Proof That the Line Between Editorial and Advertising is Blurring | SXSW PR Insights

Proof That the Line Between Editorial and Advertising is Blurring | SXSW PR Insights

8 March 2014
Content & Commerce: The Digital Cronut

You never know what you’ll experience in the epicenter of interactive and tech, AKA SXSW.  For example, I wasn’t’ sure what I’d get from a session titled “Content & Commerce: The Digital Cronut.” I like Cronuts and I thought Ben Leher, cofounder of Thrillist and partner at JackThreads, might have some interesting PR insights, so I made my way through the packed hallways for a snack and a knowledge share. The bad news, there were no cronuts in the room (false advertising?). The good news, Ben is a smart guy and I learned a more about a subject PR folks discuss regularly: the line between editorial and advertising is blurring.

Ben started by telling us about the beginning of Thrillist, which built to help guys like him and his friends find places to get drunk. It was a funny line that got the attention of the packed house, but also true. If you dig deeper and you realize Ben founded Thrillist for one reason: There was not a city guide aimed at people like him, young twenty-somethings that live in a city. AKA, not tourists. Ben set out to deliver content to his own demographic and in the end he created a media company.

Thrillist did amazing well, traffic increased and for some time it seems they focused on creating revenue through ads, as do most publishers. This worked, to a point, but as his traffic increased the ratio between premium ad space and remnant space available widened and revenue growth grew slower than traffic. When traffic and ad revenue isn’t scaling at the same pace its time to explore other revenue models. Ben looked at event, partnerhsips, licensing and more, but in the end found a new idea; he explored commerce and ultimately partnered with/bought JackThreads, an up-and-coming Men’s retailer.

Why?

JackThreads had become Thrillist’s biggest advertiser. When Ben talked to them he found that they were spending nearly their entire ad budget on Thrillist. Thirllist was returning the highest ROI for their Ad spend.

Pivotal Moment – Commerce

Thirllist realized that their readers were buying the stuff that they told them to buy. Why, because as a media company they had built an audience of devoted fans, fans that LOVE Thrillist content and ultimately trust the information provided. Including merchandise recommendations. Ben’s Reeces Peanut Butter Cup moment came when he realized content can sell, and he could sell direct, he didn’t need to rely solely on advertising revenue.

This model works well for Thrillist because desirable products are both placed within content and in an online store. Rather than a traditional display ad, Ben and team incorporate merchandise into stories and non-traditional into ad space that doesn’t look like ad space.

Advertising and Editorial Blur

What they do with content-based product placement is no different from an editorial product round up in a print magazine like Details. They choose a category such as “messenger bags that deliver” and create a story around the product. Where they go one step further than Details is by selling these products directly to their readers. Details points readers to retailers, missing out on a revenue opportunity. Thrillist owns their commerce – it isn’t an affiliate model. They sell direct and when a customer receives their product they receive it in a box labeled “Thrillist.”

Is this a problem for PR and Journalistic Integrity?

No, this is not a problem, if its done correctly.

Truth is, this is a model that existing media companies should look to in order to build revenue in a meaningful way. If a publisher is careful not to sacrifice the quality of its content this is a reasonably safe business model that will not alienate readers.

In Ben’s talk he gave a few examples of how large media might tie itself to commerce and increase revenue. For example, he mused, “what if Men’s Health bought Tough Mudder?” The result, to his point, would be fantastic. Men’s Health and Tough Mudder have the same audience. Men’s Health has a devoted audience that trusts their content. And, Tough Mudder is making money not just on adventure racing but also through commerce. Combine the two and Men’s Health has a new revenue stream, and new content its readers will see as 100% relevant.

The Men’s Health example is grand and likely a tough sell.  Most large publishers would see an opportunity like this as risky and getting a deal like this done takes willingness to accept that risk.  But, imagine the possibility!

Can this work for anyone?

Yes, and no. Anyone can copy the business model if they have one prerequisite covered, an established audience.

The reason this worked for Thrillist was their audience. By becoming a trusted source and then moving to commerce they brilliantly navigated the treacherous waters most online retailers have trouble with time and time again; building traffic and trust.  Accidentally or on purpose Thrillist took the perfect path.