Month: June 2019

Since the tail end of last year, the retail giant has been investing in free original and licensed programming, aiming to tie that with a growing video ad business, in the hopes that its retail power and customer purchase data can ultimately bring in advertisers that have dreamt of large-scale shoppable video advertising, but haven’t seen it become a reality just yet.

“It’s a huge game-changer if someone can actually figure out the connection between people watching content and making purchases,” said Sam Toles, chief content officer of Bleacher Report, who did a deal for a reboot of the ‘80s classic “Mr. Mom” with Walmart and Vudu during his previous role as svp of digital and new platforms for film studio MGM. “Audiences are being less and less receptive to traditional forms of advertisements. Where does that lead? Can we create commerce within programming? If Walmart has the data to know that if a customer streams ‘Mr. Mom’ and then goes and buys a 24-pack of Coca-Cola, think about where that leads the business.”

A Walmart spokesperson did not comment on the record for this story.

Deal terms for original and licensed programming
During its NewFronts presentation, Walmart said it has about a dozen original series and movies in the works for Vudu.

The first project was announced last year, the “Mr. Mom” reboot from MGM, will be delivered in 11-minute installments when the digital series premieres on Vudu this summer. At the NewFronts presentation, Vudu announced several other scripted and unscripted projects that are currently in the works, including a travel show with Queen Latifah, an entertainment series with Randy Jackson and a scripted futuristic crime thriller starring Evangeline Lilly.

While Netflix, Disney and other subscription video streamers are spending billions of dollars on original content, Vudu original programming will cost far less, sources said. Vudu is focused on budgets that hit “mid-tier” cable prices, according to two sources who have pitched Vudu. Both sources said this roughly equates to “a few hundred thousand dollars per episode,” though Walmart is willing to up its budgets to a couple of millions of dollars per episode, according to a report from Bloomberg in April.

“They’re paying for a scripted show for the price of an unscripted show on Discovery,” said one of the sources.

Walmart and Vudu are also focused on North America, which means studio partners have the ability to license Vudu originals in international markets, sources said. For these deals, Walmart and studio partners have also talked about co-ownership arrangements, where Walmart would recoup its production investment from ad revenue, after which revenue would be evenly split by the partners, sources said.

It’s also important to note that studios and other video makers have the ability to put movies and TV shows on Vudu, non-exclusively, for free. If Vudu is not paying to license the program, then it will evenly split the ad revenue generated by the title — although it’s not offering any minimum ad guarantees, according to a source familiar with the matter. Ad sales on Vudu are exclusively managed by Vudu, sources said.

“A 50-50 split is not the greatest, but it’s Walmart,” said one source.

The focus is on “co-viewing” and other key programming areas
With both original and licensed programming, Walmart and Vudu are focused on a few key areas.

One of the biggest focus areas for Walmart is programming that encourages “co-viewing,” according to multiple sources. This means original and licensed shows that families or other groups would want to watch together. This could mean kid-friendly animated programming or even action movies such as “John Wick,” which can draw groups of friends together, sources said.

With originals, genres that Vudu is taking a closer look at include shows and movies that center on female characters or celebrities, home-improvement shows and animated and kids programming. Vudu has also demonstrated an interest in comedy formats that mimic segments on late-night shows, sources said.

All of this runs back to Walmart’s desire to create a streaming service for “Middle America.” “We’re not just going to be programming for Williamsburg and Silver Lake,” said Vudu senior director Julian Franco, during the company’s NewFronts presentation in New York earlier this spring.

This focus on “Middle America” might also spur Walmart to rebrand Vudu. Walmart has considered renaming the video streaming service, according to sources. Recently, the company sent a legal note to content partners asking them to waive the right to end their deals in the event that the name and all references to Vudu are changed in the contracts, a source said. “Walmart TV” or “Walmart Streaming” have been two names considered by Walmart, though no decision has been made, sources said.

“Vudu does not mean anything,” said a source that received the contract amendment. “Walmart TV makes sense because people know what Walmart is.”

Not seeking to compete with Netflix, other subscription giants
Last year, reports indicated that Walmart was mulling the launch of a subscription streaming video service that would directly compete with Netflix, Amazon, Hulu and others. In January, CNBC reported that Walmart had scrapped those plans, deciding that the best path forward was to make additional investments in Vudu.

