Month: April 2019

Spring is the season of showmanship in tech and media. In Silicon Valley, Facebook hosts its annual F8 conference for developers while Google has Cloud Next later this month, followed by I/O. In New York, there’s the NewFronts, where Twitter is now an annual presentee. This year, Snap is entering the ring with its first-ever partner summit, led by CEO Evan Spiegel.

Snap’s one-day, invite-only event is a big step for the company, which has been notorious for being secretive and exclusive. Snap had previously refused to work with creators, but recently Snap has hosted creator events at its offices. Snap once only worked with a handful of media companies for Discover, but that’s since grown to more than 100 partners, including ones that can simply repurpose content.

The partner summit is just Snap’s latest effort to be more open and communicative as the company faces competition from other platforms like Facebook’s Instagram and newcomer TikTok and more departures of top executives. While Spiegel has tried to define Snap’s uniqueness, most notably by redesigning the app to divide social and media, it has struggled to impress users and advertisers. Its redesign sparked a user revolt, including Kylie Jenner, one of Snap’s most popular users. While Snap has worked to introduce more features like e-commerce, which included partnering with Jenner, it’s still failed to impress top ad agencies who devote more of their budgets to Instagram. Enter Spiegel with a new event to show what Snap truly has to offer.

“This event is a show of commitment to collaborate even more meaningfully with partners on new platform and ad product features. As a Lens Studio partner, we’re excited to hopefully hear more about AR developments,” said Stephanie Bohn, chief marketing officer at marketing tech company VidMob, who is attending the event.

Attendees told Digiday they are looking forward to having some face to face time with Snap’s leadership as well as other people in the community. Some were particularly curious about the new products to be announced. Specific announcements are under wraps, but partners have leaked the release of new original shows and a new gaming platform. Developers and advertisers who are attending told Digiday they’re also hoping for updates to Snap’s AR platform and ad network.

“I’m anxious to hear about any plans for AR for the self-serve ad platform, and I’m anxious to hear how creators and brands can better work together on the platform. It’s much needed,” said David Herrmann, director of advertising at Social Outlier.

Indeed, many ad buyers have remained unconvinced of Snapchat’s ability to provide a return on spend than Facebook. While Snapchat’s ad server may show it has more Gen Z users than Instagram, marketers still say Instagram is the ideal platform to reach that audience, according to Digiday research. Snap’s global head of creative strategy Jeff Miller told Digiday last month that the company is focused on “providing scalable ROI for advertisers of all sizes.”

Attendees have been sharing plenty of rumors between themselves ahead of the event. One attending creator said they hoped to hear about more monetization opportunities in stories and lenses. Video creators on have repeatedly expressed interest in Snapchat offering ad revenue sharing similar to YouTube, especially as opportunities for brand deals decrease for some.

Anrick Bregman, founder of AR startup AN/RK, said he was interested in meeting new potential clients at the event. He was a part of Snap’s first-ever content creator incubator Yellow last year.

“I’m excited about the opportunity to connect with creators beyond the Official Lens Creators group about making lenses and where that is going in the future, and I am hoping to make connections with people from brands and ad agencies, and maybe get some commissions going,” Bregman said.

Chris Higa, who is also attending as one of Snap’s Official Lens Creators, said he planned to meet with advertisers as well.

“I’m looking forward to some new feature launches and maybe some new brand deals or features for brands and advertisers,” Higa said.

An executive at an ad agency who was briefed ahead of the event said they are interested in more AR developments. Snap showed off its AR tech at South by Southwest last month. For example, HBO’s “Game of Thrones” activation, in partnership with agency Giant Spoon, used Snap’s new AR marker tech, where Snapchat users scan an object, instead of a QR code, to unlock an AR lens. That experience also was geofenced to a particular area, an ad product that is not publicly available.

“We’re really bullish on Snapchat continued innovation and evolution. We’d love to see them expand beyond just messaging focus to keep their audiences from ‘aging out,’” the executive said.

Regardless of what is released, attendees can at least expect to enjoy some Los Angeles sunshine and some free food.

