Month: March 2018

British magazine publisher Dennis is quietly building an e-commerce empire, and not through affiliate revenue — through online car sales.

The publisher generated $43 million (£31 million) in 2017 from selling used and new cars via its site BuyaCar.com, double from the previous year. By the end of 2018, its car commerce business is forecast to hit $83 million (£60 million), roughly 45 percent of its entire revenue, according to the publisher.

But Dennis hasn’t even scratched the surface of car commerce. Just over 8 million used cars are sold in the U.K. each year, according to the Society of Motor Manufacturers and Traders, around 7,000 of which are sold by Dennis directly from its site BuyaCar.com. “As an overall percentage of that market, what we’re doing is still very small,” said Pete Wootton, managing director of digital for Dennis. “We want to massively scale the business because we believe it will generate revenue in the hundreds of millions [of pounds] in the next few years. Next year, I believe we’ll make £100 million [$138 million].”

The majority of cars Dennis sells via BuyaCar.com are used, with around 450 sold a month. By early 2019, Dennis expects to sell 1,000 a month. New cars are sold through the site, too, but for now the focus is on used cars because they offer higher margins. The best margins are made on cars that are sold on finance packages, where people pay in monthly installments, according to Wootton. For example, the margin on a car bought on finance is around $1,400 (£1,000), while it’s $482 (£350) for one bought outright. Dennis hasn’t yet tapped other areas like car insurance, in which it plans to expand.

Owning the customer transaction is a major point of difference for publisher e-commerce strategies, which typically center on revenues from affiliate links. Dennis also has affiliate revenues, driven by its tech title Expert Reviews. But while affiliate revenues are a good addition to the bottom line, they won’t arm the publisher for the future like selling cars will, according to Wootton. That’s partly because publishers don’t retain the customer data on purchases made via affiliate links, as they typically occur on the product sellers’ own sites. Most of the time, that site is Amazon.

“Amazon is the biggest affiliate partner, and it could change its algorithm at any time, so anyone [publishers] relying on that would see their revenues massively reduce overnight. You’re not in control of it,” Wootton said. “But when we own the transaction, we’re in control.”

It helps that Dennis publishes several car magazines, including Auto Express and Carbuyer, whose sites have 2.5 million and 1.2 million monthly visitors, respectively, according to comScore. These sites have referred two-thirds of BuyaCar customers directly to the site, and 10 percent of total car transactions come from referral traffic from these sites. Unsurprisingly, it is Google search that helps drive BuyaCar customer purchase conversions rather than Facebook, so the content team for BuyaCar focuses a lot of its attention on SEO.

Interestingly, 68 percent of the people who buy cars via the site are between 18 and 34 years old, and 45 percent are women. Some of this data goes into Dennis’ data-management platform so it can build out segments for ad targeting. But there are far more ambitious plans for commercializing the data. Car manufacturers in Europe are asking Dennis what it has learned from selling cars online, such as whether there are patterns in what cars sell better online compared to those sold directly via car dealerships. “We can see those patterns, so there could be some really interesting new avenues around consultancy,” added Wootton, who is also having conversations with other publishers in continental Europe about licensing agreements.

Dennis plans to direct more resources to improving the product, expanding its content strategy to drive more traffic and hiring more staff. Part of its challenge is finding skilled people fast enough to match the growth and levels of inquiries received each month, according to Wootton. Although the team has grown from five people to 40 people since Dennis bought BuyaCar in 2015, that’s still a modest number of people to handle 3,000 finance requests and 6,000 sales inquiries monthly. Dennis plans to expand to 60 people by year-end.

The post Dennis is on track to make $83 million from selling cars online this year appeared first on Digiday.

Honda is paying for mobile ads that drive people into showrooms rather than impressions or clicks.

The car manufacturer has been targeting mobile ads in the U.K. to boost showroom visits for some time, but those ads have always been bought on impressions or click-throughs. In its latest mobile campaign, Honda will only pay for the ads that drive people into showrooms within 14 days of being seen.

Until the test — which uses technology from location technology company GroundTruth and was planned by Dentsu Aegis agency Amplifi — ends on March 31, Honda will buy ads on a cost-per-visit basis, targeting people who are likely to buy a car using different types of location data such as visits to areas that over-index for car buyers like trips to second-hand dealerships to sell their current vehicle and appearances at competitor showrooms. Honda is also using geotargeting to clarify a person’s intent to buy a car. Cookies, however, are not being used to target the ads.

