Month: October 2018

Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. Hand Over The Keys Facebook has confirmed that last week’s hack affecting 50 million accounts did not extend to third-party apps using the Facebook login, The Wall Street Journal reports. “We have now analyzed our logs for all third-party apps installed or logged during… Continue reading »

The post The Good News On Facebook’s Latest Hack; Brands Adjust Influencer Strategie appeared first on AdExchanger.

Holding companies are all about integration right now, but signs point to it being more about consolidation.

At WPP, new boss Mark Read made the first big move atop the holding company by merging the digital chops of VML with the legacy “branding ability” of Y&R, creating a 7,000-strong agency that both Read and VMLY&R’s new global CEO Jon Cook say will make the combined entity stronger than the sum of its parts.

The post The Rundown: The agency world is bound to get smaller appeared first on Digiday.

Dotdash knows how to make service content that answers its audience’s questions. It’s thinking it might do this for advertisers, too.

The publisher is working with a long-time advertiser on a custom content program that would involve a website filled with hundreds of pieces of content. Dotdash would provide the content, the site it lives on and their upkeep and be paid on retainer, with additional incentives based on business results. But the site would bear no mention of Dotdash or any of its brands.

“If we don’t do it, somebody else is going to do it,” Dotdash CEO Neil Vogel said. “I am not interested in building a content studio and working on one-off, white-label products. But we’re particularly adept at this.”

Many publishers that got into branded content to diversify revenue and get closer to advertisers now find themselves handling a double-edged sword, with a growing number of advertisers asking them to produce content for use outside of publishers’ properties — or without mention of the publisher. That puts the publishers directly in the agency business.

Some publishers, including Popsugar, have embraced this opportunity, adding entire agency services divisions to their businesses. Others approach white-labeling with more caution, seeing a lower-margin business with different economics that potentially cannibalizes the branded content businesses they are building.

“We’re naturally becoming more than a content studio,” said Annie Granatstein, the head of WP Brand Studio, The Washington Post’s branded content operation, which has mostly eschewed white-labeling. “So naturally, they start coming to us with questions that are deeper than just a campaign.”

Brand requests for white-labeling are relatively recent and tend to represent a small slice of publishers’ revenues. Popsugar CRO Geoff Schiller said these services, which PopSugar began offering about two years ago, represent a single-digit percentage of his company’s revenue, though it’s more than doubled year over year.

Brands’ appetites for digital content have been growing steadily for years. But just as many brands have struggled to attract the talent necessary to bring marketing in house, they’re often turning to publishers to create it, particularly those they already have relationships with. That’s partly because they have had trouble attracting people who can do this.

“Digital is the most pervasive, mobile and low-cost way for [brands] to touch their audiences daily. But they need fresh, original content to do this, or they get stale,” said Ken Pasternak, the managing director of Marshall Strategy. “The white-labeling trend you’re seeing tells me many brands prefer to buy it rather than build it.”

Publishers are hesitant about white-labeling because it’s often lower-margin than branded content programs that include media.

“Our business models are based on distribution,” Granatstein said. “The profit margin is based on the media buy. If we’re not distributing the content, we’re not promoting the content [and then] we have to completely rethink everything about the business.”

Whole new teams can be needed. PopSugar, which has done everything from creating white-labeled content for advertiser-owned websites to producing episodes of broadcast television on a white-labeled basis, hires contractors depending on the client needs. Working with brands repeatedly makes it easier to do these programs efficiently. “Margin is an evolution,” said Schiller. “The more clients we take on, the easier it’s been to get more efficient.”

In other cases, a publisher will serve brand’s white-labeled content needs through a larger partnership. Last month, Refinery29 launched The29th, a London-based creative consultancy. Kate Ward, Refinery29’s svp and head of international business, said among the services The29th is providing its first client, Walgreens Boots Alliance, is white-labeled content.

Organizational headaches aside, it’s not a given that white-label work cannibalizes branded content or other kinds of media sales. Schiller said that, in the two years that have passed since PopSugar launched its agency services business, the clients it has worked with have all increased their branded content investment at least 200 percent.

