Month: March 2019

A weekly comic strip from AdExchanger that highlights the digital advertising ecosystem…

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Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. The Facebook News Cycle It was another tumultuous week for Facebook. In addition to the shocking departures of head of product Chris Cox and head of WhatsApp Chris Daniels, the Federal government has opened a criminal investigation into the company’s data dealings. A Grand… Continue reading »

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From tactical solution to transforming the world

Back in 2008, no one envisioned that programmatic would become the digital ad industry’s dominant media-buying tool. It was a niche technology, a network of remnant display inventory for desktop platforms. It was merely designed to fill in some gaps.

A decade later it’s an industry of its own. Agencies, brands, and entire tech companies dedicate major resources to planning and executing programmatic strategies. Platforms as wide-ranging as mobile, OTT and TV have become targets of programmatic buyers. By 2020, eMarketer projects that $69 billion in sales will be dedicated to programmatic.

“I think the 2008 to 2012 story for programmatic was largely a tactical one…It wasn’t about transforming the world and solving TV’s problems,” said Joe Meehan, IPONWEB’s GM of North America. That’s exactly what many in the digital ad industry, from brands to agencies, want it to do now. But even a decade into its existence, programmatic technology may not be fulfilling its promise.

So where are we now? And how are things changing? We reached out to key executives from all sides of the industry to find out.

The in-housing trend is slowing

In 2018, marketers’ fears and frustrations with programmatic advertising reached a tipping point. A variety of issues—including fraud, brand safety, lack of transparency, and ineffective targeting—contributed to brands’ growing fears. Those fears drove many marketers to seriously consider—and in many cases move forward with—in-housing.

But over the past several months many marketers,  including major brands like Intel and Vodafone, have begun to reconsider, halting their plans or re-structuring some of their programmatic efforts around their external agencies. “I think a lot of people don’t think about the complexity of programmatic,” said Oscar Garza, evp of media activation at the digital agency Essence. “They think they can buy impressions at their DSP, and buy impressions within their wall, and be successful. But they can’t because they don’t understand it. And they’re being lead by consultants that don’t necessarily quite understand it.”

In that same vein, marketers have dramatically underestimated the amount of talent and expertise that’s required to make such an in-house model viable. “You can’t really make it work at a brand if you don’t understand the fundamental workings of the technology, including the points of conflict and the potential risks around fraud,” said Meehan.

Some brands are now moving to a hybrid model in which some of the technological infrastructure and manpower is handled by outside entities, including agencies. It’s quite probably that this hybrid approach is where the industry is headed overall, and for good reason. “I think that hybrid solution is actually the best way to go,” said Meehan. “Do what you can internally if you have the skills.”

Still, industry incentives are indeed pushing brand marketers to get more involved

There’s no question that some of the concerns that drove marketers to start in-housing are reasonable.

Fraud, transparency and brand safety issues persist. Display ad targeting can be haphazard. And some agency and tech providers have failed to deliver the level of sophisticated attribution that, once upon a time, they promised.

When programmatic first emerged as a new revenue source, marketers jumped on board without truly understanding its dynamics. But who needs to know the ins-and-outs when you have an agency that can do it for you? Indeed, marketers ceded too much control of the process to agencies. And some of the tech providers that helped facilitate that power shift over-promised while delivering a less-than-stellar product.

That’s why the hybrid model seems so viable at the moment. Marketers may not be equipped to do everything themselves — but they can certainly take more control, provided they have the skillset and technology to do so. “There probably aren’t many brands that [can] truly in-house programmatic,” said Meehan. “I think what they need is the discipline and the subject matter expertise of understanding how it all works and where the points of failure could be, so that they can make sure it’s being well managed.”

That will likely involve hiring new talent and bringing some technology in-house. But it will also involve close relationships with publishers, in many cases, agencies. “I think that’s mostly what the brands are [asking]: ‘why can’t they access [publishers’] inventory directly?” said Meehan. “‘Why do I have to use all this other technology?’ I think publishers have a tremendous opportunity to leverage that to create more value for themselves.”

