Category: Data-Labor-Technology Stories

So Stitch Fix is giving it to them.

Online personal styling service Stitch Fix stepped up its advertising spending by 84 percent in the first quarter of its 2018 fiscal year, with TV campaigns playing a big role in trying to attract new customers.

But the new customers attracted by the mass-market commercials had one common piece of feedback: Stitch Fix needs to offer a bigger selection of less-expensive clothing. CEO Katrina Lake told Recode in an interview following today’s release of Q1 results — its first earnings report as a public company — that these consumers want more options in the $20 to $50 price range.

So Stitch Fix plans to give these new customers more of what they want.

“In the last year, lower price point product has grown to represent a double-digit percentage of our total unit sales,” the company said in a letter to shareholders announcing the financial results. “Given the success of this offering, we plan to increase lower price point sales as a percentage of overall sales over the course of this fiscal year.”

In its first few years of existence, Stitch Fix’s selection of clothing items skewed mid-tier — higher than the range mentioned above, but lower than those of premium brands. But in the past year, the company has started to sell name-brands at premium price points, in addition to beefing up the selection in the $20 to $50 range.

On the company’s earnings call with analysts, Lake was asked what the lower-price push would mean for profit margins. She did not offer specifics on the profitability makeup of the different price points, but said Stitch Fix “can serve very profitably” these value shoppers.

Average order values, on the other hand, would be lower for these customers, but would be largely offset by new sales of high-price premium brands, she said.

For the quarter, Stitch Fix reported revenue earnings and profits that were generally in line with analyst estimates. First-quarter revenue grew 25 percent to $296 million year over year, while the company netted $13.5 million in net income.

But Stitch Fix’s stock was trading down as much as 12 percent in the after-hours market, perhaps over concerns that the company did not provide a forecast for net income.

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Like other media companies, The New York Times is recognizing that its survival depends on growth in a lot of areas, not just display advertising or subscriptions.

The Times’ push to double digital revenue to $800 million by 2020 is built off a varied business model of agency work, subscriptions, ads and more.

“There is no one single strategy for growing advertising,” said Sebastian Tomich, who was just elevated to the Times’ head of advertising from svp of advertising & innovation.

Next year, the Times will push into a few areas outside its core but mature business selling display ads on NYTimes.com and less and less so in the print newspaper. Growth is expected to come from elaborate partnerships, like the Samsung-sponsored 360-degree videos that the Times publishes daily or a kid-aimed version of its popular news podcast, “The Daily,” that the Times created for voice-activated device Google Home.

The upside is big programs like these can command many millions of dollars. The downside is it can take up to nine months to sell them, and there are only so many companies in the market for them. Tomich has identified around 25 advertisers that are candidates for these and aims to sell five to 10 deals in the year ahead.

Longer term, Tomich also sees growth coming from agency-like products and services via T Brand Marketing Solutions (formerly T Brand Studio), which could include running campaigns that run outside of Times properties.

As its growth strategy evolves, so is the kind of talent the Times is looking for. The Times will always have salespeople, but it’s de-emphasized that role as technology has made that function more efficient and clients are increasingly asking for creative expertise. As part of that shift, the Times let go several ad sales directors last week, the New York Post reported. Now, there are fully 160 people in creative services, plus five to 10 business development leads that focus on the agency businesses. To sell those big partnerships, there’s a new partnerships team led by Andy Wright that’s set to have 18 people once fully staffed. Meanwhile, T Brand, now led by Amber Guild, a vet of The Martin Agency, is hiring creative and strategy people with agency backgrounds.

“Where the industry is heading, it’s valuing creative people,” Tomich said. “To compete as an agency, you’ve got to have the people to do it.”

Closer collaboration with the newsroom will be another hallmark of 2018. To better systematize that effort, the Times named Allison Murphy to lead a new Ad Innovation team of about 30 people, separate from T Brand. Murphy is charged with developing new ad formats and leveraging Times journalism for advertisers.

That isn’t supposed to mean Murphy will sit in on story meetings or that advertising will dictate news coverage; it’s more she’ll work with the Times’ Reader Experience team on the product side (known familiarly as “T Rex”), led by svp Ben French, to identify editorial content that has an advertising opportunity. One such missed opportunity was a video the Times did on Justin Bieber in 2015 that was hugely popular but didn’t have any special ad support.

Three years ago, the Times’ scathing internal innovation report on itself revealed a deep-set divide between news and advertising that was holding back growth. Today, under the threat of extinction, there’s been far more willingness from news to cooperate with the business side, but the two still have their sensibility differences.

“The newsroom is still an untapped resource for advertising,” Tomich said. “I don’t think there’s resistance; it’s just foreign. There’s not a lot of planning. There’s a lot of serendipity.”

The push into new buckets of marketing dollars comes at a point when the Times is getting more growth from subscriptions than advertising, to the point that it now talks about itself as a “consumer brand.” The Times said it had 3.5 million paid subscriptions as of the third quarter. Print advertising revenue decreased 20 percent, while digital ad revenue increased 11 percent. The pursuit of subscription dollars has led the Times to do things like lower its paywall meter count to five articles a month from 10 and start charging for Cooking’s recipe content because the Times figures it can make more money from getting readers to pay directly than by selling advertising against that audience.

Those moves can have a short-term cost to a publisher’s ad business, though. Publishers’ ad problem has gotten bigger, with Google and Facebook gobbling up the majority of digital advertising and advertisers talking brand safety but continuing to allocate more of their budgets to the tech platform. That leaves publishers with little choice but to fight each other even harder for the scraps. For the Times, that means being more forceful about touting its quality, as defined not just by Pulitzers but its readers’ willingness to pay.

“We want to beat our chest more in the media market,” Tomich said. “Going into next year, we’re going to be much less modest. I want to be more vocal about how all inventory is not the same.”

Lotame Ignite APAC Conference 2017: The Current State of Data in Video Advertising Across Asia, brought to you by Lotame and SpotX.