Month: December 2019

While many publishers have grown interested in commerce as an additional source of revenue, most have been reluctant to move beyond the affiliate commissions that come from driving readers to third-party retailer sites. Complex’s store takes a step forward, using a marketplace model that offers higher commissions than affiliate but without the risk of renting warehouses or building out fulfillment infrastructure. The store also gives Complex a direct relationship with its customers, allowing it not only to market to readers but also sell them more without dealing with headaches like customer service (the Complex Shop’s technology provider, Bonsai, takes care of those).

“We don’t need millions of users for this to be interesting,” Baesler said, adding that Complex leadership expects the store will drive gross annual revenues close to $10 million in its first full year. “We’re not trying to build an Amazon marketplace.”

Complex is already selling products directly to its audience. ComplexCon, a culture festival originally held in Long Beach, California, in 2016, has grown into a multi-city event that drives tens of millions of dollars in revenue through a mixture of commerce, tickets and sponsorship. The inaugural ComplexCon Chicago, held this past summer, generated $40 million in revenue, CEO Rich Antoniello said.

Beyond its core brand, Complex has had success driving commerce revenue using its owned franchises and brands. The web series “Hot Ones,” for example, has been spun out into a successful line of hot sauces, which generated $10 million in revenue in 2018. Last month, Complex told Axios it would be launching a sneaker marketplace and standalone app built around another sub-brand, Sole Collector, in 2020.

Complex plans to allocate owned media and in-house inventory worth nearly $8 million marketing the shop to its readers next year, according to a source.

While Complex’s shop’s items will be chosen by Frederick Marfil, its contents are influenced at least partly by which retailers and merchants Complex’s technology partner, Bonsai, has in place. Though Complex can recommend merchants, integrating a new merchant’s inventory tends to take several weeks. At minimum, it takes about two months to sign up, then integrate a merchant’s inventory. For larger merchants and retailers, such as Nordstrom, the process can take longer.

Marfil, who worked at Complex for several years as a style editor of the magazine’s buying guide, will work with Complex editorial colleagues as well as third parties to ensure that the store is stocked with items that are familiar parts of Complex’s coverage, as well as newer brands Marfil and his colleagues see as the next big thing.

“It’s about incubating emerging brands and highlighting the established ones,” said Jeanette McKenzie, Complex’s vp of commerce and business development, who added that in circumstances where Marfil wants a designer who cannot be integrated into the back end, Complex may experiment with buying selling a small number of products from those brands directly.

Over the past year, fashion and streetwear publishers have begun acting more like internet retailers. Highsnobiety, for example, launched an own online store in May, stocked not only with exclusive Highsnobiety collaborations but pricey duds from luxury brands including Prada. Several years earlier, Hypebeast launched a curated marketplace called HBX. Those product launches, along with some recent design and product changes designed to make commerce content more shopping friendly, are part of a broader trend of digital publishers beginning to shift talent, design and business resources toward pursuing commerce revenue.

Complex’s long history of covering fashion and streetwear gives them the credibility necessary to get away with selling expensive goods to its readers. “They’re able to do that because of this brand that they built,” said Chris Erwin, the founder of the strategic advisory firm RockWater. “If they’d come out of the gate offering high-priced goods all those years ago when they were starting out, it wouldn’t have been possible.”

Having control of the customer relationship, Erwin added, will give Complex a chance to optimize its commerce efforts even further. “It’s an opportunity to further segment their audience,” Erwin said.

“The ambiguity is on the advertising side of things, the implications for the status quo of the types of targeting we do,” said Justin Scarborough, director of programmatic media at PMG.

The major ambiguity facing companies is how the CCPA’s broad definition of a “sale” of data applies to digital advertising. Under the law, a sale is not simply the exchange of California residents’ personal information for money but for any business value. A publisher passing a device ID to an ad tech firm to fill a programmatic ad impression or an advertiser sharing a list of IP addresses to an agency to plan a targeted ad buy could be considered a sale of data under the law. Or they could not be.