Direct relationships with publishers are becoming increasingly crucial

For good or ill, the programmatic ad industry is starting to consolidate around multi-platform publishers with strong reputations for quality inventory and transparency. Many other publishers are being blacklisted or automatically blocked as a result of whitelisting.

There’s also been a trend toward tighter relationships between publishers and brands, belying the idea that programmatic must strip the humanity out of ad-buying. “There’s a growing acceptance that programmatic doesn’t mean no humans [are involved],” said Ryan Pauley, chief revenue officer of Vox Media. “On the marketer side that means a lot more hands on keyboards. On the publisher side, the one-to-one relationships are important —  being able to deliver insights back to clients about performance, about the audience, about the inventory. That’s going to be where the publishers separate themselves.”

As some publishers develop better reputations for one-to-one programmatic relationships than others, that could mean a smaller programmatic playing field for marketers. But it could also mean less risk — and more control. “Once [publishers] have control they start getting more visibility into the data,” said Meehan. “They see what the buy side is actually interested in, what they’re willing to pay.”

The trend toward tighter relationships between brands and publishers could signal that marketers are finally beginning to realize that effective programmatic buying requires a concerted strategy in addition to first-rate technological infrastructure.

Sophisticated technology is more important than ever

Marketers and publishers alike agree that it’s as crucial as ever for brands to be active across the programmatic ecosystem. That’s the only way to attain the necessary reach in today’s sprawling digital marketplace. As the programmatic industry evolves, forcing tighter working relationships between agencies, publishers and marketers’ in-house teams, it becomes even more vital to get the tech element right.

But marketers will need to find a balance between actually hitting their targets, doing so at the proper scale, and doing so without breaking their budget. And when you factor in the sheer number of concerns that programmatic marketers need to stay aware of —  fraud, attribution, viewability and more — it becomes even more crucial to seek out reputable tech partners.

Technology is the glue that can hold marketers, agencies and publishers together, fostering increasingly effective working relationships.

Where are we now?

Programmatic is still the digital marketing industry’s dominant media-buying method and revenue source, and that’s not changing anytime soon. But it has a ways to go before it supplants television or heralds in an age of transparent, fraud-free media trading.

To take more control while maintaining an understanding of the complex programmatic landscape, marketers should consider a hybrid approach as opposed to full in-housing. For a better shot at transparency and strategic control, they’d be well-advised to form tighter bonds with reputable publishers. The very foundations of the programmatic industry need to shift and adapt, keeping up not only with emerging technology, but the media industry itself. Media, after all, is in a constant state of flux —  and it’s only continuing to expand.

In 2008, programmatic was built to solve a problem. In 2019, there are new problems that need solving for. Programmatic is still part of the solution – but marketers, publishers and tech providers alike need to keep up with the industry as its changes only proliferate.

 

The post Today’s forecast: The state of programmatic appeared first on Digiday.

The publisher known for the viral gravity blankets has a new owner.

Futurism has been acquired by Singularity University, a Google- and Deloitte-backed business co-founded by inventor Ray Kurzweil that provides training, community, events and services to businesses and consumers. Following the acquisition, Futurism will help provide branded content creation and distribution services to Singularity’s members and clients. Financial terms of the deal were not disclosed. (Futurism’s commerce business was spun off last year into a successful standalone business called Gravity Products.)

In the near term, the Futurism acquisition will give Singularity University the chance to offer brand content distribution services to its corporate clients, which have ranged from HSBC to Red Bull, for the first time. The long-term aspiration is to turn Futurism into a publishing platform for the tens of thousands of subject-matter experts in Singularity University’s network, who provide expertise on emerging areas such as artificial intelligence.

“It’s more difficult to do this for a generalist publication,” said Futurism CEO Alexander Klokus. “But given that our focus aligns so perfectly with S.U. and their ecosystem, I think this is how media companies of the future are going to thrive.”

After it turned Gravity Products into a separate business unit last year, the largest source of revenue for Futurism was its brand studio, a dozen-person team that had done work for advertisers including Nokia. It also has a studio business that has produced multiple feature-length documentaries and scripted series for Facebook Watch.

