Month: June 2019

Agencies can bring that kind of understanding and strategic clarity. At Laughlin Constable, Emily Hauptle, supervisor, marketing automation begins by putting together a matrix laying out what marketing technologies make sense for a client based on their specific needs. That gives clients “transparency into why we picked a marketing platform,” she says, and helps them “feel like they’ve come along the journey with us and helped us get to that answer.”

For Prolific Interactive, an agency which specializes in building out mobile apps for brands and giving them the tools and strategies they need to keep their customer retention rates high, the focus is on  “making that [marketing technology] stack really valuable,” says Al Harnisch, Prolific’s VP of Growth “So if we’re using Braze, for example, we’ll build up the email plan, we’ll build out the push plan — we’ll build out both journeys based on [the] different customer segments that we’ve identified in the planning phases. Build those up, automate them as much as possible, and then figure out what the next growth strategy is,” says. 

“In some cases,” Harnisch added,  “we’ll be looking into something like [analytics platforms] Amplitude or Mixpanel and identifying: Where are the pain points? Where are the opportunities? What are each of these people using? What features are people using the least?”

But advance planning isn’t enough — great customer engagement takes teamwork. Whether it’s between different members of a cross-functional growth team or across a range of different internal departments, effective collaboration is an essential element of a successful customer engagement program.

That said, different companies will have different challenges when it comes to collaboration. Steven Moy, U.S. CTO at full-service digital agency R/GA, has found that “some of the more progressive, digitally native companies…already have a more integrated approach.” Fortune 500 companies and other big enterprise brands, on the other hand, “create scale over tens, hundreds of years, they’ve become more functionally focused…[and] have a media department, a marketing department, even a digital department” that need to find ways to work together effectively. At R/GA, Moy explains, “we have to become the connective tissue, to get them all aligned.”

Full-service agency Laughlin Constable prioritizes getting “all of the internal stakeholders for the client to, frankly, just talk to each other about what their hopes and dreams and aspirations are for projects,” says Paul Brienza, the agency’s evp of digital.“It allows us to provide a more unified and integrated recommendation for them.But, more importantly for the client, it allows each stakeholder to hear real-time what somebody else is saying. Oftentimes there is a shared vision they just never talked to each other about. And there are also times where they have different opinions, but they can work it out in those discussions. The vast majority of the time, they leave on the same page.” But, he warns, “if you don’t have those conversations early on, you end up having to have them later on in the project when it’s much more costly to address.”

We’re more than a decade out from the rise of mobile — but the impact of that shift is still being felt by brands around the globe. While digital transformation can be disruptive to companies and even whole industries, it’s also made it possible for brands to establish the kind of strong, sustainable customer relationships that will allow them to rise above the competition. For many brands, getting where they need to go is easier with a trusted agency partner as a guide.

The post Marketing’s connective tissue: How agencies set brands up for success in today’s digital-first world appeared first on Digiday.

Based on the bills, members of Congress appear to agree that companies need to provide people with better insight into and control over the information that companies collect from them and share with others, in response to Facebook’s Cambridge Analytica scandal. They also appear to agree that the Federal Trade Commission should be responsible for enforcing any federal privacy law. However, they don’t see eye to eye on everything, such as whether consent should be opt-in or opt-out, what qualifies as personal information and whether or not a federal privacy law should preempt states’ own privacy laws, which may be more stringent than a national law but present companies with a compliance nightmare.

Social Media Privacy Protection and Consumer Rights Act of 2019, introduced by Democratic Sen. Amy Klobuchar on January 17, 2019
While introduced early into the current legislative session, this bill appears to be a model for what a bipartisan privacy law might look like.

The bill would require companies to provide an option for people to request to see the personal information a company has collected on them and with whom that information has been shared. Companies would also have to allow people to opt out of the collection and use of their personal information. Those provisions can be found in almost all of the other privacy bills that have been introduced, though not all are opt-out by default like this one.

However, the bill is notable for how it allows companies to deal with people who opt out of data collection and usage. If a person does opt out and opting out would make a companies’ services inoperable, a company would have the right to deny certain services or complete access to that person, according to the bill.

