Data-Labor-Technology

No longer the realm of outdated cosmetics companies, the peer-to-peer selling model is witnessing a renaissance in beauty.

Remade for a world of digitally savvy consumers, brands including Beautycounter, Ever Skin, Juara Skincare and Rodan & Fields are reliant on the model, while others, like Glossier, have built it into their direct-to-consumer playbook in recent years. Even Coty wants a piece of the pie: Last year, it paid $600 million for a 60 percent stake in Younique, a cosmetics company bent on social selling that reports over 80,000 reps.

The new crop of beauty brands that use the peer-to-peer selling tactic have given the business model new life since pioneering companies like Mary Kay and Avon have fallen off the map. Although both of the early adopters are still around today, they’ve struggled over the years to connect with modern shoppers. Avon’s seller community has continuously declined since 2012, and its stock market value is down to $1.3 billion, while Mary Kay has been riddled with bad press about its exploitative business model.

In their wake, newer brands have thrived, thanks to building up their selling communities on social media, tweaking their models to increase reach and emphasizing the results and ingredients-focused imagery that today’s customers crave.

The perfect timing
“Many of the older options hadn’t quite caught up to the times, but now it’s about leveraging different social platforms like Facebook and Instagram to make the model more digital and doable,” said Ani Hadjinian, general manager of Ever Skin, which is the beauty offshoot of Stella & Dot, the social-selling accessories brand launched by Jessica Herrin in 2003.

Herrin grew that brand to profitability; it’s generated more than $300 million in revenue, reportedly paying that same number in commissions to more than 50,000 stylists, who receive 35 percent of their sales. Three years ago, she saw an opportunity to do the same in beauty.

“There weren’t many modern players in the space,” said Hadjinian, adding that, on top of that, the rising popularity of the side-hustle made timing feel especially ripe.

“In this day and age, where you can choose to rely on things like Uber or Lyft for work, instead of committing to the 9-to-5, it can be such an incredible model for people — especially for women,” she said, hinting at their potential need for flexibility and their desire to continue working while raising families, a common theme among Ever Skin’s “specialists.”

Indeed, according to a study last year from the software company Intuit, the gig economy makes up about 34 percent of the U.S. workforce and is slated to reach 43 percent by 2020 — none of which would be possible, of course, without technology.

New opportunities in e-commerce
Ever Skin, for its part, gives its sellers — now numbered into the thousands — the option to sell not just at special in-person events, like its forebears, but online, as well. It sets up each seller with a personal e-commerce site and provides them with digital marketing guidance for promoting its products on Instagram and Facebook.

Beautycounter, Rodan & Fields and Younique follow the same dual model, although the latter is also bridging the two worlds by offering virtual selling parties.

Glossier’s rep program, which launched early last year, is similar in that sellers are given their own landing page on the Glossier website, complete with their favorite products and a video introduction — but, in keeping with the brand’s origins, it’s promoted as online-only. The company now reports around 500 sellers.

The model’s limitations
Not everyone was pleased with Glossier’s rep launch: In July, one representative told Racked that it felt the program might be negatively affecting Glossier’s cool girl image. “A lot of the girls are really off-brand,” she told the site. “They wear a shit-ton of makeup and I don’t even know how they use Glossier.”

Reddit threads filled with similar complaints followed.

“I think that came from the fact that it wasn’t integral to Glossier’s launch. They grew out of social media and then layered this in as a selling mechanism, which might be off-putting to someone who was so used to experiencing Glossier directly from the brand,” said Chelsea Gross, an associate director of client strategy at L2. Ultimately, though, the sales reps are just another form of influencer, she said.

The peer-to-peer sales model has been met with skepticism before, occasionally being likened to a pyramid scheme that may rip off its sellers. However, Joyce Lee, a beauty consultant and the former beauty buyer for Opening Ceremony, believes this is less of a problem today.

“Trust and transparency have more value in the beauty market than ever before,” she said.

As such, all of these newer entrants aim to be transparent about sales commissions on their websites, with most averaging between 20 to 35 percent. Some, like Beautycounter and Ever Skin, also market their products as safer than most, posting thorough ingredients directories and FAQs about how their products are made.

