Issue No. 266: The HarrisX Report

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The must-read HarrisX report is 53 page deep dive into what is quickly becoming an inevitability. Big tech is facing regulation and if it happens, digital advertising efficacy may suffer with it. The most recent member brief included higher-level action steps for brands and agencies that may have to adjust to a digital advertising space without the targeting capabilities that we have today. We’ve narrowed the entire report to a few key takeaways.

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According to the report, 83% of Americans believe that the government should enact tougher regulations and penalties for breaches of data privacy. Additionally, 67% support major legislation in the U.S. The closest of which is the GDPR act in Europe. The GDPR limits the free flow of information between tech companies and advertisers. Below, I have included the three largest areas of concern.


From Member Brief No 9

What would the regulation of Facebook look like?

Look no further than Europe’s General Data Protection Regulation Act (GDPR) set to go into effect on May 25, 2018. There are three areas of interest that will be scrutinized:

  • Sensitive info: sexual preference, religious views, and political views will no longer be accessible to advertisers.
  • Facial recognition: banned in 2012, facial recognition will be made available. But the government will monitor intrusive use cases.
  • Data collection across the web: The GDPR reduces Facebook’s ability to track you across the web.

Facebook, Inc. may outlast Congress’ efforts to regulate their data collection practices but it is smart to prepare for a future without it.


Other eye-catching polling data:

(1) 65% of Americans supporting an Honest Ads Act requiring political advertisers to reveal their funding sources.

(2) 59% of Americans believe that children 16 years or younger should have control over their online profiles. Their data should be permanently deleted.

(3) And lastly, a bi-partisan 53% believe that large tech should be regulated much like the big banks are.

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If the push for regulatory action continues in America, the implications will be felt across ad-reliant digital publishing, advertising agencies, and the vertical brands that benefit from the data farm that’s powered Facebook to outsized profitability. It’s likely that we may begin to see the largest brands in the DNVB space pursue a greater share of offline advertisings spend. This, especially as brands begin to reconsider how they a) reach top-of-the-funnel customers and b) retarget potential customers.

Read the Inaugural Tech Media Telecom Pulse Survey here

Issue No. 265: Can A DNVB Achieve Modern Luxury?

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Om Malik and Lean Luxe‘s Paul Munford had a thought-provoking exchange. Does the modern luxury go-to Lean Luxe (and the industry as a whole) have a grasp on what luxury means in online retail? On its face, a physical product that makes itself available to the masses cannot be a luxury product.

Lean Luxe on Twitter

@om Sure, by the old definition of luxury – you’re correct. But don’t judge modern luxury brands’ bonafides using the old set of luxury rulebooks. More here: https://t.co/ZLjoBdxYUz and here: https://t.co/uHYOPzsI9n

There are very few products, if any, that digitally vertical native brands (DNVB) sell that would qualify as traditional luxury goods. Here is Munford’s definition:

The key strength of a modern luxury brand is its emphasis on the entire package, rather just the product (or logo) itself. It’s a different mode of operation that takes some getting used to, but it disperses with the conventions of the old, blingy version of luxury, and is best optimized for today’s new consumer behaviors and expectations.

The fact of the matter is that competing on product quality alone leaves a brand open to exposure. MLCs have smartly understood that a better overall package or bundle — in an open market like today’s — can be far more compelling to shoppers than just product alone can.

Lean Luxe

Munford makes an important point that I’d like to take a bit further. Lean Luxe tends to maintain a narrow focus on hard goods and the packaging that they arrive in. But what about the purchase process and the attentiveness to customer happiness? And what about time?

The definition of luxury: an inessential, desirable item that is expensive or difficult to obtain.


2PM’s Meghan Terwilliger had this to say:

Luxury, however you define it, is a brand’s embodiment of characteristics that make it desirable. Historically, those characteristics have been more ‘What’ features like quality, exclusivity, and cost. You can still define luxury as characteristics that make a brand desirable, but those characteristics have shifted. Quality is table stakes.

The characteristics that make brands more desirable are ‘how’ features like excellent customer experience (how do I experience the brand), meaningful brand mission (how do they give back/make a difference), and community engagement. Is it artist-created and excessively expensive? Maybe not. But if it is a product, or even an entire experience that is highly desirable, it can be considered a luxurious brand. DNVBs just so happen to possess a great infrastructure to support the characteristics that define modern luxury.


Luxury is always relative; it is loosely defined to meet the times and the market. If you walk through a great mall in the United States, you will visit brand experiences that will provide a luxurious taste. Take Ohio’s Easton Town Center as an example. The indoor / outdoor mall features Burberry, Tiffany and Co.,  and Louis Vuitton. However, your perception of luxury changes when you walk through the Bal Harbour Shops in North Miami Beach.  Bal Harbour is considered the finest mall in America. Both malls are considered “luxury” malls but neither are as luxurious as Dubai’s mall.

