Issue No. 191: Save your clicks, brands want influence

Last Word: eCommerce doesn’t just mean physical goods

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Graphic by Ben Thompson, Stratechery.com

In a 2014 blog by Ben, he wrote:

In short, publishers (all of them, not just newspapers) don’t really have an exclusive on anything anymore. They are Acer, offering the same PC as the next guy, and watching as the lion’s share of the value goes to the folks who are actually putting the content in front of readers.

I mostly agree but there is a distinction to be made. A smiling curve is an illustration of value-adding potentials of different components of the value chain in an IT-related manufacturing industry. In the above graph, the order of the most valuable components of the chain are: (1) Consumers (Google, Facebook, Twitter) (2) Journalists or niche publications (3) and then, Publishers. The value of the publisher and its components are tied to action and the value of a consumer. The more passionate the consumer, the more valuable the publisher.

How do you gauge the value? Action. Action can mean: eCommerce sales or it can be something more opaque. This is an apolitical publication but you have to admit that the New York Times and the Washington Post are generating growth via subscription sales because their product is generating more action (activist citizenship, online chatter, intellectual curiosity). This inevitably will lead to increased digital and print ad spend. Advertisers will buy into activist citenzship, online chatter, and intellectual curiosity.

There are two above articles that delve further into the science of content creation, content delivery, and content discovery: (1) “On the Lore of Destrokid” and (2) the intro text on Hypebeast’s ability to master sellable content. It is right there that media groups can be lost in all of this. Hypebeast’s most valuable asset is not its journalists or even its publication, it’s the consumers. They prime their consumers by generating online chatter and in many cases – direct commerce sales through HBX. The more successfully their journalism leads to eCommerce outcomes, the more reliable their native advertising sales funnel. It’s no mistake that their creative services division has helped generate 46{e2c96f1c2aa7b6d7f3092c9a6fa26d51c514b7e4abf11af5894da02a08d33fce} growth YoY.

Now consider Internet Retailer’s “Snap dives into eCommerce“:

“The future of Snap isn’t Spectacles,” she says. “The future is advertising.”

Snap’s advertising revenue to date is minimal—it generated $404.5 million in ad revenue last year. However, that’s a sharp increase from $58.7 million in 2015. It’s also a far cry from the $2.248 billion in ad revenue Twitter Inc. generated last year and a modicum of the $26.885 billion in ad revenue Facebook Inc. generated. But Snap is a different platform and the ads that retailers use to drive sales on it will likely be distinct from those on other social networks, Lieb says

The most successful marketing campaign that Snapchat has led in the last two years wasn’t through traditional advertising, it was through traditional retail and eCommerce. And they weren’t building and selling a product for the sake of becoming an eCommerce brand. Two of their advertising selling points are a) the passion of their millennial consumers and b) their ability to generate action. In this case, millennial-driven online chatter and the sale of an elusive hardware piece that serves as a billboard of its own.

There is a virtuous cycle in modern digital media and eCommerce that shouldn’t be ignored. Consumers want to go where they are influenced to act and advertisers to create content in those same spaces.

See more of the issue here.

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