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:

ctc_HeaderLogoRetinaDark (1)

Read more of the issue here

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

 

 

Member Brief No. 7: Phil’s Dress Shirt

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So who wins in the world of micro brands?  This was a question posed by Scott Belsky in his recent article on digitally vertical native brands – Attack of the Micro Brands.

I think this mass of micro brands with massively efficient marketing are, in aggregate, having a much bigger impact than anyone thinks. Using hyper-targeted marketing, just-in-time manufacturing, and social media, these brands find and engage their audience wherever they may be. Of course, small brands are nothing new, but they typically remained small companies. Now I’m hearing about more and more of these brands with tiny teams generating over $10M in sales, with higher-than-normal-retail profit margins. 

Featured atop of Monday’s letter and read by 20+% of openers, the article generated quite a few submitted questions. The most important of which I felt I’d answer here:

How does a micro-brand become a household name?

Fast forward to a Tuesday morning and the question became abundantly clear. Younger brands in the digitally vertical space are typically seen on Instagram, Twitter, Facebook, Pinterest, and the like. They tend to be reduced to this type of media presence. The millennial generation will know of them but your boomers will not.

If brands are lucky, they are adored by the product journalism class of digital media: Gear Patrol, Cool Material, Huckberry, Hi Consumption, or the out right buying guides like Uncrate. Free media in exchange for affiliate revenue is a far trade. But even so, that’s not enough for brands to reach the volume of consumers needed to become a household name.

A step function is a function that increases or decreases abruptly from one constant value to another. A micro-brand becomes a household name achieving multiple step functions over its lifetime. It takes a willingness to gamble on brand statements but it also takes quite a bit of luck. As a brand operative or a c-suite level marketer, you yearn for these moments because they can’t be manufactured.

So when I received a surprised text message from Mizzen+Main CEO Kevin Lavelle on early Tuesday morning, I saw a jackpot in-waiting. The brand made him a standard fit dress shirt (with sponsors stitched on the chest and sleeve) with little to know likelihood that he’d actually wear it.  But there Lefty was wearing Mizzen+Main in his pre-round warm up. The dress shirt was a stark contrast to Tiger’s new age Nike polo.

We got connected to his team and are thrilled to have seen the shirt on the course on one of the game’s greatest!

Kevin Lavelle, Mizzen + Main CEO

The photo told a 1,000 word story. And shortly after, the shirt photo took on a life of its own. It was a Twitter account launched by a third party: Phil’s Dress Shirt. Then came the Darren Rovell tweets. And before you know it, Tiger was being questioned about his friend’s choices in competition apparel. And then came the general media stories, the types of stories that aren’t driven by affiliate revenue.

Here were the elements in play:

  • Phil Mickelson and Tiger Woods were once bitter rivals.
    • “We have gone through it a long time, and the better part of 20 years our friendship has certainly gotten a lot better, and I think it’s just age as well. We’re at the tail end of our careers, we both know that. He’s 47 and I’m 42, and we have had a great 20‑year battle.” Tiger Woods
  • All eyes are on Tiger Woods.
    • Tiger Woods’ effects on media and commerce are astonishing to consider. When it comes to professional golf, he doesn’t just move the needle – he is the needle. In 2018, if you happen to watch Woods in contention on a Sunday afternoon, it’s a major event in media, branding, and eCommerce. Here is a focused look at what that means. (Issue No. 260: The Tiger Effect)
  • In the golf industry, you will notice sponsor space on polo shirts, pull overs, vests, hats, and rain coats. But rarely do you see golfers wear a dress shirt to play a competitive round. Even if it is a technical dress shirt, capable of stretch or moisture wicking.
  • It’s The Masters and there is no greater stage. Golf moves the consumer needle like no other.

With one relatively minor investment, a DNVB captured the attention of the media in an authentic way. Not just for the product but for the impact that a product had on an event.

Think Gatorade baths after a come behind victory, or Jordan’s championship performance being attributed to his Nike’s (it must be the shoes!). Think about that time that Lebron wore an Homage tee shirt to antagonize a competitor, or the NBA team that was photographed with a $40,000 bottle of d’Armand de Brignac champagne. Or the granddaddy of them all: Phil Simms shouting “I’m going to Disney World” after the 1987 Super Bowl.

Sports can provides these moments for brands like few other mediums, it’s why marketing executives spend countless hours appealing to athletes and league commissioners.

Darren Rovell on Twitter

There’s some serious competition in the comfortable dress shirt space. Huge opportunity for @MizzenAndMain if they can somehow convince Mickelson one day to play in it.

