3) [00:03:53]:
We did a lot of management of races, running races, 5 k's, 10 k's, marathons. And it's a very small company, and and I took the job. And Nick and Neil, the the founders of Hermes, really gave me the opportunity sort of in the same way, exposing me to more on the business side and allowing me to take on more responsibility. And so, you know, what did I start what I started to realize is that, you know, having the ability to control the future and control things, having the the the ability to create was really something I fell in love with. And so, you know, today, I mean, what I love about entrepreneurship is is the creating, is the seeing of an opportunity that's not there today, and thinking about how do we create that out of nothing. I mean, to me, there's nothing more exciting than looking at an industry, looking at a challenge or a problem and saying, boy, how do we solve this and how do we build a great business out of it to create value for customers, to create value for employees, to build jobs, and to create a great company. And so, you know, it's evolved over time, but, you know, today, I I I look back at those, those experiences and and what I truly love about it today, and it's, you know, it's fascinating.

Jeffrey Stern [00:05:09]:
And where do you kind of draw the intersection of that interest in entrepreneurship with the kind of subject matter expertise that that you now have, in this world of of marketing?

Drew Kraemer (Code3) [00:05:23]:
Yeah. I mean, for me, marketing is a lot of the same. Right? I mean, marketing, it's not black and white. It's a lot of creating things. It's a lot of understanding how brands connect with their audiences, and to do that is not one of 5 ways. There's there's a million ways that a brand can do that. To me, there's some crossover between entrepreneurship and marketing. And so, you know, I I I love marketing.

Drew Kraemer (Code3) [00:05:51]:
I love the constant nature of of it changing and the innovation that it requires to to be a successful marketing company. And and to have that success over time requires massive innovation as things are changing in terms of how brands connect with audiences. And so there's a little bit of that crossover. The other thing for me is marketing is all about connections for the purpose of growing something. And so for brands to better connect with with their customers, we work with great partners today, and we work on helping them grow their businesses through marketing. And to me, you know, the mixture of of creating things from nothing and helping them grow their businesses, There's a lot of crossover and and it it it, you know, it's not surprising that, you know, I can get into something like marketing and digital marketing and entrepreneurship at the same time.

Jeffrey Stern [00:06:49]:
So the path to to code 3 didn't necessarily begin with code 3. Right? You you had some of your own endeavors prior that converged really with with code 3 and, maybe kind of working our our way backwards through that story. Tell us a little bit about marketplace strategy maybe with just kind of the founding insight that you had. What what was this originally the problem you were thinking about and what was the opportunity that you had unearthed and and how you came across those?

Drew Kraemer (Code3) [00:07:18]:
Yeah. Absolutely. So it really it all started at, I was I was working at a a company, Fathom, which is a digital marketing analytics company. And at the time, I was the president of the consumer division. And what what we really try to do is we try to help companies, mainly consumer brands that primarily sold through big box retail. We really work with a lot of those on how to develop the their own websites as sales channels. And this is sort of 2,010, 2,012, 113. And for many of these brands who weren't retailers, right, they were the one manufacturing the the products, This was a this was sort of a a a new thing for them to really think about their own site as a way to connect directly with a consumer and not through a retail outlet.

Drew Kraemer (Code3) [00:08:06]:
So we were helping a lot of brands think about, driving sales, which were typically higher margin through their website, building their first party data asset, and creating a relationship one to 1 with the customer. And and and one thing that, you know, looking back, it was so simple, but started everything was part of what we did was search engine optimization for these brands. And one day, we realized that we were being outranked for our own product by a company called Amazon, and we thought that was interesting because we were trying to rank our products higher for for for strategic keywords, and and and before we knew it, we were being outranked by Amazon. And so, we went to client we went to our clients at the time and and asked them, and and, you know, the response was, well, we think Amazon's important, but that's kind of a sales channel. It's handled by sales. And we thought, boy, that's interesting. I wonder if there's a marketing component to this. And so, you know, that was really the insight that led us on on a year journey to uncover what the ecosystem of Amazon was all about, what the opportunities for the brands were, what leverage could you pull, are they similar to Google or Facebook, are they different? And in developing, you know, what, what was an Amazon service and and and then became the the the founding, service offering for marketplace strategy.

Jeffrey Stern [00:09:35]:
And what did you uncover in that in that expedition?

Drew Kraemer (Code3) [00:09:39]:
Yeah. So so, you know, one of the biggest insights we've we uncovered was this convergence of sales and marketing that there were sales components to the platform, but there were also marketing components to the platform. You had content. You had creative. You had conversion rate optimization. You had search optimization. You had paid advertising all within this ecosystem. Now today, it's much more complex than it was.

Drew Kraemer (Code3) [00:10:03]:
This was back in 2014, but we uncovered that this wasn't this wasn't a platform that were that should be only within the sales department of a brand. This really had a marketing component to it. And so, you know, the first very first client we tested our service with was doing about 30,000 a month, on Amazon, and, we we took them from 30,000 a month to 440,000 a month. And we realized, you know, we have something here if you put some marketing strategies behind the sales, this sales platform, what this could be. And so, you know, it was exciting. We we thought we were onto something, and and and so, you know, we decided to launch marketplace strategy, which was, you know, an agency specifically designed to help brands scale, on Amazon.

