The digital landscape is changing beneath our feet. For publishers to continue building organic readership, they must become brands. Operating as a source of content is no longer enough. To do that, efforts can no longer be siloed, the traditional factions of legacy-styled newsrooms must fall.
The factions in every legacy newsroom. The (1) affiliate marketing team is paid bonuses on their revenue growth. Every ounce of content that they publish is devoted to Amazon and Skimlinks. The (2) advertising team is the highest paid group in the company, with salaries ranging from $80,000 – $250,000. They are often adversarial with the affiliate and commerce groups. The (3) native advertising (brand studio) team is newer, so the advertising team leans on them to add value to existing bigger deals. This means bigger bonuses. The (4) editorial / creative team is both underpaid and the most important. For this reason, they want nothing to do with teams 1-3. And if the media company has one, the (5) direct-to-consumer team may as well be on an island. This team sees very little support and collaboration. Hey, it’s an experiment.
A lifestyle newsroom shouldn’t have factions at all. And increasingly, this is becoming the mark of the ones that are well-managed. For those newsrooms, they share a few common beliefs. The most important of those beliefs which they share: media companies are brands, too. And the second of those beliefs: depending on Amazon for a sizable portion of eCommerce revenue is a fatal error in judgment. Let’s revisit a brief from April 2017.
Issue No 209: Amazon Wants to Dress You
Amazon’s growth as an eCommerce company is tied to its growth as a publisher. As such, Amazon’s advertising business will eventually thrive as Bezos has invested in streaming, digital magazines, and owning most of our consumer lives. The intent to buy is a powerful indicator of success and stateside, it’s harder to find a place with more consumers willing to spend money than Amazon.
Their advertising platform will eventually disrupt Google’s Adwords and Facebook’s Newsfeed for this very reason. Whereas “eyeballs” determined the last 25 years of tech growth, cart conversions will determine the next 25 years. The great digital businesses understand that this is the foundation. Amazon and Alibaba are building commerce-driven ecosystems where eyeballs and clicks aren’t enough. Retailers have no choice but to reward publishers for sales efficacy with higher margins, increased leverage, and more ad spend.
Affiliate-only commerce operations will be the next to stumble. Amazon controls affiliate percentages, all while ramping up the company’s ability to generate consumer demand on its own. We’ve seen this before.
In a recent report by Digiday+, Mark Weiss writes:
In the long run, it might be advantageous for publishers to steer clear of Amazon. Selling products on Amazon or referring traffic to Amazon only helps strengthen the direct connections between Amazon and consumers, not between consumers and publishers. As shoppers become accustomed to shopping on Amazon and fast delivery speeds, the chances that consumers will shop directly with publishers could decrease. It will also be interesting to see whether publishers, after being burned by Facebook, let themselves become dependent on another major platform.
Building a brand is essential for publishers. This cannot be done without a strong direct-to-consumer presence. And DTC success cannot happen without a collapse of departmental silos. Editorial teams believe their priority is journalism-alone; other areas of the business suffer because of it. When advertising teams see eCommerce as competition and creative teams as their horses, other areas of the business tend to suffer.
Facts and figures
- Of publishers surveyed, 40% relied on eCommerce as a revenue source.
- An astounding 83% of publishers sell products for Amazon.
- Nearly 43% report sizable revenues from commerce operations
- Less than 30% believe that editorial content should be siloed from commerce operations.
- Recent research shows that only 16 percent of publishers allocate 25%+ of their marketing spend to promote their own commerce projects.
- A worthwhile 61% of those surveyed use audience data to inform content direction.
- Just 29% of publishing executives think that editorial content should be independent of advertising.
- And 47% spend nothing on promoting their commerce efforts, according to a survey of publishing executives.
- In 2017, Amazon generated $21B in revenue on affiliate commerce.
It’s been my experience that direct to consumer commerce operations face unparalleled opposition within publishing houses. Often times, this is simply because it takes the most effort. The advertising machine is in motion, branded content (native advertising) is up-front money, affiliate marketing v1.0 is just writing a hyperbolic blog on whatever it is you’re trying to sell for Amazon or your Skimlinks partner. But direct to consumer commerce takes holistic, interdepartmental development. It takes buy-in from the top down.
In issue No. 252, 2PM covered the successes of publishers excelling in the eCommerce space. Of those publishers: Barstool Sports, Uncrate, Goop, and Buzzfeed stand out as operations who understand the importance of brand, loyalty, and repeat business.
Buzzfeed is a great example. There was such a collaborative effort between departments, that the company relaunched BuzzFeed News as a separate entity responsible for covering serious matters of national import. It’s likely that this arm of BuzzFeed will move to a subscription-based model, like NYT, WAPO, The Information, and other outlets who aim to cover matters objectively.
Just a few weeks later, they launched BuzzFeed Reviews to appeal more to consumers looking for objectivity in their purchases. In Wirecutter fashion, this approach takes research and time. It is an alternative to repetitive lists of travel gadgets to buy.
For media companies that cover non-essential matters like products, sports, entertainment, and culture, there isn’t a valid reason to pretend that journalism isn’t reliant upon the revenue driven by ad dollars and commerce spend. For media companies who do cover essential matters, a subscription model is the most favorable system. Even so, this takes an awareness of brand equity. Building a cohesive message around a publishing mission goes a long way in developing meaningful funnels for affiliate and DTC revenue. The key to understanding this philosophy is simple: publishers must be, both, intellectual property and loyalty-driven companies.
Barstool CEO Erika Nardini on intellectual property and commerce:
We have tripled down on our merchandise business with new lines of clothing, and premium clothing and apparel. Rough N Rowdy was our first foray into pay-per-view. It enables us to create things where our audience is able to buy something to wear, to listen to for 12 hours or an event to go to on a Friday night with friends.
Nardini goes on to say:
Our advertising business has grown 700 percent since I joined. […] Advertisers are also having a harder time breaking through and getting their product to resonate. Barstool does a really good job of that.
Despite perpetual controversy, they’ve figured out a model that few executives in publishing have. They report news, but the majority of their resources are spent generating intellectual property that can be monetized. Barstool has a valuation of $100M+, according to reports.
Bleacher Report, Barstool’s antithesis in many ways, has begun to do the same. Their recent eCommerce efforts have accelerated growth across all departments. According to Ed Romaine, chief brand officer for the publisher,” eCommerce is not the endgame for Bleacher Report, but rather a targeted means with which to grow its brand.”
Read more of the issue here.
By Web Smith | Edited by Meghan Terwilliger | About 2PM