“Digital advertisers use a variety of types of information that may be personal and is exchanged with other companies in order to fulfill their purpose or their services. Whether that meets the definition of sale under CCPA is questionable in some cases,” said Aaron Tantleff, a partner at law firm Foley & Lardner.

The CCPA’s definition of sale has been “heavily discussed” among agencies and their clients, said Laura Aldridge, vp of consumer and market intelligence at Rapp. “I think the definition of sale is something that’s still being interpreted legally because that is a difficult one.”

Agencies often tout their abilities to take people’s information collected by clients and create models for planning and buying purposes. The CCPA has put a question mark over whether the sharing of data from clients to agencies to perform that work constitutes a sale. “The moment you model data and extract the top decile for targeting, is that adding value? Or is that just analyzing your data?” said Aldridge.

The ad tech industry is similarly grappling with the question of whether the information passed along the programmatic supply chain constitutes a sale under the CCPA. The proverbial ad tech tax that companies charge to facilitate a programmatic ad sale would seem to meet the law’s definition of sale. But some aren’t so sure.

“There are still some in the ecosystem that want to take the approach that passing personal information with respect to advertising is not a sale, but I think the statute as drafted almost covers every use case that the ad tech ecosystem has to deal with,” said Thomas Chow, general counsel and secretary at PubMatic.

Consider GumGum, an ad tech company that specializes in contextual advertising. The company does not sell data under the traditional definition of exchanging information for money, but because it operates a programmatic advertising business, it is taking the position that it does sell data under the CCPA’s definition, said T’Juana Albert, director of global compliance and legal affairs at GumGum. By Jan. 1, GumGum’s website will carry a notice to inform California residents that it sells people’s personal information and provide them with tools for individuals to submit requests to access that information and to ask the company to stop selling that information. “We’re not going to play around,” Albert said.

The uncertainty surrounding the CCPA’s application to targeted advertising combines with a broader assault on online tracking by browser makers like Apple and Mozilla and is leading some advertisers to explore moving away from targeted advertising, according to agency execs. Retail advertisers typically rely heavily on retargeting. However, PMG has some retail clients that are testing “extreme scenarios where our ability to retarget at scale is severely deprecated” as a way to “pressure-test some of the options in the future,” Scarborough said.

Given the questions companies have and the answers they lack, companies, such as GumGum and PubMatic, that deal with personal information collected by other companies are gravitating toward the CCPA’s service provider designation. The designation enables a company to process the data collected by another company, even if a person has requested their data not be sold, so long as the service provider only uses the data for the purposes specified in a written contract with the company that collected and shared the data.

The service provider designation comes with trade-offs. An ad tech company serving as a service provider cannot use the personal information it receives from a publisher to target ads to the individual on another publisher’s site, for example. That can curtail the revenue that ad tech companies generate from being able to track people across the internet for targeting and measurement purposes. But the fines and other penalties companies could face if those practices are found to be non-compliant with the law can be a bigger concern.

“The approach we’ve taken is we want to be good actors in the space. If it costs us a little bit of revenue, so be it. It’s not worth it to our brand to be caught up in things where we’re processing data without consent. It’s just not worth it for us,” said Albert.

While some companies solidify their preparations for the CCPA before it takes effect on Jan. 1, others may not feel such urgency because of the law’s delayed enforcement window. The California attorney general’s office will be responsible for enforcing the law, but that enforcement cannot begin until six months after the AG’s office releases its finalized regulations or July 1, 2020, whichever happens first. As of press time, those finalized regulations have yet to be released.

However, anyone believing they have another six months before they’ll be on the hook is misguided, according to Tantleff. “Any noncompliance that dates back to Jan. 1, there’s a look-back, and they will be responsible,” he said.

“At the end of the day, the best thing a company like PubMatic or anyone in the industry can do is take a relatively conservative approach to CCPA,” said Chow.