Jeffrey Stern [00:10:53]:
And then kind of working our way again towards code 3 by route this time of of social code via acquisition, you know, you you built this company and and exited it very quickly. And so I'm curious as you reflect on on that journey, what allowed you to to be successful and and grow the the business so quickly? And and from the onset, were you building to sell? Or what was the original vision and aspiration that you had as you were building this company?

Drew Kraemer (Code3) [00:11:24]:
Yeah. So, you know, what I'll start with the the the latter. When we started marketplace strategy, we knew there would be a time where we would be attractive if we were successful to an acquisition. You know, the the the balance there is, you know, in the early months, in in in in the early days, you're just trying to survive. And so, you know, you wanna think about these strategic topics and, you know, long term growth opportunities, but really at the same time, you you wanna make sure you're making payroll in 2 weeks. And so there were things we did specifically early on that positioned us well when that opportunity did come up. Developing our own technology was critical. Developing the way we did contracts with clients, the way we organized our structure.

Drew Kraemer (Code3) [00:12:14]:
We had really a structure that could scale beyond, and it was clear how it could scale. You know, so so so there was a little bit of that that went into our into us building marketplace strategy, but certainly, you know, it wasn't the core focus. The core focus was just to to stay to stay around and and and to be successful and and and just to get the next opportunity. In terms of building the company, you know, one of the things that I talk to entrepreneurs about all the time is, you know, really two things for us that made that I think was were the driving forces behind behind the success and how fast it happened as you mentioned. 1 was you're never too small of a company to focus on culture. We didn't lose a single employee, over the course of those two and a half years before we were acquired, and I can tell you that is the reason we were able to grow and we were able to provide great service and value to our customers because we had continuity, with the team. We created core values when there were 3 of us. We created the way we communicate to the organization.

Drew Kraemer (Code3) [00:13:23]:
We created, our mission and our vision and our purpose very early on, and these are the things that are often overlooked, but I can tell you from our business, business that's largely people based. The cultural aspect of in building that very quickly was important. You're always gonna have the allure of a startup, as I call it in the early days. And that goes away, we were able to harness that and also layer on some of the cultural things that I think to businesses today of all sizes could use, very early on. So so, the one was culture and number 2, we had tremendous focus, as an organization. We wanted to do one thing and one thing only, that's helping, brand scale on Amazon. So you can imagine in our business, we had many great experts that came from different backgrounds and we would, you know, often our customers would ask us to do other things outside of our our core capability. And it's tough to turn down those opportunities early on, but I can tell you that it made all the difference.

Drew Kraemer (Code3) [00:14:23]:
It also got us into rooms that we probably weren't ready to be in or we were a little too small to be in because of our focus. So, you know, I would say the cultural aspect and then the focus of the company were the keys to to to our our tremendous growth very quickly on.

Jeffrey Stern [00:14:39]:
Unpacking the the focus a little bit more, you know, as a services company focusing really on the depth of expertise that you had with scaling businesses on Amazon. Was the thinking behind an acquisition the opportunity to give yourself more breath and the opportunity to expand into other markets as you kind of widen the aperture and and look through other platforms that were coming up in addition to Amazon on the Internet?

Drew Kraemer (Code3) [00:15:07]:
Yeah. I think, you know, for us, it was, we felt that there were 2 very specific things happening which would require the depth versus the breadth in terms of our services. Number 1, we felt Amazon was truly head and shoulders above any number 2 that was coming up. We thought it was going to be a game changer for brands and brands that, quite frankly, had to start to merge sales and marketing into this, into thinking about this platform. Number 2 was, you know, in services in the service business, the skill gap in the market for the clients that you serve matters, and that skill gap closes over time. We see it in every marketing channel. Right? Google in early or mid 2000, you could be a Google only shop and be tremendously successful. 2009, 1011, you can be a Facebook shop and be tremendously successful.

Drew Kraemer (Code3) [00:16:05]:
And then at some point, the skill gap closes, and the brands start to think about not what channel depth and channel expertise do we have, but how does this channel impact and connect with other channels. Right? And you can see this movie play over and over. And so what we saw is really the opportunity to take what we thought was going to be a a significant platform for consumer brands and a tremendous skill gap in the market for the 1st 4 or 5 years and run after that. And that that really was sort of the the the crux of our strategy as we look at, you know, not only the platform, but just the maturity of our of our industry. And you can see it over and over again. We see a lot of even to this day, you see a lot of OTT agencies popping up. It's because today, that will be a successful business because there's a skill gap in the market on is it linear TV? Is it a digital video channel? We don't know. It's somewhere in between.

Drew Kraemer (Code3) [00:17:02]:
Right? This movie plays over and over. One of the things that we also developed was an agency model versus a consultancy. At the time, there were a lot of consultants that popped up and they just knew the channel. And that was tremendously valuable. What we did was we knew the channel, but we also had services that could execute on a brand's behalf. And so that that was really the the crux of our strategy in going deeper rather than, you know, sort of widening the net if per se in terms of what we do for clients.

Jeffrey Stern [00:17:34]:
I wanna circle back on on that channel discussion and talk a little bit more about the market, but but just kind of fast forwarding the the story a bit through the acquisition. So you're building marketplace strategy. 2 and a half years later, you you are approached and and acquired by social code. Can you tell us a little bit about the story and and how all that transpired as we work our way towards code 3 today?

