Month: September 2020

Recently, traditional and digitally native publishers alike have made more deliberate efforts to create products and merchandise with the help of retailers and manufacturers that are seen as natural extensions of their brands, enough so to get their audiences to buy — and the strategy is paying off.

Meredith Corporation, Hearst, BuzzFeed and Condé Nast have all seen their annual total sales of branded merchandise increase from 2018 to 2019 by tens of millions of dollars, if not billions, according to License Global’s 2020 Top 150 Global Licensors List.

Meredith — publisher of Better Homes & Gardens, Allrecipes and Southern Living — is ranked number two on License Global’s list, just behind The Walt Disney Company. Last year, it amassed $26.5 billion in total sales of its branded products.

The publisher has 25 active licensing programs, which accounted for $98 million, or 3% of the company’s total revenue in the 2020 fiscal year that ended on June 30, according to Mike Lovell, executive director of corporate communications. Brand licensing revenues were up 3% year over year.

Two of its more recent licensing deals included a line of Allrecipes-branded kitchenware items sold at Kroger, which launched in January, and a line of Coastal Living branded home furniture through Universal Furniture that launched last spring and is set to expand into outdoor furniture next spring.

The real differentiator, however, that Meredith has, according to Amanda Cioletti, content director of License Global, is its licensing deal with Realogy Holdings for its Better Homes & Gardens brand that allows the real estate company to hold Better Homes & Gardens Real Estate.

“Gone are the days of slapping a logo on a product. It’s much more about the thoughtful and sophisticated process of taking a core brand and reimagining it in a way that makes sense,” said Cioletti.

BuzzFeed currently has in the neighborhood of 100 active brand licensing deals and is expecting that the sales from this business will be up by more than 40% year over year, according to a company spokesperson.

When its licensing business first launched in 2017, BuzzFeed generated less than $5 million in licensing sales, the spokesperson said. In 2019, that number increased to $260 million and the digital publisher is now ranked 92 on the Top 150 list.

“It’s a traditional approach to a non-traditional brand,” said Cioletti, who added that she thinks BuzzFeed is a strong example of a publisher who is capitalizing on brand licensing. The publisher first made the list last year, coming in at 132. “They’re clearly finding their sweet spot and a lot of that is driven by homegrown brands.” 

Its Tasty and Goodful verticals have been the primary drivers of the company’s licensing business, with a line of cookware under Tasty that’s sold at Walmart. And in addition to continuing to extend those brands out, the spokesperson said the team is looking to start discussions with retailers around its other lifestyle verticals, Nifty (DIY and home) and BringMe (travel and experience).

Hearst saw sales of its licensed good increase from $505 million in 2018 to $580 million in 2019, according to License Global’s list, and its ranking subsequently increased from 71 last year to 63 this year. Hearst declined to share information about revenue earned from this line of business, but it is continually signing new deals, including its most recent multi-brand deal with DTC bedding and furniture holdings company, Idle.

Idle and Hearst Magazines entered into a multi-year licensing partnership for a line of mattresses that will have four different Hearst titles on the label. The partnerships is a revenue share model between the two companies.

The first mattress will be Country Living branded and will launch in the fourth quarter. Early next year, House Beautiful, Men’s Health and Women’s Health will debut their branded bed-in-a-box products.

“There is a massive consumer trust element” in working with Hearst Magazines, said Idle CEO Craig Schmeizer, adding that this is the first publisher licensing deal that the mattress manufacturer has signed. “Especially with larger ticket items like mattresses, consumers are looking for brand recognition,” which helps Idle’s mattresses “cut through” all of the other bed-in-a-box companies in the market. 

Some publishers are in the midst of refiguring what their modern licensing business looks like.

Condé Nast’s women’s health and wellness title Self has licensed its brand in some capacity since it launched in 1979, according to editor-in-chief Carolyn Kylstra. But last year after several licensing deals were coming to a close, she said she wanted to move away from fitness-focused products and get into wellness as a way to represent the new direction that the digital publication was moving in.

And early next year, Self will relaunch its licensing business with a line of sex toys with manufacturer Jimmyjane.

Condé Nast earned $250 million in sales from its licensing deals last year, which was $100 million more than the previous year. The company ranked 121 on the License Global’s 2019 list and increased to 96 this year.

“We know that our audience really trusts us when we say a product is worth spending money on, whether the product has our logo on it or it’s something we’re recommending,” said Kylstra, and when re-building the licensing business, she said her goal is to focus on creating products that will serve its audience.  

“Brand affinity is the entire appeal of licensing. Consumers will gravitate towards those products much more frequently if that brand resonates with them,” said Cioletti.