The social (media) effect
But the online community and its endorsements have had the greatest impact on the category, Lee said. Social platforms facilitate speedier connections, plus they allow these companies to drive home a message of authenticity.

“Yes, those who participate in these rep programs get paid to do so, but they are usually customers who love the products they’re promoting,” said Lee.

Gross agreed: “A lot of the case studies we bring to our clients focus on the power of social media that these companies, in particular, have doubled down on,” she said. “They use their consultants as home-grown influencers, whose content they then leverage for marketing purposes.”

Rodan & Fields, for example, often posts before-and-after imagery from its sellers to promote specific products. According to research by L2, in 2017, 1 percent of the brand’s social media posts were these images, but they drove 13 percent of its overall engagement. Ever Skin does the same on its website.

Casting a wider net
Rodan & Fields and Younique are now valued at $1 billion, they’re followed by Beautycounter, worth a reported $225 million, and Juara and Ever, estimated to be more in the low millions.

For these companies to continue to grow, they may need to look past the influence of their consultants.

Although previous iterations of the model relied solely on peer-to-peer sales to drive revenue, today’s brands are finding that to be a roadblock to success. “It creates a friction that consumers ultimately are not looking for, [as not everyone will have connections to a consultant],” said Gross.

As a result, they’re pushing their products direct-to-consumer from the start, as well. The one exception in the group, Rodan & Fields, finally began selling its products directly online in recent months, though only in packages that retail for upward of $200.

Acquiring these customers outside of the consultant-sphere is crucial because, as Hadjinian put it, it’s a form of insurance. “Not everybody wants to be a seller, but you always need customers,” she said.

The post Beauty brands are remaking the peer-to-peer sales model for a digital age appeared first on Digiday.

Axios made headlines when it announced, then delayed, its plans to launch a $10,000-a-year subscription product. Founder and CEO Jim VandeHei said the publisher, which is turning one year old, is still committed to it and that he expects to launch it by the end of the year. For now, the company is focused on rolling out a new unpaid network of 200 contributors, including China expert Bill Bishop and Israeli journalist Barak Ravid; and plans to get into video. We talked to VandeHei about the subscription plans, its video ambitions and how it limits its reliance on Facebook. The conversation has been condensed.

Where are you with those high-priced subscriptions you teased last year?
Because traffic is stronger and revenue is higher, we’d be insane not to keep our foot on the gas. My guess is by the end of this year, we’ll do that. I don’t think you can have a robust, scalable, durable media company that does not have a subscription dimension to it. Subscriptions are attractive if you can get it right. Consumer subscriptions are hard. I think people value information they can trust more today than they did even a year ago.

Why launch a contributor network?
As a news organization you can’t afford to have boots on the ground in all these countries. But all these people are vetted, and heavily edited. This is not at all like what HuffPost or Forbes did. It’s not about opinion. We’re not looking for scale. It’s about who can get the best possible information, distilled smartly.

What does Facebook’s news-feed change mean for publishers?
It’s hard to imagine we don’t see a decline in the amount of Facebook traffic to the vast majority of publishers. Even before the announcement, I would not want to be a publication making garbage for clicks. That run is now over.

It’s not written on a tablet anywhere that Facebook needs to do news at all. They’re a publicly traded company that allows people to communicate with each other. It’s possible they go back to their roots. Those roots might include a massive deprioritization. I know people are up in arms about it, but you should never build a business on someone else’s benevolence.

We’re not at all Facebook-dependent. Twenty percent of our traffic is direct; 20 percent is Google; we get a lot from Flipboard. We do well with Facebook. Some Reddit. Year one, we focused mainly on text. In year two, you’re going to see a big push into video as we take the smart brevity concept and apply it to video.

Is there an ideal platform for distributing the kind of video you plan to do?
I don’t know. I don’t get all screwed up about whether this will live on Roku or on Facebook. Where it lands is not much concern to us, particularly, as long as it has a ton of value.

How important is politics coverage to Axios?
Trump is a massive international story, and being able to own pieces of the Trump story has been hugely helpful for us as a brand. But more important, we’ve been able to be as dominant and influential in other sectors. People come for the Trump, but they stay for the media, or our technology or our science coverage.

