Month: May 2019

Brands like JanSport and Unilever use Vantage to help them control the massive volume of unauthorized sellers who source products from other unauthorized channels, like Alibaba, and resell them. While Amazon, eBay and other marketplaces have come under fire for pervasive counterfeit problems, Vantage founder Derick Manlapeg said that measures taken by these companies to combat counterfeit sellers have been largely effective. What’s hurting brands the most now isn’t fake products being sold on Amazon, but the gray market: products being sold illegitimately. When a seller is getting goods they peddle on Amazon from shady sources, the product could be faulty or damaged. Even if the product isn’t of poor quality, gray market sellers usually drive prices down, and post-purchase headaches or customer service that falls below brands’ typical standards could hurt their performance in the long run, by way of bad reviews.

“Amazon’s business is made off third-party sellers that backdoor product and drive prices down,” said Manlapeg. “It benefits Amazon and hurts brands. Everyone wants them to do more — there’s a transparency program for counterfeits, but that’s not the biggest issue anymore.”

Amazon will flag unauthorized sellers, but they’re more difficult for the company to track, since some resellers are legitimate. Amazon has essentially shifted the burden to eliminate fake products and unauthorized sellers to the brands themselves. (Amazon did not respond to a request for comment.) It’s a problem that PopSockets, a brand combating thousands of resellers on Amazon, has chosen to handle with lawsuits. Hiring a company like Vantage tackles it more en masse. Manlapeg said that, from the company’s data, roughly 65% of sellers pull their listings after being contacted by Vantage, and another 20% provide the proper sourcing information to sell a certain product: If they can provide proof that they purchased an item at a Kmart liquidation sale, for instance, they’re able to resell it on Amazon through retail arbitrage.

Still, it’s an impossible issue to clear out completely.

“It’s total whack-a-mole right now,” said Manlapeg. “And every brand on Amazon is having this issue.” — Hilary Milnes

Express has a new CEO
This week, Express named Tim Baxter — previously Macy’s chief merchandising officer — as its new CEO. Baxter has his work cut out for him. During its first-quarter earnings call yesterday, Express said that comparable sales — which include both brick-and-mortar and e-commerce sales — declined 9% year-over-year.

Over the past six months, interim CEO Matt Moellering has spoken about how the company is still struggling with some merchandising fundamentals — and how it’s trying to use data to improve its approach. For example, Moellering said last quarter that Express is “reassessing our testing and buying processes to ensure we have the right data to inform our decisions,” and that it’s rolling out a new assortment planning software, as well as a new marketing mix optimization tool that the company believes will help it better identify where to spend its marketing dollars.

Express’ woes are indicative of just how many technical investments struggling retailers have to make to catch up to the competition. But, more data isn’t a panacea for all of a retailers woes, unless they can act upon it properly. — Anna Hensel

Amazon spotlight: The cost of reviews
For $60, Amazon sellers can get five Amazon reviews on their product listing. (No guarantees, though, it actually might just be one.)

Amazon’s Early Reviewer program lets sellers pay for reviews if the product in need of feedback has under five reviews and costs more than $15. To spur reviews, Amazon will contact five random recent customers and offer a small credit of $1-3 if they write a review, positive or negative. A seller is charged when the first review is made, and the review will have an “Early Review Rewards” badge on it.

First-party sellers can pay to get involved in Amazon’s Vine program, which matches products with Vine reviewers who test out early-stage products for free, in exchange for reviews on the site. The idea is that brands — especially those selling wholesale through Amazon — are at a disadvantage when they launch new products on the site that don’t have any reviews.

“Reviews are so important to a business on Amazon, but there are rules around how you can go about getting them, and Amazon makes it clear,” said Selina Heckendorf, vp of e-commerce at The Mars Agency.

Sellers can’t pay for or incentivize reviews on their own. What Amazon’s done, then, is turn the value of reviews into another source of revenue. — Hilary Milnes

What we’ve covered

On the Making Marketing Podcast: Patron and Grey Goose CMO Lee Applbaum discusses capturing luxury spend.

Walmart wants to be a tech company and its hiring the talent to do so.

Hearst is building product samples right into its advertising strategy.

