Month: March 2019

Amazon is making new changes to a royalty program for content owners that upload videos directly into Prime Video.

Launched in May 2016, Amazon’s Prime Video Direct program gives video creators and media companies the ability to put their content inside Prime Video. Once uploaded, these videos can be found inside the Prime Video app next to movies and TV shows produced or licensed by Amazon. Videos made by an auto publisher or video creator could ostensibly be seen next to reality TV shows such as “The Grand Tour.”

For those that upload either episodic video shows or individual titles through Prime Video Direct, the program pays out royalties at set rates based on the aggregate hours viewed per title. In the U.S., Amazon paid between 6 cents and 15 cents per hour viewed in 2018; a similar sliding scale also exists for other Amazon markets the PVD program is offered including the U.K., Germany and Japan, according to a rate card.

Starting in April, Amazon is implementing changes to its U.S. rate card that will drop prices to between 4 cents and 10 cents per hour streamed, according to an email sent to Prime Video Direct account holders obtained by Digiday. In effect, this means that Amazon will be dropping its rates by 33 percent on both ends of the rate card.

Amazon did not provide a comment by press time.

As part of the changes, Amazon is also introducing a new sliding scale on how it determines payments in the U.S. Instead of a flat fee based on aggregate hours viewed, the company is introducing a new metric, called “Customer Engagement Ranking,” which will score video titles based on a variety of factors including unique viewers, hours streamed and the popularity of the title in terms of talent, IMDb rating or even box-office performance.

On its website, Amazon describes CER as “a percentile ranking of a title’s level of engagement with our Prime customers in relation to other Included with Prime (SVOD) titles published via Prime Video Direct within a single territory. … CER is calculated at a season level for episodic content and is calculated on an individual title level for standalone titles.”

Going forward, if a title has a better CER than average — as measured by Amazon — than it will pay up to 10 cents per hour, which is 4 cents better than the base rate of 6 cents per hour. If the title is performing worse, payments can be as low as 4 cents per hour.

With Amazon providing little information into exactly how it calculates that customer engagement score, the ranking becomes a “black box” that limits a video maker’s ability to project revenue from Prime Video Direct, according to Aaron Linsdau, a speaker and filmmaker who has an 83-minute documentary film about his expedition to the South Pole, among a few other projects on Prime Video. “Now there is no quantifiable way for me to know how much revenue we’d make,” Linsdau said.

Amazon’s move to change its rate card for Prime Video Direct comes after the company dropped royalty rates last year. Initially, the program was paying 15 cents per hour in the U.S. and 6 cents per hour in the U.K. based on hours viewed. In 2018, Amazon introduced a sliding scale which paid between 6 cents and 15 cents per hour in the U.S.

As part of Amazon’s new terms, which will go into effect at the beginning of April, the company is also introducing a flat rate of ¥8 ($0.07) per hour in Japan; rates in the U.K., Germany and Austria will remain the same.

Amazon has not disclosed how much it has paid out in royalties over the life of the Prime Video Direct program. In July 2017, the company said the program had paid out “tens of millions of dollars” with “billions of minutes” streamed in its first year.

For some media companies, Amazon Prime Video Direct is a growing opportunity — especially as a way to earn incremental revenue from existing videos and shows. And by uploading a greater volume of content, bigger programmers have the chance to make even more money going forward. An executive at a prominent digital publisher said it can make between $10,000 and $40,000 per month from the program, and total royalties continue to go up.

Even video publishers that are on Amazon Prime Video Direct but haven’t used the program all that much, the program remains relevant because of Amazon’s interests in streaming video.

“It’s not super significant or meaningful for us right now,” said video executive at a top social video publisher. “But we know we want to be there.”

But for smaller video owners, especially independent video creators and filmmakers who saw Amazon as a meaningful source of revenue that could be put back into creating more films and series, the changes are significant.

“You can’t just get onto Netflix, Hulu,” said Linsdau. “This has been one of the only platforms that has been somewhat viable.”

The post Amazon is slashing royalties for video makers uploading to Prime Video appeared first on Digiday.

