Issue No. 251: 10 thoughts for 2018

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  • Brand: Nike will make small gains against Adidas by copying the German brand’s “creators” playbook (click above) but Adidas will remain the brand for rebels and the message will resonate better in 2018, as consumers shun the status quo.
  • eCommerce: Podcasts will continue to mature their eCommerce operations. There will be more examples of refined stores and high quality brand plays in merchandise.
  • Digital Media: Netflix is on to something and may scare the likes of AMC and Cinemark in 2018. Will Smith scored a big win with 11M week-one views. This is out of the 53 million Netflix subscribers. Expect the streaming service to redefine what Netflix means by building on the critical momentum of “Mudbound” and the viewership success of “Bright.”
  • eCommerce: Amazon will cut its affiliate spending by upwards of 40% in 2018. This will most likely affect independent media groups and some of BuzzFeed’s most recent efforts.
  • Digital Media: 2018 will be the year that Youtube influencers take ownership over their eCommerce presences and flock to white glove services that are fully vertical.
  • DNVB: Walmart will buy 1-2 more digitally vertical native brands in 2018. They will also test a smaller-box urban storefront, by a different name, for their higher end brands.
  • Brand: Brands with evergreen products will reduce Google SEM spend and shift to Amazon search products. Remember, Amazon is now a $1B+ advertising business.
  • eCommerce: Spurred by GGV Capital’s belief in China’s commerce sector, brands will begin spending considerable time working with China’s trove of mobile-first eCommerce platforms to grow through international channels. In 2008, it was SEM. In 2012, it was social. In 2016, it was the Soho pop-up. In 2018, it will be American exports in China.
  • eCommerce: Shopify will develop a ‘featured’ marketplace for its top Shopify and Shopify Plus performers and it will compete against the likes of Wish and others. Expect this to be launched in the form of a mobile app with one-click purchasing. Tobi, Harley, and crew will also launch their first of many private label brands to appear on this marketplace app.
  • Digital Media: đź—Ł2PML will become a leading commerce podcast in 2018. It will become the go-to 20 minute pod for polymaths with little time for market research, continued education, and Porter’s Five Forces analysis.

Follow @2PMLinks for this thread and other updates.

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Issue No. 250: đź—Ł Listen up!

The 2PM community is a vibrant one of thousands of smart, curious, and polymathic-types who lead in professions to include: branding, commerce, data, and digital media. 2pml.com covers the many ways in which these industries converge and where there is disruption or opportunity.

After a few months of lobbying by my wife (and great feedback from subscribers), 2PM will begin releasing a weekly podcast that will recap news and developments. In addition to recaps, there will be a scripted deep dive into one retail touchpoint each week. If you’re a member of this community and you have something to contribute, expect an invitation to join the pod.

The format will be 20-25 minutes per week, with a link to the audio in your inbox at 2PM EST on Monday. The pod will be direct, succinct, and digestible – just like these letters. Expect more news on format and partners in the final few issues of 2017’s letters.

This is the opinion of Web

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Issue No. 249: The definitive white paper

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A last word: too big to ignore 

Here is the link to the definitive white paper on Amazon’s advantages in commerce, media, retail brand growth, and ad tech.

Key excerpt:

Unlike Facebook and Google, the eCommerce giant is in the business of selling products to shoppers, not selling inventory to brands — a subtle, yet important diference.

Advertising executives are talking to Amazon’s reps about supply chains and inventory as much as ad copy or keyword strategies, which Jason Hartley, 360i’s national head of search and paid social, admitted “is very different and challenging, but absolutely necessary.

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Issue No. 248: The nine boxes

On: “The End is Already Here” by @LukeOneil47

For quite sometime, I was fascinated by the storm that is digital media. If Jonah Peretti is scared, so is just about everyone else. Buying, selling, shifting, moving, falling, rising – the tectonic plates beneath the foundation of digital media are moving ever faster. Only visionaries capable of playing three dimensional chest will remain on the sturdy ground. Count Jessica Lessin as one of them.