What is considered personal information?: This bill would cover standard categories of people’s personal information, like people’s Social Security numbers, as well as people’s email addresses, telephone numbers, the contents of their messages and information regarding their location.
What types of companies would be affected?: Any website, app, social network, search engine, mobile operating system, email service or internet provider.
Who would be responsible for enforcement?: The FTC, though states’ attorneys general would also be given the right to enforce the law within their states.
Would it preempt states’ privacy laws?: The bill doesn’t say.

Information Transparency & Personal Data Control Act, introduced by Democratic Rep. Suzan DelBene on April 1, 2019
This bill is among the more stringent and specific privacy laws introduced this year. Notably, it would require companies to get people’s opt-in consent before a company could collect, store, process, sell or otherwise share certain types of personal information that the bill defines as sensitive.

As with the Social Media Privacy Protection and Consumer Rights Act of 2019, this bill would require companies to provide an option for people to request to see the personal information a company has collected on them and with whom that information has been shared, and companies would have to provide people with an explanation for why their personal information was shared. For any non-sensitive personal information, companies would need to provide people with an option to opt out of that undefined non-sensitive information being collected, stored, process, sold or otherwise shared.

Since the bill would exempt any sensitive personal information that has been de-identified, it may not be so onerous for the advertising industry, which often relies on anonymized information.
What is considered personal information?: The bill delineates between “sensitive” personal information and “non-sensitive” personal information, though it unhelpfully doesn’t define the latter. Sensitive personal information would include standard categories, like people’s Social Security numbers, as well as their web browsing and app usage histories and their precise geolocation information. However, if a piece of sensitive personal information has been de-identified or is publicly available, it would no longer be covered.
What types of companies would be affected?: Any company that collects, stores, processes, sells or shares personal information from people in the U.S. However companies dealing with information on 5,000 or fewer people would be exempt.
Who would be responsible for enforcement?: The FTC.
Would it preempt states’ privacy laws?: Yes.

Algorithmic Accountability Act of 2019, introduced by Democratic Sen. Ron Wyden and Democratic Rep. Yvette Clarke on April 10, 2019
Technically these are two separate bills — one introduced in the House and the other in the Senate — but the text of each bill is identical. The bills do not seek to be comprehensive federal privacy laws. Instead, they would seem to supplement states’ own privacy laws as well any potential federal privacy law by taking aim specifically at the algorithms that process people’s personal information.

The bills would require that companies be able to break down how their algorithms work and evaluate how their algorithms use of people’s personal information may affect their privacy. What specific regulations companies would have to comply with would be left for the FTC to determine.
What is considered personal information?: This bill defines personal information as information that can be “reasonably” linked to a specific person or device.
What types of companies would be affected?: Any company that either made more than $50 million in average annual gross revenue over the most recent three years, has personal information on more than 1 billion people or devices, makes money off that information by either selling it, trading it or allowing outside companies to access it or is owned by a company that met the revenue or personal information criteria.
Who would be responsible for enforcement?: The FTC.
Would it preempt states’ privacy laws?: No.

Balancing the Rights of Web Surfers Equally and Responsibly Act of 2019, introduced by Republican Sen. Marsha Blackburn on April 10, 2019

This bill offers a glimpse at how Republicans, which have a majority in the Senate but a minority in the House, are looking at privacy regulation. The bill resembles Democratic Rep. DelBene’s Information Transparency & Personal Data Control Act in its stricter parameters for companies. Like DelBene’s bill, Blackburn’s bill would require companies to get people’s opt-in consent before they can use or provide other companies with access to certain categories of personal information. Blackburn’s bill goes a bit further in its rigidity by barring companies from refusing to allow a person to use their services because that person would not consent to providing a company with their sensitive personal information.

However, there could be loopholes in this bill. The bill contains a broadly defined exemption for companies to use people’s sensitive personal information without opt-in consent if that information is considered necessary for a company to provide a service to the person. Additionally, the bill states that companies would need to provide an opt-out mechanism for their use of people’s non-sensitive personal information. However, the language describing that “opt-out approval” mechanism confusingly suggests that people would use it to give companies permission to use and share their non-sensitive personal information.
What is considered personal information?: This bill also delineates between “sensitive” and “non-sensitive” information. Sensitive information would include standard information like people’s Social Security numbers as well as the contents of people’s messages, their web browsing and app usage histories and their precise geolocation information. The bill defines non-sensitive information as “any user information that is not sensitive user information.”
What types of companies would be affected?: Internet providers, sites or apps that require people to register accounts, sites or apps that sell a service to people and search engines.
Who would be responsible for enforcement?: The FTC.
Would it preempt states’ privacy laws?: Yes.