Target is out aggressively pitching so-called DTC brands with new deal terms, signaling a balancing of power in wholesale retail.

The company now sells formerly online-only brands including Casper, Harry’s, Barkbox, Quip and Native. They all have an aesthetic instantly recognizable by online shoppers — or really anyone who has experienced targeted ads on social media. They claim also to offer better versions of everyday products at cheaper prices than customers are used to finding in stores. They have established customers, and troves of first-party customer data thanks to the direct-to-consumer launch strategy. 

They’re attractive players for Target to get its hooks into, and as the cost to advertise on Facebook and Google climbs and online growth slows, digital brands need new retail outlets to both increase brand awareness and drive customer acquisition. They also need an influx of cash: Target invested $70 million in Casper in 2017. A Target spokesperson said that the company is “aggressively” seeking out new digital brands to bring into stores in every category.

“There’s unquestionably some cannibalization of DTC sales as they happen at Target instead. But we’re agnostic about that — we just want to be where the customer wants to shop. And right now, we have more share in sales at Target than we do shelf presence,” said Moiz Ali, the CEO of Native Deodorant, which now sells inside Target stores and on Target.com.

Retailers like Target, as well as Walmart and Nordstrom, are rewriting the rulebooks of merchandising in order to accommodate trendy digitally native brands that were, in most cases, launched without wholesale margins in their business structures. Nordstrom’s gm of merchandising has said the company “threw out the old playbook” in order to orchestrate inventory buys with brands like Greats and Reformation, promising to leave brands out of store-wide promotions and not requiring inventory buybacks for what doesn’t sell. Walmart is so bullish on DTC brands that it’s acquiring a suite of them under Andy Dunn, the founder of Bonobos and now Walmart E-commerce’s head of digital brands.

At Target, the best way to understand how these new DTC retail deals are playing out is to look to its health and beauty category, where Harry’s, Quip and Native Deodorant, as well as Beautycounter and Oar & Alps, are now on sale. Unlike Casper’s pillows, these items — razors, toothbrushes, deodorant — need to be purchased regularly which means a steady stream of continuous data, on how well they’re performing in stores. And as CPG corporations like P&G and Unilever monitor buzzy digital brands to see who’s worth acquiring (Unilever has bought Dollar Shave Club; Native Deodorant is owned by P&G), success in Target stores and other mass retailers is a clear indicator of performance and long-term brand loyalty.

Striking a deal on subscriptions
“If you have a successful direct-to-consumer business going into Target, you’re armed with negotiating power and data to say, ‘Here’s what’s going to work well,’” said Mike Duda, the founder of investment firm and digital agency Bullish, which has worked with Harry’s and Casper. “You have heat behind you. And Target’s gone about this a smart way — there’s a level of flexibility now you might not have seen 10 years ago in how they work with brands.”

Digital CPG brands also typically have subscription models built in to help secure repeat purchases on items that are expensive to fulfill and ship online in individual units. How Target has worked with these brands around their subscription products offers a window into how Target has been negotiating with attractive brands.

“For subscription businesses, in particular, [selling in retail] is a great model,” said JB Osborne, the CEO of the digital agency Red Antler. “As online channels get more crowded, subscription brands will start to see retail partnerships like these as a viable customer acquisition strategy, and one that will cost a lot less.”

When Quip started selling its electric toothbrush starter packs in Target stores, the brand worked to get Target customers back to the Quip site, where they could sign up for automatic brush head refills. So, at Target, Quip customers get a code that lets them register their brush online and sign up for an account. To order more brush heads, they have to go subscribe to Quip — Target doesn’t sell individual heads. But, according to two sources familiar with the deal, Target wasn’t going to simply set Quip up for mass subscription sign-ups and get nothing for it: The company receives affiliate revenue for any subscriptions activated from a Target purchase. Target and Quip wouldn’t disclose the terms of the deal.

“Retailers are looking to innovate. They themselves have their online presences, they understand movement in the industry around the convenience and value of online brands for customers and how close a relationship you can build,” said Simon Enever, the CEO and co-founder of Quip. “So Target was wanting to innovate around the changing dynamic of retail. It’s never been a painful discussion, but there are many details to iron out how that works. This hasn’t necessarily been done before, and we’re a business and they’re a business, so new things are being tried. We’re going to keep trying to get the balance right and at the core of it, it’s about creating the best experience.”