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Fewer exchanges on media plans mean agencies start to look a lot more attractive to those ad tech vendors still on them. That’s leading to discussions between both two groups that haven’t traditionally met. Demand-side platforms generally tend to be the ones to meet with exchanges and SSPs, since its the former’s tech that bids on the impressions sold by the latter.

It’s a rare chance for agencies to make money from a commoditized programmatic market. For all its faults, programmatic continues to attract ad dollars and advertisers have said they’ll spend more if they can get a clearer view of what happens to their money after they bid for ads. “Agencies have begun to realize that curating programmatic supply paths can be a valuable service to their clients,” said David Kohl, president and CEO of TRUSTX.

Engine launched its own exchange at the start of the year as a way to curate supply on behalf of its advertisers. The agency network negotiates its take as an ad exchange with the buyer. When it bids directly on its publisher impressions using their own DSP they’re able to see full bid price of that campaign all the way through to the publisher. The bottom line is the buyer benefits from full visibility to the cost of reaching the users they want to reach, and the publisher benefits from a higher CPM. Since Engine operates the exchange, it can guarantee what is bid is what gets to the publisher — minus its own disclosed fee. Depending on the buyer and how they want to curate supply, Engine can provide additional verification, such as auction logs, to verify the integrity of the bid.

While the agency works with third-party SSPs and exchanges to bulk out the reach of its own for its managed service clients, Michael Zacharski, CEO of the agency-owned exchange, said it is moving toward running its own direct demand on its direct supply as it signs up more publishers. Previously, a buyer would buy via a DSP and see the domains won alongside the price they paid, but not know how much of that price went to intermediary fees and how much went to the publisher. “We are focused on changing that model and giving the buyer visibility to both the true price of inventory as well as fees taken,” said Zacharski.

Agencies have been trying to get around ad tech middlemen for a while now, deploying a variety of different tactics. GroupM, Omnicom and Denstu are among a handful of agencies that spent much of 2018 concocting different ways to get closer to the source of supply of programmatic inventory, for example. But issues remained around how much expertise they really had, said eBay’s Smith. “Most buyers weren’t interested in committing the time to understand how the auctions worked,” he said.

Not every agency can afford to, or has the commercial clout to run their own exchange. Some prefer to exert their influence directly with the ad tech vendors instead. After putting the squeeze on the margins made by DSPs, agencies are now coming after the supply side vendors.

When the Goodway Group brokered a deal with Pubmatic in February, for example, it was on the proviso that the tech tax wasn’t charged on the publisher side as it usually is and instead the agency would pay a single fee for all media buys transacted on the SSP. In exchange for more spend from the agency, the SSP effectively agreed to lower its spend. Other agencies are trying to broker similar deals with other SSPs.

“We see agencies starting to negotiate fees directly with SSPs,” said Geoff Smith, the director of ad tech and innovation for eBay across EMEA. “It becomes a point of differentiation for an agency to be able to tell their clients they can guarantee transparency into fees and the mechanics of auctions on both sides of the supply chain.”

The problem with these deals is it puts SSPs in a tricky predicament. A pessimistic publisher could see deals between agencies and SSPs as a smokescreen for kickbacks, nondisclosed volume discounts for SSP fees that agencies would take for themselves. It makes media owners wonder whether talk of getting closer to publishers is really just a ploy from the buy-side to beat down fees. And yet SSPs continue to cast a longing eye toward agencies.

The likes of Rubicon Project, Spotx, Telaria and Openx have all invested in building out business development teams that don’t just win publisher businesses but also try to win over agencies and advertisers. “Just like we’re going into publishers to educate publishers on how our technology buys ads on their sites, SSPs are meeting with agencies and advertisers to explain how they work,” said Joel Livesey, The Trade Desk’s director of partnerships across EMEA. “SSPs are dedicating a greater amount of time to explain how their technology works to buyers and are also demoing their platforms.”

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The role of media agencies has been questioned as brands such as Bayer have taken programmatic buying in-house. Typically, because agencies are able to strike deals with platforms and publishers that span multiple clients, they are believed to be able to fetch lower rates through these bulk buys than a brand going it alone.