Some influencers have falsified screenshots of their data to make them appear more appealing to advertisers. Having direct access to an influencer’s data, whether through an influencer marketing platform or a social network, seems to be the best way to help advertisers verify they are obtaining what they have paid for in terms of reach.

“If Instagram removes likes from the feed, advertisers and agencies will be more reliant on building relationships with influencers to ensure access to the accurate data feed they need,” said James Silverstone, an account director at influencer creative agency the Projects.

Instagram, Twitter and Facebook let influencers have their profiles verified for added authentication. An advertiser who contracts with an influencer with an authenticated social media account on any of these three platforms can receive analytics data directly from that network. Thus, the advertiser need not rely on influencers’ reporting of their own analytics (such as like counts, a post’s true reach or the demographic information about users who engage with it).

Previously, influencer marketing agency Sway Group asked influencers to send screenshots of their campaign results, said CEO Danielle Wiley. Now, all that campaign data is made available through influencer marketing platforms to advertisers and their agencies, she said.

The number of authenticated accounts used in campaigns managed through influencer marketing platform CreatorIQ has grown 73% over the last six months. In May, the number of authenticated accounts on its platform was just 16% of all the activated creators; by October, it was 23%. Thus, the number of campaign posts from authenticated users on CreatorIQ’s platform jumped 94% over the last six months, according to CreatorIQ. In May, about 27% of posts from influencers on the platform came from authenticated accounts; by October, it was 52%.

“Channel authentication is enabling marketers to measure creator campaigns against more traditional forms of digital media like Google and Facebook,” said CreatorIQ’s CEO, Igor Vaks. “This requirement from brands provides a deeper understanding of a creator’s audience data before a campaign begins — and more meaningful first-party data after the campaign.”

At social media agency Wildfire Social, the authentication process involves partnering with each influencer directly — not by using an influencer marketing platform like CreatorIQ but by gaining direct access to the influencer’s pages straight from a social network. “This way, we know that 100% of the data used in our influencer campaigns are genuine,” said Gaby Khalastchy, an account director at Wildfire Social.

The removal of likes on Instagram arrives at a pivotal moment: Influencer marketing spend has reached significant levels and brand managers are demanding stronger performance metrics like sales figures. While engagement, as demonstrated in the number of likes, is a good indicator of success, it shouldn’t be the main one, said Daniel Schotland, COO at performance-based influencer marketing agency Linqia.

“Influencer marketing, like any other marketing activity, should be measured by tying into the top objective of the campaign,” he said.

At Publicis-owned media agency Starcom, campaign managers also measure the effectiveness of influencer promotions just as would evaluate a non-influencer one. For example, on Facebook a company can link its website or app tracking pixel to influencer posts, said Paul Kasamias, a managing partner at Starcom. This provides an advertiser added information, including whether and how people engaging with posts took action, “converted” and if the return on investment was efficient, he said.

Some advertisers have taken this a step further by sharing their tracking pixel rights with influencers, letting their own marketers or the agency’s execs promote targeting posts, Kasamias said. He cited, for example, the technique of “retargeting site abandoners with influencer video reviews of said product or service.” Added Kasamias: “However, a more simple method of asking the influencer to use a specific URL is still the more common method, although somewhat flawed.”

At the same time, brands should not relegate influencer marketing to merely a transactional practice, one industry player advises. “What has always performed and will continue to perform is authentic influencer partnerships founded on true brand affinity,” said Evy Lyons, vp of marketing at influencer marketing platform provider Traackr.

“It signals a whole new era for what this might be,” said Brian Lee, Group Nine’s evp of commerce. Lee said Group Nine approached Facebook about being able to make their Instagram posts and Stories more shoppable and by early September, they, along with other publishers, were invited to test it out.