Drew Kraemer (Code3) [00:17:58]:
Yeah. Sure. So, couple years in, we started to receive calls from, you know, the big six holding companies and and a few others, And we didn't really take take the calls too seriously. We thought, you know, we're probably a bit too small. We had some momentum, and we wanted to continue to build on that momentum. Quite frankly, the calls came in maybe a year or 2 before we thought they would come in. And so we weren't really dead set that that was our path. What we really wanted out of out of the out of a potential acquirer was, you know, can we put the company in a better position from a strategic standpoint? Can we put the company in a better position from an employee standpoint, and can we get the valuation that we think the company deserves based on the growth? So we started to get calls, we went down the road, we built a great team that helped us along the way.

Drew Kraemer (Code3) [00:18:53]:
I can tell you my my co founders picked up all the day to day, which allowed me, it's probably 8 months of my life I'll never get back, and and it's every day for that long when you're you're entertaining, you know, multiple potential acquirers, you're going through the process. And so ultimately, we found a Graham Holdings company, which is who owns social code at the time. Graham Holdings is a publicly traded company. They were formerly the Washington Post companies before they sold the Washington Post, coincidentally to Jeff Bezos. And we found we found a home there and we finally sold the business to their digital arm, which was which was under the name Social Code and became, you know, part of Social Code and and part of the e commerce division at Social Code. So, you know, we went from, and I can still remember the day we announced to our employees that that we sold the business. It was, you know, going from a startup where you can barely afford the the the minimum health insurance to now we have 3 or 4 options, and we have a 401 k with a match. And so, you know, it was really a it was an interesting time.

Drew Kraemer (Code3) [00:20:03]:
It took a tremendous amount of effort from multiple people to make it happen, and and you learn a lot along the way, on how the process works and, you know, ultimately, how to get it from a conversation to a deal that's closed and and we're moving on to our next chapter.

Jeffrey Stern [00:20:21]:
So maybe just now is a good point to take stock of where we are today. Just give a little overview of how you talk about and describe code 3, an overview of the business. And I'd love to just with that framing, understand the the rebrand that you had from Social Code and and maybe a little bit about your own journey now as as the CEO of your acquirer, in retrospect, how that came to be and and how you think about the business today?

Drew Kraemer (Code3) [00:20:48]:
Yeah. Absolutely. So, we required in late 2018. For the next year, we operated as a marketplace strategy under our own brand, as part of of of of this larger organization called SocialCode. And and so what that looks like in practice is you centralize, some key back office functions, finance, accounting, HR, and you try to share clients and you try to uncover opportunities to help, the clients that you already have you know, you're already working with. So one of the struggles we had was this question of, well, are we part of marketplace strategy, or are we part of social code? Are we an employee of MPS? Are we an employee of social code? And these are real questions that employees ask all the time, and we're asking all the time. And so, you know, one of the key learnings for me going through this process was, you know, we didn't have really a clear home when we were acquired, which made it tremendously difficult for employees to identify with a company, to feel part of a team, the things that are so important for culture and the employee experience. We didn't have that, let alone operational support and how that works.

Drew Kraemer (Code3) [00:21:58]:
So we continue to be marketplace strategy. And then, you know, after that 1st year, our, the CEO of Social Code, Laurel O'Shaughnessy, who is, absolutely tremendous and and a great leader. She founded Social Code back in 2009. She decided to step down as CEO, and our board asked me to step in a lot, you know, quite frankly based on the work that we were able to accomplish with marketplace strategy. And so, in in 2020, I took over as CEO of SocialCode, And one of the things that we did very early on was, we really took a look at the company history. We took a look at our strategy and and quickly realized that, you know, we really needed a new vision for this organization because the the market was changing and and the business needed to evolve and innovate. And so, you know, we put together and rolled out a new corporate strategy, and part of that was to divest in a technology business we had. Part of it was to change the name.

Drew Kraemer (Code3) [00:22:57]:
At the time, we had SocialCode, Code Creative, Code Audio, and Marketplace Strategy as different entities. We decided that brands need and want more integration in their offering, and so we decided to sunset those brands. 1 of those brands, I had a hand in creating, which was bittersweet for me, but necessary for the overall business. We became code 3, and and today code 3 is we operate at the intersection of of of media, digital media, creative, and e commerce. We have about 275 employees and offices in New York, Cleveland, and LA. So we were able to get the company, the total company, back to growth year over year last year, which was really exciting for us. But it took a lot of work, so that's kind of how we look today, a little bit of sort of the journey there. And you know, I can tell you from my own personal journey, it's it's very different when you're in a room with a couple people in in a in a in a in basically a closet the size of of what my office is today, trying to just make it to a part of a publicly traded organization where you have to report, certain numbers and and and disclosures to, you know, to the market.

Drew Kraemer (Code3) [00:24:07]:
So it's been a it's been a a great journey. It's been a it's been a learning adventure for me, and, you know, the people, our team, and the people around, organization are, are the ones that made it happen.