Snap’s “been pretty mum on all the details. The invite just says the keynote with Evan [Spiegel] and Bobby [Murphy] starts at 10:30 a.m. I get free breakfast and lunch and cocktails,” the attendee said.

The post From secretive to showman: Snap’s partner summit shows off a more open and communicative company appeared first on Digiday.

This week, the Financial Times beat its target of 1 million paying readers, a year ahead of schedule. While the FT has had a paid-for offer for 17 years, the realization has dawned that quality journalism often needs revenue streams outside of advertising. In theory, signing up the next 1 million will take more sweat.

“My mentor said to give a date or a target but never both, but we did,” said the FT’s CEO, John Ridding. “Still, reaching 1 million hasn’t been easy; it’s really hard. But we have 10-plus years on how to target readers, how to reach new audiences and understanding from reader behavior what stories engage them.”

Below Ridding discusses international expansion opportunities and why the FT’s business-to-business operation has more to it than people think. Responses have been edited for clarity.

What has contributed to reaching your target ahead of schedule?
One million was a galvanizing north star for the whole organization. Everyone in some way contributed; it was a very unifying goal. But the news agenda has been dramatic, particularly around Brexit. Also, our expertise and machinery around process, engagement and subscriptions have accelerated. It’s a virtuous circle: The bigger the subscriber base, the more expertise you gain, whether that’s on acquisition or managing churn.

Each reader has a score based on frequency, how often and how long they spend with us. This formula gives insight into which readers are likely to be subscribers. My FT, the personalization feature, was a big driver of engagement. Alerts are fairly standard but a powerful mechanism. Readers are increasingly interested in specific verticals and newsletters like Due Diligence, our M&A newsletter. It has pace and wit and information not found elsewhere; there is a demand for that. There are many push-and-pull tactics.

Has the focus and energy shifted to retention over acquisition as the model has evolved?
We keep a close eye on those metrics. There’s no point spending large sums on acquiring. A low churn rate on a high base will still lose big numbers. A lot of attention is on retention; that is why engagement is crucial. Subscriptions are a result of engagement — that’s where the hard work is. That’s why engagement is the key metric we focus on every time the board meets.

How does the strategy differ when readers are consumers rather than business professionals?
The mistake people make is thinking that paid-for journalism is easy for us because people charge it to their company. On the business-to-business side, the model is bigger, deeper and better than company credit cards. Our institutional operation involved big risks early on by coming off bundles like Factiva and Media Nexus because we wanted that direct corporate relationship. We can understand how the FT is used in places like government research institutes so we can more effectively become part of their information system. These are institutional sales to business information teams where they have dedicated FT feeds. We develop tools and services to make the ways they use the FT as effective as possible. We have nearly 500 institutional customers, which is a robust and sustainable part of the revenue stream. While we love advertising, it can be volatile.

Does subscriptions revenue take priority?
Fifty-five percent of our revenues come from journalism and content. That’s very different to 10 years ago where 70% was from advertising. Having said that, we’re resilient in advertising because of our sophisticated engagement subscription model. We’re more expensive for CPMs because of our deep insight into readers and what they want. There’s a symbiosis. People ask if it is ad or paid-for. We have both; they reinforce each other effectively.

Will more publishers in the mix make it more difficult to get to the next 1 million?
We’re happy for fair competition. The more players in the field and acceptance that journalism is something worth paying for, the better. I definitely don’t see a plateau for the FT. The global business is much, much bigger. We launched in China last year and are already north of 50,000 subscribers. We are about to launch in India after resolving a long-standing brand dispute. There’s a lot to play for in the U.S.; we are underweight there. With Nikkei, we have a strong, supportive, long-term partner. It’s not a profit-maximization strategy but a quality growth strategy. The opportunity is well, well beyond 1 million.

Are you optimistic about the future of media?
News media is an extremely tough neighborhood and has been through more disruptions than most. Any news organization doing quality journalism is really going to struggle. Ad revenues aren’t able to sustain the craft of news journalism. And Facebook and Google are hoovering up spend and have formidable tools and data behind them. Fake news has been around for ages. It’s now systematic, polarizing; it drives clicks and messes up the information system.