One big reason Vudu is taking the free streaming route is because capital costs — from content spend to customer acquisitions — are far higher in subscription streaming video.

“They’re being rigorous, they have not done the Hollywood thing of being swept away by working with so-and-so star,” said a source that’s pitched Vudu.

Of course, the free video streaming market has become very crowded. In January, Amazon launched IMDb Freedive and is reportedly working on a second free streaming service for news programming. Roku has The Roku Channel, which the company boasts is already one of the five biggest streaming apps on its platform when measured by reach (though Roku has declined to define reach).

Other key players in free streaming video include Pluto TV, which was acquired by Viacom earlier this year for $340 million, Xumo and Tubi. CBS has three free video streaming channels catering to news, sports and entertainment news and both NBC News and ABC News now have live video streaming channels. Then there’s YouTube, which has been aggressively pitching marketers on how users stream more than 250 million hours of YouTube videos on TV screens every day. It’s a big reason the video giant has started to move some of its funded original series in front of its YouTube Premium paywall.

It can be hard for a service to stick out if it does not have a high-profile piece of programming that draws viewers. Some sources disagreed, saying high budgets don’t automatically create hit TV shows.

“What show was more successful on Netflix? Marie Kondo’s or ‘Lost in Space’?” said a source. “Why are we always equating dollars spent to eyeballs? It does not actually work that way.”

Content, with commerce
During its NewFronts presentation, Vudu also unveiled an ad network that will span multiple streaming services, including its own, as well as shoppable ads. These units would allow users to add items to their Walmart shopping carts, which they can buy online or pick up at a store later.

The ability to merge video ads with commerce is an intriguing and attractive option for advertisers, though many are still hesitant about the ability for shoppable video advertising to succeed at scale.

“I’m not sure [shoppable video] is something people are exactly jonesing for, given the glut of content that’s out there and the likelihood that there will be nothing particularly unique about what’s being sold off of Vudu’s shows,” said Alan Wolk, co-founder of TVRev.

What helps Walmart is the fact that it’s the largest physical retailer in North America, which gives the company a lot of sway over brands that need Walmart’s shelf space. Walmart has already been able to convince some major advertisers to commit tens of millions of dollars in upfront ad commitments, according to Bloomberg.

“They are the most powerful retailer in the world,” said Toles. “And because they have great relationships with major brands, it is logical that they could partner to create something enormous together.”

The post ‘Something enormous’: Inside Walmart’s ambitious streaming video plans appeared first on Digiday.

It’s looking more like we’re entering a make-or-break moment for DTC startups: Grow up, or peter out. That “growing up” is coming in a few different ways: physical retail, other channels, and new products.

“We’re focused on sustainable acquisition tactics,” said Katie Fernandez, the brand marketing and content director at beauty brand Winky Lux. For Winky Lux, that looks more and more like physical retail. By designing stores for Instagram moments, the brand pays for its own social media travel out of the store. Customers taking photos and tagging the brand pull a lot of the weight and help pad out the cost of paid media on channels like Instagram.

Marketing channel mix isn’t the only area of DTC strategy that’s getting more complex. Brands that most likely launched with a single, buzz-driving hero product are plotting their next move in order to stand up against legacy brands and keep customers engaged.

“Always be thinking about your next product,” said Brandon Steiner, the founder of Steiner Sports Marketing. Brands are only worth their ability to predict what their customers will want before they realize that they want it, Steiner said; otherwise, they’ll find it elsewhere before a brand can act.

It’s not as simple as piling on in a product category. Buffy, a home goods brand that launched with a single comforter in 2017, made its mark by boasting a new kind of comforter made with sustainable materials, like eucalyptus. As Buffy adds new bedding and eventually, furniture, to its product line, it has to be as mindful as sourcing and materials with every new launch as it was when it first hit the market with a single comforter. Being able to pull that off can make or break a new brand.

“We’ve pushed our manufacturing partners to do more,” said Shaoib Kabani, Buffy’s co-founder and vp of operations of adopting sustainable practices, most recently around colored dyes. “But in a retail setting, I still think that’s something they don’t really get.”