Jeffrey Stern [00:24:21]:
When you reflect on the earlier days establishing culture with 3 people, how do you maintain that over time? You know, you mentioned kind of the challenges of via acquisition, maintaining that that sense of of culture, now running an organization the size that it is. How do you think about that and and kind of the the maintenance of of culture and and building it and incorporating everyone else that wasn't part of marketplace strategy prior? How have you kind of approached that problem?

Drew Kraemer (Code3) [00:24:53]:
Yeah. Well, one thing I would say, it's it's it's harder. Right? It's much harder to grow culture and and and have a great culture the larger you are. But, you know, the core fundamentals are there. You know, people want certainty. Employees want certainty. They wanna know. So when we when we when we had, you know, 4 different agencies, it was I'm part of this team, and I'm part of this team, and I'm kind of part of this team.

Drew Kraemer (Code3) [00:25:15]:
And and so the sense of team and camaraderie doesn't change. You know, when we were in the the the the small office together, you know, that that feeling comes almost natural, because it's us against the world. That team, that sense of belonging, that sense of team and camaraderie doesn't change. And so, you know, how do we create that today? We are, you know, that's part of the rebrand. That is part of having one set of core values on how we operate every day and what we expect from our employees and what our employees should expect from the from the company. It's meeting employees where they where they wanna be met. It's it's understanding what experiences what employee experiences that that they require and that they desire from their employer. You know, today and even with with COVID, which has which has created a ton of challenges for us, in this area, you know, we very much believe that the employer employee relationship is changing.

Drew Kraemer (Code3) [00:26:13]:
It's evolving, and employers need to evolve and change. And we need to meet employees where they're at, and we need to help them further develop and grow and learn, in an environment today where many employees aren't in the office, which is hard. You know, agencies have traditionally won by having a cool office, right? You worked at an agency because there was ping pong and there was beer and there were snacks, right? And there was just this fun environment. You work with fun clients and and on fun challenges, and and overnight, we lost all of that. And so, you know, that and with with code 3's rebrand, you know, it has created some challenges. And so, you know, we work very hard to do things like community days. We we have individual growth plans for every single one of our employees, which usually doesn't scale and it's very hard. And it takes a ton of resources, but we have that today.

Drew Kraemer (Code3) [00:27:07]:
Days off mental health days, managing workload, right? We used to think it was an issue with work life balance when people in the office. Well, we live in a world now where there's no break. There's no break between work and life, and so it it is it is another area where we're really leaning into and trying to manage when we have to work off hours. You know, being in our business, there's always media running. It never ends. It runs on the weekends. There's Super Bowl time. There's q4.

Drew Kraemer (Code3) [00:27:35]:
We have to be very conscious of tracking the hours of our employees, not to know what they're doing, but more to know where when do we need to lean in with individuals and make sure that they're not getting burned out. Yeah.

Jeffrey Stern [00:27:48]:
I'll build on that changing world dynamic, if you will, and and maybe transition a little bit to the the market dynamics at play. But, you know, the the traditional marketing funnel may have made sense in this world where different parts of the customer journey happened in different places quite literally. It's the part I have a better understanding of having experienced it myself, you know, you might see an ad on on TV and a coupon in the newspaper and then finally a product in the store. And every one of those exposures was a discreet advertising event that culminated in in the customer picking up the product in question and putting it, you know, literally maybe in their shopping cart. And like you were saying, the there's the the separation of those boundaries, is no longer there in the Internet. And the the journey is increasingly compressed in the kind of the singular impression. You see an ad on Instagram, you click it, you log in. It's all it's all very streamlined and happens very immediately, when all these are a few steps away and just the loops are tighter.

Jeffrey Stern [00:28:54]:
So I I don't I have a lot of questions just kinda general generally about the market. But as you've expanded your horizons outside of Amazon and also just working with really, you know, well established brands, Nestle, Smucker's, Purell, I know there's there's many more. At the onset of our conversation, you mentioned that really you're thinking about how do you improve business through marketing. And so, how do you start those conversations with clients? How do you kinda think about the changing world order and stay abreast what's happening?

Drew Kraemer (Code3) [00:29:25]:
Yeah. I mean, it's it's I like to, you know, call it look. It's it's a business conversation, less a marketing conversation. But, you know, if you think about the world that that is transpiring in front of us is there are countless ways that brands can connect with their audiences now more than ever. But the most important part of this is not that they connect with with with different channels. It's the it's the availability that brands have to connect with with their audience at any level. So it used to be where, you know, to have a Super Bowl ad, there's only so many brands in the world that can afford a Super Bowl ad. Right? Right.

Drew Kraemer (Code3) [00:30:05]:
And so when you when you would would reach an audience, where would the audience buy? They would they would go to a store. Right? They would have their their choice of what store. When you went to a store, what happened? You had a finite shelf space that was occupied by 2 or 3 brands, whatever product you're buying, and you would choose 1 of 3. Right? Today, if you think about it, that journey in the digital world is I could be listening to my favorite podcast. I could be watching Hulu. I could be on Google, Facebook, Instagram, TikTok, and be exposed to ads specifically designed for for me that every brand can afford because you don't need to write a Super Bowl ad check to to to reach that audience. And then think about the consumer journey. Once you're exposed to a brand or a product, where are you buying? And that might be on Amazon, that might be on a brand site, that might be on target, on on walmart.com, on Wayfair.