Privacy Bill of Rights Act introduced by Democratic Sen. Edward Markey on April 11, 2019
This bill would be a doozy for businesses if it passed into law. Combining GDPR’s opt-in consent requirement with the California privacy law’s broad definition of personal information, it appears to present the worst-case scenario for companies and the most sweeping privacy protections for people.

Companies would have to get people’s opt-in consent before collecting, using, storing, sharing or selling people’s personal information. Companies would also need to provide people with options to access the information that a company has collected about them as well as to correct, delete or transfer that information.
What is considered personal information?: Like California’s privacy law, this bill takes a broad definition of personal information to include unique personal identifiers, IP addresses, email addresses, purchase histories, browsing and search histories, interactions with a site, app or ad that is specific to an individual; and any inferences drawn from any of this information.
What types of companies would be affected?: Anyone (everyone?) that collects or otherwise gets access to people’s personal information.
Who would be responsible for enforcement?: The FTC, though states’ attorneys general would also be able to enforce it and individuals would be able to sue companies for violating this law.
Would it preempt states’ privacy laws?: Yes.

Do Not Track Act, introduced by Republican Sen. Josh Hawley on May 21, 2019

This bill takes aim at targeted advertising. It would effectively disable behaviorally targeted online advertising by default, though it would exempt ads contextually targeted based on a site’s or app’s content or ads targeted based on the search terms that led people to a site or app.

The bill would require the resurrection of an online Do Not Track mechanism, which browsers had previously adopted and just about everyone came to ignore. The FTC would be charged with developing that DNT system for people to use to request that sites and apps not track them. When enabled, this system would, by default, ask sites and apps not to track people, but people would be able to specify individual sites and apps that would still be allowed to track them.

Sites and apps would have to check for people’s tracking preferences and provide people that request not to be tracked with the same services and products as those that enable tracking. If the DNT signal is sent, they would not be able to use any information collected from a person to target them with ads or to share that information with another company without that person giving their permission for the company to share that information with that specific other company. If there is no DNT signal sent, then a site or app would have to notify a person that the DNT system is available.
What is considered personal information?: This bill would cover any information that a site or app collects that is not necessary to operate the site or app, though even information necessary for the operation of a site or app would be covered if used to target people with ads.
What types of companies would be affected?: Any company that operates a website or app for profit.
Who would be responsible for enforcement?: The FTC, though states’ attorneys general would also be able to enforce it.
Would it preempt states’ privacy laws?: The bill doesn’t say.

Designing Accounting Safeguards to Help Broaden Oversight and Regulations on Data Act, introduced by Democratic Sen. Mark Warner and Republican Sen. Josh Hawley on June 24, 2019
This is another bill that would appear to serve more of a supplementary — and potentially foundational — role for any federal privacy law. The bill includes the table-stakes requirements for companies to give the people the option to request that a company delete the information it has collected from them and to disclose to people how the company uses that information.

What makes this bill unique is its requirement that companies catalog the types of information that they collect from people and then to assess the financial value of that information. At least once a quarter, a company would have to provide each person that uses its service with a report detailing the information it has collected from that user, how it has used that information and the financial value of that individual user’s information. Additionally, once a year companies would have to file a report with the Securities and Exchange Commission that states the aggregate financial value of the company’s user information as well as the financial value of its data collection contracts with third-party companies. The SEC would be charged with coming up with the methodology for companies to use when assessing the financial value of the information they collect from people.