Trading data
While brands have more leverage in cutting retailer deals than traditional wholesale brands have in the past, companies like Target and giving away their massive reach and foot traffic for peanuts.

For Harry’s, a shaving brand, the company had a few stipulations before selling in Target. It didn’t want its products to be disseminated throughout the personal care department, instead of pushing for all Harry’s products — a shave gel and bar, the different razors — to be grouped into one branded section. When it came to subscriptions, which were an add-on and not the company’s launch model, co-founder Jeff Raider said that his team pushed Target to enable Harry’s subscriptions through Target’s website, to get a better idea on how many Target customers would want to buy that way.

“We encouraged Target to do that because of the data that comes in. We want to make sure we’re available wherever you are but also have the best experience,” said Raider. “If Target can do a better job by serving Harry’s subscriptions, that’s greater experience overall.”

Raider said that Harry’s and Target regularly share data insights from customers back and forth, with the goal of boosting sales in stores and online.

Building a mass footprint
But going into retail shelves is not always about tying in subscriptions or pushing customers online. While customers can sign up for a subscription on Native Deodorant’s website, the brand didn’t work that into its deal with Target. Instead, it negotiated on positioning: It wanted to have a branded end cap, or the open retail space at the end of an aisle, with its logo oriented vertically as it is on the bottle. Ali said that as Native’s Target sales have grown, it’s been allotted more space in stores. But Ali didn’t want to tie Target customers back to its website by way of subscription in an effort to establish Native as channel agnostic as it grows. It recently expanded its retail footprint as well, launching in 3,000 Walmart stores.

“I don’t want to dictate how the brand is built — sales will always happen online and in stores. Five years from now, I don’t want to say 60 percent of our sales will be online and 40 percent will be in wholesale, and I’ve built around that. I want customers to tell us where 60 or 40 percent of their purchases will be.” Native doesn’t disclose revenue breakdown by channel.

As Target explores new digital brand partnerships does so, it will face more individualized merchandising deals from brands that have the weight of their online brand and existing customers behind them. But digital brands need retail distribution to reach the customers they couldn’t online.

“We learned with Target that the people buying Harry’s there had heard of Harry’s before, but didn’t want to buy online,” said Raider. “Those customers are really incremental to our business — people we couldn’t reach before but were interested in Harry’s.”

That’s eye-opening for brands who thought they could reach the world online, and that the future of retail was digital.

“Direct-to-consumer brands can win by not necessarily being pure DTC, and Target can win by adopting direct-to-consumer brands,” said Duda.

The post How Target is getting more DTC brands to sell in its stores appeared first on Digiday.

YouTube is breaking out YouTube TV inventory from the rest of its offerings in an effort to capitalize on advertisers’ growing interest in addressable TV inventory — and address their frustration with how the platform had initially sold ads for YouTube TV.

A year after offering YouTube TV as simply another inventory source for Google Preferred campaigns, YouTube plans to pitch advertisers on buying YouTube TV inventory separately during this year’s upfront buying cycle, according to three industry executives with knowledge of the matter. Advertisers will still need to sign deals for Google Preferred in order to access YouTube TV, but they will be able to manage their YouTube TV campaigns independently of their Google Preferred campaigns, the execs said.

YouTube declined to comment.

Being able to treat YouTube TV as a separate purchase can make a significant difference when it comes to ad buyers’ interest in the streaming TV inventory. That might seem counterintuitive, given advertisers’ scale concerns with streaming TV services, which are notably smaller than their traditional pay-TV counterparts. But being able to manage streaming TV inventory in a silo gives advertisers more flexibility to combine it with their broader addressable TV campaigns, in which ads are targeted at the household level and aimed according to categories beyond viewers’ ages and gender, and accrue the scale that the services lack on their own.