Acquiring that brand studio team gives Singularity University a chance to deepen its relationships to its most important customers. Singularity University has an events business, a membership licensing model, executive- and enterprise-level training programs and an accelerator program, but the company earns most of its money from enterprise partnerships it forges with companies that want to train their executives on new ways of thinking about their businesses.

Adding a brand studio allows S.U. to help those brands, then crow about the changes they’ve been able to make, opening Futurism’s brand studio up to a whole new line of advertisers. “We help them figure out, ideate, then tell that story well,” said Singularity University Rob Nail.

Over time, the plan is to give members of the University’s community a way to use Futurism as a media platform. Before that happens, the two organizations will experiment with other ways to integrate Singularity University alumni and experts into Futurism content. Those could range from Singularity members offering expertise to Futurism editorial staffers as they work on articles and videos to Singularity writers delivering full op-eds, Nail said.

How they monetize those experiments will be worked out over time, Nail said, referring to the editorial partnerships as a “grand experiment.”

The post Gravity blanket seller Futurism acquired by Singularity University appeared first on Digiday.

Insider has found a new way to make money off its old Facebook news-feed videos: by recutting and distributing them on Snapchat.

For instance, Food Insider created a two-minute video profiling Junior’s Cheesecake, which has received 19 million video views on Facebook and another 4.3 million views on YouTube since being released in July 2017. Earlier this week, Insider’s video team edited a Snapchat-specific cut of the video, which has already been seen by more than 4.8 million unique viewers, according to Insider. The Snapchat cut was part of Insider’s daily channel — or “publisher story,” in Snap’s parlance — on Snapchat Discover. Here, Insider makes money from ads that appear within the daily editions.

With Snap opening up Snapchat Discover to include non-exclusive content, this has created an opportunity for Insider and other publishers to distribute and make money off of their social video archives. Specifically, the type of videos that used to dominate Facebook’s news feed but have since been devalued by the platform — shorter than 2 minutes, square and with text on screen — can now be remade for another mobile video platform.

“Facebook is focused on longer videos; YouTube always has been. We started to look at Snapchat as the home for this type of storytelling — and we can monetize it,” said Tony Manfred, head of video at Insider Inc. “That has been a big revelation for us from the publisher channel. This type of storytelling has a home now.”

Manfred said Insider has “thousands” of short-form videos and is constantly scouring its archives for content that would fit its daily publisher channel. This doesn’t mean Insider’s daily publisher channel, which typically features three stories and 21 snaps, is entirely old Facebook videos; but it doesn’t hurt to have such a library, either.  “Some of our biggest publisher editions have been led by stories from the archives,” Manfred said.

Insider on Snapchat includes the daily publisher story as well as five weekly video shows including “Cars Insider” and “Art Insider.” Insider is profitable on Snapchat, according to the publisher.

Across one daily publisher channel and five weekly video shows, Insider has 3.7 million subscribers in aggregate across its daily channel and video shows, and is adding about 15,000 subscribers per day, according to the publisher. From a unique-viewer basis, Insider’s daily publisher story alone reached 24 million unique viewers in February, according to Snap.

Insider also said it’s also getting users to stick around: The average time spent on Insider’s daily channel is 51 seconds, and ranges between 1 minute and 95 seconds for its five shows, the publisher said. (Typically, Insider’s daily channel runs for roughly two to three minutes, with episodes of the weekly shows averaging 3 minutes in length.)

As Snapchat opened Discover up to non-exclusive content, publishers have begun to find cheaper and more efficient ways to program for the platform. In many cases, this has meant doing away with 10-person teams dedicated to creating exclusive content for Snapchat, and folding the platform into the daily work overseen by a unified video department. Insider, with its 100-person video team, takes a similar approach.

“We care about all of the platforms,” Manfred said. “And we know that we’re going to need a YouTube cut and a Facebook cut, and Snapchat is right in there too.”

One way Insider has been able to improve viewership and time spent is by focusing on striking images in its thumbnails, which appear to users as they scan Snapchat Discover. Similar to thumbnails on YouTube, eye-catching images are more likely to drive users to click through to the channel or show on Snapchat Discover. And with more content creators on Snapchat Discover than ever before, thumbnails have become a key way of sticking out from the crowd.