These reports itemized the financial value of companies’ user information would be helpful for a couple of reasons. First, they could be used to determine penalties for companies that have violated people’s privacy in connection to the information they collect. Second, knowing the financial value of this information could come into play if a federal privacy law were to allow a company to provide people with some sort of discount for providing their information or, for people who opt not to provide their information, to charge those people for access the company’s service.
What is considered personal information?: Instead of specifically covering people’s personal information, the bill would cover any information that can be associated with an individual, whether that information was provided by the individual or inferred by the company based on a person’s use of the company’s service.
What types of companies would be affected?: Any company that “generates a material amount of revenue” from use, sale or sharing of people’s information and that operates a service with more than 100 million monthly active users in the U.S.
Who would be responsible for enforcement?: The FTC would be charged with enforcing that companies provide people with the data deletion and disclosure options as well as the quarterly reports for individuals. The SEC would be charged with enforcing companies’ annual disclosures of the information’s financial value.
Would it preempt states’ privacy laws?: The bill doesn’t say.

The post Circling closer to a federal privacy law, Congress has introduced 7 privacy bills this year appeared first on Digiday.

On the surface, the document is extremely worrying for ad tech. But ad tech businesses remain unfazed, partly because there is no threat of serious penalties and partly because any attempt to address the issues raised will take a long time to fix given the complexity of the digital ad supply chain. Until it can call out specific players for GDPR violation, any major changes will be unlikely, at least in the short term.

The ICO said it will work closely with the IAB and Google on their GDPR frameworks to help them become fully compliant and check back in six months to ensure there is evidence of change. But officially, it has only committed to potentially issuing further guidance, rather than strict punishment.

“They [the ICO] have punctured the tin but not ripped the lid off [of ad tech],” said Dan Wilson, CEO of London Media Exchange. “This [how data is used within RTB-based ad calls] has been flagged as a systemic risk to privacy. They can’t issue statements like that and walk away.”

Media agencies like Essence have welcomed the ICO’s warning as a necessary step to shining a light on continued GDPR malpractice. “Practices which effectively game the acquisition of user consent have a shelf life, and we’re keen to see the back of,” said Ryan Storrar, svp and head of media activation for EMEA at Essence. However, Storrar added that warnings alone won’t change the status quo. “A lot of people are talking about it, but only enforcement will bring change. A lot of the report’s findings are unsurprising, but they need to make examples [of businesses falling foul.]”

To date, the ICO has made it clear it will favor the carrot to the stick when it comes to the majority of GDPR assessments. But many media agencies and some ad tech vendors have said that it’s time for the ICO to show its teeth. “It has to happen — without those fines there is very little impetus to change,” said Brian Kane, co-founder of publisher tech vendor Sourcepoint.

The ICO will need to do more than issue a written wrist slap, as it did with the Washington Post. “That was the most wishy-washy of statements,” said Kane. “It was meaningless. At some future point, the ICO will come out with some sort of fine against someone. They have given plenty of warning and time to adjust.”

Many advertising executives believe that if ad tech businesses that are in breach don’t respond hastily to the latest warning, there will be serious repercussions. “Not taking the ICO’s guidelines seriously at this point would be equal to playing with fire,” said Alessandro de Zanche, an independent publishing consultant. “I have heard that the ICO will be issuing warnings first, then leave an informal buffer of a few months before issuing fines,” he added. “Being in contempt of this and showing an arrogant and defiant approach will just create further damage to an industry whose credibility is through the floor.”

Others agree that the digital ad industry must respond if it’s to avoid further penalties or risk more of a mainstream news spotlight on the issue, which would place it higher on consumer radars, like with issues around brand safety.

“It’s in danger of getting on a larger radar [if left unchecked],” said David Morris, director of solutions consulting, EMEA, at ad tech vendor Tealium. “Cambridge Analytica put a lot of what happens at Facebook on a larger radar, and when GDPR went live, it made mainstream BBC news.”

But there’s still skepticism around whether the current use of data within RTB as a method for trading ads programmatically has a future. “Parts of the industry are willingly prepared to crash against a wall at full speed rather than accepting the obvious: RTB and privacy regulations, GDPR in particular, are incompatible,” said de Zanche.

The post ‘Only enforcement will bring change’: Ad tech responds to regulator’s GDPR warning appeared first on Digiday.

Chrome began testing this change in late April, but publishers have been complaining to Google about it since February, when a Chrome developer first proposed testing the change.