J.Crew and Gap’s shining stars hit some speed bumps
J.Crew and Gap are looking to spin off Madewell and Old Navy respectively, in an attempt to generate some short-term cash infusion and help their parent companies regain a sense of focus. But both of their recent earnings reports show that, even though these soon to be independent companies have been reporting solid growth for the past couple of years, they still have a tough road ahead.

Last week, J.Crew reported during its earnings call that growth at Madewell is slowing. Comparable sales at the denim-focused brand rose 10% during the first quarter of 2019, compared to 31% during the same quarter last year. The company did not say exactly to what they attributed the slowdown, but interim CEO Michael Nicholson said that the company is still pleased with Madewell’s online growth, and digital marketing strategy.

Meanwhile, at Old Navy, comp sales were down 1% year-over-year. Last year, they were up 3% during this time period. Chief financial officer Teri-List Stoll blamed unseasonably cold weather, which challenged store traffic in particular, as well as product softness in certain areas of its women’s assortment, which the team is addressing by diversifying its silhouette, print, pattern and color.

Both Madewell and Old Navy still have a relatively small store footprint — Madewell has 132 stores, while Old Navy has 1,106 stores, but only a dozen or so stores in Europe and Asia — so a simple way for them to continue growing is just to open more stores. But, that may not be enough when they become standalone companies. — Anna Hensel

How DTC brand behave at different life stages
Growing up is hard to do. As DTC brands mature, priorities shift, social spend doesn’t stretch as far and more marketing channels in the mix muddy up attribution.

Yotpo, a commerce marketing platform, released a report breaking down the strategies around customer acquisition channels, user-generated content, loyalty and more by brand size: small (under $10 million in sales), medium ($10-100 million in sales) and large (more than $100 million). Here’s what Yotpo found.

Small brands

• Top challenges: Driving e-commerce sales, followed by customer acquisition and conversion
• Top acquisition channels: Organic and paid social media, SEO and direct traffic
• UGC is used primarily in social media strategies and email marketing.
• More small brands offer loyalty programs than industry average, while fewer small brands use referrals than average.

Medium brands

• Top challenges: Attracting new customers, followed by e-commerce sales and conversion
• Top acquisition channels: Paid search, paid social
• UGC gets traction in paid social ads.
• As brands spend more on social, returns diminish. So medium-sized brands reroute ad spend, primarily to Google.

Large brands

• Top challenges: Conversion rates, new customer acquisition and e-commerce sales
• Top acquisition channels: Paid search, paid ads online and offline (large brands start to move into TV, radio and out-of-home) and SMS
• Offline retail starts to play a bigger role for bigger brands. Pop-ups and retail stores start to eat up some of the marketing budget.
• Higher budgets yield bigger spend across the board: Large brands start to increase spend on new platforms like Amazon, while Google advertising transitions to YouTube.
• On social, large brands look to return to their roots, mimicking the strategies of smaller brands on platforms like Instagram.

What we’ve covered

Pitch deck: Target is trying to win over advertisers with its first-party data.

Programmatic money savers: Bayer saved at least $10 million after moving its programmatic in house.

Dollar General bulks up logistics: The discount retailer wants to start selling fresh and frozen foods.

The post ‘What now?’: DTC brands are facing a make-or-break moment appeared first on Digiday.

Time Out has been on a yearslong mission to develop new lines of revenue, such as commerce and live events, while managing losses in print advertising. In 2018, Time Out Group generated $61.6 million in revenue. On the media side, digital advertising accounted for $18.8 million and e-commerce $7.9 million, compared to $19.4 million in print ads revenue. The Lisbon market, which had revenues of $11.4 million, accounted for 18 percent of the group’s revenues. Those changes haven’t been enough to get the company back into the black, but they pointed the company in the right direction: Time Out Group lost $10.2 million last year, compared to an $18 million loss in 2017, according to public company filings.

Time Out Group is projecting a return to profitability in 2020, with its market concept providing the momentum: The four U.S. markets Time Out is supposed to open this year are expected to generate $15 million in revenue in 2019, and become solidly profitable by 2020, with an estimated $11.2 million in EBITDA on estimated $55 million in revenue, according to research released by investment bank Liberum in March.

“The obvious catalyst for the shares over the next 12 months is the opening of Time Out Markets across North America,” Liberum analyst Andrew Bryant wrote in a spring note. “The markets’ roll-out finally accelerating not only helps underpin the move into group profitability, but more importantly, should evidence the sum-of-the-parts equity value of Time Out.”

