Data-Labor-Technology

Amazon already is a media giant with a $1 billion ad business. But brands are confused about Amazon’s slew of puzzling acronyms and struggle with navigating the Amazon ecosystem, even with an Amazon rep.

For the latest installment in our Confessions series, in which we exchange anonymity for candor, Digiday spoke with an agency exec who is working with several brands to revamp their Amazon strategies after Amazon persuaded them to purchase expensive media bundles that have not delivered results.

The conversation has been edited for clarity.

What do brands struggle with when it comes to spending on Amazon?
A lot of brands, especially in the [consumer packaged goods] and luxury personal care space, are now saying, “OK, we have to do this Amazon thing, but we’re not really sure what to do.” Most of our brands don’t even know the difference between AMS [Amazon Marketing Services) and AMG [Amazon Media Group]. So for the most part, when they look to their media agencies or Amazon, they are very much encouraged to invest dollars in AMG with expensive bundle packages that have minimum thresholds. But you don’t have to spend a lot of money with Amazon to get great results. At one point, $100,000 was one of the thresholds for an AMG package. But with AMS, you could spend $10,000, and that’s fine. Ultimately, these AMG packages are a bit of an overkill for brands because they may not need that right away. [Brands] are running before walking. Most of the time, when we engage with a brand, they’ve already done AMG, and it’s understanding how they can roll back and get their house in order.

They realize they’re spending too much money and not getting the results they want.
Right. AMG is about driving awareness over a long period of time. It’s mostly display advertising with behavioral data, and ad serving goes outside of Amazon to some of Amazon’s other properties like IMDb. You can also get a homepage takeover or a seasonal banner. In some cases, if a brand spends enough, they get a representative, but an AMG rep is not going to help you with a product page or any challenges you have. They are strictly there for media.

How is AMS more efficient?
AMS is focused on direct sales and ROI. AMS is the self-service platform that allows sellers to target, via keywords and sponsored ads, and drive traffic to their brand stores. Many of the AMS services are pay-per-click and very efficient. With AMS and a keyword strategy, you can capture category folks who weren’t looking for your brand. Plus, you don’t have any other media in a brand store and viewers are not being served competitor or third-party products, so it’s a little more controlled. Lastly, the brand store is also free for now, so it’s almost like, why wouldn’t you want to do that? We’ve had the most efficient results with AMS. For some clients, it’s between 300 to 500 percent return on ad spend. A good example of a potential inefficient use of budget is a brand spending $100,000 on a homepage takeover before investing $10,000 in an SEM campaign. We generally recommend our clients spend about 1 percent of their projected sales against media on Amazon.

How does Amazon reach out to brands about AMG bundles?
Because clients aren’t exactly clear on what they need to do, they go to their media agency or Amazon and end up buying a huge media package from AMG, and they’re spending a lot of money. A lot of the time, media agencies will recommend these bundles because they look very similar to what media bundles look like outside of Amazon, or Amazon reaches out to brands directly about these bundles.

Why would Amazon push brands into AMG relationships versus focus on showing them what they can do with AMS?
AMG is a separate entity and is a direct competitor of any other media, publishing property. So it’s a place to make money. It’s opportunistic, and that’s just how Amazon is. We try to help brands be educated before they make those investments.

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Jesper Doub, CEO of publisher Spiegel Online, believes the time is right to create a subscriptions model. In a recent conversation, Doub discussed Spiegel’s reader-revenue strategy, the ePrivacy Regulation and the duopoly’s power. Our conversation has been edited and condensed.

What’s your view on publishers turning to reader-revenue models?
We’re seeing a dramatic shift in revenue streams. The traditional display ad business is stalling, and programmatic bidding tends to drive prices down. One option is to reshape our ad business and ensure there are new, attractive ad packages which prioritize brand safety, not just reach. We also see a window of opportunity opening for us to access more reader revenue. We believe in the future of subscription models and are developing a paid content model, called Spiegel+ Reloaded.