A source at the News Media Alliance said when the organization shared complaints with Google’s news partnerships team, the news partnerships group seemed unaware that the test was underway; subsequent conversations revealed that Google’s news and chrome teams had connected and that Google planned to prioritize consumer privacy over the news industry’s concerns, that source said.

As soon as the tests started, publishers saw a loophole they’d worked hard to close beginning to reopen; Google saw work being done to correct a bug in the name of protecting user privacy.

When reached for comment, a Google spokesperson wrote in an email that the company understood that enforcing meters in environments where cookies are not persistent is a challenge across browsers.

As a possible workaround, the spokesperson proposed that sites could force all users that arrive to a site without cookies to register and log in for access to a certain number of free stories.

Google has earned praise from some publishers for the work it has done to help them pursue consumer revenue, pledging to spend hundreds of millions not just on building new tools but funding research into new business models for news publishers. But developments like these, along with ad tech-shaking changes forced on publishers’ programmatic operations and plans to block certain kinds of ads by default in Chrome, are the latest reminder that Google’s efforts to help publishers do not supersede the search giant’s larger business priorities.

“This most recent move is really disappointing,” said one executive at a news publisher who wished to remain anonymous. “What we’ve found is that the publisher team within Google is in a vertical silo; the search folks are in a vertical silo; the ad folks are in a vertical silo. The cross-over points where all the intersection happens are up at the senior executive level, where it’s hard to get anybody to pay attention.”

“I don’t know whether the silos are intentional or accidental,” the executive added. “But at the same time, if their interest was really in helping publishers, they’d be able to bring the point of contact down to where we could speak to them.”

It is difficult to gauge how big a risk the Chrome change could mean for the news industry. Though Chrome dominates the browser market, claiming 69% worldwide market share among desktop and 59% share among mobile browsers, according to Statcounter, stats on the prevalence of private browsing are harder to come by.

Research conducted in 2017 by the privacy-focused browser Duck Duck Go found that 46% of internet users had surfed the internet in private browsing mode at least once, but only about 11% of respondents used it on a weekly basis, mostly to avoid having “embarrassing searches” saved on their devices.

Publishers may have limited legal recourse as well. Though some publishers could try to frame Chrome’s incognito mode as a tool that encourages copyright infringement, a publisher would have to successfully argue that Chrome, as a browser, is either marketed as a way to infringe on copyright, that Chrome has limited commercial use beyond copyright infringement or that it was designed expressly to enable copyright infringement, said Kendra Albert, a clinical instructor at the Cyberlaw Clinic at Harvard Law School.

“It’s quite difficult to imagine Chrome meeting any of the criteria required to bring an anti-trafficking claim,” Albert said. “I can understand why many news providers would find the change pretty obnoxious, but I think it’s consistent with what incognito mode is supposed to do.”

Opinions differ on how valuable an audience publishers risk losing because of this change. While industry wisdom holds that people who use incognito mode tend not to become subscribers, there is anecdotal evidence that blocking access among those users works. The Dallas Morning News, for example, sees between 7% and 15% of its site’s unique users visit in incognito mode, according to Mark Francescutti, director of digital marketing operations at the Dallas Morning News. He added that the publisher had amassed a “good number” of subscribers by blocking their access in incognito mode, though he declined to share a specific value.

Since paywalls have come back into vogue among publishers as they hunt for consumer revenue, some have been steeling themselves for the arrival of paywall blockers, which have begun to appear as extensions in the Firefox browser. But while ad-blocking still costs publishers hundreds of millions of dollars a year in revenue, according to the Association of Online Publishers, publishers are hopeful that the value proposition at the heart of a subscription will limit adoption of paywall blockers.

“We are working hard to build the message that supporting our journalism is important to the community,” Francescutti said. “If we can’t block [incognito access], we will have to find another solution.”

The post Chrome’s privacy changes are a humbling reminder for subscription publishers appeared first on Digiday.

“The year has started off slower than we’d like,” CEO Michelle Gass said during an earnings call with investors. “It’s a highly competitive market and we’ve seen more aggressive pricing and promotions in categories like home.”