After a three-year stint in and around the digital media space, I have seen enough to know that executives must be forward-thinking to survive this whirlwind. I know some who are, I know many who are not. So O’Neil’s words strike me because many will read them today after reading Peretti’s words on Buzzfeed’s future. Here’s a striking para from O’Neil’s essay:

Dailies who aren’t already well ahead of the game in terms of reverting back to subscription models, or of significant enough national prominence, or don’t find their own relatively benevolent billionaire owner, will continue to either be neutered or flattened out by conglomerates into content distributors. The ones that don’t will buy some time, but will ultimately become vanity projects read only by people wealthy enough to remain interested in the superficial comings and goings of other wealthy people.

To Luke’s point,the remedies that I envisioned were tactical departure for most in the media space (and very difficult to execute). These were the five points on my whiteboard:

  1. Build a premium subscription product for our most loyal. Do not ignore this advice, bosses. Recurring revenue is something that we can build upon.
  2. Let’s treat news like a commodity but let’s treat our platform as a brand. This means avoid discounts or promotions. It also means that we must think like a CMO.
  3. Direct-to-consumer commerce and native advertising partnerships should be influenced by affiliate data. Affiliate revenue is a treasure trove of data.
  4. Let’s measure success, not in DAU or MAU but in affiliate / D2C commerce conversion. What are eyes without the ability to influence the mind (i.e. cart conversions)?
  5. Let’s build a community, not a readership. Communities persist, readerships do not.
Read Neiman Lab’s 2018 predictions in journalism, including Luke O’Neil’s “The End is Already Here.
This is just my opinion. – @Web Smith

 

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Issue No. 247: Welcome Back

Opinion: DNVB’s must become luxury brands

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There are a great many tidbits in this essay, in addition to the original infographic above. The notion of moving a brand up-market is one that I believe very strongly in – not only as a price-anchoring function but as a product differentiator and brand builder.

This is the first essay that I’ve featured by the New York venture capitalist but it’s a worthwhile one. It’s lengthy but it’s worth your time.

Excerpt: Building a luxury direct-to-consumer brand is easier said than done, but take comfort in the fact that it can be done. Every generation has its share of holdover brands from the last, but millennials, like our parents before us, have a cadre of all new logos and experiences we want to be seen in, on, and around. Unlike our parents, we care about the experience of the purchase as much as product itself and are willing to pay serious premiums for individualized VIP treatment. Use that to your advantage. Provide a level of service your competition won’t, and tack that additional cost to the end of the price tag.

Read more here.

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Issue No. 246: DNVB&’s will be just fine

A last word: eCommerce is a bear

Consumers are becoming brand agnostic and DNVB’s seem to be holding on to their loyalty by appealing to internet-first consumers. It’s expensive but for some DNVB’s, there may be a positive outcome.

Read: From a digitally-native gold rush to an impending bloodbath

One passage stood out when I read Richie Seigel’s latest for his Loose Threads project.

While many people believe that Digitally-Native Brands have both larger addressable markets and cheaper acquisition avenues to realize their potential—leading to this influx of capital—there is little proof that these theories will result in long-lasting or profitable companies.

Building a successful brand takes time. While many Digitally-Native Brands have tried to take shortcuts—raising more money and spending it faster—many of these companies find themselves in precarious positions, with investors breathing down their necks, employees’ livelihoods in their hands, and uncertainty about what comes next.

When I reached out to a prominent (profitable) DNVB founder / CEO to discuss this prediction, we both agreed that it had merit. There will be many bad DNVB exits. But there will be even more heritage brands that will fail along with the stores that propped them up for years.

You know that age old adage, you only have to outrun one person to escape a bear’s pursuit? In this analogy, heritage brands are the ones being outrun by DNVB’s.

Of the heritage brands that Seigel lists in his second para, the publicly traded ones are trading at an average of -25% on the year. This includes Columbus’s own L Brands (owner of Victoria Secret); VS is a heritage brand that’s anchoring a crumbling stock due to inbound intimates competition from a growing number of DNVB’s.