Saying that, I am optimistic. We are not alone, and we’re showing that quality journalism can be a quality growth business. A trusted brand like the FT is a cause for confidence. If done right and done with investment, there is a strong future.

What more needs to be done to clean up the media space?
There needs to be offense and defense around the system. Big tech platforms need to get their houses in order. Hiring thousands of fact-checkers is not enough. They’ve got to play defense. More can be done through technology to flag fake or irresponsible stories.

There have been long battles, whether that’s ending Google’s first-click free or getting a more direct reader relationship through Apple. Google has done positive things, but there’s a lot more big tech can do to project quality journalism and not just play for scale and promote traffic above all else. More needs to happen. It’s disappointing. Google’s mission to organize information is admirable. It’s in everybody’s interest to have faster, better information; it’s not about subsidies.

Publishers aren’t going to be their first priority though. Are you confident there will be a change now?
I am not confident because it has taken too long. I wouldn’t want to lump all the platforms together — there have been productive conversations between the FT and Google in a number of areas — but a big driver of behavior is self-interest. The platforms are in an incredibly powerful position, but you can hear the siren sound of regulation. Mark Zuckerberg invited regulation this week. This is firmly on the radar, and I’m not surprised. Governments, society and people, in general, are pretty appalled.

The post ‘The opportunity is well beyond 1m’: The Financial Times CEO John Ridding on growing subscribers appeared first on Digiday.

The era of creative agencies is well and truly over with the sale of Droga5 to a consultancy. Accenture Interactive will now own what has been arguably one of the last “great” creative agencies, with founder David Droga remaining in his role as creative chairman.

Droga5 will retain its brand and remain its own entity. But for Accenture Interactive the acquisition sends a few messages. One is an answer to those who say consultancies lack the creative je ne sais quoi to actually make a mark in this industry. The second is that scale matters, and money talks. Even Droga, who famously said he’d never sell and wanted to stay independent, got a price and a deal he couldn’t say no to.

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Last year, Merisant North America president Brian Huff left a meeting with Amazon in Seattle feeling inspired.

Amazon was looking for a manufacturing partner to produce a sweetener to complement newly launched coffee brands that were live on Amazon. Merisant, which owns artificial sweetener brands like Equal and Whole Earth, had been selling products on Amazon and was looking to fine-tune its e-commerce business. To create a new product for Amazon would mean finishing a production cycle faster than the team had before — 90 days compared to roughly eight months. But it would be worth it.

“This was something that we saw could take our organization to the next level and act as a challenge,” said Huff. “What Amazon felt like we had was expertise in the field, and they mostly let us move. They trusted the company they partnered with to drive and develop the best product.”

Huff said that Amazon had a role in making the final decision on elements like packaging, branding and pricing. The sweetener is now sold exclusively on Amazon, and Amazon handles the marketing and fulfillment of the product.

Merisant is just one of the companies with who Amazon has repeated this production process with over and over. It’s done it with brands ranging from GNC to Tuft & Needle, in categories from CPG to home furniture.

The number of exclusive brands on Amazon exploded in 2018, according to TJI Research, a firm specializing in Amazon analysis and insights, there are 434 exclusive brands now active on the site. That’s more than double the number it had at the end of 2017, as well as the number of private-label brands it sells, which TJI Research totals at 138. According to Gartner L2 research, exclusive brand launches outpaced private-label brand launches for the first time in 2018.

Like Amazon’s private-label brands, exclusives sit under Amazon’s “Our Brands” umbrella, which signifies items that can only be found on Amazon’s site. But separate from its private-label brands, which require Amazon to trademark, develop, produce, market and distribute products on its own, exclusive brands let Amazon shoulder some of the work, and resources, required to roll out new products. The burden of R&D and production is shifted to the brand partners Amazon is tapping to participate in its exclusives programs. For Amazon, it’s a way to reap the benefits of exclusive inventory, without needing to put in the work of a manufacturer.

