Month: February 2019

Morning Brew gave its business a major jolt in 2018. It hopes to keep hopped up in 2019.

On Thursday, Feb. 7, the newsletter publisher will announce that it has amassed 1 million subscribers since its launch in 2015. It is planning to launch a new line of vertical-specific newsletters, targeted at industries including emerging technology and marketing and advertising. It expects to launch two of those specialized newsletters in the first quarter of 2019, and possibly put out up to eight this year, depending on how their subscriber base responds, co-founder Austin Rief said.

Those milestones set the stage for what the publisher hopes will be an even healthier 2019. Morning Brew wants to grow the audience for its core newsletter, which covers finance and business news for a millennial audience, to 2.25 million by the end of the year. The company also wants to eventually build six-figure audiences for the specialized newsletters; it expects that one or two might hit that milestone within 2019.

Already “highly profitable,” Morning Brew also plans to more than double its revenue in 2019, Rief said. The company generated $3 million in revenue in 2018, Rief said. Morning Brew has 11 full-time employees.

Newsletters might not be considered a cutting-edge digital product, but they have powered some of digital media’s big success stories. Axios, for example, has built its business around email newsletters. This has powered it to a self-reported $24 million in revenue and break-even. On the Digiday Podcast last October, Industry Dive CEO Sean Griffey said its network of industry newsletters is solidly profitable with $22 million in revenue.

Morning Brew’s subscriber base experienced a major growth spurt in 2018. In April 2018, three years after its launch at the University of Michigan, it had 180,000 subscribers. By November, that number had ballooned to more than 700,000.

Rief said that the growth was powered in large part by word of mouth, but Morning Brew took advantage of some proven marketing tactics, too. For example, 2018 was the year that Morning Brew began leveraging cross-promotional partnerships with other newsletters they saw having similar audiences, such as a newsletter published by CB Insights and Next Draft, a newsletter written by angel investor Dave Pell.

Much like other hit newsletters including the Hustle and theSkimm, Morning Brew also found some success using a referral program to grow readership. Over 50,000 Morning Brew subscribers have referred at least three subscribers, Rief said.

Those tactics haven’t done much to dilute the quality of Morning Brew’s subscriber base. Its daily newsletter boasts a unique open rate of around 40 percent, high for a media newsletter, according to Mailchimp data.

That combination of subscriber growth and high open rates attracted a large number of new advertisers. Going into 2018, Morning Brew had worked with just four advertisers, co-founder Alex Lieberman said. It currently has active relationships with more than 50, including finance and banking companies such as JPMorgan Chase and Fidelity, as well as consumer brands such as Casper and Allbirds.

Sponsors pay for native ad placements that appear in each newsletter, both written by a Morning Brew copywriter and approved by the client. Today, Morning generates around $200,000 per week in advertising revenue. It has already sold 90 percent of its ad inventory through the first half of 2019, a spokesperson said. The goal, Rief said, is to double revenue in 2019, though he acknowledged that there is an opportunity to surpass that target if it keeps pace with the revenue it’s pulling from advertising.

Morning Brew’s model is made to be lean: each vertical newsletter will be written by a single person.

Though expanding from one product to another can have its challenges, observers see logic in Morning Brew’s nascent vertical approach. “It’s better to have multiple distinct products available than to try and build ‘one newsletter to rule them all’ because it’s easier to explain and sell their distinct audiences directly to advertisers,” said Keith Sibson, svp of product and marketing at PostUp. “‘Millennial professionals interested in business and financial’ is sellable, an audience receiving and mix and mash of different content, less so.”

It also plans to grow on its own. Though Rief and Lieberman thought last year they might try to raise a round of venture capital in 2019, they have since abandoned that idea. “It’s not that we’re set in stone on not raising capital,” Rief said. “We’ve just learned from other media companies that have taken on capital and grown too fast.”

Over time, Morning Brew would like to expand beyond the inbox and offer more products and services to its readers. But these aren’t on the road map for 2019.

“We’re very heads down,” Rief said. “We’re looking to grow a sustainable business.”

The post Morning Brew claims 1 million subscribers, $3m in revenue — and a profitable business appeared first on Digiday.

DTC company SmileDirectClub is taking its first steps to sell internationally, and it’s starting close to home, with Canada.

The company, which sells invisible tooth braces online and in 206 stores in the United States, began opening SmileShops — places where people can come get custom fittings — late in 2018 across Canada.

By May, the company plans on having 20 locations throughout the country, with the majority in Toronto. By the end of 2019, it hopes to push into two other countries, declining to say which ones.

It’s a common trajectory for brands looking to grow internationally, opting to start in the friendlier business climate of neighboring Canada and learn from that before expanding elsewhere. They’re doing this selling online, opening physical stores or pop-ups and launching wholesale partnerships.