Kohl’s wasn’t alone. Nordstrom reported a net sales drop of 3.5% during its first-quarter earnings, after it reported a sales increase of 5.8% during the same period last year. Nordstrom attributed its sales decline to its decision to cut back the number of direct mailers it sent to loyalty program members, reduced digital marketing spend, and soft sales in its women’s apparel and beauty categories. One of the best performances from a department store came from Macy’s — but its same-store sales rose just 0.6%.

One bad quarter isn’t going to sink any of these retailers overnight, but it adds to the list of challenges they have to overcome. The department store sector has been under siege for a while, as evidenced by Sears filing for bankruptcy in October, after years of decline. But chains like Nordstrom, Kohl’s and Macy’s have, by all accounts, taken steps necessary to prove that it wasn’t too late for them to evolve.

They expanded the availability of services, like buy online, pick up in store, continually ensured that they had exclusive product in-stores through collaborations with designers or digitally native brands, and found unique ways to downsize. Nordstrom, Kohl’s and Macy’s are doing a lot of “new retail” right, but retooling the department store for modern customers involves more than just updates to store models, influencer collaborations or e-commerce initiatives — these stores are competing in a new retail landscape that has called the value proposition of a department store into question.

The first half of 2019 has underscored just how tough it is for department stores to consistently grow sales. Competition is Department stores’ biggest competitors continue to be Amazon and its influences, as well as off-price stores. TJX Companies, the parent brand of TJMaxx and Marshalls, reported a net sales increase of 7% last quarter. Meanwhile, Target and Walmart have surpassed the department stores in building out a delivery network that can support some next-day delivery.

“Just the fact that you can buy anything almost anywhere takes away from the original proposition of your department store: that it was a one-stop-shop for many different departments,” Tiffany Hogan, retail analyst at Kantar Consulting said.

The new department store
Department store’s efforts around reinvention have fallen into two main buckets: Convenience and curation.

In stores and online, modernizing operations. That’s included downsizing stores: Nordstrom started piloting a new services-only store called Nordstrom Local, while Macy’s has been opening smaller-format stores as part of its Growth 50 plan. They’re also bringing services that were previously only found in-store, like styling, online, and are looking at how they can use mobile and e-commerce to make the department store shopping experience easier. For example, Macy’s CEO Jeff Gennette said during the company’s last earnings call that Macy’s is looking at redesigning its mobile app to make it a tool that will help customers better navigate the Macy’s store, by alerting them to where certain products that are new or on-sale are located.

The connective tissue linking all of these initiatives is convenience. Department stores want to convince the modern shopper — who are not as keen as they used to be on shopping at huge stores that are difficult to navigate — that they’re still easy places to shop.

“More and more often we recognize that time is a valuable commodity,” Shea Jensen, Nordstrom’s vp of customer experiences, previously told Modern Retail. “Our ambition is really to be available whenever, wherever and however customers want to shop.”

Competing on product
But department stores have to be both convenient and compelling places to shop. So, these retailers have sought out more exclusive products. For Nordstrom, that has meant clinching deals with DTC brands like Bonobos, Everlane, Reformation and Allbirds, and at times being willing to bend to individual brands’ needs. Meanwhile, Kohl’s has channeled its energy into collaborations with designers to launch exclusive collections at Kohl’s, particularly ones like Jason Wu and Elizabeth & James, which are popular among the younger customers they are trying to court. And Macy’s is relying on its acquisition of retail concept shop Story to make its stores more of a destination for new product discovery. Right now, Macy’s has 36 Story shops that live within its own stores that will change themes every few months. The hope is that Story will continue to draw repeat customers back, who want to see what’s new.

But, many of these initiatives are still too incremental to be considered a saving grace for these retailers.

“There are a lot of retailers that I think are basically delivering a slightly better version of mediocre — that in and of itself doesn’t give you significantly different results,” said Steve Dennis, the CEO of retail consultancy SageBerry and former vp of corporate strategy at Sears. Dennis added that he thinks recent initiatives like Macy’s acquisition of Story and Kohl’s Amazon returns partnerships are “good, but not game changers.”

Changing pains
As department stores make investments in new digital strategies, they risk misstepping.

In September, Nordstrom announced that it was rolling out a new loyalty program that would give customers more access to redeem points earned through the program in exchange for personalized services, like scheduling an at-home appointment with one of the company’s stylists. It’s a step that other retailers like Foot Locker and Ulta Beauty have taken, as they seek to not rely so heavily on discounts.