And by limiting white-labeling projects to brands they already do a lot of business with, many publishers see a chance to pursue it opportunistically. “I’d rather us compete with us,” Vogel said.

The post Publishers are expanding their content studios to do more agency work appeared first on Digiday.

Over-the-top streaming video has gone mainstream among users. But in terms of advertising, the U.S. market is pretty much Hulu, a couple of other emerging heavyweights, and then everybody else.

THE KEY HITS:

• Hulu, which topped $1 billion in ad revenue last year and is on pace to grow that in 2018, is capturing a majority of the $2.2 billion OTT ad market.
• There are emerging heavyweights: Roku’s ad business is expected to surpass its device sales this year and CBS’s suite of streaming channels is bringing “hundreds of millions” in ad revenue. Streaming TV services, which include Hulu, YouTube TV and Sling TV, are also expected to pull in greater ad spend.
• Marketers are also waking up to OTT, but have a lot of catching up to do as many don’t separate out OTT as its own line item in the budget.
• Ultimately, OTT is still a fraction of TV and video ad budgets, but the next 12 months will demonstrate how quickly this market can grow.

Hulu hit a milestone last year by topping $1 billion in ad revenue for the first time. What’s even more impressive, the entire OTT ad market didn’t crack $2 billion last year, according to Magna Global. It will this year, as the agency expects U.S. OTT ad spend to jump more than 40 percent and hit $2.2 billion in 2018 — and Hulu will continue to carve out a significant chunk of ad spend.

The post Video Briefing: Hulu’s the OTT ad giant, but other players are emerging appeared first on Digiday.

CNN is taking the wraps off its new business site, CNN Business, to reflect an increased emphasis on Silicon Valley. CNN is ditching the CNNMoney brand, which was part of a joint venture with then-Time Inc.’s Money and Fortune magazines going back to 2001.

“The driving force behind this change is, we felt the CNNMoney brand wasn’t quite up to telling the generational story of business news at this moment,” said Jason Farkas, who’s running the new site as vp and gm of CNN Business. “If you work at an auto or retail or financial services firm, at the core, all of those are technology companies. Money magazine is really tips and tricks for people trying to balance their financial life. We didn’t think it could stretch far enough.”

CNN staffed up with 200 new digital hires in the past couple of years but then laid off a few dozen this year. Casualties including the Snapchat and VR teams and the CNN MoneyStream app that delivered personalized business news. (The app still exists but is just an automated feed.) To fuel the new site, CNN Business is hiring six to eight people to staff a new San Francisco bureau, its biggest outside of New York City, for a total of about 70 editorial staffers, including 30 covering media and tech.

CNN Business will have several new verticals and franchises to showcase big names in tech and business. There will be an opinion section with pieces by Facebook’s Sheryl Sandberg and Melinda Gates and a deep dive into how Amazon works, for instance. CNN Business still wants to be taken seriously when it comes to breaking news, since that’s such a big part of CNN’s identity, so market news will be live-streamed and live-blogged, but certain political-related economics stories will be handed off to the news desk, Farkas said.

As for the bread-and-butter content CNNMoney used to deliver, CNN Business is aiming at a more upscale audience now. “We want to do less entry-level, personal finance coverage,” said Farkas. “We’re upscaling the coverage we used to do to distance ourselves from the Money magazine brand. We want to be a resource for them, but not in a newbie sense.”

There’s already a lot of tech business coverage out there, but CNN’s contention is that no one else is covering tech’s impact on the rest of business as it will.

“If you look carefully at a publication like Wired or Recode or TechCrunch, they’re primarily covering the technology space,” Farkas said. “NBC or Bloomberg, they’re covering it through the lens of what this means for the end investor. We want to cover the story of how business outside the tech sector is being affected by the tech sector. We think it’s the compelling narrative no one else is telling.”

The expectation is that the focus on tech and its big-name CEOs will help CNN Business make inroads with financial, tech and luxury advertisers. Fidelity is sponsoring the site’s launch.

