Month: December 2017

Amazon has long honed the business of being the middleman — getting brands to sell on its site, letting shoppers pay for and receive those items fast and efficiently.

But 2017 was the year Amazon started taking steps to create its own brands. If done at the right price point, Amazon will be in a strong position next year to prove it not only can help other retailers grow, it can be a retailer itself.

Amazon already has its AmazonBasics line of essentials like batteries and chargers. These items are largely commoditized, said Forrester analyst Sucharita Mulpuru-Kodali. It’s easy for Amazon to keep growing there: By bumping those products up in search results and pricing them right — which will be easy to do since Amazon owns the data — this line is poised to keep growing.

But the more interesting prospect is for private-label items that aren’t Amazon-branded. There are at least 19 brands Amazon owns and doesn’t operate under the Amazon brand name — from lingerie brand Arabella to furniture brand Strathwood. In October, Amazon rolled out private-label sportswear brands, including Goodsport (which competes with Champion), Rebel Canyon and Peak Velocity. Amazon may boasts fantastic brand recognition, but Amazon-branded panties are still a hard sell.

An October report by firm One Click Retail examined how Amazon’s private labels have performed. Amazon owns around 45 brands, and about 15 percent of its private-label sales come from those. The biggest one is women’s clothing line Lark & Ro, which had about $10 million in sales in 2017 to date when the report came out. Amazon’s Amazon Essentials clothing made about $3 million this year.

In apparel, Amazon’s most successful category with private label, L2 research found that the absence of major fashion brands that have traditionally abstained from selling on Amazon creates more room for private label to swoop in, a trend that would continue next year.

“This is the uphill battle,” said Mulpuru-Kodali. “This is dependent on leveraging data and picking the right things to develop or manufacture.”

The key is where Amazon chooses to focus. “Amazon will never be Nike,” said one merchandise head who didn’t want to disclose her name. “But it has the ability to own the lower price point in apparel and shoes, and make a lot of money that way.”

Mulpuru-Kodali agreed: “Private-label brands win because of price. Look at a Target brand or a Walmart private-label brand. They’re great value for [the] money.”

More Amazon private-label brands are coming. Late in November, Amazon moved into the furniture business — one of the last categories that people said would not be open to it — unveiling two private-label brands called Rivet and Stone & Beam. Amazon is also reportedly approaching furniture brands to sell on its marketplace.

It seems like 2018 won’t be about Brand Amazon: It can be Brand X, owned by Amazon. Unlike when other retailers make moves into private label, Amazon has control of customer data, and because of its seemingly endless amounts of cash, it can withstand some profit loss in early months or even years.

There’s another wrinkle. For smaller brands, Amazon is no stranger to looking at top-performing products and making its own to sell at a lower price. There are even small sellers who report that Amazon works with their factories.

In a way, experts say, 2017 set up just the beginning of Amazon’s domination — changing from being less of a marketplace and into conducting more of a full assault to own every part of the retail experience.

“Amazon private label is tiny, maybe a few billion, but because it’s small, it has huge opportunity for growth,” said Mulpuru-Kodali. “They get it right and execute it, and it represents potentially high margins.” It also means that Amazon has recognized it can’t get every brand and seller in the world to sell on Amazon. “This would mean they have control of their own destiny,” she said.

The post In 2018, Amazon will turn to private label goods appeared first on Digiday.

Tony Haile is making two big bets in 2018, and both of them are both shorts.

The first is that average revenues per user for publishers won’t improve. The second is that digital advertising will remain unpleasant enough that people continue to try and avoid it.

Those bets will have a big impact on how next year goes for Haile, when the founder and former CEO of Chartbeat unveils Scroll, a startup aiming to solve publishers’ problems with ad blocking and intense competition for ad revenue simultaneously, with a paid service that removes ads from users’ browsers.

Haile discussed publishers’ challenges over the phone with us. The conversation has been edited and condensed for brevity.

2017 was a horror show for ad-supported digital media, and many publishers are trying to diversify away from it. Is the era of free, purely ad-supported content over?
The platforms, with their dominance of traffic, are going toward what I call a platform tipping point. At a certain point, so much of ad spend is concentrated with two players that actually the economic costs of maintaining the infrastructure to buy elsewhere becomes increasingly inexcusable for an advertiser. I don’t think you’re going to see ad-supported media disappear tomorrow. I do wonder whether we’re going to start seeing those premiums start to shrink and disappear over time.

Ad blocking loomed larger when you started thinking about Scroll in 2015. Why do you think ad blocking was a less urgent topic of conversation this year?
Ad-blocking rates have mostly stabilized, around 12-15 percent. Then, you look at sell-through rate. There’s relatively few publishers out there that are at 100 percent sell-through rate; for direct-sold, nowhere close. So while we can talk about the projected loss, in reality you haven’t seen publisher revenues affected by it too much. Ad blocking shouldn’t be seen as this Chicken Little problem to defeat. It’s a consumer signal: You have 236 million people saying they don’t want this experience anymore. That’s the shift in thinking from “Ad blocking is the end of the world!” to something that will stabilize.

Next year, browsers will start exerting more control over the ads that sites can display. Are you worried that the browsers will compete with Scroll, with the advantage of being free?
The challenge you tend to get is you’re not going to get publishers that say, “I was making a $30 CPM on this page, and now I’m making a $5 CPM, and I guess that’s just life.” Instead, you get a game of whack-a-mole. If they don’t get the autoplay video ad, I don’t expect publishers to just go, “I guess we’ll just run that one 300 x 250 banner.”

You wrote about the lousy job Facebook has done monetizing video for publishers. Is 2018 the year publishers start distancing themselves from Facebook?
I don’t think they’re going to start distancing from Facebook because it’s still way too powerful. What’s interesting is whether Facebook can make a go of its big bet, which is Watch. Facebook has had a tough time instantiating new behaviors on their platform, outside of news feed and Messenger. If you believe Watch is make-or-break, then they will continue to throw a tremendous amount of money at that for the next year or two. Publishers are going to be attracted to that like moths to flame.

The post ‘Ad blocking is a consumer signal’: A look-ahead to 2018 with Scroll CEO Tony Haile appeared first on Digiday.

A month ago, Donald Trump tweeted “we should have a contest as to which of the networks, plus CNN and not including Fox, is the most dishonest, corrupt and/or distorted in its political coverage of
your favorite President (me).” Now, Trump’s reelection campaign committee has launched a poll asking its email marketing list to vote to “Crown the King of Fake News.”

Content is still king. But down the road, the cost of content could be an issue as more traditional TV content providers get squeezed by higher costs and competition.

Last week, Facebook made the controversial announcement that it would drop the “Disputed” tag from stories fact checkers found to contain false information. What the platform is really saying: It will
no longer take responsibility for fake news stories – and the damage caused in their wake.

NBC says the NFL programming franchise is once again on track to be the most-viewed TV series this season, yet ratings are down from a year ago. NBC says “SNF” averaged 18.2 million Nielsen viewers
for live program-plus-same day viewing from Sept. 7 through Dec. 25.

LinkedIn is conducting a roster-wide assessment of its ad agencies, according to Adweek, which reports that the business social network may be looking to reduce the number of agencies it uses. 

The reassessment comes
after last year’s acquisition of the company by Microsoft for $26.2
billion. 

In response to a query, LinkedIn issued this statement: 

“Our model depends on trusted agency partners from around the world. We’ll also continue to
explore conversations with new agency partners as new projects arise and our business needs evolve.”