These are the moments that brands hope for. And these are the types of step functions that brands need when competing against great counterparts like Ministry of Supply. Ministry, by contrast, operates by focusing solely on the types of targeting efficiencies that built vertical brands like Warby Parker. High on web traffic, low on foot traffic.

Mizzen+Main‘s approach diverged, early on. Medium on web traffic, high on foot traffic. Lavelle emphasized a strong wholesale business to supplement eCommerce efforts – reducing the costs associated with online targeting and providing a baseline in monthly revenue that eCommerce-only companies can not rely upon.

For brands like Mizzen, this type of earned media is especially important. Wholesalers are always looking for social proof. This week, they won’t be looking for long.

I was giving [Phil] a little bit of grief for that. All he was missing was a tie. 

Tiger Woods, Augusta National Golf Club 


Read more below:

Tiger Woods, Phil Mickelson both say their relationship has changed over time

CLOSE AUGUSTA, Ga. – Rory McIlroy ran into Tiger Woods on the practice range a little past noon on Tuesday. “I never thought I’d see the day, Tiger and Phil playing a practice round at Augusta,” McIlroy said. Woods laughed. Yes, it was true.

2018 Masters: Phil Mickelson’s button-down dress shirt is generating tons of buzz – Golf Digest

We’re all about golfers pushing style boundaries to look less like, well, golfers. But the Mizzen+Main button-down dress shirt Phil Mickelson is wearing during Tuesday’s practice round with Tiger Woods (and Fred Couples and Thomas Pieters) pushes boundaries in a questionable direction. An ill-fitting gingham shirt screams, “I trade stocks on Wall Street from 9 a.m.

Lefty’s shirt leaves Tiger, fashion police on alert

Apr 3, 2018 Bob HarigESPN Senior Writer Close Senior golf writer for ESPN.com Covered golf for more than 20 years Earned Evans Scholarship to attend Indiana University AUGUSTA, Ga. — Phil Mickelson showed up to Augusta National for a practice round Tuesday wearing a long-sleeved, collared shirt that garnered a good bit of attention.

What’s up with Phil Mickelson’s button-down shirt?

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Phil Mickelson’s button-down shirt raised eyebrows during a Masters practice round with Tiger Woods

Phil Mickelson wore a button-up dress shirt during his Masters practice round with Tiger Woods. Tiger Woods was asked after the round if he had plans to buy one of the shirts. Woods said he gave Mickelson some grief for the shirt and noted that the only thing that was missing was a tie.


Read the rest of the letter here

Disclaimer: Web Smith, LLC is a shareholder in Mizzen+Main. 

Issue No. 263: The End of Conglomeration

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Monopoly is not a suitable term for what Amazon is in the process of accomplishing. A monopoly is defined as the exclusive possession or control of the supply or trade in a commodity or service. There is no term for a corporation becoming the supply or the trade.

I am not anti-Amazon but it’s becoming easier to see how this current administration could bend precedent to break up a web-based conglomerate.

Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. 

Yale Law Journal: Lina M. Kahn, Amazon’s Anti-Trust Paradox

Amazon is trading at near all-time highs, with a market cap in excess of $700B. Historically, Wall Street investors and consumers have been tremendous fans of Amazon, Main Street businesses have not. This is an important distinction.

Until the 1970’s and 80’s, anti-trust litigation has focused on structuralism:  a focus on relationships of contrast between elements in a conceptual system that reflect patterns underlying a superficial diversity. 

After Reagan’s Anti-Trust Explosion of 1982, things began to shift from structuralism and toward consumer sentiment. That year, AT&T and IBM faced anti-trust litigation that forced changes in each respective company by 1984. As you know, Amazon Web Services (AWS) and Prime Memberships have helped the public company to minimize losses. Thus far, Amazon has been immune to these pressures. Due to the successes of AWS and Prime subscriptions, the direct-to-consumer side of the business has operated as a loss leader. As Kahn points out. this loss leading metric has blinded regulators to the hazards of Amazon’s business strategy.

[My] analysis reveals that the current framework in antitrust—specifically its equating competition with “consumer welfare,” typically measured through short-term effects on price and output—fails to capture the architecture of market power in the twenty-first century marketplace. In other words, the potential harms to competition posed by Amazon’s dominance are not cognizable if we assess competition primarily through price and output. Focusing on these metrics instead blinds us to the potential hazards.