Beyond ads, CNN is looking for other ways to make money as it along with other digital media companies have missed financial targets. Farkas said CNN Business won’t have a premium, consumer-paid model built in at launch, but over time the plan was to diversify the business model. “We’ve got to hone in on the audience and then the business models will evolve,” he said.

Media buyers said the CNNMoney brand didn’t stand out from other business news publishers and that the shift away from that brand could help CNN define itself. CNNMoney reached 26.5 million unique visitors in August, seventh in the business news category behind sites like Yahoo-HuffPost Finance Network, CNBC and Bloomberg, per comScore.

“CNNMoney is limited,” said Barry Lowenthal, president of The Media Kitchen. “I give them credit for saying their name means something. CNN Business reflects their view of the world. When you call yourself CNNMoney, it says you’re focused on the way businesses make money as opposed to the larger cultural consequences of being in business.”

The post CNN launches CNN Business with a focus on Silicon Valley appeared first on Digiday.

The Walt Disney Company has invested in mobile entertainment app HQ Trivia’s parent company Intermedia Labs, according to a source with knowledge of the deal. An Intermedia Labs spokesperson declined to comment and Disney did not respond to a request for comment by press time.

The investment is the latest example of the entertainment giant looking to evolve its business as traditional distribution outlets continue to lose ground to digital platforms and direct-to-consumer properties. Disney’s stake in HQ Trivia could create more opportunities for Disney to market its businesses through the app and incorporate the app’s branding into its other businesses, such as producing an HQ Trivia-branded show for ABC’s broadcast network or ESPN’s ESPN+ streaming service. And for HQ Trivia, Disney’s backing could bolster the year-old app’s ad sales efforts and expansion into new show formats as well as reassure any advertisers or other business partners wary of HQ Trivia CEO Colin Kroll’s sordid history. (Disney investing in HQ Trivia’s maker is not the same as Disney buying HQ Trivia, a distinction that could be connected to Disney’s troubled acquisition of digital video network Maker Studios.)

The size of Disney’s investment wasn’t available. Intermedia Labs disclosed earlier this year that it was raising $15 million and was still looking for someone to invest $2.46 million to close the funding round, according to a regulatory filing published in March.

HQ Trivia may be a mobile app, but it has the markings of a traditional entertainment property. It’s a game show that demands people tune in at a certain time or miss out entirely. In that vein, it’s not much different than “Jeopardy” or “Wheel of Fortune” in their pre-DVR heydays. But the fact that HQ Trivia can get hundreds of thousands of people to tune into scheduled programming on an owned-and-operated property in 2018 makes it noteworthy among traditional entertainment companies. In August, 6.7 million adults in the U.S. used HQ Trivia, according to comScore. That figure is up from 2.5 million U.S. adults who used the app in December 2017, the first month that the measurement firm tracked its audience.

Disney is among the entertainment companies that have flocked to games like HQ to reach audiences that are likely to tune into traditional TV but are tuning into what’s more or less a new type of TV. Disney, NBC, Nickelodeon and Warner Bros. have sponsored HQ Trivia games this year; the Disney-themed game that aired last month got 785,000 players, according to the person with knowledge of Disney’s investment. Fox and TBS have rolled out their own live trivia apps.

James McQuivey, vp and principal analyst at Forrester Research, said HQ Trivia can accomplish in mobile what few have: high-frequency, high-emotion, low-effort experiences worth repeating. The investment in HQ Trivia could also aid Disney’s effort to distribute more of its content directly to audiences. Last year, Disney announced that it would remove its movies from Netflix to build up its own streaming video service. And this year, Disney-owned ESPN introduced ESPN+, a subscription streaming service that provides exclusive shows and game broadcasts. To attract subscribers, Disney needs to provide enough content that people would be willing to pay for. While HQ Trivia is a free, ad-supported app, it wouldn’t be out of the question for Disney to turn the app’s recent foray into sports-related trivia into an HQ Sports show for ESPN+, for example. At the very least, Disney could use HQ Trivia to promote its digital video services to an audience that’s already using one.