Streaming services ad inventory is attractive to buyers, because it’s ads that appear next to actual TV content, reaching cord cutters that can be targeted to specific audiences across a national footprint. But it’s typically insufficient. Not only are these services only allowed to sell two minutes per hour of ad inventory per network on their service — the same allotment as traditional pay-TV services — but their reach is limited to a million or two subscribers at best, whereas their traditional counterparts, while regional, have tens of millions of subscribers.

The streaming TV services continue to chip away at their scale problem. Dish Network’s Sling TV appears to be the largest of the streaming TV services with 2.42 million subscribers at the end of 2018, up 9 percent year over year, according to its parent company’s most recent earnings report. According to Bloomberg, Hulu’s live TV service reportedly has nearly two million subscribers, and YouTube TV has more than one million subscribers. And AT&T’s DirecTV Now had 1.6 million subscribers at the end of 2018, up 38 percent year over year, per the telecom giant’s most recent earnings report.

“A year ago, the scale wasn’t there,” said Michael Law, evp and managing director of video investment at Dentsu Aegis Network.

That scale is particularly more apparent when it comes to YouTube’s and Hulu’s TV services, which each launched in 2017. While Sling TV’s subscriber base increased by 9 percent year over year and DirecTV Now’s by 38 percent year over year (though the latter did lose 267,000 subscribers in the fourth quarter), since January 2018 Hulu’s reportedly has quadrupled from 450,000 subscribers and YouTube’s has more than tripled from 300,000 subscribers, according to a report from CNBC published that month. “The growth has come from Hulu and YouTube TV. Both put the money behind it in promotions,” said Mike Piner, svp of video and data-driven investments at MullenLowe’s Mediahub.

YouTube’s and Hulu’s streaming TV services not only have lacked scale but also have supply constraints, given the fraction of ad slots they are allowed to sell. To shore up the issue when they each began selling this inventory during last year’s upfront cycle, both YouTube and Hulu wove their streaming TV inventory into broader packages. YouTube added YouTube TV to Google Preferred, while Hulu has been has been mostly testing it, per ad buyers, because the company’s live TV service is not yet available on every device through which people can access Hulu’s regular service, such as its OTT apps for TVs connected to older Apple TVs or running Google’s Android TV platform.

Ad buyers have been hoping that YouTube and Hulu will address their supply constraints by following the example of Sling TV and DirecTV Now. Both services have latched on to advertisers’ interest in addressable TV by fastening themselves to that inventory. “A lot of times we’re looking at Sling from the addressable perspective because you can do that easily along with a Dish buy,” said Samantha Rose, svp of video investment at Horizon Media.

Buying ads from streaming TV services “really makes sense when you’re using it as a complementary product to another buy you’re doing, really an addressable [TV] buy,” said Piner.

Traditional brands are rarely interested in streaming TV inventory, because when they buy national ads from TV networks, it runs on the streaming service as well. But these advertisers are increasingly interested in being able to target and tailor their ads to particular households, especially cord-cutter households that are generally considered by ad buyers to overlap with those hallowed millennial and younger demographics.

Additionally, many digitally oriented advertisers, such as DTC marketers, are looking to advertise on TV to build their brands in the way of the companies they are trying to unseat. These advertisers are turning toward addressable TV, including the streaming TV services, as a more cost-effective way to enter the market. “We’ve seen more appetite [for streaming TV inventory] from digital-first clients who may not have a large TV ad budget,” said Rose.

However, using streaming TV inventory to complement an addressable TV buy is only possible if it can be packaged to align with an addressable TV buy. That meant adding it to an addressable TV buy for Sling TV and DirecTV Now, and for YouTube and potentially Hulu — no ad buyers contacted for this article knew of any changes Hulu plans to make to its streaming TV pitch — it means offering that inventory for advertisers to manage independently and therefore more easily in relation to their addressable TV buys. “Our number one wish would be that we could buy it independently but in an addressable format,” said Law.

The post To chase addressable TV budgets, YouTube is changing how it pitches YouTube TV appeared first on Digiday.

