Member Brief: Lore’s Great Challenge

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Marc Lore is right. On the heels of an explosive report by Recode’s Jason Del Rey, 2PM delves into the forces in play. Amazon alum and Jet founder Marc Lore has always had a tough task within the walls of Walmart Incorporated. Consider the influence of history on his task at hand.

By 1967, the five year old retailer had achieved a profitable $12.6 million in sales, just five years into its proper existence. In today’s money, that’s $96,500,000. The Bentonville, Arkansas retailer would incorporate two years later and IPO within three years, going public in 1972. Today, Walmart is the largest company by revenue and it is the largest private employer in the United States, employing some 2.2 million people. The DNA of the company is one of cash flow and expansion, cash flow and expansion. The genetics will need to change to win the future.

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No. 322: On DTC and Public Relations

As digitally native brands go, high-growth DTC concepts find their way to the halls of creative engines like: Bullish, Gin Lane (now Pattern Brands), Red Antler, or King & Partners. A subset of the dozens of DTC companies that launch each week, these digital-natives have likely completed a raise or they are well on their way to closing that first $1 to $5 million in seed capital. Primed to achieve outsized success at launch, it’s not uncommon for a small selection of DTC brands to finalize cap tables before their products are finalized or go-to-market strategies are decided upon.

Before a potential customer can determine their affinity for a product, or tolerance for its price, or their appreciation for the go-to-market process, or even intensity of their brand preference – a company’s PR precedes many of these decisions. Product, price, process, and preference share two letters: PR.

Depending on the product being sold and the company’s average order value, key performance indicators vary but CPA, CAC, LTV, COCA, and ROI are considered the most important. The aforementioned measures tend to be quantitative. For PR agencies, however, the majority of the key performance indicators are qualitative in measure. Here’s a short list of those qualitative KPIs.

  • quality web traffic: did the campaign reach the right audience?
  • media mentions: was there buzz around the campaign? did the promotion earn media?
  • content quality: a sentimental analysis (how it was received by potential consumers) and prominence (was the campaign distinguished?)
  • share of voice: media performance in comparison to the brand’s competitors. Which company has the greater share of attention
  • social engagement: the volume of potential consumers that interact with the story
  • impressions: while extremely difficult to measure, this KPI is the number of views across all media sources and platforms

And here is a list of KPIs quantitative measures:

  • lead volume: the success of the campaign as determined by contacts received via email, opt-in, or enquiry form
  • advertising value equivalency (AVE): the (volume of media) x (ad cost per impression) at volume. PR firms often measure what a client would have paid for the same exposure through traditional advertising.
  • revenue: did the efforts of the PR agency impact top line revenue? Sophisticated efforts include attribution monitoring across traditional media channels and social media.
The Harry’s “pre launch” landing page. KPI: captured emails. Waiting list? “100’s of thousands.”

Though the DTC era chatter tends to revolve around the vaunted LTV:CAC ratio, it’s time that we consider PR has potential to be an x-factor for brands looking to efficiently grow. From Member Brief collection’s Retail Media Report: “On February 15, 2010, warbyparker.com went live. Within 48 hours of GQ’s dubbing the company “the Netflix of eyewear,” the site was so flooded with orders for $95 glasses that Blumenthal temporarily suspended the home try-on program.” This is not the only example, Harry’s executed a similar approach to use a PR agency to drive pre-orders by collecting tens of thousands of email addresses. And Away launched with the help of Sunshine Sachs and then Azione PR and a clever plan to sell coffee table books before their now-famed carry-on’s were available to fulfill. From her recent interview with NPR’s “How I built this“:

So basically, you had to buy the book for $225, which was the price of the first suitcase. And we sold hundreds on the first day. And a bunch of other [news] outlets picked it up all of sudden. The people [featured] in the book were like really excited about it.

By nature, public relations is a wild card. Media efforts can launch a brand to sold out inventory. Or the launch can fail and lead to a terminated PR agency. Sometimes, both can happen – depending on the circumstances. With retainers ranging from $15,000 to $30,000 per month – founders and PR executives must be aligned on approach and expectations.

Product, price, process, and preference share two letters PR.

The direct-to-consumer (DTC) era is maturing and with that growth comes a shift in priorities. To differentiate themselves, brands have begun to emphasize efficient acquisition and improved brand equity. Digital-only has evolved into digital-first. Until recently, challenger brands maintained an insatiable appetite for a narrow scope: paid advertising. It’s not uncommon to see brands focus spend on a limited number of platforms. These platforms shouldn’t be a surprise: Instagram, Facebook, and Google. And perhaps, Pinterest, Snapchat, and Twitter – if the brand is more risk tolerant.

A Different Era: Zero to one

For top DTC PR agencies like Derris, Moxie, Azione, and Jennifer Bett Communications, the stakes are always high. DTC brands that invest in public relations retainers require an ROA that resembles what they’d otherwise earn through quantitative spend (Facebook, Instagram, Google). But to do so, it takes a mutual trust, a shared vision, a bit of risk, and a lot of luck. One macroeconomic development works in the favor of PR agencies: the DTC ecosystem has spawned countless of traditional and independent media brands who’ve modeled their growth on the coverage of breaking news and analysis of burgeoning DTC companies.

In Member Brief: Retail Media, we featured a short list of the reporters who were most-read by the 2PM audience.

