Is Commerce the Future of Content Marketing, Publishing, or…
…is it the other way around?
#digitalcronut: the Future of Media Companies?
I’m writing this blog post from the interactive portion of SXSW in Austin, Texas, between samplings of world-famous Austin BBQ and educational sessions about the state of the union in technology. The largest technology conference in the entire universe (well, the one we’ve explored, anyway), SXSW 2014 has thus far proven to have a good offering of advanced sessions for folks who have been in tech for longer than they’d care to admit (me being one of them).
One such session happened yesterday, wherein NY venture capitalist Ben Lerer – founder of Thrillist Media Group – held a session marketed as the “Digital Cronut.” We arrived to this jam-packed session to discover that there weren’t any cronuts to be had, which – after two days of plates full of meat – was truthfully a bit of a relief. (In related news, I would love Whole Foods to be cruising around Austin with crudités for those of us not accustomed to meat as both a main and a condiment.)
As it turned out, the cronut was a metaphor for Ben’s vision of the future for media companies: taking two excellent things and putting them together can sometimes make an even better thing, and in this case he was telling us that editorial content is the donut, and commerce is the croissant.
So, what does that mean?
Content Marketing + Commerce = $$$$
To Ben’s point, the traditional advertising model for traditional publishers is dying, with a flat trendline that will continue to decrease as brands spend their marketing budgets online (that trendline is up, up, up). With that in mind, rather than using their remnant ad space to rent their customer relationship to another brand, the smarter option for media companies to use their owned media for themselves. So, following that logic, traditional publishers should become commerce companies and actually sell things that make sense directly to their readers.
This doesn’t mean that a traditional media company should slap up a banner ad they might have rented to someone else. What it means is that they should come up with well-crafted, useful content (advertorials) that feature the stuff they’re selling within a context that makes sense for their readers.
Thrillist & JackThreads: the Bronut of Media
Thrillist is a media company that sells a lifestyle aimed at young, hip dudes who like to know where the cool place to go out and get drunk is. But Thrillist isn’t just a publication: it’s also an e-commerce company. JackThreads was the first acquisition they’ve made, and if you order something out of an article on Thrillist, what you’ll find is that the entire experience is owned and branded Thrillist. This is a soup-to-nuts fulfillment model that includes their own dedicated customer service and fulfillment teams. They don’t outsource any of this process: they own it, and as a result they own that customer relationship in its entirety.
If you look at the article, “7 Things You’re Doing Wrong in Your Home Bar,” you’ll see that Thrillist is selling the items they’re recommending right there in the article. This gives the reader a seamless purchasing experience and brand relationship, and indeed these items are stocked at Thrillist’s own fulfillment facility.
Ben went on to note that the revenues associated with e-commerce so outpace and simply outperform an advertising spend that this is not only the future of publishing, but that it must be the future of publishing. Ad spend revenues are down and will continue to drop on all traditional media channels (print in particular), and only a select few can expect their own readers to pay for content behind a paywall.
That being the case, Ben argues that any brand that owns a good relationship with a customer should use that relationship, rather than rent it out to someone else. He believes very strongly that media companies should become commerce companies based on the “why” in the relationship: WHY is someone consuming your content? Start there, and then figure out what to sell that services the same goal. He gave some good “What if X owned Y” pie-in-the-sky examples, like:
What if “Men’s Health” owned Tough Mudder?
What if Esquire owned J. Crew?
What if the New York Times owned Warby Parker?
I’ll add my own here: What if the Food Network owned Sur la Table?
Seriously? A Major Publisher Buying a Retail Brand?
Now, you may be thinking – fairly – “Why don’t these media brands just do an affiliate model, rather than try to get into a retail business in which they have no experience?”
And the answer is twofold: (1) Margins and (2) Customer Lifetime Value. Margins are particularly important if you’re trying to sell something that your readers can get cheaper on Amazon: they don’t like you that much. The #1 rule of content marketing is that you must be useful to your readers, and trying to sell them something for more than they need to pay violates that basic principle. As for CLV, it’s inevitable that this will be much, much higher for you if you own that relationship from the time these folks read an article to the time a box of your stuff arrives at their house, complete with receipt.
Yes, there are probably white label fulfillment houses out there who can do this for a large brand in order to test the waters, and that may well be the best way to see if this model will work.
It’s worth noting here that Millennials as consumers expect a different level of convenience and service from their favorite brands than other consumers, and this is a model that not only makes purchasing easy, but also speaks directly to both their twitchy buying habits and their desire to live a tech-forward lifestyle.
The Church vs. State conundrums that can arise with this model are easily solved if (1) the publisher isn’t putting their own self-interest above that of their consumer (which is bad marketing and bad business in the first place, especially as corporate practices become ever more transparent), and (2) there is a very clear message that this sort of content is, in point of fact, an advertorial.
Now, one thing to note here is that – if media companies don’t figure out a way to monetize more effectively long-term than paywalls and static advertisement – they may well find themselves being purchased by massive retail brands, rather than the other way around.
The Future of Content Marketing?
If the Thrillist model turns out to be one that traditional publishers adopt, the future of content marketing looks pretty bright indeed. Listen up, young writers and editors: a solid storytelling skill set may soon be in higher demand than ever before. Putting relevant context around a product that a reader might want is what content marketing is all about; we do this in my own Content Marketing department.
One hugely interesting thing about the Thrillist model is how easy it makes tracking your ROI for content marketing. An article tied directly to purchase allows for both tracking and a direct marketing metric (sales) directly attributable to revenue (as opposed to something like impressions). This isn’t to say that current social media marketing ROI isn’t there; I believe that it is (check out this article). But, integrating a commerce model into content allows that content to hit people at two parts of the sales funnel: both the top and the bottom. In this way, your content is servicing a dual purpose and will carry two sets of KPI’s that service an overarching business goal.
Now, it seems like a stretch to imagine the New York Times buying Warby Parker or, National Geographic buying Tom’s Shoes… or does it? Time will tell; what’s clear is that this model is working for Thrillist (their e-commerce products far outsells their ad space), so at the very least I’ll suspect we’ll start to see smaller media + commerce companies springing up to address a specific lifestyle demographic.