How has the media in general covered the administration?
There’s been terrific investigative and accountability journalism done by mainstream media from day one. I’d say the negative is a forming Trump derangement syndrome across the media. The people with their thumbs on the scale are in hysterics when they talk about this presidency, or the Republican Party, when they appear on television. I worry this undermines the great journalism that’s being done.

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One unintended consequence of Facebook’s feed purge is that it may make publishers more vulnerable to ad fraud.

With Facebook favoring user content and deprioritizing publishers’ posts in its news feed, publishers will turn to traffic resellers to make up for the clicks they’re losing from Facebook, said independent ad fraud consultant Augustine Fou. The traffic brokers found through online forums and LinkedIn tend to specialize in low-cost traffic that’s of low quality, though. More than 90 percent of the sites that DoubleVerify flags for having high levels of fraud purchase clicks from traffic resellers.

An exec at a digital lifestyle publisher, speaking on the condition of anonymity, anticipated buying more traffic to make up what his site loses from organic visits. This publisher has people devoted to making money on paid Facebook traffic through arbitrage and has gotten the cost down to a few cents a click.

Publishers that don’t already focus on buying Facebook traffic won’t be able to afford those prices at scale, so they’ll likely turn to traffic sellers whose costs per click are under a cent.

Publishers that pay celebrities like George Takei and Lil Wayne to promote their content on Facebook are also likely to find themselves in a precarious situation. Facebook has told publishers that people will see less content from celebrities in their news feed. Facebook did not reply to an interview request for this story.

“Publishers that rely on celebrities will scramble and turn to lower-tier traffic markets,” the publisher exec said. “Those that don’t know how to do proper audience targeting [with paid Facebook traffic] will get crushed.”

Jonathan Mendez, board member of ad tech firm Yieldbot, said that when Facebook and Google change their algorithms to reduce organic traffic, a swath of publishers reacts by purchasing cheap clicks from traffic brokers. Getting industrywide data on this effect is difficult because publishers typically don’t publicly admit to buying traffic, even though the practice is common, and getting data from the traffic brokers requires sleuthing.

Facebook at least has real human users, which can’t be said of many traffic sellers. If publishers turn to traffic sellers as a shortcut to replace their declining referrals from Facebook, then they’ll likely end up with a high amount of fraud that drives down their CPMs, Mendez said.

Of course, publishers aren’t blameless in this scenario. Nobody forced publishers to become dependent on Facebook, just as nobody is going to force publishers to buy cheap clicks when Facebook rips the rug out from underneath them. But platform-dependent publishers that are already feeling strained are likely to look for a new source of cheap clicks, according to an ad fraud exec, speaking anonymously.

“If the publishers are running light on traffic, they will take steps to buy the traffic, and so they are contributing to fraud,” the ad fraud source said. “In their desperation, they may make the entire ecosystem worse.”

The post How Facebook’s feed purge could expose publishers to fraud appeared first on Digiday.

Ad tech is getting a linguistic makeover.

With vendors across the complicated ad supply chain using their own terminology (one platform will use the term “anonymized ID” while another uses “identifier” to describe the concept of identifying a user through a unique code), analysts at media-buying agencies are spending the majority of their workday formatting and relabeling data rather than analyzing it, said David Smith, CEO of ad agency Mediasmith.

Smith co-chaired an Interactive Advertising Bureau Tech Lab task force that’s pushing an OpenData spec to standardize the language that vendors, advertisers and publishers use in their campaign reports. The idea is that having everyone use the same terms and definitions will make it easier for advertisers, publishers and vendors to transfer and use large data sets. The IAB opened the spec last week for public comment.

Vendors use their own lingo to describe their data to stand out among the clustered Lumascape. This creates confusion, but the intention of tech firms’ marketing isn’t to create awkward acronyms — it’s to appear unique to prospective customers, said Jason Krebs, chief business officer of GIF engine Tenor. This is why vendors pushed their own nomenclature for years around the concept that we now call header bidding.