Publishers are emerging from a winter of reckoning with an air of realism. Multiple media companies have announced layoffs as the digital ad economy faces pressure while growth flows to U.S. tech platforms. Yet publishers still need to rely on platforms for reach, giving up full control over their audience and strategies. On top of that, the aftermath of data privacy rules, like the General Data Protection Regulation, have tightened the grip on data sharing for ad targeting, squeezing programmatic revenues.

Publishers gathered in Milan, Italy, on March 5 – 7 to discuss these issues and more. Here’s what attendees learned:

The post ‘Scale itself isn’t that transformative’: Insights on sustainable publishing models from the Digiday Publishing Summit Europe appeared first on Digiday.

Grayson, a direct-to-consumer women’s button-up brand, is launching on Thursday with a different go-to-market strategy than many other DTC brands: it’s launching its wholesale partnerships at the same time as its online store.

Nordstrom and Anthropologie will each carry Grayson shirts at roughly a dozen of their stores at the same time the brand starts selling through its e-commerce store. Founder Audrey McLoghlin is trying to position Grayson as a hybrid DTC-wholesale business, rather than a DTC business with wholesale partnerships tacked on as an afterthought.

“The reason we want to be DTC and retail at the same time is to ultimately allow the end customer to touch and feel the product, and to be able to connect with their favorite associate who will be able to tell them, ‘Hey, we have this new brand in, I really want you to be able to try it,’ and really get that tactile experience that you can’t get with DTC,” McLoghlin said. 

Grayson is launching wholesale and DTC channels simultaneously because while brands have the benefit of being able to speak directly to the customer through DTC, wholesale has the benefit of introducing customers to new brands in a familiar setting. And, as the cost of advertising is rising in mediums that DTC companies have traditionally turned to, like Facebook, they’re finding that it’s harder to win over new customers online than it used to be.

It’s a departure from the typical direct-to-consumer brand formula, which usually includes fast online growth backed by VC dollars and a later shift into physical stores and wholesale retail. McLoghlin has no desire to shoot for the hockey-stick-like growth that iconic DTC brands like Warby Parker and Casper have. And she doesn’t have to — McLoghlin didn’t have to take on any outside investment for Grayson and has no plans to do so in the future. Of the hundreds of millions that venture capitalists have poured into DTC companies, she says that “that is bananas,” and doesn’t believe that will last long term.

Additionally, McLoghlin believes it’s “borderline impossible,” for DTC brands to add a wholesale partnership later on “unless their margin structure is set up to be able to do it [from the beginning].”

Web Smith, the former chief marketing officer and co-founder of menswear DTC brand Mizzen + Main, said that he doesn’t think it’s impossible to work in wholesale partnerships later on. But the risk is that if a DTC brand waits too long to pursue wholesale partnerships, those retailers sign deals with competitors, making them “less likely to pursue retail partnerships in that category.”

McLoghlin has experience with the hybrid model, as she’s the founder of Frank & Eileen, another women’s button-up brand and the parent company of Grayson. Frank & Eileen’s button-ups range from $200 to $300, while Grayson’s will range from $128 to $138. Frank & Eileen started as a purely wholesale brand 10 years ago, selling at Neiman Marcus. McLoghlin then “started making a real commitment” to DTC three years ago, and now 50 percent of the brand’s sales come from DTC, while 50 percent come from wholesale. She’s also aiming for a 50-50 split between wholesale and DTC sales with Grayson.

McLoghlin said that one of the biggest challenges for her in adding a DTC channel for Frank & Eileen was adjusting to the different level of creative assets required for DTC. In wholesale, she said, the “store is telling your story,” so you have to produce very little creative. DTC requires different copy for email marketing or social media blasts, both of which are platforms that essentially require daily refreshing. McLoghlin said she’s had to do “very little” social media marketing for Frank & Eileen, so she partnered with Red Antler, which specializes in DTC branding, prior to the launch of Grayson to shape the company’s messaging.

Even for the DTC companies who figure out their margin structure and have a sufficient creative team, there are downsides to wholesale. As Digiday’s sister site Glossy reported, sometimes wholesale partners push DTC companies to sell in more stores than they can manage Richie Siegel, the co-founder and lead analyst of consumer advisory firm Loose Threads, also said in an email that it can be hard for DTC brands — who are used to working on their own schedules — to adjust to the wholesale calendar.