In February, DTC underwear company Thinx will launch its second international wholesale partnership with Canadian retailer Drake General Store, said Siobhan Lonergan, chief business officer of Thinx. Other brands planning to venture into Canada this year include home décor company Horne. It will begin selling online to areas in Canada for the first time, and is in the beginning stages of working through the logistics, said Ryan Walker, CEO of Horne.

Shoe brand Allbirds began experimenting with a pop-up store in Toronto last year, and is planning on putting up a permanent location in the future as it plots its international expansion, said Travis Boyce, head of global retail operations for Allbirds. 

For many, Canada provides a safe, easier first step in charting international growth.

“[Canada] is a natural first country to expand into after you’ve created some presence in the U.S. It lends itself in a viable way,” said Alex Fenkell, co-founder of SmileDirectClub, who said Canada’s proximity to the U.S., the same use of the English language and consumer demand in the country as the main reasons for choosing the country as the first step in the company’s international expansion.

Companies are quick to say that consumer demand is what brought them to the country and while that might certainly be true (Thinx said Canada is one of its top-five markets), experts say it’s also just as much about testing diverse audiences before expanding overseas into Europe or Asia. In the city of Toronto alone, 51 percent of residents were born outside of Canada, and the population speaks over 180 languages and dialects, according to Toronto census data.

Toronto also has a tax rate 13 percent lower than most U.S. cities, the Canadian government offers funding and grants to startup founders to cover development costs and Google, Facebook, LinkedIn and Wattpad all have headquarters there. Over the years too, Toronto, home to over $2.9 million people, has emerged as a tech hotspot, with plenty of ad tech, media companies and ad agencies moving in. There’s also close proximity to Shopify’s headquarters, the service popular with DTC companies to power their e-commerce businesses. 

“It’s a test city,” said Bruce Winder, Canada-based retail expert and co-founder of freelance retail talent marketplace Retail Advisors Network. “It’s so diverse. Before building out to other countries in Asia or in Europe, brands can see how audiences from those nations react. It’s like learning how to ride a bike — you have to start with training wheels.”

Walker said Horne is planning on opening up fulfillment centers in Canada when it begins selling there in 2019. He said that since Canada is such a concentrated country, it’s much easier to reach more of the population with one fulfillment center than it is in the U.S.

“Ontario is over 33 percent of the population of Canada, so if you wanted to have a fulfillment point in Canada, setting one up in Ontario would make great sense,” said Walker. “Closest comparable example in the U.S. would be California, which has 12 percent of the country’s population.”

DTC companies now expanding into Canada are also taking notes from early successes in the DTC space. Bedding DTC company Casper was early to the Canadian DCT scene and began selling in the country in 2014, and glasses DTC company Warby Parker launched its first Toronto store in 2016. Shampoo DTC company Function of Beauty began selling in November 2017, before growing to the U.K., Australia and New Zealand, and sees 10 percent of sales coming from Canada, according to Zahir Dossa, CEO and co-founder of Function of Beauty.

“Canada was a great testing ground,” said Dossa. “We were still a pretty small company and hadn’t yet worked out how to go international. We were able to work out drop shipping to a new market, and marketing and selling to a different group of consumers.”

Nicole Tapscott, gm and vp of Canada for Casper, said the company took lessons from its Canadian presence and applied them to selling abroad in Germany, Austria, Switzerland, and the United Kingdom in 2016. Casper now operates two stores out of Toronto and sells in Indigo, EQ3 and Hudson’s Bay. Last month, it launched its first headquarters in the city.

“The Canadian market holds tremendous opportunities for brand expansion. It’s big, diverse and has high density,” said Tapscott. “It has mirrors to the rest of the world.”

The post Before planning international expansion, DTC brands use Canada as a testing ground appeared first on Digiday.

More publishers are prioritizing loyalty metrics — time spent, engagement, repeat visits — over raw audience numbers like unique users and pageviews. That’s giving a boost to automated personalization tactics.

While some form of personalizing content has been used for years, a renewed focus on loyalty metrics, audience data that can be monetized for ad sales, and improved technology has meant it’s becoming an important tool in publishers’ arsenal. As part of Reuters Institute’s predictions for 2019 — its annual survey released in January of 200 digital leaders in 29 countries — 73 percent of those leaders see increased content personalization as a “critical pathway to the future.”

Last year, The Times of London and Sunday Times developed its own self-learning algorithm to serve subscribers content most relevant to them based on their reading patterns. Early results showed the algorithm increases the likelihood that digital subscribers will open and click through on newsletters. Last July, Reuters redeveloped its app — although not for a subscription product — so users can customize the content they see. The success of the app is measured on total time spent in the app per month rather than pageviews. Also last July, The Telegraph introduced My Telegraph in its app, a feature where registered users can customize the topics they see. The app is key in propelling it toward the milestone of signing up 10 million registered users in the next few years, after reaching its 2018 goal of 3 million in August.

The Telegraph wouldn’t reveal subscriber numbers but claimed its own app is a key driver in converting readers to registered users and subscribers.