“You want to use a thumbnail that’s going to draw someone’s eye, but once they see it, you also want to make sure people understand [the type of content] they’re going to get,” Manfred said.

The post Insider is finding new revenue on Snapchat from old Facebook news-feed videos appeared first on Digiday.

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The openings of two new retail developments in New York City today indicate how the future of digital brands is taking shape in the shopping mall.

• The retail and dining destination at Hudson Yards, where revolving art installations, restaurants, luxury outlets and larger-footprint stores, like Neiman Marcus’s first New York City location, has its second story dedicated as a “Floor of Discovery,” meant to drive visitors to startup brands that mostly exist only online.
• The floor will storefronts from born-online brands like M.Gemi, Mack Weldon, b8ta, Rhone, Heidi Klein, Lovepop, Stance and Dirty Lemon, which will be testing its cashierless drug store vending concept.
• Other established brands, like Madewell, Muji and Uniqlo, will be experimenting with more experience-based store concepts in the retail space.
• The 18-million-square-foot real estate development, open March 15 in New York City, is promising 65,000 visitors per day
• Meanwhile, downtown in New York’s Soho neighborhood, the new four-story retail store Showfields has partnered with Shopify to fill its retail space with online Shopify merchants.
• Brands include Wild One, Hudson Wilder, Meso Goods, Coco and Breezy and Best Self Co.
• Shopify, whose low-barrier e-commerce platform has contributed to the rise of the DTC brand boom, is now pushing into physical retail, acting as a backend bridge for online stores going offline for the first time.
• Elsewhere in Showfields is a rotating selection of 30 startup brands in physical outposts, launching with Quip, Frank Body, PureWow and more.

The opening marks a new relationship between retail developers and brands. To get digital startup brands in the door — in many cases for their first permanent store, or at the first in New York — the real estate developers made accommodations. Leases were made to be more flexible to help the brands take on less risk, something that’s becoming increasingly more commonplace as online brands eye physical spaces but bulge at 10-year agreements, a formerly standard lease term in retail real estate.

The post Retail Briefing: The future of the DTC mall appeared first on Digiday.

The industry’s anti-fraud initiative for online advertising has finally and officially made its way to OTT and mobile in-app advertising. On March 13, the Interactive Advertising Bureau Tech Lab released the final version of app-ads.txt, which is intended to combat bad actors that disguise themselves as another company’s app in order to siphon the money that advertisers are spending on mobile and OTT advertising. App-ads.txt bears many similarities to the original ads.txt, but there is a crucial difference that could complicate advertisers’, publishers’ and ad tech vendors’ efforts to adopt the initiative.

I think I knew ads.txt. But WTF is app-ads.txt?
It’s the version of ads.txt for mobile in-app and OTT advertising. Mobile and OTT app publishers can list the ad tech vendors that are authorized to sell or resell their ad inventory, and programmatic ad buyers can check these lists to make sure that a company claiming to offer an app’s inventory is actually able to sell the app’s inventory. This way, advertisers can mitigate instances when they think they are buying ads in, say, ESPN’s mobile or OTT app but really are bankrolling fraudsters who see programmatic advertisers are easy marks because of the programmatic supply chain’s historical lack of transparency.

Mitigating app spoofing is important for mobile in-app and OTT advertising for a couple of reasons. Ad fraud has become a huge issue in mobile in-app advertising because fraudsters saw that advertisers are spending a lot of money advertising in mobile apps because people are on their phones so often. And while ad fraud has not become so pervasive in OTT apps, there are ways for bad actors to defraud advertisers buying OTT inventory, and as more advertisers invest in OTT, more bad actors will try to get in on the action, in the same way they did with mobile in-app advertising.

But ads.txt already exists. Why does there need to be a separate version for mobile in-app and OTT advertising?
Two reasons, and they are related. First, app publishers need to publish the lists of their authorized sellers and resellers — these are called app-ads.txt files but they’re formatted the same as ads.txt files — to their websites in order for programmatic buyers to easily access those lists; this is how ads.txt works, and so far it’s worked fine (so long as companies implement it correctly). Second, programmatic ad buyers need to be able to confirm that a list on a publisher’s site corresponds to the app inventory they are trying to buy.