“We knew that Amazon was experimenting with exclusive brand partnerships, but it’s become clear that Amazon has switched gears to focus on exclusives. It makes a lot of sense,” said Oweisi Khan, senior principal of Amazon Intelligence at Gartner L2. “It’s a win-win situation for Amazon as well as brands on the platform.”

It’s proven to be a winning format for Amazon. TJI Research notes that Amazon has been launching new exclusive brands on a weekly basis over the past several months. It’s a shift in inventory strategy for Amazon that speaks to a broader marketplace transition for Amazon. By simultaneously building a deep inventory of exclusive brands and products while pulling brand partners closer to the chest, Amazon is further solidifying its ability to scale its retail business beyond competitors.

Amazon did not respond to a request for comment.

From private to exclusive
Exclusive brands are a critical piece of Amazon’s inventory strategy, because they help Amazon expand its “Our Brands” selection without the pitfalls of private label. In 2017 and 2018, Amazon launched more than 100 private-label brands, according to Gartner L2 research. But outside of recognizable brands specializing in everyday items, like AmazonBasics and Amazon Essentials, studies indicate that the bulk of its private-label endeavors haven’t made much impact. Right now, private label accounts for 1 percent of sales, according to the company.

“It ends up being sunk cost that’s time and money wasted for Amazon,” said Juozas Kazienkas, founder and CEO of Marketplace Pulse, which found that of the 100 private-label brands that Amazon launched in 2018, none are category leaders in areas like fashion, CPG or personal care.

Amazon isn’t abandoning private-label brand launches, but they’re becoming more considered, and it’s leaning on its exclusive brand launches to pad out product volume.

“Amazon was going hard and fast for two years, releasing more private labels but without seeing much traction across the board. A few have been doing really well, but across the board, private label hasn’t taken off,” said Khazi. “Amazon is reevaluating its retail marketplace, and exclusive brands are taking on more priority.”

A robust private-label business has also brought upon regulatory scrutiny around whether or not Amazon should be able to act as manufacturer and marketplace. Just this week, it removed some of its more aggressive promotions of its private-label brands, like ones that were included on competitors’ product pages. Exclusive brands bring more hands into the pot, making Amazon less liable to be called out for unfair practices.

Amazon’s recent changes to its marketplace have included requiring vendors to sign up for its Brand Registry, which requires a trademark, shifting underperforming vendors to the third-party marketplace, and pulling back on price-matching requirements for sellers.

“Across the board, Amazon is trying to clean up its act, and exclusive brands will help it do this,” said Khazi.

Exclusivity on Amazon’s terms
In typical Amazon fashion, its process around exclusive brands has been scattered and opaque. Some retailers, like Merisant, are recruited by Amazon to participate in the Manufacturer Accelerator Program, in which Amazon provides the prompt — manufacture a certain product on a specific timeline — and incentives, like Vine reviews and marketing dollars in exchange for the production efforts and exclusivity.

Third-party sellers on Amazon can also get in through the Amazon Exclusives program, which accepts applications from sellers wanting to bolster their Amazon businesses with Amazon assistance. Sellers in the Amazon Exclusives program have to meet certain requirements around sales performance, agree to sell products only on Amazon and their own sites. They’re selected based on how they’ve been able to prove that they can drive sales traction on Amazon on their own, and differentiated by more unique branding and positioning than the manufacturers, which create items that more easily blend in with Amazon private-label products. Tuft & Needle, for instance, was tapped by Amazon to produce a lower-priced mattress than the one it was currently selling on the site, based on data Amazon offered up about the amount of money Amazon customers tend to spend on mattresses. With the partnership, Tuft & Needle was able to create and sell a cheaper mattress without watering down its brand.

“Amazon is a retailer, but it achieves scale best when it gets others to do the work for them,” said Juozas Kazienkas, founder and CEO of Marketplace Pulse, which recently ran a study on Amazon’s private-label strategy. “That means the risk is on someone else. It creates an environment where brands who want to work with Amazon get advantages that others don’t.”