The advertiser is using data from location measurement company Rippll to measure whether ad exposure drove in-store visits and could eventually use it to track incremental visits. Proximity-based ads aren’t at the forefront of Honda’s latest effort; instead, it has favored using individuals’ behavioral data to predict their future behavior and likelihood to visit a store.

People will change their minds until the moment they buy a car, said Louise Furneaux, Honda’s marketing communications manager. “If you can intercept them at the last minute, then you have a chance of changing their mind on that purchase journey,” she said. “When you look at geotargeting, location can be one of the highest indicators of intent to buy.”

While Honda’s marketers have yet to decide whether to include cost-per-visit campaigns in future media plans, Furneaux believes cost per visit could become the metric of choice when trying to drive in-store traffic. By only paying for the ads that drive visits, it “takes the risk out” of paying for impressions, Furneaux added. Furthermore, Rippll’s independent verification of the ads mitigates any concerns about fake visits.

However, Furneaux stopped short of saying Honda would abandon click-based measurement schemes for all its mobile ads, should the test prove fruitful. Honda sees cost-per-visit campaigns performing a specific job at a specific point in a person’s attempt to buy a car.

Before cost-per-visit ads can become the next performance model for Honda, it still needs to iron out kinks. The advertiser and its partners on the campaign have yet to determine how to identify moments where cost per visit may overstate an ad campaign’s efficacy. There may be instances where people were going to visit a Honda showroom regardless of whether they saw an ad.

Despite this, Furneaux said the model should result in less wastage. “If you run a traditional campaign, you can have a lot of media spend wasted because you’re still reaching people and they’re seeing the ad, but they’re not necessarily taking the desired action you want them to,” she explained.

Honda knows it needs a new pricing model for mobile. While desktop display ads take a larger slice of its media budget in the U.K. compared to mobile, the latter is growing fast. That growth stems from how many people Honda sees researching on mobile devices before making a purchase. People are spending 50 percent of their research time on mobile, according to Furneaux.

The post Honda shifts its media buying to pay only for in-store visits appeared first on Digiday.

How streetwear infiltrated luxury fashionA riot broke out on Thursday night in Paris outside of 46 Rue Cambon, a venue that frequently plays host to Paris Fashion Week runway shows. The crowd was a formation of fans of the on-fire streetwear brand Off-White, the fall collection of which would be going down the runway that evening. They thought they could catch a glimpse or maybe even sneak in — after all, the brand’s shows had been opened to the public in the past.

The surrounding hype was unprecedented for a fashion week show. No wonder Off-White designer Virgil Abloh’s name is one of the first to surface every time a luxury house is in need of a new designer.

“Luxury brands would look so far down on this 20 years ago,” said Andrew Raisman, the CEO of sneaker and streetwear app Copdate. “Now today, the people who shop at Chanel on Rodeo Drive feel just as validated in an Off-White long sleeve. There’s no more division between luxury and streetwear.”

While luxury brands have always gained inspiration from underground, subculture and streetwear style, for the first time, these designers and brands are getting a seat at the table. What used to be contained to the sidewalks of Soho, where dedicated fans and business-savvy resellers line up pre-dawn to get their hands on coveted new product drops, has seeped into not just mainstream fashion, but the highest echelons of it.

As a result, Balenciaga can sell a $1,040 sweatshirt and get away with it.

For luxury fashion houses, there’s a new ultimatum as they look to win over a younger set of customers: Find a way to cop some street cred, or risk irrelevancy.

‘These designers are turning the definition of luxury on its head’
Leading the forefront of this streetwear-ification of luxury are designers like Abloh, Kanye West and Demna Gvasalia, whose designs for both Vetements and Balenciaga can be so mundane, yet so expensive, that anyone who isn’t acting like they get it must think it’s some kind of joke.

A model on the Vetements runway

“The price points are astronomical. But when you buy luxury streetwear, you’re not paying for the most handcrafted, highest quality piece of garment. You’re buying into a subculture. It’s something you either are a part of or want to be a part of, and when you think about it, that’s what any luxury brand has always been about,” said Mick Batyske, a DJ, streetwear influencer and investor. “Maybe the item itself is not justifiably worth it, but you’re attempting to buy membership into a club. That justifies the price.”