But, Nordstrom said during its most recent earnings call in May that its sales were hurt when it cut back on the number of direct mailers it sent to loyalty program members.

“With loyalty and marketing, our missteps were not motivated by cutting expenses,” CEO Erik Nordstrom said during the earnings call. He said that the new experiences Nordstrom had added to the loyalty program were “still resonating well with the customers.” But, he said that Nordstrom had failed to account for how many of its loyalty program members still relied on direct mailers to be notified about new sales or promotions.

To regain their footing for the remainder of the year, Macy’s, Kohl’s and Nordstrom are accelerating the roll-out of some of their more forward-thinking partnerships. Gennette said that Macy’s will be opening 100 more of its Growth 50 stores this year, which he said are “outperforming” the rest of Macy’s brick-and-mortar fleet, as well as 50 more of its off-price Backstage stores. The Amazon returns service, which Gass called “the single most important initiative of the year” for Kohl’s, will roll out during the crucial back-to-school season. Meanwhile, Nordstrom continues to expand Nordstrom Local to new areas like New York City. It’s also adding those services to all of its stores in Los Angeles, its initial test market for Nordstrom Local.

But, all of these efforts may not be enough to grow sales in the face of changing consumer behavior. If consumers continue to do more of their shopping at off-price chains, specialty stores or Amazon, there’s only so much of that business that department stores will be able to grab. And, there’s less sales growth to be had from new store openings, given that many of them are coming in the form of smaller-format or off-price chains.

“To me, the only way that the last [department store] standing will have decent numbers will be [if] just enough of the competition has gone away that they’re not under so much margin pressure,” Dennis said.

—

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The post Despite digital investments, department stores are at a disadvantage appeared first on Digiday.

“In the U.K., the debate is very immature for what podcasting can deliver for brands and businesses,” said Peter Mitchell, co-founder of podcasting consulting company 4DC. “There’s demand for a proper, big discussion on the role of podcasts. Understanding the value equation between the listener and you means the revenue paradigm completely changes.”

The way podcast listeners are measured needs updating, according to Mitchell. With roughly 2,000 podcasts released each week according to research from 4DC, only the top 5% of podcasts will generate six-figure audiences, enough to get advertisers interested. Low audience numbers don’t account for the time people spend with podcasts and the focus they give them, which are favorable environments for advertisers to be in.

For its clients, 4DC calculates the podcast listener value using the audience number, attention and action people take after listening. After an ad campaign has run in four podcast episodes, 4DC runs effectiveness studies on the audience asking questions ranging from specific content queries, like whether something made you laugh, to how likely they were to buy something from a brand mentioned in an ad.

In a report released this month, 4DC and podcast platform Audioboom ran a post-campaign analysis for two podcast advertisers, music audio brand Bose and The Economist. In the study, brand recall was 67% and 60%, respectively.

4DC launched in December, so it’s too early to gauge the impact in whether offering post-campaign analysis leads to repeat business. Mitchell said that each week it signs up between four and six new clients, many of which are in the tech, pharmaceutical and financial industries.

Companies that look at how podcasts drive brand objectives are few and far between. According to MediaCom, the number of clients buying podcast ads has doubled in the last year, but the agency has run just a few post-campaign analysis studies.

“That research is still really in its infancy,” said Charlie Yeates, commercial trading, partner, at MediaCom. “No one really knows what the purpose is, whether it’s brand uplift or sales. KPIs will be smaller than most; it will often be more basic and not big enough to turn the dial.”

Another barrier: A lot of podcast listening happens offline, which makes it harder to target people at the right time and prompt them to take another action online within the ad.

So for all the research into growth, podcast consumption isn’t mainstream enough to tempt advertisers en masse in the U.K.

Meanwhile, in the U.S., publishers have made decent podcast ad revenue. The New York Times said — on a Digiday podcast — that podcasts are “a meaningful, eight-figure business,” driven by The Daily’s 2 million daily listeners. U.S. sports outlet The Ringer said it made more than $15 million (£11.4 million) on podcast ad sales in 2018, averaging 35 million monthly downloads.