So far, Group Nine has been selling its own products, such as Dodo-branded merchandise, and a collaboration between The Dodo and direct-to-consumer brand Sock Club that donates 10% of sales to help critically endangered species. The collection of six Dodo-branded socks launched just two weeks ago and in the past week, Lee said nearly half of site traffic for the socks came from Instagram.

Like Group Nine, Bon Appétit has also been testing out this new feature by selling its own merchandise, which includes branded shirts, hats, sweatshirts and other items, some of which feature the publication’s popular test kitchen editors-turned-influencers. On Sept. 27, Bon Appétit posted its first shoppable Instagram post, and since then, every post relating to its merchandise store has included shoppable links.

“The most recent [merchandise] drop, in terms of Instagram performance, was even more successful than the initial drop [in August],” Rachel Karten, associate director of social media for Bon Appétit and Epicurious, wrote in an email. “It got over 54,000 likes and 1,875 comments — putting it at one of our most commented posts of all time. We had always seen our followers say on social ‘make BA merch!’ so we knew that these drops would play very well to this audience specifically — but to see it continue to grow like this is really exciting.” Clicks from the shoppable links have been “incremental,” and Karten said, “So far, we’re definitely pleased.”

On Friday, 15-year-old lifestyle news publisher Highsnobiety debuted its first ever shoppable Instagram post, promoting one-of-a-kind upcycled pieces made by artist Nicole McLaughlin. The company just launched its e-commerce operations in May, and U.S. PR lead Jennifer Ong said its strategy revolves around the art of the drop, with products sold on Instagram likely being exclusive to the platform.

“Within Instagram, the drop feature enables customers to set reminders about product launches, so they get a notification once the product is available, with the option to buy them right on Instagram,” Ong said. She said so far Highsnobiety is pleased that customers can opt into reminders and notifications and she described the shopping experience as “seamless and intuitive.”

Invited publishers don’t pay any commission to Instagram for any conversions. Karten said, “The analytics are somewhat minimal. I’d love to see more granular numbers and tracking at some point.”

Group Nine, Highsnobiety and Bon Appétit would not disclose specific numbers related to conversions or sales being driven via Instagram, but it’s an area where mobile-first social media platforms have generally had mixed results and apps are still evolving to become more shoppable.

Instagram isn’t the only platform testing out how successfully it can marry commerce with content. YouTube, TikTok and Snapchat are also investing heavily into this space, but Lee said that, with varying degrees, publishers find the process to be “very manual” and that more is needed to make e-commerce simpler and easier to conduct on those channels.

“It’s slowly growing to become a big, big part of our overall meaningful sales,” Lee said of Instagram Shopping.”Not just for The Dodo, but it will also be a main channel for a lot of our other brands like Thrillist, Now This, Seeker and PopSugar. “We think this feature is going to be huge for that category, for fashion, fitness and wellness.”

At the moment, only a handful of publishers testing out Instagram Shopping are able to use the Instagram Checkout feature, which lets consumers pay for and manage their purchases all within Instagram. Highsnobiety was one of the first, although that feature is currently only available in the U.S.

Consumers who click on the shoppable posts from publishers like Group Nine and Bon Appétit are being directed to offsite websites, but those publishers have found it’s a significant improvement from previous promotions.

“When we send our followers off-platform, we typically direct them to our link in bio,” Karten said. “It can sometimes feel like a clunky process, especially when we are asking them to buy something, so I love that we can keep the purchase within platform. It feels like a more seamless process than the link in bio. I also like how I don’t have to list out prices in the caption — they are right there on the image for our followers to see.”

Going forward, both Lee and Karten said they’d like to have the ability to sell more things on Instagram. They said the possibility of adding affiliate links would be especially welcomed by publishers. “I could also see how opening up this feature for publishers to use on sponsored posts (linking directly out to the product that paid for the sponsorship) could be powerful,” Karten wrote.

Both said they’d also like the ability to sell event tickets via Instagram, or subscriptions, whether for magazines or subscription box services.