ReporterTitle2PM MeasureReader AwarenessOrganizationCityTwitter
Hilary MilnesRetail Editor0.926253.2%DigidayBrooklyn@hilarymilnes
Jason Del ReyReporter0.891651.8%VoxNYC@DelRey
Jill ManoffEditor-in-Chief0.723838.9%GlossyNYC@jillmanoff
Lauren ThomasReporter0.678237.2%CNBCNYC@laurenthomasx3
Andrea ChengSenior Contributor0.683335.9%ForbesNYC@andriacheng
Elizabeth SegranSenior Staff Writer0.678933.2%Fast CompanyCambridge@LizSegran
Hayley PetersonSenior Correspondent0.643131.0%Business InsiderNYC@hcpeterson
Daphne HowlandReporter0.621330.6%Retail DivePortland@daphnehowland
Sarah NassauerReporter0.567228.1%WSJNYC@SarahNassauer
Lauren ShermanChief Correspondent0.541427.8%Business of FashionBrooklyn@lapresmidi
Ann-Marie AlcántaraReporter0.531224.8%AdWeekNYC@itstheannmarie
Nicole RehyleReporter0.511719.9%Retail MindedDenver@RetailMinded
Christopher MimsReporter0.503223.4%WSJBaltimore@mims
Zak StamboreCommerce Writer0.497322.1%Internet RetailerChicago@byzakstambor
Anthony HaWriter0.475621.7%Tech CrunchNYC@anthonyha

Retailers shifted to a leaner go-to-market strategy, over the last decade. In turn, a growing number of publications, consultants, reporters, and analysts expanded their coverage to feature the strategies, successes, failures, and macroeconomic effects of online retail. Just 5-7 years ago, stodgier business publications covered major retail. Coverage of DNVBs were limited to Warby Parker, Dollar Shave Club, Bonobos, and Harry’s. Capacity was limited and so were the perspectives. But over time, newer publications (and reinvented traditional outlets) began to cover developments in greater detail. This democratized coverage and gave readers a unique look into companies that were in an earlier stage; these companies are more vulnerable (and interesting) than ones who’ve raised venture in the nine figures.

Retail media’s analyses have expanded and resources have grown to cover the ecosystem with greater depth and a growing frequency.

Quite frankly, the DTC media industry has evolved into sport. This, especially, as the coverage has become more lucrative. Publishers like Forbes, Fortune, Fast Company, and Inc. now cover early-stage, direct-to-consumer developments en masse. And this is not just limited to traditional media. Without this new era of direct-to-consumer retail, it’s unlikely that platforms like New Consumer, Lean Luxe, or this one would exist. Digiday‘s recent decision to expand their coverage of the DTC era by launching Modern Retail, a familiar format, confirms this. The term “ecosystem” has taken on new life. In response to an early-draft of this report, Paul Munford of Lean Luxe had this to say:

Because people’s first interaction with Lean Luxe is the newsletter we publish or the reporting that we do, they tend to think of Lean Luxe as a media property. In some way it is, and that’s always been a core function (and will continue to be). But by far, pound for pound, the most powerful component of the Lean Luxe ecosystem is the private Slack channel that subscribers, for the moment, have to qualify for in order to be considered. Not only is it a place for daily connection between users around this shared interest in modern brands and business, it’s also, more importantly a place that facilitates real world connection offline.

Platforms like LL have amplified impressions and product discovery. Rather than focusing on reach, Lean Luxe chose to focus on depth, a characteristic of many of the most effective PR nodes throughout the ecosystem.

What does this mean for DTC and public relations? While it may be easier than ever to submit a quote for a major tech, lifestyle, or retail publication, market-moving coverage has never been harder to achieve. Alternative forms of PR will be considered and KPIs will continue to be developed. A press mention isn’t the validation that it used to be. But PR agencies have never been more essential to the lifespan of DTC brands. And the best agencies are finding new ways to reach primed customers, online and in real life. In some niche circles: forums, Slack chats, and direct email – product buying decisions are made and brand affinities are formed. Haus [1] cofounder Helena Price Hambrecht saw this first hand when with the successful launch of her spirits brand. She opted for personal connections over the traditional KPI: optimizing for top funnel impressions:

Influence is not follower count. Influence is years of making meaningful connections in the industries you’ve chosen to work in. It’s building a reputation for doing what you say. It’s a track record of putting out work that doesn’t cut corners. If people expect quality work from you, they’ll invest in whatever you put out next.

It’s now a matter of mass impressions (lower conversion) vs. niche influence (higher conversion). As customer acquisition continues to evolve, PR must evolve with it. One observation is abundantly clear for DTC founders: revenue is the KPI. For digital-natives looking to launch with velocity, they’re opting to set aside impressions as the primary KPI. These brands are optimizing for a genuine and deep connection.

Read the No. 322 curation here.

Report by Web Smith | About 2PM

[1] Haus is a 2PM portfolio company

Member Anecdote: Mailbox Zero

The market is approaching a new saturation point, one that is ripe for a new cycle of customer acquisition innovations. Brands are looking for volume, audience targeting, captive attention, and the ability to retarget their visitors. Direct mail marketing has served as an efficient way of accomplishing these goals. Just two years into adoption, the cycle is nearing saturation.

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