But can a DNVB be a luxury brand?

The notion of luxury is often applied to tech fashion brands. I partially agree with Om Malik’s statement here.

[Lean Luxe] is again confusing smoke / mirrors marketing and what is really luxury. All I know is that AllBirds and Brandless and Casper are not luxury, And no amount of your linguistic gymnastics will convince me of what is luxury, FWIW, LV is not luxury either. Too common.

AllBirds, Brandless, and Casper do not make luxury products but Munford isn’t suggesting that their products-alone are what classifies them within the modern luxury space.

Louis Vuitton was first hired as a personal box maker and packaging expert for the Empress of France. He was charged with “packing the most beautiful clothes in an exquisite way.” It was the practice that helped him to gain influence among the elite and royals, catapulting Louis Vuitton’s namesake to luxury status.

Louis Vuitton began with an early product and the two advantages commonly seen in the DNVB space:

  • Packaging
  • Maniacal focus on customers

The definition of a DNVB: a brand born online with a “maniacal” focus on the customer experience. A DNVB may start online but it often extends to a brick-and-mortar manifestation. Digitally native vertical brands control their own distribution.

Luxury brands don’t always begin as purveyors of luxury products. And due to a macroeconomic consumer shift from materialism to investing in luxury experiences, there are a large number of consumers who prefer DNVB’s luxury-experience over traditional luxury products. For many in the business and wealth classes, it’s a symbol that their money is better spent on even finer things than goods. The definition of luxury is changing.

Here are two relevant passages from 1994’s The Idea of Luxury:

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Buying experiences over buying consumer goods is a trend being adopted by the luxury-set. The interpretation of the word luxury means something altogether different for the types of customers who have the means and awareness to shop with DNVB brands. Skift’s latest research shows a clear shift in demand for more transformative travel experiences among upscale travelers (Skift / May 2, 2017). Whereas expensive products used to be the consumer desire: products, community, and service now play the role of enabling experience economy.

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Many DNVB products (see the database here) are marketed to enable this type of consumer: Mizzen+Main (No. 86) is for the traveling business class male. Ministry (No. 91) is for the well-educated, urban millennial. AllBirds (No. 56) is worn by the business casual, aspiring member of the investor-class. Rogue (No. 8) turned a garage into a coveted space in a home.

Digitally vertical native brands are founded with these basic questions:

(1) How do we make a great product?

(2) How do we build a community around it?

(3) How do we provide an elegant solution for commerce?

(4) How do we enable customers to save time and focus on what matters?

“One fundamental trap that people run into when assessing the merits of a modern luxury brand is the tendency to judge that brand using the ‘best-in-class’ framework,” says Lean Luxe’s Paul Munford. Lean Luxe’s definition is mostly right. Munford discusses packaging as part of the bundle: “[These brands] offer a better bundle to offset [traditional definitions of luxury] — more convenience, transparency, connection, better messaging, pricing, etc.”

But a selection of modern luxury brands are also marketing time as part of the proverbial “bundle” and that’s the only place where Munford and my thoughts differ.

It’s no longer sufficient to define luxury products by how difficult they are to attain. Time is the scarcest resource and the ultimate luxury. Being a modern luxury brand is about being self-aware. These brands sell time as a scarcity and then build products around it.

There may be no greater example of the community / product / service paradigm than Peloton, a DNVB that Malik’s True Ventures joined back in 2015.

Peloton is now shifting gears with a new financing program ($97 per month for 39 months for both the bike and subscription service), an ad campaign that’s more relatable to a diverse consumer base and an NBC Olympics sponsorship. Peloton counts NBCUniversal among its investors, and has raised nearly $450 million in total funding to date.

“We had this idea of a very affluent rider who many of our early adopters were,” she said. “We realized, through conversations with our community, that there was a huge opportunity with people who thought $2,000 was a huge investment but were [buying] it over and over again because the product is so important to them.”

How Peloton is Marketing Beyond the Rich

Peloton is not a traditional luxury product, but it shares consumers with traditional luxury brands. Think about the type of living arrangement necessary to house a wi-fi enabled bicycle or a $4,000 VR treadmill. It’s a brilliant piece of hardware that blends community with product and service. The brand’s proposition explicitly states that the purpose is to free the owner to focus more on experiences.

Peloton’s value proposition is as much about what you can accomplish away from the treadmill. Why take the time to travel to a gym? That time could be better spent elsewhere. This is the mark of a modern luxury brand.

Read more of the issue here.