HQ Trivia also could be added to the portfolio of properties that Disney sells to advertisers. Last month, Disney consolidated its ad sales into one organization that spans its TV networks, including ABC and ESPN, and its digital properties. Being part of Disney’s ad sales arsenal could help HQ Trivia attract more sponsors, especially for its newer shows like HQ Words that will premiere this month as a made-for-mobile send-up of “Wheel of Fortune.”

The post Disney invests in HQ Trivia’s parent company amid direct-to-consumer push appeared first on Digiday.

Video has a measurement problem. This was true six years ago, when digital platforms and publishers first started to vie for TV dollars en masse through the Digital Content NewFronts, and it’s true now. There is no unified metric in digital that the industry can agree on and use to effectively compare digital performance with TV. And walled gardens have been erected by tech platforms and even major media companies that make apples-to-apples comparisons even harder. In fact, a unified metric may never arrive, and if it does, it might be imperfect at best.

That’s just one of the many lies the video industry deals with on a daily basis. Here are some cold, hard truths:

The post Alternative Truths: The explosion of streaming video has brought with it many myths appeared first on Digiday.

Congratulations, publisher, you’ve won the pitch for that big native ad campaign. But branded content is notoriously low-margin, leading some publishers to lose money on campaigns if they aren’t careful. High-cost, premium content isn’t cheap to make. And without experience in honing efficiencies across production and distribution, only shrewd publishers will make content studios profitable.

A publisher might win a quarter of the campaigns they pitch for, in some cases spending a few grand on a concept video to explain the vision before they even win the work. The sky’s the limit with content production and distribution costs, and that’s in addition to salaries and other overheads, of course. Here’s how easy it is for that juicy campaign fee to disappear before you know it.

The post The Native Money Pit: The hidden costs of branded content appeared first on Digiday.

Unless, by day three of Advertising Week, attendees didn’t already feel the existential dread settling in, featured celebrity speaker Will Smith spent a portion of his Wednesday morning stage session talking about death.

“Your mind is always telling you, ‘You’re gonna die!’ Only one time that your mind says that is it gonna be true. You’re really not, most of the time. But when that time comes, who gives a fuck? you should be having fun,” Smith told Google vp Adam Stewart.

That might have stung a little for the people in the audience who just spent over an hour of their lives waiting in line to hear the Fresh Prince tell them to live their lives to the fullest.

Messaging for marketing
The primary marketing channel for Gap’s newest brand Hill City isn’t simply funneling dollars into Instagram; it’s Facebook’s Messenger. While messaging has had its highs and lows with seemingly every brand launching a chatbot in 2016, for ad platforms like Facebook and for brands like Gap, it’s back at the forefront.

“When you see a red notification on a messaging app versus email, what are you going to open first? That’s the way of the future,” said Eric Toda, Hill City’s head of marketing.

That’s why Hill City, only a few weeks old, is growing its brand on Messenger. Over its first week, 4,000 people interacted with its chatbot. These types of channels, whether over Messenger or Twitter, are commonly associated with customer service issues and that’ll still be a part of Hill City. But Toda said he was betting on more immersive experiences in the future such as using augmented reality to virtually try on products. The hope is to lower return rates. And while chatbots of the past and future have been known for their names and strong personalities, Hill City is sticking to the basics, for now.

“We come from a time that a lot of brands have personalities and prey on your insecurities. For me and HillCity it was about keeping it really simple and figuring out what their personalities are. What we want is a community brand, not a brand at a community,” Toda said.

As for Facebook, engaging with a chatbot is free, for now. Facebook’s head of messenger Stan Chudnovsky’s said the the money comes from dollars spent on Messenger ads and promoting the experience in News Feed or other Facebook-owned channels.

— Kerry Flynn

CPG goes DTC
Snack brands are under pressure to break out of the grocery store aisle and appeal to customers on a personal level, and so, in the mind of CPG giant Mondelez North America’s CMO Jason Levine, they need sassy personality traits to define them. Oreos are “playful.” Sour Patch Kids are “mischievous.” Ritz Crackers are defined by their “richness.”