Brands that work with Amazon to create exclusive products, through either program, get to have their products marketed by Amazon for free, and get preferential treatment in search results. Amazon has begun promoting an “Our Brands” ad carousel at the top of search results for commonly search terms in categories like CPG, personal care and apparel to prioritize its exclusive and owned products first.

“We realized that we could do two things at once: Perform better on Amazon, as well as learn more about how Amazon works internally,” said one brand founder who worked with the Amazon Exclusives program. “It felt like playing the insider’s game after being on the outside.”

By focusing on exclusive brands, Amazon has to convince brands that it’s an amicable partner, and not a brand killer, similar to how Target and Walmart have attracted exclusive partnerships, particularly with DTC brands. Amazon is positioning its exclusive programs as a win-win: Brands who participate succeed on Amazon and lift sales overall.

But one manager at a brand that created an exclusive product for Amazon said that Amazon hadn’t been as much of a resource as it claimed to be when it agreed to work with them.

“Data and metrics are still as scarce as ever, and it feels more like being a cog in a much greater machine than a real partner,” said the manager. “No matter what, Amazon still holds the cards.”

The post Amazon is now focusing on exclusive brands, signaling a shift in strategy appeared first on Digiday.

MasterCard CMO Raja Rajamannar, who is also the World Federation of Advertisers’ newest president, is on a mission to rethink the internal organization of his teams. Under Rajamannar, the brand has brought communications and marketing under one roof, and created new roles in brand safety and risk management that sit within the marketing function. Digiday talked to Rajamannar about why creative marketers struggle, why platforms need to take action and stop pontification and why it’s about societal safety, not brand safety.

What are your priorities — both in your role as chief marketing officer and as WFA president?
Priority number one is marketing for a better society, marketers for a more equal society, and marketers for a better web. That’s the mandate for WFA. My second priority is, look, when I graduated from my MBA 35 years ago, at that time, the best students would all go to marketing. Marketing has lost a little glory and glamour. Top marketing companies are eliminating the role of a CMO and instead of hiring a chief growth officer and chief revenue officer. We need to be bringing back the stature and gravitas of marketing. And third would be in terms of talent. Marketing talent today you require today a different one than you require in the past. You required marketeers who specialized in marketing. Today you require general managers. Many CMOs have a tech budget that is more than a counterpart CTO’s budget. There is a need to understand technology and PR. The CEO and COOs are under tremendous pressure to deliver results every quarter. We’re putting in hundreds of millions of dollars in marketing. What are we getting in return?

Do you think marketing has lost confidence among the CEOs?
Most marketers have come up in a creative way so they’re lost. There’s a reduced level of confidence in CMOs and marketers who have come from the creative side. Which is why you need general managers. And that’s why we need talent. That’s the talent that’s not easy to find.

Why did this happen?
There are three key reasons. The entire consumer landscape has changed thanks to digital media, data explosion and social media tsunami. That has totally altered the field of marketing. In the past, a large company in packaged goods did things a startup couldn’t dream of it. Now, they can, and the large players are caught unawares. So this change requires a rethink of marketing. I don’t think many marketing departments in various companies have begun that reinvention journey. They’re left behind a little bit. Also, the pace at which technology, data and the digital has been exploding and transforming the landscape. Marketers do not know what the hell is happening. They don’t understand what programmatic is.

Is that why all these issues of ads showing up where they shouldn’t have been caught them unawares?
Exactly. It was evident that they took the black box as a given and whatever happens inside black box as a given. When you put something in a faulty machine, what comes out of the other end is not what you’re hoping for. Marketers have to learn. Today, everyone drops the name blockchain, or artificial intelligence, 5G. These are good words. But unless you understand what it is, every tiny company coming out of the woodwork says they work based on AI. If you don’t understand what you’re buying but you’re buying to avoid FOMO, you’ll get into trouble. The problem is classical marketers are not good at contemporary marketing. Contemporary marketers are not strong in classic marketing. Where you have two breeds of marketers that’s sub optimal. When the head of marketing has through the creative route and isn’t number savvy or finance savvy they struggle to justify the investment in marketing.