Drew Kraemer (Code3) [00:31:04]:
And so, ultimately, what we have here is we're just recreating what we've been working on forever in the marketing world. We're creating it to what is now available to us in the digital world, which is infinite opportunity for all sizes of brands. And so you have that, you layer that into ultimate transparency where we can know exactly the ratings reviews of customers and see that feedback almost in real time before making a purchase decision. It really comes down to the best products, the best strategies of the brands that are successful today. And and I would say the other thing that's interesting in in how we think about the changing landscape is, you know, Amazon, for example, used to be thought of as just a a place to buy things for a low price. They were an ecommerce platform. Today, they're more of a media platform than they are an ecommerce platform, not only with their search advertising platform, but also their programmatic, their display product, which allows us to use Amazon's purchase data to target audiences not only on Amazon but off Amazon. And then you have Facebook on the other hand, for example, with Instagram shopping, Facebook shops.

Drew Kraemer (Code3) [00:32:16]:
They're trying to get closer to the transaction. You see what's happening. There's just there's this this merging of retail platforms and media platforms, and and they're all building their own ecosystem within their walled gardens. The walls are getting higher. Right? And so this is the changing landscape and how we think about this. And so for us today and how we think about you mentioned some of the brand, how they're thinking about marketing is really understanding all the places you can reach your audience and then how to drive them to a consumer through a consumer funnel that might be individualized for that consumer. And and what's the connectedness of those things as well? Right? What's the connection between you know, we know that 53% or so of transaction on the Internet happened on Amazon. And so I would traditionally measure my Facebook ads based on, you know, whether it's a CPC or whether it's, sales through my own website.

Drew Kraemer (Code3) [00:33:15]:
Now I have to think about an ecosystem that's bigger. And and there's a lot of parallels to the physical world, that we've been living in, and there's a lot of differences. And and quite frankly, the market's becoming more robust, and the opportunities are becoming much larger for brands of all sizes, which I think is is healthy.

Jeffrey Stern [00:33:35]:
When you think about these new channels, right, customers can be anywhere at this point. It doesn't even necessarily make sense to think about it as a geographic place just existence on the Internet. How do you discern the best places and platforms which which are changing all the time to to reach them? How do you filter that signal from the noise?

Drew Kraemer (Code3) [00:33:57]:
Yeah. I mean, it's it's an important question because there is a lot of noise. And so our method has has has always been we put a very robust learning agenda with all of our clients, so they can be constantly testing because we feel that it's not whether all of your tests, you know, win. Right? Was that's it. The win is are we constantly testing to know how platforms, are going to react to our offering or what platforms we can leverage to to reach certain audiences. And it's not only the certain audiences, but it's at what level of the funnel that you're reaching those audiences. Today, you know, TikTok is is primarily used for an upper funnel purpose. Right? I think that will change over time, and see the the the evolution of of Meta and and and their their their journey.

Drew Kraemer (Code3) [00:34:45]:
But we see constant opportunity, and we we we work with all of our clients to allocate a certain percentage of their media budget specifically for testing. Now on the ecom side, most of what we see today is brands focusing 80 plus percent of their resources on Amazon and then applying similar strategies to diversify to walmart.com or Kroger, or other retailers that are opening up their marketplaces, which is growing significantly year over year. And so, you know, it starts with Amazon, grows from there. On the media side, really having that test and learned agenda, buttoned up and, is is is important. And, ultimately, we we let the data tell us versus a feeling or, you know, who's talking the loudest. Right? Because we talk about noise. Oftentimes, it's who's talking the most. You know, it's it's it's really about, having access and using the data that we're now available to get to make those informed decisions for our clients.

Jeffrey Stern [00:35:43]:
When you think about Amazon really as the the dominant player in the space capturing that percentage you mentioned earlier of of transactions on the Internet. I'm curious how you think about this whole movement of direct to consumer and and the Shopify movement and arming the rebels, if you will, against the Amazon empire. How is this trend playing out?

Drew Kraemer (Code3) [00:36:10]:
Yeah. I think it's you know, how I look at it is I think if there's a parallel to when they would put a Walmart in the middle of a town and consumers had to make a choice whether they got to go to the store they've been going to or they get to go to Walmart. I think for a lot of brands today, what we talk to them about is there's tremendous value for them to leverage a Shopify and and to create that that that that relationship with their customers. Right? We talk about margin. We talk about first party data assets before. Ultimately, it comes down to a couple questions. 1 is, what value are they creating for the customer and the customer experience compare comparable to the customer's other options. I'll have a client come to me and and and talk about, you know, really trying to leverage up their their their site and drive, drive transactions and build their 1st party data asset.

Drew Kraemer (Code3) [00:37:12]:
But it's more expensive. It ships in 4 days. They have to pay for the consumer customers to pay pay for shipping, and it just simply doesn't align. Right? We can't expect consumers to do something that, you know, they wouldn't do otherwise when making a an informed decision. The brands that that that that do think about that and can provide additional value to customers. Right? It's preferred, purchase program like Amazon Prime and and those types of things. I mean, there's a there's a ton underneath that. But ultimately, you know, I see a world where, you know, consumers may purchase on a brand site, they may purchase on a retail site.