“Our strategy has shifted toward getting people to come back to the website often, getting them to register for and become regular users of our services,” said Lucian Craciun, head of engineering and technology platforms at The Telegraph. “We recognize that people have an ever-increasing expectation of personalization from the content providers they interact with.”

Serving up content based on people’s preferences has weathered accusations in the past for being creepy or leading audiences into filter bubbles. According to the Reuters report, over 78 percent of people think it’s important to invest more in artificial intelligence but not as an alternative to employing more editors, hopefully laying claims to rest about robots stealing reporter jobs. This combination of human and machine in choosing content relevance is key. But as you’d expect, consumer concern has lowered as it’s become more commonplace.

“The risk comes when content that is peripherally linked gets presented in front of the consumer, the obvious question is how does that sit with my broader content set,” said Greg Harwood, director at strategy and marketing consultant Simon-Kucher & Partners. “Without some degree of human interaction, and in the absence of a clear consumer rationale, this can lead to confusion.”

Publishers like The Wall Street Journal, Norwegian publisher Aller Media and Swiss news publisher Neue Zürcher Zeitung have been experimenting with building flexible paywalls based on personal criteria, using propensity modeling and machine learning to spot patterns in conversion behavior.

“Every publisher has its own set of metrics around engagement and retention and is constantly running controlled tests,” said Harwood. “There is evidence of it driving engagement, but this is very individual and not necessarily in the public domain.”

The post The pivot to paid is bringing renewed focus on automated personalized content tools appeared first on Digiday.

EBay, which has used PayPal for checkout since 2003, is working to bring its payments system in-house by next year.

The switch to what eBay calls “managed payments” is the result of eBay wanting to own the payments experience, controlling the customer relationship from product discovery to checkout, simplifying transactions and giving eBay more insight into customer behavior. It also drives revenue for eBay, which will bill sellers directly for payment processing as part of a bundle of seller fees. The company announced its plans to do this early last year, and has so far rolled out its payments service to a small number of sellers as a test last September. In the new arrangement, payments company Adyen will be the back-end service provider, but eBay will be making decisions on the front end and controlling how the transactions appear on buyers’ statements. It’s a data and relationship advantage that the company hopes will drive up transaction volume and attract more customers, especially those who may not use PayPal.

“It offers strategic flexibility into the future as commerce continues to evolve, and it ensures that eBay has the flexibility to continue to iterate and evolve our experiences by having control on the payment side,” said Alyssa Cutright, eBay’s vp of global payments.

Owning the payments relationship, Cutright explained, streamlines the checkout process for both sellers and buyers. Sellers only need to deal with one relationship instead of two (they currently need to have both eBay and PayPal accounts), and buyers can use whatever payment method they choose, including Apple Pay, which Cutright said wasn’t available through PayPal. Instead of going through PayPal’s platform, the checkout will take place within eBay. Managing payments gives eBay access to transaction data, exerting more control and minimizing risk on payment transactions, she added.

“[Now] if you’re buying a pair of shoes from a seller on eBay, you put in your Visa card and PayPal is making the decision [on authorizing the payment] — in the future that will be fully controlled by eBay,” said Cutright.

In its fourth-quarter 2018 earnings, eBay reported that it has enabled more than $140 million in general merchandise volume from over 3,500 active sellers in eBay’s payments trial. Since it launched the program, it said it saved sellers more than $1 million in payment-related costs, and it expects the savings will increase as the program scales. According to the company, at full roll-out in 2020, payments will be a $2 billion opportunity at scale. 

In 2002, when eBay acquired PayPal, the bulk of PayPal’s business was reportedly through eBay auctions. eBay and PayPal split into two separate companies in 2015 and have since branched out into different areas: PayPal has grown its point-of-sale capabilities for smaller merchants in an effort to take on Square; meanwhile, eBay wants to use payments to improve customer experience and generate additional revenue from its marketplace. EBay also reports that payments directly through the platform will cost sellers less, but it didn’t give exact figures on the cost reductions.

EBay said it’s not offering additional data to sellers. The data from the payments platform supports better payment security, according to eBay. But outsourcing payments to a third party doesn’t make sense if eBay wants to grow the relationships with its sellers and, by extension, their customers. Any information eBay can acquire about its customers and how they pay is likely a big advantage for them, according to payments consultant David True, a partner at Paygility Advisors.

“Anybody in business right now wants to hold on to as much data as they can — data is king,” he said. “You have to be careful with all the concerns around privacy, but as a general rule, everybody wants to have more data, even if what you don’t know exactly what you’re doing to do with it and you have to handle it very carefully.”

In addition, by reducing the number of steps buyers need to go through during the checkout process, reducing the number of abandoned transactions is also a likely motivator. 

“Any challenges that a consumer has within the buying process is going to stop them from completing the checkout process, and that has a detrimental effect on revenue — even a small percentage could have a significant implication for eBay’s revenue,” said Chris Hansen, chief operating officer at IgnitionOne.

 

 

The post Inside eBay’s payments strategy appeared first on Digiday.

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