How is an app-ads.txt file able to be associated with a mobile or OTT app?
Through the app listings that app stores publish online. IAB Tech Lab is hoping that app stores will add some HTML code for each app listing that provides the app’s website domain, bundle ID and store ID. The website domain will point to the domain where buyers can find a publisher’s app-ads.txt file online, and the bundle ID and store ID can be matched against the bundle ID and/or store ID that are included in the bid request when an app has an ad impression to sell programmatically.

Why do you say that IAB Tech Lab is hoping that app stores will add that code?
Because most have not. App store support was a major sticking point when app-ads.txt was being developed. Without app store support, there’s no reliable way to ensure that an app-ads.txt file on a publisher’s site corresponds to a given app.

Which app stores do support app-ads.txt?
At this point, only Google Play, which is Google’s app store for Android and Android TV apps. That Google is an early supporter isn’t so surprising considering how active the programmatic ad giant was at getting advertisers and publishers to adopt ads.txt a couple of years ago. It’s also important to note that Google’s Android mobile operating system is a particularly popular target for mobile ad fraud.

As of right now, several major mobile and OTT app stores, including Apple’s, Amazon’s and Roku’s, do not appear to support app-ads.txt, according to a review of the code for their online app store listings. And Samsung does not appear to publish listings online for apps running on its smart TV platform. Roku declined to comment on future plans, Apple, Amazon and Samsung have yet to answer questions about their plans to support app-ads.txt.

What happens if the other major app stores don’t support app-ads.txt?
A lot of headaches. First off, it depends if an app store publishes app listings online. If it doesn’t, then basically app-ads.txt won’t work for those apps. If an app store does publish app listings online — as Apple, Amazon and Roku do — then it depends on whether those online app store listings include the website URL of the app’s publisher. Apple and Amazon include publisher’s website URLs in their app store listings. Roku does not appear to do so, but its online app listings do feature links to the privacy policy on a publisher’s site, which could be used to find the publisher’s app-ads.txt file if that file is hosted on the same domain. In each case, the companies developing tools to check for app-ads.txt files will need to tweak those tools for each app store to find publishers’ URLs, and publishers will need to ensure those URLs match the domains that host their app-ads.txt files.

So it will probably take a while for publishers, advertisers and vendors to adopt app-ads.txt, just like with ads.txt?
Yup.

The post WTF is app-ads.txt? appeared first on Digiday.

Turner wants to use its social audience data to help advertisers drive sales.

Over the past few months, Launchpad, a 40-person agency that sits within Turner Ignite, has begun pitching advertisers three new products designed to help with lower-funnel business goals such as actual sales or lead generation. These include ads which allow audiences to buy a product or register via email directly inside social posts; interactive videos that provide product information; and access to a suite of e-commerce services, including customizable online storefronts, digital commerce solutions, even warehousing and drop-shipping.

For now, Turner is not taking a cut of any transactions it drives through these new units, or claiming any kind of bounty for every email address an advertiser acquires. Instead, the commerce units are simply a different kind of ad unit that a customer can purchase for a campaign; Turner sells the spots on a cost-per-view basis.

The new units are meant to help position Launchpad as a one-stop shop marketers can use to target both current and potential customers with messages that help them sell. Rather than a short-term grab at commerce revenue, the new offers are supposed to position Launchpad as a results-oriented partner as marketers come under increased pressure to tie their spends to business outcomes.

“Some publishers might be exploring commerce as a revenue opportunity,” said Frank Kavilanz, svp of social strategy and insights at Turner Ignite. “This is about completing a full-funnel strategy.”

Global spend on digital branded content is projected to hit $9.8 billion in 2019, according to branded content distribution platform Polar.

That rising interest has helped Launchpad grow the business. In mid-2017, Kavilanz said Launchpad had executed 160 campaigns for advertisers. Today, that number has grown to nearly 1,000.

Yet, as branded content investment has grown, so has the pressure on marketers to prove that the investments they’re making are driving business results. A Digiday Research survey of over 200 marketing executives in Nov. 2018 found that 77 percent of respondents were under more pressure to connect their marketing spend with revenue; separate research from Digiday found that a small but growing number of marketers are now asking for performance guarantees for their branded content campaigns.

