Memo: New York, Los Angeles, and Columbus

One line from a book written 130 years ago would influence marketing and branding for ages to come. In his novel Five Hundred Dollars, Horatio Alger writes: “I don’t know but I can wait two or three weeks,” he said slowly, “if you are sure we shall play at Peoria.” This line gave the advertising industry “Will it play in Peoria?”, an old adage that is traditionally used to question whether a product, person or theme will appeal to the average person in middle America. It’s a question that answers a product’s potential role in the lives of a broader demographic or psychographic. In today’s digital age, for brand owners, Peoria is worth your time and here is why.

The Trope

The trope was meant to characterize the Midwest as somewhat of a lesser-than place where uniformity, simplicity, and a resistance to modernity reigned supreme. Don Marine, a professor of theater at Illinois State University once said:

The widespread appeal of this verbal maligning by comics, actors and other performers suggests Peoria as a paramount example of the dull, banal, and provincial theatrical road stop. But the popularity of the “put down” suggests as well that the city possesses a theatrical heritage of considerable longevity.

If you close your eyes, you can imagine Don Draper sitting in his office on Madison Avenue, asking, “Will it play in Peoria?” as he decides between models for a new Dodge ad. Today, the concept of a test city is more likened to Columbus, Ohio – the city where I choose to live despite my deep love for the pace and promise of cities like New York, Los Angeles, and San Francisco.

Sometimes, a city can fail to understand its own power. Columbus is affectionately (yet restrictively) known as “Test City, USA” because it accomplished what Peoria only did in America’s 19th and 20th century imagination. A 2012 CBS News report says it well:

With Ohio State and dozens of other colleges, the student population here is massive, and there’s a strong international presence. It all adds up to a near-perfect cross-section of the country’s consumers. It’s Middle America – but that doesn’t mean it’s average.

The perfect mix of consumers and the perfect volume of them has collectively reassured corporate brands that they are ready for market expansion. I grew up believing I needed to be in New York, Los Angeles, or San Francisco to succeed. If you were a child from the South or the Midwest, unless you were well-traveled, you believed that your success would rely on your proximity to the centers of the world. In reality, you are always at your own center – especially now. This is beginning to reflect in certain circles: technology companies are thriving in Miami, Tampa, Austin, and Atlanta. But for the most part, product brand development still lags behind. There are exceptions of course: Outdoor Voices (Austin), Summersalt (St. Louis), Mizzen + Main (Dallas), and Jeni’s Ice Creams (Columbus).

Line up 10 brands and you will see similar attributes driven, alone, by their geography. There are the internal similarities: design agencies, performance marketing agencies, product development consultants, public relations firms, the same industry events, newsletters, Discord servers read, and degrees had from Wharton or Columbia. And there are the external similarities: product packaging, copywriting styles, typefaces, front-end design, and distribution strategies. In fact, when new ideas come along, they are well-rewarded simply because they are fresh. Snaxshot is like a breath of fresh air because Andrea Hernández is different, Ruby’s marketing strategy woke up the blands, and Parade’s sex-positive marketing strategy broke open a boring underwear industry. But these are mere exceptions.

If you query 1,000 people interested in DTC culture, the majority of them will know several millionaires and Ivy League graduates. It’s a very coastal, affluent club of people with (or nearing) lots of money had. If you ask 100 founders where they will be this weekend, 70 of them will say Los Angeles or New York. As a whole, the disruptors have fallen in line, savoring the laws of best practices and oldened rules of perceived aspiration. If you want a pop-up, why else would you choose a neighborhood away from Soho, Atwater Village, or Fillmore Street? The DTC industry is a club and clubs have rules made to be broken. The first rule to break?

Build for New Yorkers, San Franciscans, and Los Angelenos.

Modern brands must understand that there are consumers outside of major coastal cities. And it is the spaces outside of these comfort zones that may end up determining the long-term viability of the brands themselves. Of course, some of the industry’s pioneers understood just that.

The Reality

Warby Parker launched one of its earliest DTC brick-and-mortar retail experiments in history. They chose a small corner of the Columbus, Ohio neighborhood known as the “Short North.” Dave Gilboa and Neil Blumenthal of Warby Parker sought to understand whether it “played in Peoria.” The showroom was a success. Today, the official Warby Parker store sits just steps away from its original 20-square-foot Ohio showroom. The company recently filed an S-1 for their IPO.