Drew Kraemer (Code3) [00:37:53]:
It's very similar to, as I mentioned before, it's very similar, obviously, to the physical world. I think retailers are gonna create more and more. They're gonna adopt a marketplace approach to their ecom presence, which allows most brands to sell on their platform with zero relationship with the retailer. And so I think we're gonna live in a world where consumers are gonna have choice. They're gonna have an abundance of choice on where they want to purchase a single product. And I think for a brand, we always talk about not only where is your audience and how to reach your audience, but what are the digital transaction points that we envision now and in the future? Where are all the places that we wanna sell our product or make our product available to a consumer. And that's oftentimes evaluating retailers, and the value they're delivering, and also evaluating our own ability to deliver the product to a customer. There's a lot of products that I would ask you today.

Drew Kraemer (Code3) [00:38:48]:
I I may not because I don't wanna specifically call it anymore of our clients, but you would never purchase that product. And I bet you you've never purchased that product directly from the company. Right? And so in some in some respects, it's just evaluating, you know, can that scale, or am I better off focusing on the retail platforms?

Jeffrey Stern [00:39:09]:
I'll build on that idea a little bit. I I love that idea that maybe good marketing could make an average product more successful, but not so much the reverse. And maybe this is is a good time to put to kinda paint the picture of of how the rubbers hit the road and and speak through some examples that you have of the customers that you've worked with and the impact that it's had. But but how do you actually recommend, you know, people who are trying to primarily improve their business through marketing approach that problem? And what has been some of the the outcomes that you've seen as you've taken companies through this journey?

Drew Kraemer (Code3) [00:39:44]:
The first thing is understanding how you will deliver your product to your customer. I've had a lot of companies, over the years that have said to me, well, you know, in our industry, ecommerce really isn't there yet, or or, you know, we don't really see our customers purchasing online. And I tell them all, everything's gonna be able to be purchased online. Right? It's just where and when. So every company today should be thinking about ecommerce as not a a portion of how sales are driven today, but the majority and what decisions they would make if that was the case today. I do think that from a strategic standpoint, starting on those platforms that can drive higher ROI in a in a world where we can see the data and starting to build upper funnel is critically important. One of the biggest mistakes, however, is that most brands only stay at the bottom of the funnel, and they're tied to this this ROI metric that they hold on to, and they won't spend a dollar more if it didn't hit the ROI that they need. When in reality, you need awareness for your brand, especially a young brand that's starting out or or a brand that's trying to challenge an industry, which as we mentioned as I mentioned earlier, has the ability now to compete with industry leaders today with this infinite shelf space.

Drew Kraemer (Code3) [00:41:06]:
They need awareness. Right? And there are inefficiencies on platforms today that are still out there where they can get awareness, and they don't have to overpay. You know, we talk about OTT. We talk about these newer channels. There's inefficiencies in in the in the auctions that will persist for a while. And so that balancing of awareness and lower funnel, to me, is is one of the most important elements of of of young brands being successful on these digital platforms. But I see too many sort of adhering to this ROI that, quite frankly, it's a bit limiting. So I I I I give you some examples.

Drew Kraemer (Code3) [00:41:45]:
So, you know, one is we work with Chipotle. Chipotle is, one of the the best run companies in my opinion in this country. They were able to pivot, and and we helped them do this when the pandemic hit. That accelerated the process of of transitioning from an in store sale to a digital sale. Years before that, they knew that they were becoming a digital company, Right? And they sell burritos, right? I don't sell a burrito on Amazon, but they they knew, they said we have to figure this out. And so they came to us, and we've been working with them for many years. And we started the foundation of this transition to what if transactions all happened online through the app, through the site? How would we get the food to a customer? And so we were able to pivot very quickly, at the beginning of the pandemic and and execute on a digital only, you know, ecommerce only campaigns. And and we we, know, quite frankly, it's their digital sales went from 0% to over 55% of their company.

Drew Kraemer (Code3) [00:42:57]:
And and that that doesn't happen by accident. That happens with, as I mentioned earlier, companies thinking about how will my customers interact with my brand, purchase my products in a digital only world. And because they were thinking about that years before, we were able to help them pivot very quickly and take advantage, of the opportunity. Another example, is a great client we worked with for many, many years, Starkist. They make tuna, and they, you know, they thought that digital and and ecommerce was going to impact their business. They didn't know when. And they came to us years ago and said, you know, can we sell on Amazon? And and can we find success in our category on Amazon. And so, you know, we've taken them from, you know, 282% year over year growth in terms of their ecommerce, and and and now ecomm is a significant part of their business.

Drew Kraemer (Code3) [00:43:56]:
So so so and and we do this by all kinds of ways of launching launching the brands, scaling the content, and the creative aspects of it, targeting certain audiences on certain days of the week and certain there's all the things that go into that, but the foundation of it is these companies are thinking about ecommerce not as a portion of their business, but as the driver of their business.

Jeffrey Stern [00:44:20]:
What has you most excited both about the the future of of marketing and advertisement and then more specifically about code 3, and the the vision you have looking forward?