“The more a brand optimizes for wholesale, and the less power it has when it is small, the less fluid and modern it will be under the hood, and it can run into the same challenges many traditional brands are running into with excess inventory and lots of debt,” Siegel said.

For McLoghlin, the lesson she wants other aspiring founders to take away from Grayson is that “there’s the wholesale world and there’s the DTC world,” — and that brands need to master the skills needed for both worlds. 

“All all these people are coming out and saying, ‘We’re DTC only, we’ll never sell wholesale, we’re purist.’ …  They didn’t think about the future of what they might need,” McLoghlin said.

The post Why DTC brand Grayson is launching with wholesale partnerships appeared first on Digiday.

Nutella-maker Ferrero is trying out voice commerce.

The advertiser is one of the first in the U.S. to use the “send me a sample” application, which delivers a free jar of its Nutella chocolate hazelnut spread to people who have it installed in either their Amazon or Google voice assistants. Whenever someone repeats the “send a sample” phrase followed by the name of the brand, an order is made by the app, which pulls delivery information either from the Amazon or Google account linked to the voice assistant.

Diageo used the app in the U.K., last year, and whereas Diageo was experimenting with calls to action and aspects of sonic branding, Nutella wants to use the intel to gauge whether voice could be the commerce driver it anticipates.

Should enough deliveries come via the app — Diageo’s trial had more than 6,000 requests in its first week — then Nutella will explore other options, said Ferrero’s head of e-commerce in the U.S. Rachel Tetreault, who said voice search could be something it looks into later this year.

CPG advertisers haven’t been the quickest to explore marketing via voice assistants in the way other verticals have, in part because there’s a worry it could do more harm than good. With Amazon, for example, there’s a growing worry that the Alexa personal assistant in its Echo smart speakers will aid the online marketplace’s attempt to learn what products and categories are most profitable before introducing its own alternatives.

Ferrero doesn’t believe advertisers can afford to have that view — not when so much commerce is moving online. Indeed, 5 percent of consumers use voice shopping now, but that number could reach 50 percent by 2022, per research firm MoffettNathanson.

“Voice is getting traction with consumers, and it’s only a matter of time before it plays a bigger impact on the customer journey, particularly as more grocery sales migrate online,” said Tetreault. “According to our forecasts, this shift will be more noticeable over the next three to five years.”

In China, for example, online sales account for 15 percent of Ferrero’s annual sales there. Tetreault would not give comparative figures for the U.S. but did say a jump in online sales had pushed it to rethink its relationships with tech partners like Amazon and existing deals with supermarkets. “We’re building strong relationships with platforms like Amazon and Google but that’s not going to be at the expense of our retail partners who are also doing more to understand that customer journey online.”

The best way for CPG advertisers to get their foot in the door is by developing voice apps now to cater for the user behavior of the future, said Steff Preyer, account director at voice-based marketing agency Rabbit and Pork. “The user behavior data collected over time will determine how you can continually enhance and improve the voice shopping experience.”

The post Nutella tests out voice commerce with first sampling push in the US appeared first on Digiday.

Facebook head of video products Paresh Rajwat detailed several updates related to Facebook Watch at the social network’s South by Southwest event, also touching on new features related to music on users’ profiles. Over 20 new episodes of original show Red Table Talk–hosted by Jada Pinkett Smith and her daughter (Willow Smith) and mother (Adrienne…

The twttr prototype application Twitter first discussed last month was made available to its initial group of testers earlier this week. Twitter Support tweeted when introducing twttr last month, “We want it to be easier to read, understand and join conversations–and we’d love to know what you think.” Sarah Perez of TechCrunch shared details on…

Verizon said it will introduce 5G wireless service in selected areas in Chicago and Minneapolis on April 11, for an additional $10 a month.

Facebook began experiencing issues just before noon ET Wednesday that has brought the social network and its family of applications to a virtual halt for hours. There was initial speculation about a massive distributed denial-of-service (DDoS) attack, but that does not appear to have been the case. A Facebook spokesperson said late Wednesday afternoon, “We’re…