This, in turn, has compelled publishers big and small to look for ways to prove that their branded content is effective in generating outcomes. “The market is asking for this,” Kavilanz said. “We need to ensure the alignment of content, ideas and marketers’ objectives.”

In a perfect world, Launchpad should be able to prove these new ads work by pointing to digital sales or leads they drive directly. But Launchpad can also plug into a host of third-party measurement tools and partnerships parent company AT&T developed for sister company Xandr to measure things such as brand and sales lift, Kavilanz said.

WarnerMedia is still in the early stages of bringing this new version of Launchpad to market. But agency observers say that, in theory, it ticks a lot of boxes.

“It feels like a place we’re moving to from a market perspective,” said Kieley Taylor, the global head of social at GroupM. “From a business case perspective, there’s a story around the scale they’re able to deliver on television and may be able to track to more performance-oriented actions.”

Launchpad’s distribution reach is also expected to grow. Its social footprint spans more than 100 channels and pages that reach nearly 900 million people, according to the company. In the fourth quarter of 2018, Turner began offering advertisers the ability to distribute that content to addressable TV and OTT audiences through Xandr’s ad targeting platform.

The post Turner dangles commerce tools in front of advertisers appeared first on Digiday.

For Jurrien Swartz, co-founder of 3-year-old reusable housewares brand Stojo, his office space at WeWork’s New York City Dumbo location is more than just a place to work. It’s a gateway: Through his company’s relationship to WeWork, Swartz can get help securing funding and scaling his direct-to-consumer company. Stojo is part of WeWork Labs, a mentorship program from WeWork that helps grow early-stage startups, including direct-to-consumer retail companies.

WeWork invited Swartz to join the program six months ago, and he said through it, he’s cemented crucial relationships with venture capitalists through WeWork connections. He said the program also helped him navigate other startup growth challenges, like marketing and legal issues, through meet-ups with experts from both within and outside the WeWork member ecosystem.

“The idea was to identify startups that would be seeking to raise capital, and have services or products that are not necessarily consulting or freelance operations but actual businesses that will grow and add staff over time,” he said. “I saw it as an opportunity as I prepared to raise capital — from a strategic standpoint, it made a lot of sense to get involved.”

WeWork Labs is part of the company’s bigger plans to move the business beyond co-working. WeWork’s parent company, The We Company, has in recent years moved into furnished apartments (WeLive) and schools (WeGrow). Now, it’s focusing on retail as a way to develop services offerings that build off the 9-year-old company’s physical locations and the network effect of its 400,000 members.

With the rush of interest in direct-to-consumer retail startups in recent years, WeWork sees an opportunity. It’s a space that’s getting a lot of attention from investors. According to recent research, last year, direct-to-consumer startups garnered more than $1 billion in funding. WeWork is sitting on a trove of direct-to-consumer companies it already has in its ecosystem, and catering to upstart retail brands brings possibilities for broader services offerings. It also serves as a point of differentiation from other co-working businesses, through networking and connections with funders.

The company’s efforts to grow retail startups is served through two primary vehicles: WeWork Labs, which offers direct-to-consumer companies mentorship; and placement of WeWork member companies’ products in WeWork’s on-site stores, through which WeWork offers informal advice and support through events and networking. As its efforts in the retail category come into focus, WeWork is growing its startup mentorship possibilities through other programs, including a food tech accelerator that launched Wednesday, and a creator’s fund for “future of work” startups that rolled out last September.

A fine line between an incubator and accelerator
WeWork Labs launched in 2011 out of two New York City buildings; the program was re-launched last year as part of an effort to scale the program globally. Labs is housed in a dedicated section of participating WeWork locations, currently offered in 49 locations across 32 cities and 15 countries. Companies can reach out to WeWork expressing an intent to participate in Labs, and WeWork in some cases reaches out directly. Companies sometimes pitch for a chance to be part of the Labs program. Labs participants don’t pay anything to participate beyond their WeWork rent dues.