Drew Kraemer (Code3) [00:44:34]:
Yeah. I mean, I I think for what what what what what is exciting for me is is the innovative channels that a brand can use to reach and engage their audiences. And to me, it's the we're leveling the playing field, and we are absolutely leveling the playing field from start up brands to major players. And and and the the brands with the better digital marketing strategy will win. And that to me is exciting when you think about the new channels. We haven't talked about the metaverse yet, which I figured would come up at some point. But Yes. If you think about what opportunities NFTs, the metaverse, it it creates for not only for a brand to expose their brand to a customer, right? So I have my own skin in Fortnite or Roblox, but marketers for years have been talking about this idea of what the brand stands for.

Drew Kraemer (Code3) [00:45:37]:
And how do we get customers to really feel the brand? We can literally create a customer experience for them to feel the brand in the metaverse and and without the sort of limitations of the physical world. And so, you know, these these these innovations and these new platforms to me make it so exciting. For for us at Code 3, you know, it's it's 2 things. Number 1, it's connecting media, creative, and commerce together. This is still you know, media and creative, you know, many, many agencies and many brands have thought about this for many, many years. How does the right creative affect the media performance? You start to add in the the the ecommerce piece to it, and I think it gets really exciting for a brand to understand how the media that they're the retail media that they're running on ecom platforms, how that impacts their overall customer acquisition strategy, how does running on Facebook or Meta or or or TikTok influence our ecom sales, and and what engages a consumer across those platforms. You know, to me, it's it's it's, you know, we used to wake up in the morning and watch the morning news and listen to the radio. And, you know, way back, it was the newspaper, you know, you pick.

Drew Kraemer (Code3) [00:46:54]:
Now we live in a world where it's podcast, and it's it's it's it's streaming, and things are on demand. Right? So these these platforms are are creating opportunity for us to reach audiences. To me, it's how they connect. That is sort of the next thing and and what we think a lot about it code 3 is the integration of media, creative, and commerce. And if a brand can nail that and understand that, we believe very much they'll be successful. So it's the connect the connection points, that we care a lot about. And a lot of that is rooted in in data science and analytics, and how that comes up from a strategic standpoint. And then the other part is really on the innovation front.

Drew Kraemer (Code3) [00:47:32]:
Right? What's new? What are the next 3 or 4 platforms we can reach our audiences? And, we feel very much that we can get our clients on those platforms, earlier. We can take advantage of, you know, sort of natural inefficiencies in auctions and and test and learn and and and go from there. But, yeah, I think, you know, we go going back to our the first part of our conversation about entrepreneurship and creating things and what the opportunity is, what exists what will exist in a year or 2 from now that that, you know, that doesn't exist today. To me, it's it's it's really exciting. I mean, augmented reality, virtual reality, the mixed reality, which we're probably a year or 2 away from. These are the things that, to me, are incredibly exciting, for marketers to think about.

Jeffrey Stern [00:48:15]:
No. I'm I'm glad you you brought those up. I wanted to to get your perspective on metaverse and just having seen over the last year really the proliferation of NFTs and and enormous brands throwing their weight behind what, in my personal history, was this very niche crypto movement that's now proliferated to to where it is today. It's it's pretty incredible to see, but just again, always kinda going back to that question of the signal versus the noise, what has staying power, and and how you think about those, especially in this world where things are changing so rapidly. It's and it's exciting, but it's cool to hear your perspective on that.

Drew Kraemer (Code3) [00:48:55]:
Yeah. I think I think, you know, NFTs, for example, are incredibly interesting. You know, there's a lot of questions. There's probably more questions than answers today, and, you know, most brands are thinking about NFTs in terms of what can I create and sell and, you know, what is the experience? And and we see, some really great brands that are doing this today. You know, I think where where that evolves into is is is more of what's the application of those n f t's. And that's that I think now unlocks, much more potential for a brand. But, yeah, I mean, you know, I think it's it's incredibly exciting and, you know, something brands should be thinking about today in terms of how they how they leverage NFTs to, to to create awareness and potentially create revenue.

Jeffrey Stern [00:49:43]:
So we'll kinda bookend the conversation here with some reflections and learnings of the whole company building process from inception to acquisition to scaling code 3 to to where it is today. You know, what what are the things that that you've taken with you throughout this this journey?

Drew Kraemer (Code3) [00:50:02]:
Yeah. I mean, you know, it's it's sort of cliche, but I'll start, because it is you appreciate you do appreciate the people along the journey, and you realize in reflection that none of it would be possible. And and and we had such great people around us from, you know, from some of our early employees where we had to convince them, you know, we're a real company, we promise like we may not look like it, but we're real. And you will have a paycheck in a couple weeks like it will we might hand it to you, but, you know, we're to, you know, to when we were going through the acquisition process, we really built a team with, you know, with lawyers and accountants that we were able to punch above our weight class, quite frankly. To our employees now and the evolution and going from social code and and and and mps to code 3, it's a huge effort in the people. They it really matters at the end of the day. You know, the other lessons for me are we all have a finite resource in time. We all have the same amount of time.

Drew Kraemer (Code3) [00:51:10]:
What we choose to spend our time on matters, and it should be thought about, and not taken for granted. And so, you know, this process and and the process, quite frankly, that we're still on, it comes down to what are we what are we choosing to do, and what are we choosing not to do more importantly? Because you can't do everything. And so we talked we we spoke a little bit about focus. I think that still holds true for us today at at 275 employees as it did when we were 27 employees. Right? Focus matters. And and to me, that's a difference, many much of the time between a successful company and one that's not so successful. And so, you know, that matters. And then, you know, I do think, you know, the other the other lesson for me is really the value creation to your customers.