Contingency plans on contingency plans

If you ask marketing leaders how their jobs have changed you’ll likely hear about needing backup plans should another crisis arise. Being prepared with those plans in place has become a new norm for marketers and agency execs. “2020 has been the year of contingency plans,” said one media agency executive. “We’ve had to be so prepared. Every social team I’ve spoken to internally and externally has been working through plans A, B and C.” 

Having to plan for different scenarios isn’t new, of course, but the breadth of various scenarios to plan for as well as the need to actually be able to implement those plans on a dime is new. That has an impact on both media planning and creative execution. For example, marketers are currently thinking through what holidays like Halloween and Thanksgiving will look like this year. Figuring out what social norms will be, reflecting those via new ads and doing so in an ever-changing climate is forcing marketers and agency execs alike to “take creativity to a new level,” said one exec. 

Perfecting e-commerce capabilities

Prior to the pandemic and the stay-at-home orders, major marketers like Procter & Gamble and Anheuser-Busch were acquiring direct-to-consumer brands known for their expertise in e-commerce as well as performance marketing. In recent months, as people have opted to shop online rather than in-person the push to perfect e-commerce channels has only accelerated. 

“The last six months has changed marketers’ business models to put e-commerce and data front and center,” said Greg Paull, principal at R3 Worldwide. “The best agencies are retooling their teams with analytics and online sales consultants that can help drive friction free commerce.” 

Duane Brown, founder and head of strategy at Take Some Risk, a performance marketing agency echoed that sentiment. “We are seeing people and agencies who would not have touched e-commerce in the past trying to get into the space and win business because there is so much work and money out there right now,” said Brown. “If you were not e-commerce and DTC focused before… you are now.”

Doing more with less

As I wrote about last week for this marketing brief, the push to make marketing more agile, nimble and flexible has been going on for years. But during this disrupted and challenging period, marketers and agency execs have been forced to make that back-burner philosophy a hardcore a reality. They are working with smaller teams due to layoffs, tighter budgets and faster turnaround times. And now that chief financial officers and procurement execs at brands have a sense that marketing can do more with less, it’s unlikely for budgets and team sizes to return to the levels they had been at before the crises. 

“We’ve been marching towards a transformation of the agency business for some time and Covid accelerates that,” said Jay Pattisall, principal at Forrester. “Some of the furloughs and layoffs could be more lasting propositions. I think it would be incorrect to assume that in a recovery all of those jobs come back. Some will. But it’s not realistic to assume that all those jobs will come back.”

This isn’t your parent’s QVC.

While NTWRK takes a similar approach to selling products live and on the air, the mobile-first marketplace is emphasizing content and featuring talent that appeals to the streetwear community.

NTWRK CEO Aaron Levant and president Moksha Fitzgibbons — who previously worked together to create Complex Network’s festival ComplexCon — wanted to pair the engaging content and influencers that are seen in media companies like Complex, with desirable and exclusive products that people are only able to purchase in a specific moment of time. That all leads to a high velocity of transactions, Fitzgibbons said.

“There is marketing value that comes out of the limited quantities, but our goal is to become a massive marketplace and to generate tons of sales on the platform,” said Fitzgibbons.

It was also born out of the livestream commerce model largely driven by influencers that has been successful in Asia for several years but has not yet made its way to the west.

NTWRK now has over 1 million people who have registered their information and linked their credit card information. The platform’s total monthly audience is upwards of 10 million, according to the company. And as 90% of the company’s revenue comes from transactions on the platform, registering people to be able to buy is the top priority, Fitzgibbons said. 

The high number of registrations also enables NTWRK to keep a high conversion rate of 5-15% on its shows. The conversion rate tracks the number of viewers who make a purchase during the livestream.

In the latest episode of Digiday’s The New Normal, Fitzgibbons said that despite the pandemic, the platform’s younger cohort of viewers — 85% are between the age of 18-34 — are still making purchases, enough so that sales doubled from March to April. But as a company that’s introducing a new way for consumers to shop in the U.S., a strong strategy for getting the audience on board is key.

Image description –

The intersection of NTWRK.

Taking an editorial approach to commerce

“Most successful e-commerce marketplaces are extremely utilitarian. It’s anything that anyone could possibly need,” said Fitzgibbons. “But there is no editorial point of view there.”

So in order to crack the live-streaming commerce market in the west, he said there had to be a strong, trusted point of view to stand out.

To do that, the products featured on NTWRK are highly curated and exclusive. They’re always either exclusive to NTWRK, created in collaboration with the company, or are first to market on the platform. 

Beyond that, the products are showcased on NTWRK through shows. Each show is hosted by or features an artist, designer or influencer that is associated with the brand or product. Right now, the platform is showing two shows per day but Fitzgibbons said the goal is to scale that up to 10 per day.