OK, but a lot of this is because there is waste in marketing spend.
There’s always a certain level of wastage. What is an acceptable level of wastage? Elimination is a lofty aspiration, but for example, there is waste due to fraud, bots, sites you don’t want, viewability issues, verification issues. There are a lot of breakdown points.

Like what?
There are different studies that say that abuse and fraud ranges from as little as 10% to as high as 40%. To me, I think the fraud kind of thing should be zero. There’s also inefficiency, where a significant chunk of the money is going to intermediaries. It is an inefficient way to organize the whole system. That’s where the association role comes in. From MasterCard’s perspective, from a fraud point of view we have direct relationships with reputed publishers. We have whitelists, blacklists, verification by third parties. We do as much as possible that we’re taking care of even when an ad is going to be served through programmatically. In terms of contracts with media companies, we exhaustively document what our rights are and expectations from the point of transparency. We control that portion.

You also have brand safety and risk management roles within your teams.
Advertisers need to rethink their playbook. We invest so much time and effort in building a brand that we’d like to be proud of and wins the consumers trust. We don’t want to put that safety in jeopardy. We have to not accept compromises. If we find media where safety is at risk we won’t go there. Or we’ll pay a premium in order to do that. Also, what about societal safety? As marketers, and as people who are channels and channel owners – collectively we all owe to society to make digital a safe place. When marketing comes together and has conversations, everyone says we’re doing on the best effort. Social media channels own the accountability and responsibility for this and they have to deliver it and we have to move beyond philosophical agreements.

The post MasterCard CMO Raja Rajamannar: ‘Marketing has lost a little glory’ appeared first on Digiday.

Staples no longer wants to be thought of as a place to buy office supplies.

In a brand revamp, Staples this week repositioned itself as “the Worklife Fulfillment Company,” or a place where it says workers can feel happy and productive, reminiscent of WeWork. Staples wouldn’t say if this means it’s going to launch co-working spaces of its own (it ended a co-working trial with startup Workbar earlier this year), but it’s rolling out new private-label technology and office products and yet-to-be-announced business services. It’s also launching a business-focused content-marketing platform called The Loop.

“The focus on Worklife means providing services, products and solutions and an improved digital experience that allows our customers to work wherever, whenever and however they want,” a Staples spokeswoman told Digiday.

Among office supplies companies, a services focus isn’t unique to Staples. Office Depot’s Los Gatos, California location, for example, includes 5,000 square feet of co-working space. Called the Workonomy Hub, it has flexible hot desks, a Starbucks kiosk and a dedicated area for shipping. Any business or worker can sign on for subscriptions or à la carte services.

The pivot to services, including shared-office space, along with agency-style marketing, advertising and other business services, is a way retailers can monetize unused space, generate additional revenue from co-working customers, and build an ongoing relationship beyond one-off interactions or purchases. The co-working market, however, is highly competitive. Beyond industry heavyweights like WeWork and Regis, there are an estimated 200 co-working companies across the U.S. that have at least one location that’s 5,000 square feet, according to real estate company Cushman & Wakefield. Retailers, particularly office-supplies companies, are betting on services and co-working as a means to lock in regular revenue from clients already in their ecosystems.

“We have a very large physical footprint across the country as you can imagine with almost 1,400 locations; we’re always looking for new ways to reimagine how we can get more value out of that square footage,” said Kevin Moffitt, Office Depot’s chief retail officer. “It’s also is a way for us to continue to develop our communities. With our business customers, we have very strong relationships.”

Relationships, in turn, make way for additional service offerings and product purchasing opportunities. It’s a follow-on effect that resulted in increased sales, Office Depot CEO Gerry Smith told investors last November. After opening the initial co-working space and office services center in Los Gatos in August 2018, Office Depot added new locations in Irving, Texas, and Lake Zurich, Illinois, and it’s planning to expand the concept to Dallas and Chicago. Meanwhile, Staples rolled out a new line of private-label brands associated with its new mission, including office supplies products line Tru Red, Nxt Technologies, a tech product line, CoastWide Professional, a facility supplies brand, and breakroom essentials label Perk.

