Month: January 2020

For some high-end businesses like Dyson and LVMH, Amazon’s site may not be the right venue for selling their products online. In Dyson’s case, a rival company could hijack Dyson’s product listings on Amazon.com with their own. And Amazon finds it in its best interest to have multiple sellers for each product listing as this creates pricing competition and a range of choices for consumers.

Yet, senior Dyson executives felt their relationship with Amazon had become one-sided. The money Dyson spent driving traffic to its Amazon product listings ended up being a win for Amazon because of traffic that was driven to other sellers’ products, Hellberg told Digiday at a Mindshare event earlier this week.

“Premium brands like Dyson and Nike are investing heavily in media, both online and offline, to build brand equity, brand preference and drive conversions,” Hellberg said. Invariably, these investments end up driving consumers to Amazon’s marketplace, where two-thirds of U.S. shoppers typically start their search for new products, per Feedvisor.

But building a brand while closing sales on Amazon.com isn’t easy for a company.

“Now, when you’re [building an Amazon.com presence], you have people searching for your product which will inevitably put them on a path to Amazon as the first port of call,” Hellberg said. “But the way the algorithm works and treats brands inside that platform isn’t ideal. It’s an algorithm that will use a bunch of data points on each user to serve them products that won’t necessarily be the brands we or a company like Nike represent.”

Ultimately, Dyson’s partnership with Amazon did not give Dyson’s marketing executives the control they craved over their company’s presence on Amazon’s marketplace or products sales there. Rather, the marketing executives felt they could do as much, if not more, by instead expanding their company’s direct-to-consumer opportunities with other retailers and on Dyson’s site.

Amazon has tried to play nice with marketers that desire to promote and sell their products on its site: Direct sellers like Dyson have a degree of control over how products are presented as well as the data surrounding searches and product preferences. The problem is the exchange of information is always on Amazon’s terms. Thus, companies with premium brands have found it difficult to build a branded experience on Amazon.com, Hellberg said.

“You can’t tell the brand story the way you want … regardless of what brand you own,” Hellberg said. “A middle ground would be for Amazon to enable real marketplaces to ensure an experience more consistent with the brands sold on [its] platform. That would be more attractive.” Amazon should “ideally also share the data,” he added.

Dyson’s exit from Amazon.com came about much in the same way that Nike and Ikea pulled their products from that marketplace. Some companies are discovering that they no longer want to rely on the infrastructure provided on big marketplaces like Amazon’s. Instead, these companies are aiming to create a more streamlined route to reach consumers — by partnering with retailers that are willing to help them understand shopping preferences or by tinkering with their own e-commerce sites.

“Direct-to-consumer is hard for us to do due to the challenges of distributing our product so we work with Amazon Fresh and Amazon Prime,” said Jane McMillan, Warburtons’ head of marketing communications, at the Mindshare event. “For us, DTC is about projects like experiential activations or by offering merchandise.”

Yet, it’s unlikely retail companies will exit in a mass from Amazon.com any time soon. Indeed, digital agencies like Croud work with marketers that find having a presence on Amazon’s website to be valuable.

“Trust is a key issue and it’s clear Amazon is keen to address well-publicized problems with counterfeiting and growing concerns about the use of sales intelligence to develop its own brand products,” said Andy Siviter, director of e-commerce at Croud.

“Risk” represents a major investment in video that Quartz has made to help bolster its membership program. For 2020 Quartz’s nine-person video team will have six other member-exclusive series in production, said Jacob Templin, an executive producer at Quartz, adding that at least half of them will be finished and released before the year ends. Some will be new seasons of established shows, such as “Because China,” which examines China’s impact on the global economy. Other series will be brand-new but focusing on topics that guide Quartz’s other coverage.

Quartz is investing in creating videos because management sees them as an important driver of member acquisition and retention, said Quartz membership editor Walter Frick. Twenty-five percent of last year’s membership acquisitions can be attributed to videos; that share is second only to the percentage credited to the in-depth field guides produced by Quartz’s reporter on emerging hot-button topics like cannabis or blockchain, a spokesperson said.

But high-quality digital video is notoriously expensive to produce, and Quartz’s series are no different. A typical episode of a Quartz show takes four to six weeks to complete, the spokesperson said. Each show has one or two producers and at least four staffers working on it, plus occasional freelancers. The spokesperson declined to share specifics about the average production cost per show.

And not every Quartz member is interested in the videos. Just 27% of Quartz’s 10,000 members watch the videos, and about 10% of them watch one video each  month. But unlike many other publishers that try to monetize their video content in a variety of different ways, Quartz expects membership revenue to contribute most of the revenue for their funding. Although Quartz puts some episodes on YouTube and monetizes them through ads, most of the video content remains behind a paywall.

The investment seems to be worth it for Quartz because these videos do a great job of communicating the value and quality of the Quartz membership, according to Frick. “They can see that reporters are on multiple continents for a single episode,” he said. “They can literally see the investment that goes into it.”

Quartz has had a small video team for many years and like other digital publishers has evolved its video strategy over time. At first, video was not a central component of  its membership product, which instead emphasized other assets like Quartz’s field guides, conference calls with reporters and a community of engaged members to interact with. Quartz’s membership team had an ambitious target of attracting 20,000 subscribers by the end of 2019. According to the third-quarter filings of Quartz’s parent company Uzabase in November, it had acquired more than 10,000. In 2019 Quartz had two small rounds of layoffs and experienced substantial employee attrition.

While Quartz’s strategy is unusual, it is not the only media company investing in high-end video for its subscribers. For example, the team of AD Pro, a business-to-business subscriber product launched by Architectural Digest last year, has planned to produce about two videos a month for subscribers.

“It’s obviously very compelling as a customer value proposition, but I can’t think of anybody else [other than Netflix] who’s totally made that work,” said Sam Jordan, Manifesto’s evp of North America. “Most other [publishers] are focusing on lower-cost content,” added Jordan, whose consultancy specializes in designing and developing consumer products.

Quartz’s membership-focused video strategy is unusual in another way by 2020 digital media standards: Templin said that editorial judgment, rather than a pure reliance on audience data, tends to inform the decisions about what kinds of shows to make. Though his video team takes seriously the idea of relying on feedback, it does not have the kind of audience data that could help it determine which shows to make, Templin said.

“We have a team of video journalists that have really strong interests and beats and [who] are experts in their own right,” Templin said. “I’ve found the best product comes when [series ideas] come from within the team.”