It sounds like a word association game that might be played at marketing camp, but Mondelez’s goal is to bring CPG brands alive as actual brands powerful enough to build customer loyalty. “One word gives you consistency in a highly complex media environment,” Levine said.

He describes Mondelez’s modern brand strategy as a “reach to relationship” evolution. In the age of direct-to-consumer brands, a set-it-and-forget-it wholesale retail strategy doesn’t work anymore, not even for cookies. Take Oreo. With a 50 percent brand penetration rate in American households, the brand is still focused on mass reach. What’s changed is the messaging strategy: Oreo released a “left-handed box” in a gimmicky campaign targeted toward lefties, and its #MyOreoCreation contest has yielded customer-chosen flavors like Kettle Corn and Cherry Cola. “There can be no dead ends anymore in how we talk to customers, no more isolation in marketing,” said Levine.

For Kellogg’s, responding to changing customer behavior resulted in the company’s first standalone store in New York City’s Union Square, where visitors can eat cereal and cereal-related snacks and buy other brand paraphernalia. According to Gail Horwood, svp of of integrated marketing at the Kellogg Company, 10,000 people visit the store every month. At Kellogg’s, the store is categorized in the marketing strategy as a content play. Not only is the store itself considered a (very expensive real estate) piece of content, but a live social media feed prompts user-generated content from visitors. To pull it off, Kellogg’s had to bring down the silos.

“When we think of content today, we have different people in the conversation than we did in the past. We have a cross-functional team of retail, expert, media, creative and platform experts at the table,” Horwood said. “We have to think so much more now about the role that we play in people’s lives.”

— Hilary Milnes

Wayfair’s build-don’t-buy strategy
According to Wayfair director of marketing Jessica Jacobs, agency partners help the e-commerce home goods retailer experiment with new types of media and creative. But as soon as the company catches on to a channel that’s working for them, they pull the operation in house.

It comes down to two key concepts that Wayfair sees as essential to its technology-backed retail operation: Control and connection.

“This allows us to control the performance of the media we’re running, or the creative that we’re building, directly in line with insights about our customer,” said Jacobs. “Control over our messaging, and direct connection to the customer is so valuable today, we can’t outsource it.”

This mindset, said Jacobs, helps Wayfair personalize its product messaging and promotions to customers with full view of their past behavior, and it will come into play as Wayfair takes on physical retail. On Wednesday, Wayfair announced it will go into stores for the first time with a series of pop-ups around the holidays.

“We’re digital first, so we’re lucky that as we experiment in the offline channel, we can take the same, single view of the customer as far as personalization goes,” said Jacobs.

— Hilary Milnes

Publishers see a new chance to prove their worth to marketers
Marketers have never focused more on measuring the effectiveness of their digital advertising, and publishers are feeling the squeeze. Not only do they have to compete with tech giants for advertisers’ budgets, but they have to deal with a dizzying amount of attribution and measurement products that are jockeying for marketers’ attention. Fighting to win a small campaign is exhausting enough; having to plug into a new system to demonstrate its effectiveness is something else.

“It’s challenging to keep up with the new tools that are constantly being introduced,” said Sarah Okin Livengood, the vp of product at Refinery29. “The advertising measurement world is completely bifurcated.”

The publisher solution to this problem, it seems, is to get away from small campaigns and focus on becoming one-stop shops for brands. Rather than fight over whatever gets put into a RFP, publishers are trying to get more intimately involved in marketers’ core businesses. “We’re changing from campaign to program to marketing solutions provider,” Forbes Media CRO Mark Howard said.

That means working on programs that extend well beyond media sales. Starting in 2019, it may start to mean driving sales: “Marketers need to see more conversation happen on our platform instead of off,” said Jason Wagenheim, the chief revenue officer of Bustle.