While the growth of co-working and service arms are natural areas for expansion for office-supplies companies, one disadvantage they may have when compared to pure-play co-working companies is a physical space that looks and feels more boxy and less niche.

“I’m not sure that office supply stores are that attractive as destinations,” said Forrester retail analyst Sucharita Kodali. “Part of the appeal of WeWork is that they are in interesting locations and have attractive layouts that make the space appealing to members.”

Meanwhile, companies that specialize in setting up co-working spaces are seeing increased inquiries from big-box retailers. Industrious, which runs its own co-working spaces and designs them, said it’s seen an increase in the number of big-box retailers that want help redesigning their spaces, and Kettle, a subscription-based service that allows restaurants to be used as co-working spaces, also said it’s also seeing an uptick in interest from retailers.

“It lowers the barriers to entry to allow people to come and stay, they’re surrounded by your branding and it offers opportunities for new customers,” said Kettle co-founder Daniel Rosenzweig.

Compared to co-working companies, office-supplies companies say they’re uniquely positioned to cater to businesses and mobile workers because they offer on-site services on demand which other companies could be challenged to provide at scale.

“You go to other competitors, and they may have a single printer available for 300 folks who are working there, while we have end-to-end marketing services available within a 20-foot walk from your dedicated office, and you can get your laptop fixed right there,” said Moffitt.

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Madewell, which has been acting as the J.Crew Group’s breadwinner as the flagship brand’s sales struggle, is on a mission to double its annual sales from $500 million to $1 billion.

The company announced yesterday that Libby Wadle, who was previously Madewell’s president, will become its first CEO. In an interview with Fortune, Wadle said that she was getting a title change because the “complexity of the business is changing.” Madewell generated more than $500 million in revenue last year, and Wadle said that “we have our eyes set on becoming a billion-dollar brand in short order.”

The struggles of parent company J.Crew will only compound the challenges ahead for Madewell. J.Crew is carrying around $1.7 billion in debt, and sales there decreased by 4% last quarter, while sales at Madewell rose 16%. J. Crew could be giving Madewell more autonomy and the directive to juice its sales in order to sell it off, and pay down part of its debt, according to Neil Saunders, managing director of GlobalData Retail.

Wadle gave few specifics about how Madewell plans to become a billion-dollar brand, but emphasized that “we need to build our community of customers.” To do that, Madewell has already made efforts to appeal to a broader customer demographic through initiatives like collaborations, increase its product assortment by adding extended sizes and lingerie and swim categories, and pilot new in-store concepts that emphasize community.

To double sales, it’s transitioning to become a lifestyle brand, after launching as a women’s only denim brand in 2006. In doing so, Madewell will face the same challenge as other brands that started as a niche offering: how to maintain what made them unique while pushing for faster and faster growth. Wadle said in a previous interview that “thinking small” is what’s been key to Madewell’s success.

Though J.Crew’s former CEO Mickey Drexler said back in 2015 that he hoped that Madewell would be “the Levi’s of its generation,” the brand’s been deliberately slow in building its footprint. Today, it has just three wholesale partners: Net-a-Porter, Nordstrom, and Shopbob. It also has only 131 stores, and is planning to open six more stores within the next year, according to a spokeswoman. Madewell is also piloting new retail concepts that are centered around bringing loyal customers to stores more often. Last month, it opened its first “Denim Edits” retail store, which offers on-site embroidery and tailoring. Last summer, it opened Madewell Commons, a new “community-focused concept store,” which has offered concerts, yoga classes, and a special section selling goods made in Austin.

So instead of opening up a rapid clip of shops, Madewell is extending to reach customers it previously didn’t serve to drive sales.  It introduced extended sizing this past year, but its biggest untapped potential lies in menswear. Madewell just rolled out a menswear line this year, and right now, it’s only sold online, in Nordstrom, and in two of Madewell’s stores. So Madewell can simply juice sales there by selling its menswear line in more places, and increasing its product assortment.