Agencies “can get rates that are incredibly low compared to what we’d get,” said one marketer in attendance. Whatever money their brand would save from in-housing would not be enough to offset the higher fees they would face without an agency, this person said.

However, that has not been the case for Bayer. With the exception of one unnamed ad tech vendor, the brand has been able to negotiate better pricing with every vendor that it works with compared to what Bayer paid when it had an agency, Gelb said.

While Bayer still works with an agency for its TV buying and continues to work with a creative agency, it is not working with any agencies in digital, other than MightyHive, which Gelb described as the brand’s “transition agency” as Bayer looks to bring all digital media buying in-house by 2020.

At the same time as Bayer has taken programmatic in-house, the brand has seen its overall spending shift pretty dramatically. In 2015, 80% to 90% of Bayer’s advertising budget went to TV. Fast-forward to today: the brand is on the verge of spending more money on programmatic and social advertising than on TV ads, and when Amazon is added to the mix, Bayer is already spending more money on digital than TV, Gelb said.

The money that Bayer has saved by taking programmatic buying in-house can be a tough look for its former media agency. However, MediaCom’s chief digital officer for North America, Steve Carbone, made a case for the agency’s continued role when a brand goes in-house. “We’re not the ones pulling the levers, but we’re still the ones advising,” he said on stage the day after Gelb’s talk. MediaCom clients that have taken programmatic buying in-house “keep our best programmatic people on retainer,” Carbone said without naming any clients in particular.

Agencies’ programmatic talent continues to be their raison d’être as more clients’ look to move programmatic buying in-house and struggle to find employees experienced enough in programmatic. Some marketers that have brought programmatic buying in-house “couldn’t get people to move to their headquarters,” said Oleg Korenfeld, global chief platforms officer at Wavemaker, who joined Carbone on stage.

Recruiting programmatic talent was not a huge challenge for Bayer because its programmatic buying had set up shop in New Jersey where it was easier to recruit veteran executives who had worked for ad tech firms that had been acquired and were looking for positions that offered more work-life balance without a need to commute into New York City, said Gelb. “I don’t see any brand in a major metropolitan area that can’t [successfully bring programmatic buying in-house] if they are willing to hire and well compensate people,” said Gelb.

However, for brands like SafeAuto, convincing such execs to move to Columbus, Ohio, can be more of a challenge. The brand’s in-house programmatic team currently has three open positions and is in search of “people who really want to wear a lot of hats, people who don’t necessarily want that cookie-cutter role,” said Claudia Beale, digital media supervisor at SafeAuto, during a separate session on stage.

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“It’s not about having one bureau but having centers of excellence, hubs of people working together in an ecosystem,” said Kate Ward, president, international, Refinery29. The London bureau will lead audience development and content strategy, working with the Berlin hub that will handle execution and something called “transcreation,” per Ward.

For example, once the relevant story is found, the team will layer additional content so topics are understood across regions, tweak data, change hyperlinks to relevant language and alter the image based on A/B testing. “It’s as if it’s an original execution of that story,” Ward added.

Refinery29’s German edition launched with a combination of local and translated content relevant to local audiences; the split was roughly 60% local and 40% translated. In 2018, local content became the minority when it saw a more-than-50% increase in performance on translated beauty content, particularly around topics like tutorials and “alternative” beauty content rooted in self-expression, such as tattoos. The reason: This taps into global expertise from specialists rather than having one local writer covering fashion, beauty and style. This gave the publisher the confidence the model could scale sustainably internationally.

The international team is roughly 80 people and doubled from last year.

France has been in the pipeline since it launched in the U.K. Over the last two years, the audience in France reading English content has grown, but the company didn’t divulge how many. In total, 38% of the audience to Refinery’s owned and operated platforms are from outside the U.S. According to Comscore, in April, Refinery29 had 2.2 million unique monthly users on mobile and desktop, up from 700,000 the same period last year.

The French site is focusing on beauty, wellness and lifestyle at launch. Broadly, these have been the topics resonating with a French audience. But there’s scope for a lot more, and the publisher already has several global-facing franchises that will travel.

“We don’t think of a distinction between U.K. and U.S. content; it’s global storytelling,” said Ward. She points to global franchises like “Money Diaries” that are popular in the U.S. and U.K. Refinery29’s YouTube series “Style Out There” has a global outlook on fashion trends and has filmed in Japan, Israel and Namibia.