But the U.S. is a much larger market. Podcast advertising revenue in the U.S. totaled $479 million (£376.27 million) in 2018, according to research by the Interactive Advertising Bureau and PricewaterhouseCoopers. While the U.K. podcast ad market is estimated to be far smaller — in the region of $12.73 million (£10 million), according to agency sources. The larger, more developed U.S. market allows for more advanced measurement and attribution modeling to attract bigger brand budgets. Still, the appeal is the rapid listener growth and U.K. agency executives have predicted around a 60% growth in spend each year.

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The brand’s specific formula unlocked the DTC model for distribution. Any wine-based spirit with under 24% alcohol is regulated like a wine, and therefore isn’t bound to the three-tier distribution system (comprised of producers, distributors and retailers) that limits how spirits are sold. Because of its makeup, Haus can be sold online, and it can also open its own physical stores down the road, neither of which traditional spirits brands can do. According to a 2018 report by Rabobank, “only five states allow DTC spirits shipments, with 5 percent of the U.S. population having access to the channel. Shipping laws are so complex and the market so small that common carriers won’t even ship spirits in states that do permit distilleries to ship DTC.”

“You see this approach by some restaurants without full liquor licenses, but no one’s taken advantage of this loophole on the internet,” said Hambrecht. “I could see how completely out of date the alcohol industry was, especially as startup founders were creating new products and figuring out new ways to distribute them and update branding. That wasn’t existent in alcohol because such regulations don’t allow for much innovation.”

Haus is the first alcohol brand to use that loophole to start a DTC business, debuting as a broader trend in alcohol consumption ramps up. As reported by the New York Times, millennials are “sober curious” now, and other spirit-alternative drinks have started cropping up, like Kin, an alcohol-free “euphorics” beverage line. Hambrecht saw an opportunity for a lower alcohol volume liquor to gain mainstream attention, pointing to the success of Aperol, which has 11% ABV and saw sales increase 59% last year, as proof. The brand wants to appeal to people who have intertwined social and professional lives and want to drink, but not suffer the consequences of a hangover so severely.

To target this group, which Hambrecht believes is more psychographic than a demographic, the brand is borrowing from tried-and-true DTC practices — opening a Shopify store, relying on content and education, opening pop-ups and working with branding agency Gin Lane — to get noticed in an industry where the traditional distribution model would leave an unheard-of aperitif buried in a complicated cocktail’s ingredient list or on a bartender’s back shelf.

“We’re not interested in that route. We don’t necessarily trust bars and restaurants to use our product correctly,” said Hambrecht, who said the model is also inefficient: brands have to spend to “outbound” their product to bars and restaurants on a one-by-one basis. “We want to be where our customer lives. Co-working spaces, hotel chains, tech offices — places where millennials are finding themselves connecting with each other outside of the home but not wanting to get wasted.”

Marketing comes with its own regulations: As an alcohol brand, Haus’s wording has to get approved for every digital marketing campaign, and platforms that gear toward a younger audience, like Snapchat, age-gate alcohol-related advertising and stifle dollars spent. Hambrecht said that the company plans to raise awareness through partnerships with retail partners like Soho House, word of mouth and user-generated content at the outset. Hambrecht said influencers will be part of the strategy, pointing out they’re the exact type of customer — put in social, boozy situations where their behavior is broadcast on Instagram — the brand has in mind.

“I don’t believe we should rely on something like Facebook ads,” she said. “If that’s our main go-to-market strategy, we’re in huge trouble.”

In establishing its positioning as a spirit, the company has put suggested recipes and the ingredients list on the site, and including a how-to mailer in order shipments. When working with outside partners, Hambrecht said she will only agree to sell to people who agree to established terms on how to serve it: in a spritz, on the rocks, or with only a few other ingredients. The brand’s $1 million pre-seed round of funding helped it through launch, while Hambrecht said the next round of funding will focus on its own offline retail strategy.

“We want the feedback. We can have this direct relationship with our customers, which has never happened with a booze company, and we can make a new recipe in nine hours, we can iterate so quickly. That allows us to be really nimble with product launches,” said Hambrecht. “It’s really exciting as someone who has never had the opportunity to know the end customer.”

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