Unlike traditional incubators or accelerators, Labs follows a loose structure, with each company pursuing specific objectives, and regular networking events. Companies also have the opportunity to connect with others in the Labs network through a Slack channel, according to Swartz. Through Labs, WeWork is laying a foundation for an ongoing relationship with the new brands. It has no time limits, unlike traditional accelerators. Companies also get opportunities to connect with investors, though WeWork Labs’ head of programming, Osnat Benari, vp of programming at WeWork Labs, said WeWork doesn’t invest in Labs companies. In January, however, the company held a Labs pitch competition where winners received investments from WeWork, with the first-place winner getting a $150,000 prize. Swartz, who won a $75,000 investment from a second-place result in January’s pitch competition, said WeWork is taking some equity in his company, but WeWork declined to comment on the specifics of the funding arrangements.

“We see WeWork Labs as a way to incubate a number of different startups, with the hopes that they will grow and stay with WeWork in a variety of different ways,” Benari said.

The long game
WeWork’s attention on retail isn’t just happening behind the scenes through its internal Labs program; it’s also tapping brands for its own retail program. Wallet and accessories brand Dynomighty is not part of WeWork Labs, but it won a pitch competition to get its products featured at WeWork’s on-site stores. It said WeWork is a valuable resource for advice, particularly regarding scaling and marketing.

“I feel like I’m treated with some very special gloves — they’re taking care of me,” said Terrence Kelleman, founder of Dynomighty. WeWork facilitates introductions to other WeWork member companies that specialize in fields that help grow his online business, like SEO, and WeWork facilitates opportunities to connect with the media, he added.

Those efforts should benefit WeWork in the long run. According to Swartz, the opportunities brought about by WeWork’s mentorship are a powerful influence on companies to stay with WeWork and continue to partner with it as the businesses grow.

“By supporting all these companies, and if [WeWork] has a hand in their success, [the thinking is] as long as WeWork provides me with space and services, I’m going to stick with them for a while,” he said.

The startup incubation will hopefully be added value for other startup retail brands to consider locating in a WeWork and deepen their relationship with it.

“Ultimately, it’s a lead-generation tool for people to fill desks in WeWorks,” said Andrew Murphy, managing partner at Loup Ventures. “The strategy makes a ton of sense — on the Labs side, they offer connections with startups that are going to grow and fill desks, and on the store side, it’s a great way to utilize retail space that is going for pennies on the dollar.”

But scaling services offerings is challenging, and yet another unproven new area in its expansion of business areas. The We Company has ambitious goals to grow into a multi-armed services company, but it’s not going to be a seamless transition.

“They’ve got to try services because it’s an obvious next step, and time will tell if they’re successful in transitioning to a suite of business services,” said Murphy. “It’s really hard for a business like that that’s grown so rapidly on one core skill to leave its core DNA and build a new one.”

WeWork, however, said the follow-on results of the mentorship are the core objectives of helping to grow retail companies that participate in its programs.

“We’re using the retail platform as a way to celebrate stories between all these makers [of products] and simultaneously provide an in-real-life network of idea sharing,” said EunJean Song, global vp of retail, food and beverage operations at WeWork.

The post ‘Very special gloves’: WeWork is mentoring retail startups as it extends services appeared first on Digiday.

Los Angeles has evolved from a celebrity-adjacent startup hub to a hotbed for San Francisco and New York transplants, as its e-commerce scene diversifies.

Today, the region’s hottest companies include marketplaces like GOAT Group, which received a $100 million investment from Foot Locker earlier this year, direct-to-consumer companies like vitamin purveyor Ritual and Unilever-owned Dollar Shave Club, consumer goods powerhouses like the Honest Company, and e-commerce platform startups like Stack Commerce and Magento, which was acquired by Adobe last year.

As a result, commerce startups say it’s easier to recruit talent, and find Los Angeles-based investors and mentors with experience in the sector than it was 10 years ago.