Observing this early Warby attempt (in addition to co-founding Mizzen+Main with Kevin Lavelle on the same street) was my inspiration for helping Tenfold agency CEO Rachel Friedman with her latest project, Tenspace. It’s the latest retail experiment to cater to the DTC industry, located just down the street from that first Warby Parker showroom and the original Mizzen + Main flagship store.

Tenspace is an ever-changing, brick-and-mortar store in the Short North that will share stories of rising online brands with the public in an interactive, experiential format. Every two months, the space is transformed to immerse customers with new brands. Web Smith, founder of 2PM, a subscription-driven media and e-commerce company, was integral in the Tenspace launch. [1]

The process was not kind to Friedman. Over the course of months, several New York and San Francisco-based retailers inched towards the finish line before cancelling or stalling their decisions to engage altogether. A few, worried about stepping outside of the DTC playbook, cited things like, “…Not New York…” or “…I am so busy….” or “…we have another pop-up in Santa Monica….” But the irony is that in no way was any labor expectation placed on any of the brand partners. In a way, they said no out of underestimation of Friedman. I began to take it personally, for her sake! The premise was simple: take a brand and editorialize it through physical expression, retail installment, and a multi-media depiction of the brand’s roots. In this way, she is using real estate as media, not as the retail format that we are accustomed to. And I am comfortable suggesting that there are few if any operators in modern retail who are as talented as she.

Friedman, a forum mate of mine in Entrepreneur’s Organization, committed a reported hundreds of thousands of her own capital to bring the first show to life. I stood by as a late-night ear at times while she coped with her investment. I’ve been there. Her two-pronged strategy was failproof, in my opinion. The comfort that I provided, if any, was grounded in my confidence in: the idea, her execution, and market timing. Her strategy for recouping that investment is two-pronged:

  1. Show brands her storytelling capability and they will flock to her for the experience.
  2. Provide data around visibility to potential sponsors like Shopify, BigCommerce, Yotpo, Loop, Klarna, Lumi, or Lightspeed Venture Partners and await their interest.

They are flocking and they are interested. By all accounts, this strategy is playing out just as anticipated. She has outside interest and a growing book of potential sponsors and brands. But to get to this stage, she needed her first brand partner. And heading into the early months of summer, I was short on DTC contacts who understood retail markets outside of Los Angeles and New York. Five well known DTC brands turned down the opportunity to work with Friedman and each were based in New York, the Bay Area, or Los Angeles.

As I stood watching our daughters play in a tense soccer match, I recalled that there was a brand that may have the appropriate context to understand the opportunity after all. I didn’t have to call, tweet, or text anyone. I looked over to my left at Ohio State wrestling legend and former National Team wrestler Tommy Rowlands, and told him: “I have an idea for you and I need you to say yes.” Tommy, a stoic and imposing friend of mine listened intently and quipped, “Sure, let me talk to her.” The her was Friedman.

Rudis social growth

Rowlands and his partner Jesse Leng are co-founders of Rudis, a brand that is on the precipice of leaving behind the niche of wrestling apparel thanks to savvy sponsorship of high-profile Olympic athletes like Kyle Snyder and Tamyra Mensah-Stock, the first African-American woman to win a wrestling gold, plus a timely partnership with Authentic Brands Group to market products with the licenses of Muhammad Ali, Jesse Owens, “Rocky” Balboa, and Vince Lombardi. With these forces working in its favor, Rudis launched as the first Tenspace partner just eight weeks after the sideline soccer match presented the opportunity. Over those weeks, Friedman and team developed, fabricated, and stocked the brand’s show. The reception has been extraordinary, quantifiably and qualitatively. The retailer’s social channels have grown, sales have reflected new interest, and the media from within the walls of the Tenspace installation have amplified the brand to the far ends of the internet.