Refinery29 is working with Evian for its launch in France, hosting an event in Paris and content that will run in other markets. Refinery teams from London and Berlin will run events in France, which it plans to grow. Events have been a staple for Refinery29’s U.S. business, and Ward is confident the team can scale this in France.

“Google and Facebook are grabbing all the growth of online advertising where scale seems to trump anything else,” said François Godard, media analyst at Enders Analysis. “Digital advertisers seem indifferent to context. Competition of ‘influencers,’ who are potent advertising vehicles, is very strong. If you create a French franchise you need a French team, only a small part of your content can be translated.”

Revenue from the international business grew over 100% last year and will grow over 100% this year, according to Ward. This comes from Refinery29 branded content and consultancy from its creative agency, The29th, which launched in London last September and has clients like Walgreens Boots Alliance and Samsung. Globally, the company missed its revenue target by 5% in 2018.

The publisher isn’t ruling out future deals like joint ventures of licensing the brand to fuel further international growth, but the team was confident it could build the French audience by drawing on the London, Berlin and New York hubs.

“We’re greater than the sum of our parts, that’s the ambition,” said Ward. “We’re building a fast-growth and audience-focused and sustainable, scalable model for international. That’s central to the business.”

Image: Courtesy of Refinery29, via Facebook.

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Though Wired and its sister brands at Condé Nast have been experimenting with different kinds of offers over the past several months, Wired has not done any testing of this kind with advertisers before. But it expects the tests will contribute to strong continued subscriber growth: Wired expects to add another 104,000 digital subscribers in 2019, site director Scott Rosenfield said.

“We believe that, fundamentally, our business models and journalism work best together when they’re supporting one another,” said  Rosenfield.

Publishers and broadcasters have been letting brands sponsor extra audience access to their content for years. The Washington Post, for example, has experimented with allowing advertisers to sponsor access to paywalled stories since 2017, and vendors such as TrueX, which was acquired by Fox Networks in 2014 for $200 million, built a business around giving viewers access to content in exchange for watching special kinds of video ads.

And as publishers have focused more on consumer revenue, many have been trying to figure out how to pitch those subscribers to advertisers. The idea is that subscribers, who are typically among the most engaged segments of a publisher’s audience, could yield higher CPMs.

Robbie Sauerberg, vp of operations at Wired, declined to answer questions about how much sponsored article access costs advertisers, saying only that it is priced like a “premium sponsorship,” in part because the messages appear in a “can’t miss” part of Wired’s site templates.

Wired has not yet figured out how widely, or regularly, it will be deploying these kinds of offers. Running the offer every month would effectively lower the paywall permanently, and over time, audience familiarity with the offer might diminish its appeal to advertisers. Lowering the paywall height could also have a negative effect on Wired’s subscriber conversion rate.

“I’m as excited as you are to see how this goes,” Rosenfield said. “We did a lot of experiments that relate to this project, but we haven’t done any testing other than modeling.”

For now, the ads will be seen by everybody who visits Wired’s site an appropriate number of times: On the first visit, users will see a message that Wired’s paywall is at five articles instead of four in June, thanks to WeTransfer; the user will then get a second sponsored message on the fifth visit that month.

But as Wired learns more about how those sponsored extra articles affect subscriber conversions, it may aim future versions of the promotion only at select pockets of its reader base; a person who has hit Wired’s paywall more than once, for example, might not get the offer.

“Overall, we want to get more surgical,” Rosenfield said.

While some publishers are reluctant to tinker too much with the kinds of offers they make to readers, some see Wired as having permission from its readers to experiment. “I think Wired is uniquely positioned to test something like this,” said Matt Rizzetta, the CEO of the advertising agency N6A. “Wired’s website was an innovative and pioneering property in the tech and media landscape, and I think Wired can lean on that when they roll out an exploratory project like this one.”

The experiments will continue. “We are continually working on ways to augment how advertisers can communicate to both the existing and would-be subscribers,” Sauerberg said. “Paywall sponsorships are just one of those opportunities, and we have more to come.”

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