— Max Willens

3 questions about influencer marketing with BuzzFeed’s Ze Frank
Earlier this summer, marketers beat up on influencer marketing on stage on the Riviera during the Cannes Lions. Yet the emerging medium remains a source of fascination for advertisers and, increasingly, publishers too. We grabbed a moment with Ze Frank, who heads BuzzFeed’s chief research and development officer, to talk about how he sees influencer marketing changing. The conversation has been condensed.

How do you see the relationship between creators and brands evolving?
It’s a three-way proposition between brands, consumers and the influencers. The question is how to employ the special characteristics that influencers bring to the table in terms of affinity and rarefied power of authenticity, and bringing it to bear for brands.

It’s going to require brands to think about how their classical approach to demographic-based targeting is going to have to shift to take advantage of these microscopic relationships. In classical demographic work, the brand creates a homunculus of a sort. This kind of approach is very different than when you’re thinking about influencers. Influencers and their audiences combined are this this living, breathing organism that has special characteristics that belie the kind of demographic segregation we’re used to.

So how does that change the way BuzzFeed thinks about working with them? Tasty launched a talent program recently, and you’ve brought in outside influencers like Hannah Bronfman.
We think about the next wave of influencers as having a real opportunity to partner with publishing companies like ours, which basically gives a number of different benefits. You can start appearing alongside a variety of media that we know resonates with audiences, might push you outside your comfort zone, it might allow you to broaden the dimensionality of who you are to your fans.

What we’re really excited about is we can have our in-house influencers and outside influencers work across the different kinds of properties we have, get exposed to all the different ways we think about making media and connecting with audiences. Then obviously there’s these secondary benefits that are really powerful: You have this giant sales force that can help you understand where the opportunities are in the marketplace.

So many publishers talk about forging deeper relationships with advertisers, but influencer marketing feels very transactional. What does it take to make influencer marketing less transactional?
I think it needs to be transactional. Ultimately, the craft of being an influencer or creator is understanding where the line is. Ultimately, it’s trying to figure out where the transactional opportunities are that still have that authentic feature to it. If the places where you have a lot of power don’t represent some of the transactional opportunity, then where are you going to grow it somewhere else. You think about evolving it, that has to be part of it. You have to think about it as a business. You have to also pay respect to the fact that this is a human function. Tread lightly. These are real people, real interests. Real relationships.

Overheard
“Everyone thinks we’re out here stealing agencies’ business.” — a consultancy employee

“Pre-roll ads are the Nickelback of advertising.”

“There was a Snapchat guy there plugging it hard being like, ‘We came up with Stories first!’ Like OK.” — Ad buyer

“Find a big enough venue. Whether it’s Javits Center or something in Long Island City, I don’t know, but this is a stupid mess.”

“They keep assigning me to work stages where I have to disappoint people or put them in staircases for 30 minutes. I kind of hate it.” — an Advertising Week badge scanner

Coming up

• 9:30 a.m.: Digiday’s Hilary Milnes discusses proving ROI today with LinkedIn, a4 Media, Cuebiq and Wavemaker.
• 10 a.m.: The New York Times team breaks down its business coverage during “The Biggest Stories in Business” session.
• 10:30 a.m.: Wendy’s chief concept and marketing officer Kurt Kane discusses the fast-food chain’s “sassy” social presence with Twitter’s brand lead.
• 11:15 a.m.: Under Armour’s CEO sits down with the president of Edelman to discuss the evolution of the American brand.
• 12:30 p.m.: Casper, Bark and Sweet Defeat come together for the “DTC Allstars” panel.
• 1:30 p.m.: CROs from BuzzFeed, Index Exchange, Foursquare and USA Today discuss diversifying revenue streams.
• 3:30 p.m.: “The Evolution of the CMO” with Northwestern Mutual, Outdoor Advertising Association of America, Norton Consumer Business and GE.
• 4:30 p.m.: Digiday reporter Kerry Flynn will moderate a panel about the power of brand disruption with Pandora, Mekanism and Fiverr.
• 4:45 p.m.: The Washington Post’s CRO Jed Hartman shares the publication’s monetization strategy.