I’d never suggest that a retail exhibit of Tenspace’s caliber is superior because it is located in Columbus, Ohio. But what I will say is that we live in a digital-first society now. Drake’s Certified Lover Boy album release featured billboards in places all over the world. They each made their way to Twitter, Reddit, and Instagram. Physical billboards became digital fodder. Such retail opportunities should no longer be looked at merely through the lens of geography. Part of the reason why the social shareability of Tenspace is such a sure bet is precisely because the project isn’t based in a place like Los Angeles or New York, where art and retail are so common that they become background noise.

The actual space

For the retailers with the courage to think outside of the box, opportunities to breakthrough can be found far outside the cities and strategies of the status quo. Of them, Tenspace has raced to the top of those options. Friedman and her team did an extraordinary job of meeting media and brands at its point of linear commerce, and she did so in a way that has to be seen for one’s self. There are no comparisons. And as for Rudis, the wrestling brand for hardened athletes and the warrior minded, it has begun to show that it has the crossover appeal required by any sporting brand who may want to change the world.

Last week, Jeni Britton Bauer was hosted at Tenspace for a virtual and in-person hybrid talk with a number of executives in the 2PM ecosystem, including Loop founder Jonathan Poma, Kat Cole, Nugget co-founder Ryan Cocca, Tenspace founder Rachel Friedman, Kelly Vaughn, myself, and a few dozen others. She left with a Rudis “Ali” jacket and a new appreciation for the wrestling brand and its retail partner. A wrestling brand turned a DTC ice cream pioneer into a fan. Her appreciation for the product was later noted before her Instagram following of 150,000.

Cities like Columbus can seem secondary to the coastal retail ecosystem, it’s time to reassess the opportunities beyond the borders of America’s top metropolitan areas. To avoid doing so is limiting. It’s early days for the level of execution seen within the walls of Tenspace so the first actors will still earn the greatest return on investment. Don’t worry, your brand will play in Peoria.

By Web Smith | Editor: Hilary Milnes | Art: Alex Remy and Christina Williams

Member Brief: The Case for Consideration

In the direct to consumer era, “last-click attribution” has overshadowed all marketing reason, it’s become the priority for data-driven marketers. With spend shifting to the bottom of the funnel: Facebook, Google, and now Amazon (FGA) are able to draft off of the contributions of top-funnel marketing channels. In turn, FGA is able to charge premiums for the tangible data that they can provide retailers. As a result, many brands miss the opportunity to reach customers more efficiently. Retail is overwhelmingly ignoring the middle of the funnel.

This member brief is designed exclusively for Executive Members, to make membership easy, you can click below and gain access to hundreds of reports, our DTC Power List, and other tools to help you make high level decisions.

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No. 310: The Bonobos Curve

bonoboscurve.jpg

The history of digitally native vertical brands (DNVBs) goes back just 12 years. However, the framing of the industry has evolved and so has its terminology. Appointed by Bonobos’ founder and current Walmart executive Andy Dunn in 2016, the DNVB acronym has given way to a simpler version: “DTC” or direct-to-consumer. It rolls off of the tongue and it’s all-encompassing – reporters, analysts, and sources like 2PM and Lean Luxe can apply the terminology across the board. For Bonobos and Dunn, there is symbolism in the paths of the company and the executive. It’s emblematic of the curve that many companies and executives will follow.

By the end of this, you may see how short-sighted the DTC descriptor can be. I believe that the acronym should be viewed as a title of a sales channel or perhaps an emblem of a retailer’s core competency. It’s a misnomer when product manufacturers are appointed the title DTC, as if it’s main channel denotes the character of the entire company. To the mere observer, the consumer has evolved. To operators within digitally native retail, it’s a complicated conversation.

Platforms like Shopify democratized opportunity for early-stage product manufacturers. Led by Tobias Lütke, the CEO led the burgeoning commerce platform at the onset of the Great Recession of 2008 and remains there today. Under his leadership, the company is trading at a $22 billion market capitalization. The timing of Shopify’s ascension is significant. By 2009, the Wall Street Journal was publishing articles like “Recession turns malls into ghost towns.” And given the lack of eCommerce presence for many of the brands that lived and died by big box retail, the macroeconomic effects on the worst recession of this lifetime thwarted brand sustainability. In some cases, the product manufacturers had to seek bankruptcy protection as overall consumer demanded dwindled between 2007 and 2010. This era of web-first retail was fortuitous, it happened at the weakest point for traditional brands in the last 60 years.