Madewell has room to grow, but it will have to do so without diluting the brand. Ken Morris, principal at Boston Retail Partners, praised Madewell for its “narrow focus,” and said that its reputation for “offering a great product at good prices,” is what’s helped build customer loyalty. Avery Faigen, a retail analyst at Edited, attributed Madewell’s success to “honing in on the best selling fits and then animating those core pieces.”

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In the face of industrywide challenges, Hearst UK grew its digital ad revenues by 30% in 2018. Magazine print circulation remained steady, and the group raked in millions of pounds in new revenue by licensing its magazine brands as products, from Men’s Health beef jerky to two Country Living hotels.

“I think of us as a marketing-services business rather than magazine publisher,” says James Wildman, CEO of Hearst UK. “When you think about all the products and services that sit on top of our brands and audiences, we can talk to advertisers about solving, rather than selling their challenges. That makes us more strategic, partner-friendly, and more interesting to do business with. It’s less about selling pages or impressions and more about genuine partnerships and integration. That’s a big shift. We’ve sharpened up our game.”

The conversation has been condensed and edited.

What has driven the increase in digital ad revenue?
There is an increasing gravitational pull toward lighthouse brands with purpose. We’re a safe haven in a world that is increasingly negative. We can offer premium experiences, so it’s partly that brand-halo effect, and partly because we have invested significantly in journalists and digital talent. But we’ve also had a clear focus on everything from video to our ad stack strategy to data generally, to e-commerce, viewability, to our digital publishing model reach versus engagement, all parts of our digital acceleration plan. We have a clear focus.

Do you attribute any of that digital ad revenue uplift to advertisers shifting spend from YouTube and Facebook because of brand-safety issues?
I’m sure that’s a part of why [digital ad] revenue is up so much. It’s difficult to pinpoint it exactly when it’s traded programmatically, but there is a correction taking place. We have also invested a lot in our creative solutions. We have 20 people in that team doing integrated deals. It’s an antidote to some of the worst brand-safety issues that are going on elsewhere. There is no risk for brands with us.

Has there been any fallout for publishers as a result of advertisers’ tighter control on brand safety?
We‘re frustrated that blocklists aren’t managed particularly well. So we’re getting blocked for keywords like “shoot.” We write about photo shoots constantly. The Duchess of Sussex, who we write about a lot, gets blocked because the title has the word “sex” within it. Seriously, this is a big problem. The word “Manchester” still gets blocked, as they [advertisers] haven’t updated their blocklists [since the Manchester Arena bombing in 2017]. We are doing quite a bit of work to shine a light on how crazy it is. There are as many as 2,000 blocked words for some of our big advertisers. Advertisers are genuinely worried about it because of the issues of appearing next to disgusting content on the platforms.

Who is to blame?
These big platforms are doing big global deals with the top people in marketing teams at advertisers, agencies are completely disintermediated. Agencies aren’t controlling how much money is spent on these platforms; the deals are done outside their remits often. But publishers should get on the front foot talking about the huge benefits of working with us. The duopoly takes all the column inches, but we should be talking more about us.

How have conversations changed with brand clients over the last six months?
More clients come to us directly now, often unsolicited. We’re doing more strategic, longer-term work with them that’s more valuable and of more mutual benefit. But I won’t bite the hands that feed with the agencies. We get asked a lot how we get on with our agencies and whether we think their agencies are representing them well enough. We handle it diplomatically.

Where do you see the growth coming for Hearst this year?
We have four diversified revenue streams: licensing, events, accreditation [affiliate] through our Good House Institute, and our content marketing agency. We will soon take that to six: e-commerce and consumer products. In 2017, print accounted for 70% of our revenue, now it’s more 60:40 print to digital. Of our digital revenue, diversified channels are close in size to our advertising. Around 40% comes from diversified revenue streams. We expect to see that start to tip the other way.

Would you consider online subscriptions?
I wouldn’t rule anything out, but a paywall would be problematic. We’re testing in the U.S. on two properties. But we won’t put the whole brand behind a paywall. We’re doing so well at growing our digital ad revenue, putting a paywall around our content isn’t the right route for us right now.

The post ‘We’re a brand-safety haven’: Hearst UK chief wants to win the brand safety war appeared first on Digiday.

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