In addition, most heritage brands rely upon department stores and costly ten-year leases to bolster sales. Most of these investments are quietly financed by toxic amounts of private equity. Someone check on J. Crew for us.

Wal-Mart, who invests heavily in DNVB’s, understands the importance of the internet as a platform for retail. They are doing something interesting to compete against Amazon:

“Wal-Mart Stores Inc. is near a deal to add Lord & Taylor to its website, part of a broader effort by the retail giant to build an online shopping destination that can compete with Amazon.com Inc., according to people familiar with the matter.” – WSJ

This is why Wal-Mart is doing this: They will now sell fashion’s heritage brands through Walmart.com, becoming a new-aged destination for all things department store: including Patagonia, Ralph Lauren, Nike, and maybe even Commes De Garcons.

This is while their six most recent acquisitions are also helping them appeal to new audiences. Jet.com has already announced a private label. And it’s no secret that Wal-Mart is building a strong case with Mark Lore’s new strategy. In time, Wal-Mart will be a machine capable of launching new private-labeled brands that target the consumers of the heritage brands of old.

Mark Lore’s recent Lord & Taylor move has Bezos’ tutelage written all over it.

Amazon, Alibaba, and Wal-Mart are vying to become this century’s version of the department store. And every brand should be nervous but it’s the (eCommerce-lagging) heritage brands that should be most afraid of the bloodbath. These brands have invested little in eCommerce and even less in the types of communities that innovators like Stitch Fix seems to have fostered.

As consumers become more brand agnostic, heritage brands are closest to being devoured by the bear.

 

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Issue No. 245 What’s old {radio} is new again!

Brief: It wasn’t worthy of a feature article but here is a great interview with the Warby Parker founders on how they’ve accomplished so much.

Today I will be recording an episode of Lumi’s Well Made podcast and it will be an opportunity to discuss 2PML capstone topics. Respond to this email with any retail, eCommerce, or DNVB issues that you’d like to hear more about.

And over the last several weeks, I have been working on the next steps for 2PML. With some assistance, I have begun to lay the groundwork for a 2PML-based fund to work with in pre-seed DNVB’s and subscription-based digital publishers. The target date for the first investment is Q2 2018.

 

Part two: the coming of podcast commerce

What do you notice about the response this tweet? Over the past few months, I’ve transitioned from building eCommerce functionality into existing media brands to supplying merchandising capability to influential media brands.

If you’ve ever listened to a podcast, you’ve listened to an ad read. Don’t be too down on them. They support your favorite pod and people are actually being influenced by them. You’ll be fascinated to learn that you a podcasts’ ability to move merchandise may be unparalleled in the digital publishing sphere.

Mizzen+Main CEO Kevin Lavelle would tell you that the brand tipped into the mainstream, a bit faster than any of us imagined it would, after a few paid reads on the Tim Ferris Podcast.

Via Kevin Lavelle (2015):

Let’s talk specifics. Below is a ranking of our sales days, in order, and relative percentages of how our other top days compare to our best day for perspective.

  1. Day Three of Tim Ferriss First Podcast Sponsorship
  2. Fundraise Announcement, Wall Street Journal, 83% of Highest Day
  3. Day One of Tim Ferriss Podcast, 73% of Highest Day
  4. New York Times Profile, 69% of Highest Day
  5. Day Two of Tim Ferriss Podcast, 58% of Highest Day
A lot has happened since 2015 but the Ferris podcast remains a pivotal point in the company’s growth.

Podcasts may be the most influential medium on the internet today. While podcasts must have visibility, the podcast host’s objective is influencing the listener. This contrasts the model for many digital publishers, whose objective is to simply collect visitors and sell ads on purported volume. Influence-first journalism = eCommerce efficacy.

In Issue 246, 2PML will feature an in-line list of the top 15 most influential podcasts and online publishers. Your participation is requested. Respond to the tweet for your input to be considered. Or you can simply respond to this email with your thoughts.

See more of the issue here.