The retail industry has changed, not the consumer.

Younger brands had few if any places to turn to effectively market their products. With their lean teams and inexpensive architecture, these brands were capable of surviving the treacherous waters of American consumerism. In 2013, this is what Kevin Lavelle and I wrote for the Wall Street Journal in 2013:

Startups like ours can focus our energy on developing our product, service and brand because of the platforms and tools available today. With the emergence of new web applications and plugins, the face of e-commerce is changing dramatically. A business can launch a product or service worldwide and reach millions without the massive infrastructure investment required just a few short years ago.

[…]

Platforms such as Shopify and Stitch Labs have enabled Mizzen+Main, along with myriad other companies, to focus on brand and product first — essentially democratizing e-commerce. That’s not revolutionary news, but with the robust, cloud-based add-ons available, we really can run an entire business with two partners in two states and nearly all systems run virtually. 

Most challenger brands focused on direct to consumer sales in 2007-2014 because distribution through the likes of department stores, Walmart, and Target were inside games navigated by industry veterans. Coupled with this historic economic downturn, there was little to no access to those channels. And when their were, ERP technology was difficult for newer brands to adopt. In short, those distribution deals were difficult to land.

In this way, direct to consumer sales efficacy was a sort of social proof for potential big box retail contracts. These contracts are much easier to land now; big box retailers invite breakout challenger brands to their shelves. This is enabling traditionally digitally native companies to expand their physical footprints by way of owned storefronts and wholesale agreements.


Bonobos Curve: the path of diffusion from a siloed direct to consumer (DTC) method to a holistic organization of online channels (native, marketplace), physical brand stores, and wholesale partnerships.


By the time that Andy Dunn wrote the heralded rise of digitally native vertical brands, his company successfully raised over $120 million with at least a dozen Bonobos Guide Shops and a nationwide partnership with Nordstrom. In his famed blog, he discussed this in detail:

While born digitally, the DNVB need not end up digital-only. This means the brand can extend offline. Usually its offline incarnation is through its own experiential physical retail, or pop-up strategy, or highly selective partnerships. In nearly all cases of partnerships with third parties, the brand controls its external distribution versus being controlled by it.

Assuming that the economy continues to hold steady and Tier A and B malls continue redeveloping real estate to attract this new wave of brands and their followers, we will see the curve continue and with rare exception. Even companies like Glossier, who are notably opposed to diverging from DTC marketing, have begun to invest in physical retail. And there will be more. In this way, the retail has boomeranged. The retail industry has changed, not the consumer.

Below, is the “Bonobos Curve.” This is the behavioral path toward sales maturity that the brand winners of this era will pursue. As such, many of the most successful brands have relationships with Nordstrom, Macy’s, Target, Walmart, or direct partnerships with progressive mall development companies.

A typical path followed by DTC brands | Souce: 2PM

Few brands will remain online-only. In a recent conversation with Betakit, Shopify discussed their plans to address the “Bonobos Curve”:

The pair see vast opportunity for Shopify to grow in the brick-and-mortar retail market. It’s Shopify’s goal, stated Black, to span the entire ecosystem to meet the needs of all its merchants. He emphasized that it doesn’t matter if merchants approach Shopify from a Shopify Plus standpoint or from Shopify Retail, the company hopes to create seamless solutions that span both markets.

Legacy product marketers, like P&G, have equipped their brand management teams to infuse their operations with many of the same tools and practices that their challenger brands counterparts made popular. It’s true that those challenger brands will mature with online retail operations as a core competency. Given the age of many of today’s founders, digital-first competency will be as natural as walking or eating.

But DTC was never the goal of these retailers and consumerism hasn’t evolved as much as we’d like to believe. Brand traction was the goal for many brands like Bonobos and platforms like Shopify, WooCommerce, and BigCommerce leveled the digital playing fields for a while. Time will tell who holds the advantage as brands compete on traditional grounds but Andy Dunn is now a Walmart executive. And Bonobos is a Walmart brand with flagship stores and Nordstrom distribution. This represents the end of the curve and the closing of the Book of DNVB.

Read the No. 310 curation here.

Report by Web Smith | About 2PM