While propped up on the same set of values and motivations, streetwear and luxury truly converged as streetwear designers began to cross over to luxury brands. Key hires have come to define a luxury brand’s cool cachet.

“In order to protect their place, luxury brands have to identify with the customer, and they have to hire the right designers who can tap into what that customer today wants,” said Yu-Ming Wu, the co-founder of Sneaker Con and founder of Sneaker News. “Gucci did it. Yves Saint Laurent did it. Givenchy did it. These designers — Alessandro Michele, Hedi Slimane, Riccardo Tisci, Demna, Virgil — they’re all turning the definition of luxury on its head.”

Most recently, Burberry hired Tisci to help steer the brand’s turnaround efforts by lending his street-inspired style to an old-fashion brand. It’s not a guaranteed formula. Whether a brand can hire its way to cool depends on if it can hit the right notes with the customer base that they’re trying to appeal to. And today’s customers can sniff out a phony from a mile away.

“The guys that get it right are so hot because it’s so hard to do,” said Raisman. “What the big brands do have is money to burn. They can afford to give everything a shot. Tisci is a smart hire, but it doesn’t assure the brand of anything. You want to be cool? You’ll be cool when we say you’re cool, and that’s the only thing that matters.”

The Virgil Abloh effect
The challenge, of course, is that predicting what’s cool is impossible, and in fashion, nothing stays cool forever anyway. According to Raisman, Gucci should already be thinking about what it’s going to do when the cool kids turn their back.

But when all this goes away, the key is that brands have evolved their intrinsic mindset about what luxury means to customers.

“Everything in fashion goes in cycles. Next year, everything you see on social media today may not be cool anymore,” said Arby Li, the editor-in-chief of Hypebeast. “But there is an overriding shift that’s taking place. Luxury fashion has become much more approachable.”

According to Batyske, streetwear designers “popped the Upper East Side elitist bubble” that luxury brands used to live in. It’s almost ironic: Streetwear has a reputation for being anything but inclusive, and the price points are equally prohibitive. But the more streetwear designers have spent in the mainstream, the more community-minded they’ve become.

“The community aspect of streetwear has infused itself into high-end fashion to take it down a few notches and make it more about the people,” said Batyske.

Consider it the Virgil Abloh effect.

“Like with a lot of this discussion, it points back to Virgil,” said Li. “He’s transparent. He’s opened up so you know exactly what’s going on with the brand and with the industry, so even if you can’t get it, you’re part of it.”

Designers like Abloh have brought a sense of approachability to an industry that once felt closed off, but streetwear has to walk the same line that luxury brands do in the age of overexposure and Instagram. They have to figure out how to maintain a level of exclusivity that fuels desire and cachet while still drawing the attention of the masses.

“Streetwear brands and luxury brands both have to maintain their exclusivity and perception. Demand has to drive interest; if everyone could get something, it would kill the hype,” said John McPheters, the CMO of sneaker retailer Stadium Goods. “You have to drive conversation that’s even greater than your actual sales. It’s aspiration. And that’s why these designers can do such great things in a luxury setting.”

‘There’s no point in categorizing anything anymore’
When streetwear is luxury and luxury is a sweatshirt, where do both industries go?

“It’s all clothing. I don’t think today’s customers require a definition. They just want to see something different,” said Li. “There’s no point in categorizing anything anymore.”

Regardless of shifting definitions or the cyclical nature of fashion trends, brands on both ends of the spectrum can plan on one thing remaining consistent: Customers today call the shots. That’s an ongoing point of adjustment for luxury brands that once set the tone of the industry from the top down.

“Having all the money, research, agencies, everyone at your service, doesn’t matter anymore. The public has got to be feeling it. The kids call the shots,” said Raisman.

A scene like the one outside of the Off-White show during Paris Fashion Week is not going to become the norm. But it can be considered the pinnacle of what’s possible when a designer catches lightning in a bottle — and it’s something that other brands are going to be watching and pushing for, regardless of what camp they’re in.

“The greatest part of this shift is that it keeps the creatives from not being lazy, and let’s be honest. It was lazy for a while. The way luxury looked 15 years ago? Give me a break,” said Raisman. “Everyone got a good shakeup, and this whole incorporation of artists and collaborations and capsules, that’s keeping these brands on their toes and pushing out better product. It’s a zero sum game.”

The post How streetwear infiltrated luxury fashion appeared first on Digiday.

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