No. 280: Media Companies Are Brands Too

Barstool CEO Erika Nardini | Game recognizes game.

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.

Screen Shot 2018-07-30 at 2.17.39 PM

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


No. 268: The Billions Effect

facebook-ad copy 2

Affleisure: affluent leisure. Showtime’s hit series Billions peers into the life of Bobby Axelrod, a 9/11 survivor who rose through the ranks to become a billionaire hedge fund investor only to establish a rivalry with U.S. Attorney Chuck Rhoades. Axelrod is loosely based on hedge fund manager Steve Cohen and is described as a man from humble beginnings. This is the appeal of the most polarizing character on television. And he is just one part of premium cable television’s most talked about show.

If you’ve built a great product, you’ll need an audience. And if you’ve built a captive audience, you’ll need a great product. The study of content x commerce shouldn’t be reduced to digital publishing.  We see examples of media properties’ influence on commerce all around us. As such, analysts cannot ignore the influence that Billions and, particularly, Damien Lewis’ portrayal of ‘Bobby Axelrod’ has had on apparel consumers.

Historically, a media property’s proof of influence is the measure that drives advertising revenue. Thanks to a shift to streaming media, media conglomerates like Showtime, Inc. will measure this data in new ways. Namely: how will this media property advance our subscription business? 

The show, which averages between 4.5-to-5 million weekly viewers across platforms, has a very loyal legion of fans that via word-of-mouth, have helped grow the show’s viewership season-over-season. Throughout season two, the series grew on Sunday nights by more than 35% from premiere-to-finale. And, the season three premiere was the show’s highest-rated ever with the March 25 debut up 23% from last year.

Fans Love Billions, Forbes

Taking note of the viral spread of pop culture trends based on influence, Showtime recognized the opportunity to drive an additional revenue stream beyond the standard media subscriptions and event sponsorship (boxing, etc.).

Here is a recap from Issue No. 252: Content x Commerce Super Powers:

Billion’s Axe Capital is one of the most intriguing fictional companies on television. It should be no surprise that I’ve stumbled upon a handful of sophisticated finance-types wearing these branded hedge fund vests on a spring day in Manhattan. They are in on the joke.

But more than just intellectual property hawking, Showtime is innovating here. Their commerce software is capable of overlaying store content on screen during broadcasts.

Connekt’s patent for T-Commerce enables seamless and secure viewer engagement and checkout by combining consumer profiles with pre-existing registration services.

Showtime is preparing for an Apple TV-driven entertainment world where purchasing products is as simple as authorizing your iTunes account to spend $44.95 for the hoodie that Bobby Axelrod was wearing.

See the Showtime store here.

As media and branding continues to converge, controlling the ecosystem is key for many industry players. One of 2PM’s capstone beliefs is that success in merchandising is a foremost indicator that a publisher’s existing community can grow by word of mouth. And without the pull of fickle social networks or a weakening advertising business.

Web Smith on Twitter

Bobby Axlerod is influencing white collar soccer dads. Everyone is dressed in head-to-toe, all-black, biz-athleisure.

This is where cultural impact comes into play. Unlike viewership and eCommerce sales, culture can be difficult to quantify. But it’s apparent that the show is influencing its target demo: 24-39 year old males.

Type “Bobby Axelrod” into Google and the first recommendation that pops up is “Bobby Axelrod hoodie.” So, to satisfy your curiosity: Mr. Axelrod, the cool-as-an-ice-cube-in-Alaska protagonist of Showtime’s series “Billions,” wears Loro Piana zip-ups. They’re cashmere and just in case you’re really interested in dressing like the man who makes the billions on “Billions,” each one costs $2,295. 

How to Dress Like a Billionaire, Wall Street Journal

There is a palpable shift in both the style of clothing and the color palette used by the upper-middle class fans of the show in Silicon Valley, Los Angeles, New York, and even the metropolitan midwestern cities. Brands are beginning to partner with Showtime to capitalize on this.

Last week, Brooklyn’s Greats Brand released an ultra-limited edition Axelrod shoe; 100 pairs of the premium Italian-suede shoes sold out in under 17 minutes. Viewers are so drawn to morally-ambiguous Bobby Axelrod that they’re buying shoes in his name.

May 2018 saw peak search traffic for the ‘Billions’ character

CEO of GREATS Brand (2PM No. 73), Ryan Babenzien had this to say in defense of the collaboration:

Bobby Axelrod is a man from humble beginnings. A desire to escape his means and prove his ambition drove years of hustling and grinding. Add no small amount of cunning, and eventually Axe made himself into one of the most powerful men on Wall Street: a bona fide billionaire. We admire Axe for his ambition as much as we do for his style. Favoring a well-worn pair of jeans and Metallica t-shirt over the obvious power-suit, Axe carries himself with the confidence and understated elegance that we appreciate here at GREATS. With Axe as our inspiration, we partnered with Showtime to create our richest Royale yet.

Billions has achieved a television milestone like only a handful of shows before it. It’s influenced men’s fashion by redefining business casual (specifically high dollar affleisure) for white collar workers. Babenzien’s aforementioned statement perfectly summarized the character’s appeal. The shoe collaboration further established the influence of the show’s culture and the virtuous cycle of water cooler chatter, media buzz, and search traffic around each week’s episode. Coincidentally, the most recent Sunday night was the show’s strongest in its three year history.

Read more of the issue here.

By Web Smith and Meghan Terwilliger | About 2PM

Member Brief No. 10: Acquisition Targets

Sign In

This is another important moment in digital that will fly under the radar. Despite relatively minimal coverage and discussion around this acquisition, it marks a pivotal shift in publisher economics–one that serves as a central thesis of 2PM:

Read more by signing in. Not a member yet? Learn more here.