Yale Law Journal: Lina M. Kahn, Amazon’s Anti-Trust Paradox

The 1982 anti-trust guidelines introduced by Reagan and his administration set a meaningful departure from ninety years of legal precedent; these guidelines were re-emphasized in 1968. The actions of the Reagan administration in 1982 reflected a new focus. Lina Kahn went on to say: “The law against vertical mergers is merely a law against the creation of efficiency.” With the election of President Reagan, this view of vertical integration became national policy. This has been known as the Chicago School approach.


The Chicago School approach to antitrust, which gained mainstream prominence and credibility in the 1970s and 1980s, rejected the structuralist view. In the words of Richard Posner, the essence of the Chicago School position is that “the proper lens for viewing antitrust problems is price theory.”


To pursue an Amazon anti-trust case, President Trump will have to reverse the revered national policy of the Reagan Justice Department. It can be implied that the Reagan administration’s shift from structuralism and towards price theory was meant to emphasize middle-class consumerism. But no one could have foreseen Amazon’s role in building a modern monopoly over America’s consumer web. Frankly, their version of a monopoly is altogether different. Here is an illustration for you:

Web Smith on Twitter

Thought more on $AMZN’s anti-trust concerns. Here’s a (short) history of U.S. monopolies being broken: 1. Standard Oil owned oil. 2. U.S. Steel owned steel. 3. American Tobacco owned it. 4. AT&T owned communications. Amazon owns just 4% of retail. And 43% of eCommerce.

The 4% / 43% figure doesn’t begin to tell the story. No one could have predicted how effective an internet-based conglomeration could be. Or the impact that Amazon’s sales could have on commercial real estate woes. Or how Amazon lobbies for potentially detrimental state / local tax benefits. Around the country, real estate brokers are in a panic as warehouse / office park leasing have fallen off a cliff. In addition, Amazon’s HQ2 campaign is leading to a growing criticism from those who believe that Amazon may have too many tax and cost benefits and at the peril of middle-class workers and retail entrepreneurs.

Trump’s deep-seated antipathy toward Amazon surfaces when discussing tax policy and antitrust cases. The president would love to clip CEO Jeff Bezos’ wings. But he doesn’t have a plan to make that happen.

Jonathan Swan, Axios

Amazon built its business around the belief that as long as consumer prices were low, anti-trust laws wouldn’t apply. Lina Kahn went on to say: “Due to a change in legal thinking and practice in the 1970s and 1980s, antitrust law now assesses competition largely with an eye to the short-term interests of consumers, not producers or the health of the market as a whole; antitrust doctrine views low consumer prices, alone, to be evidence of sound competition.”

The health of the retail sector has been on decline for quite sometime. Retail business owners, real estate brokers, lenders, and commercial developers didn’t foresee how much of an effect Amazon and eCommerce would have on their adjacent sectors. Where there was originally confusion and apathy, there is now a shared disdain for the Seattle eCommerce giant. Main Street business owners, politicians and pundits have taken notice. And this is the audience to whom President Trump speaks.

Under the current interpretation of antitrust laws, Amazon seems to be getting a free pass. So I should say that antitrust laws in, their current state, don’t prohibit conglomeration. They don’t prohibit a single company from being involved in all these different lines of business. But what they are supposed to prevent is a company that enjoys a dominant footprint in one area of the market, using that footprint to leverage its way into other markets, and so I think that’s the area where Amazon potentially should be facing scrutiny.

From Korva Coleman’s interview of Lina M. Kahn, NPR

In 1890, the father of the Sherman Act, Mr. John Sherman (R-OH) stood on the floor of the Senate and declared the following:

If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life. If we would not submit to an emperor, we should not submit to an autocrat of trade, with power to prevent competition and to fix the price of any commodity.”

When the gentleman from Ohio made this statement, he couldn’t envision a future where one man presided over a corporation responsible for a great deal of production, transportation, and the sale of any necessities of life. Sherman also couldn’t envision the internet, a virtual destination void of political governance or etiquette. Amazon’s strategy continues to be the forging of an anti-trust proof conglomeration – loved by consumers and feared by both incumbents and challengers.

Anti-trust law is overdue for change. The language no longer matches the time. And while Amazon may not be the most deserving of this scrutiny, they are the most likely target.

The laws will change to address the modern day concerns of retailers, logistics networks, newspaper publishers, ad firms, shipping companies, grocers, auction houses, book publishers, movie studios, software companies, hardware manufacturers, credit lenders, payment services, and internet service providers. In our modern American economy, any business that touches the internet has been affected by Amazon.

Bezos is aiming to possess the entire board upon which a monopoly can be formed  — the consumer internet. And populist politicians will eventually conclude that no corporation should be able to own the consumer internet.

Read more of the issue here.

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