The post Advertising Week Briefing: With Hill City, Gap aims for a ‘community brand’ appeared first on Digiday.

Furniture and home decor brand Mackenzie-Childs is focused on building a direct-to-consumer model to grow its customer base.

Currently sold through high-end retailers like Neiman Marcus and Williams-Sonoma, the luxury brand is investing more in its e-commerce site and store network. While the company isn’t cutting off wholesale partnerships, it’s realizing, like many consumer retailers, that digitally acquired customer data through a DTC model is an engine for growth. It’s become a go-to pivot for brands as they address the limitations of the wholesale-only model: limited data visibility, a less concrete customer connection, and a lack of access to people who prefer to shop online.

“It’s less about using the web to change the way we’re doing things, but it’s one of the [legs] of the stool,” said CEO John Ling. “You need to be good at all [channels]. As a retailer, we can’t decide where the customer is going to shop — you need to be accessible to them in all those different channels.”

The 35-year-old brand, which has three physical locations in the U.S. and a dozen partner-operated stores in global locations including the U.K., Turkey and Russia, depends on real-life interactions. Customers want to see and feel the products in stores and at events like the brand’s annual farm sale at a flagship upstate New York location.

Though the company has sold online for 13 years, it’s been investing in e-commerce technology and new hires for the past two years to get a better view of customer behavior and improve the online shopping interface. It revamped its website, optimized the site for mobile shopping and devoted a larger percentage of its ad spend to digital and social campaigns to drive traffic to the site. Through the new website and backend system, the retailer now draws on customer analytics to personalize offers, reach out to customers who may have abandoned their purchases, and grow the brand’s reach among a digitally native population who are less drawn to physical stores.

“Throughout all the different channels [online and at physical stores], we’re in the middle of upgrading all of our [customer data] systems — we’re building a more robust customer database tool that will allow us to track customer orders, and behaviors,” he said. “We want to evaluate the intersection of the customer and product — we don’t just want to know what product they’re buying but what they’re doing with the product, how often they shop and what products they buy together.”

Going DTC offers a data advantage over operating through partner retailers. Ling, who wouldn’t comment on specific sales numbers, said e-commerce is the fastest-growing part of its business, with “double digit” growth. The retailer also sends a physical catalog to a limited number of active customers — an outreach that’s only possible through a study of customer data. But phone orders are declining — just 10 percent of orders are now carried out over the phone, a 20 percent dip compared to three years ago.

Meanwhile, the brand’s physical stores will also play a role is marketing channels in order to better communicate the brand story to customers. Enhanced data will only make the in-store experience more relevant, Ling said.

“The brand is just so visual and so tactile — it’s important to put that out in front of the customer,” he said.

While Mackenzie-Childs doesn’t sell on third-party marketplaces like Amazon, it’s considering how it may incorporate them into its DTC strategy. The challenge is to maintain the distinctiveness of the brand while owning the customer experience.

“Our products are on there sometimes due to unauthorized sellers,” Ling said. “We don’t believe we can ignore it, [but] once you get into that, you’ve got to get it right.”

One concern from selling on third-party marketplaces is ensuring the company can meet the demands of millions more customers. And while these marketplaces can grow, the customer base through its massive scale, not fully owning the customer data and analytics remains a disadvantage, Ling said.

Despite this risk, third-party e-commerce marketplaces may still offer a window into customer intent that can go further than that which can be obtained through the traditional method of sourcing to retailers’ shelves. Selling on third-party marketplaces like Amazon also offers a marketing lift for a legacy brand that can make it appear more tech-forward, said digital marketing consultant Judge Graham. The trend among brands going DTC — either through third-party marketplaces or its own e-commerce sites — is a wake-up call to retailers to offer brands more access to customer data and analytics, he added.

“We’re slowly getting into a world where the Neiman’s of the world are going to have to put down their walled gardens and be a bit more collaborative with customer data as it relates to those brands,” he said. “Retailers need to flip the script and get on board.”

The post Inside upscale furniture brand Mackenzie-Childs’ DTC strategy appeared first on Digiday.