Tracy DiNunzio, the founder and CEO of peer-to-peer resale marketplace Tradesy, said that when she officially launched the company in 2012, it was the “generation of Beachmint.” Many of the commerce companies that popped up around 2010 were, “marrying a celebrity with some sort of product,” according to Andrew Blackmon, the co-founder and CEO of the Black Tux. That included Beachmint, which designed apparel lines in partnership with celebrities like Mary-Kate and Ashley Olsen, and Rachel Bilson, as well as TechStyle Fashion Group, which launched Fabletics with Kate Hudson and acquired Kim Kardashian and Kimora Lee Simmons’ ShoeDazzle. The most well-known exit by an e-commerce startup at the time was HauteLook, which was acquired by Nordstrom for $180 million in 2011.

“When I started Tradesy, we were a bunch of totally inexperienced, very ambitious people. And it was just hard to find people who had experience. There was some commerce experience, but there was effectively no marketplaces experience,” DiNunzio said. “So we did some recruiting from [Silicon Valley] and from New York, but it’s always hard when you have to relocate people to make those hires and to make them when you need them.”

Los Angeles did have some experienced technical talent in other areas — Greg Bettinelli, the former chief marketing officer at Haute Look and now a partner with Los Angeles’ Upfront Ventures, said that the early success of MySpace and CarsDirect turned Los Angeles into the “SEO capital of the world,” in the early to late 2000s.

“We’ve always had people here who’ve understood organic traffic acquisition,” Bettinelli said.

Now, DiNunzio said it has, in particular, become easier to find senior-level engineering talent — in part because the engineers who started at companies like Tradesy 10 years ago are now experienced engineers. DiNunzio says that she’s recruited a lot of engineers from TrueCar, a Los Angeles-based auto-pricing marketplace platform founded in 2011.

Other experienced senior-level talent, like Bettinelli, are becoming investors, ensuring that the next generation of Los Angeles commerce founders have access to more early-stage capital to start their business. Though DiNunzio and Blackmon said that they’ve never had a problem raising funding in Los Angeles — partially because investors from New York and San Francisco have always proven willing to make frequent trips to the area — they seem to be visiting more frequently in recent years.

Additionally, what Los Angeles has always had is a surplus of creative talent. Blackmon said that when he and his co-founder, Patrick Coyne, were starting the Black Tux, they had to decide between Los Angeles (where Blackmon lived), New York (where Coyne lived) or San Francisco. Los Angeles got the edge because of its influx of creative talent. They also liked the fact that Los Angeles’ e-commerce scene was younger, and that there were a lot of founders working on companies at a similar stage as the Black Tux.

“Anything from a creative director to a copywriter to a designer, to a web designer, Los Angeles has so much talent in that space,” Blackmon said.

The proximity to entertainment means a more diverse talent set.

“Here, you got a lot of people who worked in entertainment or video production, so we’ve found that we get a lot of good Swiss army knife creative thinkers,” DiNunzio said, in contrast to “some of the more traditional product marketing and design people,” in places like San Francisco, where career tracks follow the Stanford MBA-to-startup trajectories.

Los Angeles’ reputation as a creative hub has also cemented it as a good place to live in job applicants’ minds, particularly those hailing from San Francisco. Both Blackmon and DiNunzio say they’ve seen an uptick in recent years about job applicants from San Francisco and the Bay Area, who want to move to Los Angeles to get out of a city that’s so dominated by tech and is getting increasingly expensive to live in. The Black Tux recently hired Thad Hwang, formerly the director of product management at Lyft, to be its chief product officer, for example.

And DiNunzio said that she’s now seeing companies like Facebook and Google — who also have companies in Los Angeles — recruit from the same talent pool they are. Bettinelli said that he’s also seeing more second- and third-time entrepreneurs moving to Los Angeles than in recent years, typically from New York or San Francisco.

That competition for talent is only going to get tougher, as companies like the Black Tux, which has taken on more than $60 million in venture capital funding, and GOAT Group feel increased pressure to grow quickly and deliver the necessary returns to their investors. Additionally, more alumni of these consumer companies started in 2010 or later are starting their own ventures — an Honest Company alum recently raised $8 million for a natural perfume startup, while Tradesy’s former director of engineering recently started her own company, a child care provider platform called WeeCare. Now, they’ll have a better launching pad than the generation of commerce founders before them.

“I’m always very bullish. I think we’re still in the very early innings of Los Angeles’ success,” Bettinelli said.

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