By Web Smith and Meghan Terwilliger |About 2PM

Issue No. 264: Welcome Common Thread

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Pictured: The founders of Qalo

2PM has the privilege of working with a new corporate partner [1] for Q2 2018. Common Thread Collective is one of 2PM’s noted eCommerce agencies, notable for what they are doing on behalf of digitally vertical native brands. Demand generation for eCommerce is an oft-discussed topic on 2PM. There are three styles of content x commerce strategies. The most talked about models:

(1) publishers who are building an eCommerce as a revenue source:

(2) vertical brands who insource content-publishing to bolster organic traffic, improving net promoter score (NPS):

There is a third way that brands interact with top-of-the-funnel consumers. And it centers around connecting brands to influencers, using messaging to develop content that resonates with prospective buyers. From there, it’s about harvesting first-party data to develop one on one relationships with consumers. Here is a highlight from a recent 2PM Executive Member Brief that should provide context for you:


Member Brief No. 3: The Attention Stack

First-party data (FPD) is information compiled and stored by by DNVB’s, media groups, and marketplaces. FPD describes your brand’s visitors, customers, and loyalists. Because companies with FPD have a prior relationship with their customers, they are in a position to use the data, to include names, addresses, email, demo, and gender — to communicate directly with them. First-party data is what is stored in your brand CRM. The attention stack is what your brand and data-minded operatives work to build by harvesting this data.


There isn’t just one way to approach the attention stack or the collection of first-party data. Here’s a look at one of Common Thread Collective’s methods.

  • Step one: understand the brand’s existing and potential customers.
  • Step two: recognize who influences the brand’s potential customers.
  • Step three: configure the most efficient and effective approach to reaching potential consumers with the influence that CTC has cultivated on behalf of your brand. Invite them to engage with your brand.
  • Step four: drive them to conversion or re-engage and retarget with the previously engaged consumer with dynamic product ads.

Given the importance of building the eCommerce sales funnel (i.e. the attention stack), I sought out an agency partner that would allow 2PM to observe their work with DNVB’s and mainstream retailers. Over the next three months, 2PM will examine the processes that have worked for their brands.

As Facebook begins to address their data controversy, agencies like Common Thread Collective will be the first to adjust, better serving their brand partners who are dependent upon Facebook’s marketing data to drive numbers at the bottom of the sales funnel.

Why should you know Common Thread?

Their approach to optimizing a brand’s attention stack is working and it’s working well. On top of this, their culture is truly unique. Prior to settling in on agency life, the group of managing partners focused on two areas of business that remain pivotal to their work: product entrepreneurship and professional athletics. The CTC partnership includes the former founders of Power Balance and are the existing owners of Qalo. Common Thread’s key clients are:  Diff Eyewear, QALO, Theragun, 511 Tactical, 47 Brand, and Owl Cam.

Many of CTC’s influencers were introduced to brands through the partners’ personal network for professional sports contacts. And influence is vital because CTC’s approach to bolster product sales is driven by social proof. There are two reasons that the average American consumer purchases a product: (1) low pricing (2) recommendations from someone that they trust.

We believe social networks are fueled by human interactions and video content, so to be great at social advertising you have to be able to create human content. We create content and activate influencers in unique and scalable ways. 

Taylor Holiday, Managing Director

Growing their own eCommerce brands, in house, is an additional datapoint that sets them apart. The founding team operates a holding company of micro-brands under their 4×400 incubator umbrella, to include: Slick Products, Opening Day, and FC Goods.

By building an attention stack for their own brands, it provided them with a deeper understanding of the economics that determine paid media’s best practices at scale. Common Thread Collective has skin in the game and proving sales efficacy on your own products is not often seen in the agency space. And their work is serving them well, Common Thread Collective’s typical return on advertising (ROA) ranges anywhere between a 4.06x to 8.3x ROA.

Elephant in the room: Facebook changes?

The success of digital ad buys depends heavily on the troves of data that Facebook has on consumers. Given that Facebook could face regulation, this could spell trouble for retailers who are dependent upon Facebook’s ability to influence product sales. The common fear is that Facebook will begin to roll back some of the data collections that allow the best brands and agencies to do their work.

My top priority has always been our social mission of connecting people, building community and bringing the world closer together. Advertisers and developers will never take priority over that as long as I’m running Facebook.

Zuckerberg, Testimony before U.S. Congress

Considering that greater than 70% of Common Thread Collective’s ad money under management is with Facebook and Instagram, Common Thread will be at the forefront of  the agencies tasked with managing these potential changes. We’ll continue to discuss those developments here. In the meantime, learn more about Common Thread by clicking the logo below:

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Read more of the issue here

By Web Smith | Web@2pml.com | @2PMLinks