Drew Kraemer (Code3) [00:51:58]:
You know, at the end of the day, customers come to us for a reason. We shouldn't shy away from that. We should embrace that. We should listen to them and demonstrate active listening and and solve their challenges and be a partner, not just somebody that can execute, but really a partner that can listen to them, create relationships, build those relationship, nurture those relationships over time. I can tell you a real quick story that the, you know, we had our, when we when we started Marketplace Strategy, we had our our sort of first big break. It was there's a manufacturer of printers called Brother, Brother International. They make some sewing machines, but they're mostly known for their printers. And and we were invited to their RFP, and so we couldn't afford plane tickets to to their headquarters.

Drew Kraemer (Code3) [00:52:46]:
We drove and we we packed in a van, the 3 of us, we drove. And, you know, we're practicing the pitch the whole time. And these these are the moments that are really special when you look back. And and we we went in, and we knew we were we were first. Right? You never wanna be first. You kinda know that you're just in there as a practice round. And so we were first. We knew the competition.

Drew Kraemer (Code3) [00:53:05]:
It was it was much larger agencies, and we didn't think that the client knew how small we really were. We went in and the first thing we talked about was earning their business over time. And that we were committed to not win their business today, but earn it over time based on our actions. And we made this pitch, and, you know, 3 weeks later, we got a call. We thought for sure it wasn't gonna happen, and we won the business. And it was it was such a win and a celebration for the company at the time. I still remember leaving the room and calling some folks and saying, look, we need help. Like, we have to grow our team.

Drew Kraemer (Code3) [00:53:45]:
We just but those are the moments I would say, you know, when you look back and you can really appreciate the journey and the grind and every day getting a little bit better, getting a little bit better, taking a step back but taking 2 steps forward. I mean, all of those types of things. So to me, it's like the relationships, but also just the appreciation of the process. As an entrepreneur, you have to sort of love the process. And so that's that's, you know, reflecting back. I mean, that's those are the moments. I mean, those are the moments that make it all worth it.

Jeffrey Stern [00:54:18]:
That that all resonates a lot. The the process is important because the it's hard. Yes. To be to be singularly focused on the outcome is is probably not the the way.

Drew Kraemer (Code3) [00:54:30]:
Lot of long rides home, questioning yourself, and, yeah, it's it's a long long journey, but a fun one.

Jeffrey Stern [00:54:37]:
Yeah. Well, I'll I'll, I'll close it out here with a question that we ask everyone on on the podcast, which tying it back to Cleveland is not necessarily for your favorite thing in Cleveland, but for something that other people may not may not know about, a hidden gem.

Drew Kraemer (Code3) [00:54:56]:
Yeah. I I for me, it's it's a place I love, and I and I'm surprised how many people don't know about it. It's this little it's this little place called Velvetango Room. It's in Ohio City. They make the best cocktails. And when you walk in, you're sort of questioning, am I at the right place or not? And they just take on a vibe of, you know, 50, 60 years ago. And and so it it's a place I visit frequently. I I think I would call it sort of a hidden gem, but I'm sure it's probably gained some popularity in the last few years.

Jeffrey Stern [00:55:31]:
I would I would second that. It's a transportation to another world in that place.

Drew Kraemer (Code3) [00:55:36]:
Yes. Very cool. Yes. Yes.

Jeffrey Stern [00:55:38]:
Well, Drew, thank you so much for for coming on and for sharing your story and and journey. It's very exciting, the the work that you're doing and and the presence that that you have here in, in Cleveland.

Drew Kraemer (Code3) [00:55:50]:
Yeah. And and and and likewise, I mean, thank you for what you do. I think, you know, growing entrepreneurs here in Northeast Ohio, it's the absolute best place in the country to be an entrepreneur, to grow a business, great people, and adding more stories of entrepreneurs, you know, only helps that. So, thanks for having me on, and I appreciate all the work you

Jeffrey Stern [00:56:10]:
do. Yeah. Appreciate it right back. If folks have anything that they would like to follow-up with you about, what is the best way for them to do so?

Drew Kraemer (Code3) [00:56:19]:
Yeah. I'm on I'm on LinkedIn. You can always find me there. You can email me. My email is, drew@cod3.com. Pretty simple. But, yeah, shoot me a note on LinkedIn email. Let me know what questions.

Drew Kraemer (Code3) [00:56:32]:
If there's anything I can help, you know, local entrepreneurs with, if they have questions, they wanna grab coffee, lunch. I was at a lunch today helping an individual. I love doing that. There's a number of organizations I'm involved, and also just taking, you know, taking personal time, I think, you know, it's it's really important. And so, let me know if you have questions. Wanna grab lunch, coffee. Happy to do so.

Jeffrey Stern [00:56:54]:
Right on. Well, thank you again very much. Really appreciate it, Drew.

Drew Kraemer (Code3) [00:56:57]:
You got

Jeffrey Stern [00:57:00]:
it. That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show, so if you have any feedback, please send over an email to jeffrey@layoftheland.fm, or find us on Twitter at podlayoftheland or @sternjefe, j e f e. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on iTunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be back here next week at the same time to map more of the land.