Though they will vary in shape and size, the concept for each Time Out Market is the same. Time Out recruits the restaurants it deems best in a given city and works with them to come up with a small, reasonably priced menu they can cook and serve on-site out of small stations positioned throughout the market. The Brooklyn location features 21 restaurants and three bars spread out across two floors of space located in a shopping center.

Restaurants sign contracts for a minimum of one year, with Time Out taking a 30% cut of each restaurant’s revenues while shouldering most of the restaurants’ costs: Time Out supplies equipment such as pizza ovens, front- and back-office operations, plus a steady stream of free publicity for the restaurant’s food and owners.

Done right, Time Out Markets can attract a lot of foot traffic. Time Out’s Lisbon market had 3.9 million visitors in 2018, which made it the most-visited attraction in the city that year, said Time Out Group CEO Julio Bruno.

While Time Out Group operates its media and markets teams as separate lines of business, they work together continuously, Bruno said. Editors in each city identify which restaurant owners should be in the market, for example, and play key roles in determining whether a restaurant should stay involved in the market.

Though participating restaurants lock into long-term commitments, editors keep an eye on the food and the performance. In Lisbon this spring, Time Out decided not to renew the contract of a burger restaurant on editors’ advice.

Editors also help sustain interest in the markets. In addition to the food stalls, each market has space for events and entertainment, with a dedicated marketing and events manager who collaborates with editorial staffers not just to help plan promotions but to book events and people; each weekend features multiple days of events programming.

In addition, Time Out’s editorial teams create photo and video content about the restaurants participating in the market, a content strategy that appeals to the restaurant owners and has had a positive effect on the size of Time Out’s social footprint. Time Out New York’s Instagram following has grown more than 30% over the past 12 months, according to Crowdtangle data.

“For us, it’s the evolution of Time Out,” Bruno said. “These are big bets, but they fit together. Time Out Market does not exist without the Time Out brand.”

The physical spaces themselves provide an additional surface for driving Time Out’s other revenue streams. At the Dumbo location, large video monitors spread across the market periodically display Time Out editor-curated event listings that include QR codes. If a visitor scans the code to buy a ticket, Time Out takes an affiliate commission on the sale.

Pursuit of new revenue streams has driven several food-focused publishers, including Tastemade, Vice’s Munchies and BuzzFeed’s Tasty into branded food retail environments; for instance, a Munchies-branded food court is scheduled to open in New Jersey in the summer of 2019.

The post How Time Out is using food halls to diversify its revenue base appeared first on Digiday.

In particular, Costco has realized that its website is a useful channel to sell products that have a limited shelf-life in-store, or that it’s struggled to sell in stores in the past. Previously, its leadership would respond when asked about its e-commerce strategy that it still wanted to do “everything possible” to get customers in the store. That’s a big contrast to Sam’s Club’s approach, which in fiscal 2018 decided to close 10% of its stores, turning many of them into e-commerce fulfillment centers because it believed that building out more fulfillment centers to offer faster shipping options was the better bet. And under the guidance of parent company Walmart, Sam’s Club has been experimenting more with rolling out new technology in stores, like scan-and-go checkout.

“[Costco is] one of the best-performing, most successful retailers out there and yet they are pretty digitally immature, from my perspective,” said Jason Goldberg, chief commerce officer for Publicis Sapient. Costco’s net sales during the most recent quarter were $34 billion, up 7.4% over the same period last year. 

As recently as 2016, Costco’s chief financial officer Richard Galanti said that the company’s preference was for customers to come in-store because Costco believed that in-store customers would purchase more than those who shopped online. E-commerce is still only about 5% of Costco’s sales. But the company has since woken up to the importance of e-commerce, as it’s said it’s been able to sell goods through its website that it hasn’t always been able to sell in stores.

For example, Galanti said last October that the website has been particularly helpful in increasing sales in seasonal goods.

“[With] online and e-commerce, we’ve been able to sell some items that were seasonally in nature that we might only have for eight, 10, 12 weeks, notably, patio furniture and lawn and garden or furniture during the summer,” Galanti said. “Now, we’re in 52 weeks online, and there are some real sales to be had there.”