“Vendors started to compete on the basis of ‘my metrics are better than yours,’ and with each new tech update, they had new things they could measure or call by a different name,” said Altimeter analyst Omar Akhtar.

As the number of middlemen in the supply chain ballooned, ad buyers ended up getting reports that all use different terms to describe the same thing, leading advertisers to spend money on analysts to manually restructure data sets, said Bidtellect CTO Mike Conway, who sits on the IAB Tech Lab’s OpenData task force.

Unlike other tech sectors like finance, ad tech has little oversight. Groups like the IAB can create a Rosetta Stone for data labeling, but there is no fine for failure to use these standards since the industry is self-regulated. The IAB’s specs will gain adoption if ad buyers withhold their dollars from vendors that refuse to abide by them, Smith said.

The IAB’s spec is open to public comment through March, said Dennis Buchheim, gm of the IAB Tech Lab. The task force is only creating standards for data mentioned in campaign reports. Later in the year, it may do the same for audience segments and data used for billing purposes, he said.

The biggest barrier to getting people to pay more attention to how they label data is that this work is wonky and unsexy, Smith said. “People aren’t going to say, ‘Wow, you normalized field headers? Let’s give you an award for that one.’”

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Influencer marketing has a fraud problem. Brands have run campaigns with fake influencers and on real ones who use bots to boost their followings. Influencer agencies themselves have also inflated their own influencers’ accounts.

The J.M. Smucker Co., parent of brands like Smucker’s, Jif, Pillsbury, Dunkin’ Donuts and Folgers, is trying to limit fraud, using influencer marketing and technology company Ahalogy to develop influencer content and reach real audiences.

Josh Williams, senior manager of shopper marketing at The J.M. Smucker Co., wouldn’t say how much fraud the brand found among influencers it’s used in the past but said the amount of fraudulent traffic to its paid influencer posts has decreased by 98 percent and that The J.M. Smucker Co. posts accrue less than 1 percent of fraudulent views.

Williams said the company started paying attention to digital fraud in 2015, when the most prevalent form was bots clicking on banner ads. In the past year, the company has shifted its focus to the problem of fake followers among influencers, which the company has been using more to connect with customers.

To see which influencers have authentic followers, Ahalogy uses tracking technology from verification firm Moat to audit influencers’ accounts before, during and after campaigns. An influencer’s account can still be inflated due to bots or bought followers. For this reason, Ahalogy only guarantees impressions and site visits from paid media posts, like promoted Facebook and Instagram posts that are verified by third-party services. Ahalogy still asks its influencers to share The J.M. Smucker Co. content with their social followers, but any click-throughs to unpaid content are automatically considered bonus impressions.

In July, for instance, The J.M. Smucker Co. worked with Ahalogy on an influencer-driven campaign with The Dannon Co., choosing a blogger named Allie and her Baking a Moment blog for a sponsored post after making sure her site was clear of bots and fake followers. The post, a recipe for triple berry honey yogurt breakfast cheesecakes, received 9,187 pageviews, with only 0.72 percent coming from bot-driven views, according to Ahalogy. Similar sponsored blog posts for The J.M. Smucker Co. have gotten nearly 50 percent fraudulent views, said Ahalogy.

“We want to make sure our content is actually being viewed by people who are utilizing our products and not by a fake bot poisoning our campaign,” Williams said.

The post How Smucker’s cut fraudulent views on its influencer content by 98 percent appeared first on Digiday.

YouTube is ordering workers to review thousands of hours of its most popular content and setting new limits on which videos can run ads, in moves to ease advertisers’ worries that their brands are showing up alongside offensive or controversial videos.

State attorneys general and internet activists filed legal challenges to the Federal Communications Commission’s recent rollback of Obama-era internet regulations, launching a legal battle that could go on for years.

Facebook, Google and Amazon dominate their worlds just as Standard Oil and AT&T once did. Critics say they should get the same treatment. The answer to the antitrust question depends on a narrow test: Are consumers worse off?

After nearly a year of complaints from advertisers concerned about their ads appearing alongside questionable content and a slew of its biggest influencers going rogue on the platform, YouTube is revamping its policies for how creators make money off of their videos. Over the past year, YouTube has tweaked several of its policies, upping the…