The drop model still works 

Given the nature of the products that appear on NTWRK’s platform, there are often limited quantities of each item available, playing into the “drop model.” 

Fitzgibbons said that drop culture works because people like to buy into the perceived exclusivity and being able to boast that they were one of the few people able to purchase that item.

One show on NTWRK, for example, featured jeweler Ben Baller, who showcased a $175 gold plated scale from his collection. The collectable had only 2,000 units available, but Fitzgibbons said 3,800 attempted to purchase the item during the episode —the scale sold out within six seconds. 

“That demand generation that leads into it and comes out of it drives a lot of marketing value for not just our platform, but for all of the partners involved,” he said.

Because the products tend sell out so quickly that it reverberates into alternative consumer conversations, he said, and people will brag about their purchases on social or will be angry that they didn’t, and then the media catches on to that. 

“If we really do it right, it ends up in the secondary market, trading for two or three times MSRP,” he said. That marketing value coming out of the demand generation for restricted inventory reverberates into the brand’s mainline products, creating a halo effect for the whole company.

Remote operations that make sense

When NTWRK launched, the team built a studio to create high quality content. When the pandemic forced remote work, content became what influencers, celebrities and show hosts could create from the comfort of their homes and often from their iPhones. Luckily, however, that meant a steep decrease in the average production costs, according to Fitzgibbons. 

The other added bonus was that consumers felt more closely connected to the show hosts since it very much felt like the personality was experiencing the same remote reality. This format will live on, he said, but when safe, the studio will come back as well, as his team looks to increase the number of shows they produce. 

Much like Snap introduced ads into Snap Games shortly after they launched last year, the company is now looking at how it can bring advertising into Minis. On Games, which also sit in the chat section of the app, users are rewarded for watching ads, with extra weapons, for example. 

“We are experimenting with running Snap Ads inside these Minis — we had a similar strategy with Games — it’s early days but we will start there,” said Ben Schwerin, Snap vp of partnerships. 

“There’s certainly potential for other types of monetization in the future,” added Schwerin when asked whether Snap might also look to monetize Minis by introducing payment or subscription features, similar to those within Chinese messaging app WeChat. Tencent, WeChat’s parent company, is an investor in Snap. Evan Spiegel, Snap CEO, told the Financial Times earlier this year that the company’s relationship with Tencent had inspired its shift towards becoming more of a “superapp.”

At this stage, the benefit for Minis partners is primarily marketing: Being able to showcase a version of their apps to a potential audience of 238 million, mostly young, daily active users. Schwerin said Snap has purposefully gone for “quality over quantity” when bringing on additional Minis partners, though any company or developer can apply.

“We have taken a deliberate approach in the past, whether with Discover content partners or with Games — you will see a similar strategy here,” said Schwerin. “What we don’t want to do is launch lots of Minis from every partner interested in doing it before we learn what makes partners successful and what will resonate with our community.”

France-based product and software engineer and creator of the Tembo flashcard app Adrien Dulong said he was approached by Snap to make a Mini in April. Dulong had been using the Snap Kit set of developer tools to let users of the full version of the Tembo app attach their Snapchat Bitmoji avatar. While declining to provide numbers, Dulong said he was “amazed” by the number of people that had interacted with the Mini app since it became available in July.

“It’s the perfect place for me to target students because they all use Snapchat,” Dulong said. “To be able to bring something around education inside the place you use the most during the day is really perfect.”

Snap is increasingly building out additional ways for companies to integrate themselves within the Snapchat app, beyond advertising. In July, Snap rolled out brand profiles, for companies to display their AR Lenses, commerce stores and other content.

“In the future, we believe that Snapchatters will engage naturally with businesses of all sizes across our service,” said Snap chief business officer Jeremi Gorman on Snap’s second-quarter earnings call in July. “For a brand like Target, this could mean they visit the Target Store on the Map to check store hours; use a Mini to find the best offers with friends; try on the latest looks via an AR Lens; and more.”

Snap generated $454 million dollars in revenue in the second quarter, a 17% increase on the prior year.

For marketers, one drawback to exploring Minis is the technical chops required to develop the apps, said Garrett Woods, associate director of platforms at Fullscreen, a social content company.

“Building new skillsets internally (or with agency partners) will ensure taking advantage of these cool new features can actually happen,” said Woods, via email. “Additionally, Snapchat needs to fill this gap if they want to scale Minis — make them easier to create.”

Advertisers that find most success on Snapchat tend to be those that create experiences that people can share with friends, said Gareth Leeding, executive creative director at creative agency We Are Social.

“Advertising in general tends to be a lot about experience. If you start to think about advertising as a utility — how brands step in and help people —[advertisers should] try to create things that are useful,” said Leeding. “At a time when people are not together, create a shared experience where people can come together.”