Costco has also relied on its website to drive more of what it calls “white-good sales” — bulky home appliances like refrigerators, washers and dryers. Three years ago, Costco did about $50 million in white-good sales. This year, it’s projecting to do $700 million. Costco is relying mostly on third-party vendors to deliver and install these bulkier products — the company said in December that it ships about 50% of the products that are bought online from its own fulfillment centers, but that it is mostly focused on shipping smaller items from its own centers.

While Costco’s made big improvements, Goldberg says that its digital experience remains thin. Unlike competitors Target and Walmart, Costco doesn’t use the homepage of its website to push its popular private-label brand offerings, like Kirkland. It also doesn’t give customers the ability to check what products are in stock at a store near them, only what departments are available there. And unlike Sam’s Club, which opened a testing store for new in-store technology in October, it hasn’t experimented as much with installing technology to make the checkout or in-store navigation experience faster.

“They don’t have rich content about products that makes you want to buy it — it seems like they’ve done the bare minimum to check the box and say they have an e-commerce site,” Goldberg said. 

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As a result, 49% fewer people canceled their subscription compared to a control group. The publisher declined to share what its current churn rate is.

“The defining challenge that all media organizations face is how do you build relationships with someone you have never met, meaningfully, at cost and at scale,” said Mike Migliore, head of customer value, The Times and The Sunday Times. “Without the right tools, it’s just not possible. Now, engagement is the highest it’s ever been. We have new customers coming in every day, and James has been no small part of allowing us to do that.”

According to the publisher, subscribers create a billion data points every day across The Times’ platforms. The self-learning algorithm ingests these data points, including information on customers’ propensity to convert to subscribers, as well as churn propensity, to serve up the right content to the right individual at the right time.

For James, News UK took a representative sample of 117,000 customers, including subscribers and registered users, across a range of age groups and sent them daily emails to fit their content habits. Generalizing what type of content retains people is hard when each person has different needs and habits.

“This customer might read three times a week for two hours, another might read multiple times a day for five minutes,” said Migliore. “Without AI, it’s not possible to have a deep understanding.”

Over the course of the year, it has been comparing the findings to a control group, it found that 70% of people interacted with the emails. Only 15% percent of people opted out of the emails, and these were already loyal customers who had developed their habits, said Migliore. “They didn’t need us getting in their way,” he said.

James was the most effective in keeping hold of customers who scored low on News UK’s bespoke customer engagement score, which calculates metrics like recency, frequency, interaction and articles read to give a propensity to churn.

The Times and The Sunday Times has 527,000 subscribers, of those 286,000 are digital-only. It also has 3.75 million registered-access users who can view two articles a week, and it’s building up its data prowess to understand the customer journeys at each stage. Acquiring new readers is part of the puzzle. But keeping existing ones from churning is critical, and it’s also cheaper. The longer someone is a subscriber the higher their lifetime customer value.

Publishers are increasingly turning attention to customer needs rather than content itself when it comes to what converts. Titles like The Wall Street Journal have dynamic paywalls that show conversion messages at the point when people are the most receptive, based on self-learning algorithms.

Nine people from News UK’s data science team and the publisher’s project partner, Belgian digital publishing company Twipe, were dedicated to developing James, with 20 people overall, including journalists and marketers, contributing. The project was also funded by Google’s Digital News Initiative, which contributed €1 million ($1.2 million).

“The key goal was to leverage AI and news especially is an interesting challenge,” said Danny Lein, CEO of Twipe. “News has a different relevance throughout the day. What can AI do to drive relevant interaction for readers?”

Publishers are working out how to balance personalization with editorial judgment. Subscribers pay for the editorial decision-making from The Times. Too many algorithms in news feeds have led to finger pointing of filter bubbles.

“We have no intention of going down the Facebook route,” said Nick Petrie, deputy head of digital, at the publisher. “This is marrying tech with our journalism.”

The goal is to develop James, expanding to other communications channels like push notifications and social media, plus incorporating it into News UK’s data management platform to deliver more effective advertising to customers. Beyond that, it plans to white-label the tool to other publishers in Europe. But there are also benefits in editorial commissioning too.

“In terms of the newsroom, James has leveraged a huge amount of data around how we treat individual subscribers and understand which type of articles resonate with the reader,” said Petrie. “We are more data-informed in what we are writing.”

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