Is your paid digital newspaper experiment Spiegel Daily part of that strategy?
It’s a small test in that direction. Spiegel Daily is like a live lab environment for us, but one which we can earn money from. It’s a new product that doesn’t relate to our free-access website, [or to] our print magazine or its digital copy. We wanted to test a paid digital product using Google AMP technology, which wasn’t an app, so that the platforms wouldn’t end up taking a share. The product isn’t quite where it should be yet in terms of numbers, but we’ve had great uptake, learned a lot and had positive surprises in the sales process.

What are the biggest concerns regarding the duopoly in the German media market?
We have a huge debate around the power of the duopoly. Different media companies are taking different approaches to how they want to tackle that and work with the platforms. But there’s a lot of politics involved — if you live in an ecosystem that changes a lot you must adapt, not just cry for others to bring back the good old times. We need to find ways to work with the duopoly.

Why does the proposed ePrivacy Regulation worry German publishers more than the GDPR?
For publishers, GDPR is just a matter of doing your homework, although advertisers and marketers are having more challenges with the GDPR. But the ePrivacy Regulation would mean a major change to the whole ecosystem in Europe. The way the regulation is written now is way too general. In a nutshell, it would force everyone to have a login and [for publishers to have] very detailed user consent for whatever they do on your platform — a very big problem for small and midsize players.

What does it mean for the platforms?
It will drive advertising, money and reach to those with registered users, and above all, that will be the big four [Google, Facebook, Apple and Amazon]. I suspect Google and Facebook are getting ready to offer us their help, to say, “We have registered users: If you use our logins on your website, we can get the user content [on your behalf].” In doing so, we would transfer our users to the platforms.

Should the duopoly be regulated?
The issue is, how can [platforms] identify a credible journalistic source? Who makes that decision? If you look at the U.K., Germany, France, Spain, it’s easier as there’s a common sense of what professional journalism is. But if you look at a country like Turkey where the government has a totally different view on what proper journalism is, how do you handle that as a platform? Do you adhere to what the government view is in that country? It’s a difficult thing to do.

Publishers are starting to more aggressively address ad fraud in the U.K. Is there similar concern in Germany?
The concern is growing. [Ad fraud] has come up a lot over the last month. It’s not as much of a big issue for Spiegel as we are not selling a high share of programmatic ads yet, but that’s not typical of the whole German market.

Does Facebook work for you in terms of monetization?
Few publishers in Europe are satisfied with Facebook monetization. We are on Instant Articles and earn extra money from that. It’s not something like a quarter of our revenue or anything, but it’s additional revenue. We’ve been working closely with the Facebook Journalism Project. If Facebook’s ideas aren’t attractive for us, we will do less with them; if they are, we’ll do more. If you’re a publisher that’s totally reliant on Facebook, you’re in big trouble.

Spiegel launched on Snapchat Discover last May. How’s that going?
So-so. We’re really happy with the product performance. The audience we reach [on Discover] is younger and more female than we would have gotten with our own channels. But monetization-wise, it is not satisfying at all. Snap demands high-quality content, but because the majority of the ads are sold programmatically, there are a lot of crappy ads sold at low prices. It doesn’t work. We’re aligned with a couple of publishers on this and are in open talks with [Snap] to change that.

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Amazon invited an agency executive to learn Alexa’s product road map at the company’s Seattle headquarters last spring. The major themes from multiple meetings with Alexa product managers throughout the day were how Amazon could direct individuals to discover and further use Alexa skills through the conversational interface; and what a paid model for skills promotion should be, according to this agency executive, who prefers anonymity given the business relationship with Amazon.

Three other agency executives agreed that skills discoverability is top of mind for Amazon in 2018, based on their conversations with the company. Two of them said Amazon is also looking to earn revenue from Alexa users through advertising, but the e-commerce giant hasn’t yet figured out how to inject advertising into a voice environment without compromising user experience.

“Amazon has been working on a scoring and paid model for skills on the Alexa app for at least nine months,” said Michael Nicholas, co-founder and partner of artificial intelligence agency Born. “But the problem is how to make paid work. Amazon is rightly very protective of user experience — it won’t introduce any advertising on Echo until it is perfect.”

It’s hard to make paid voice-based search work because unlike a website page that lists many search results, a voice assistant like Alexa only presents one result at a time, said Nicholas. For instance, if an individual asks, “Alexa, how do I cook steak?” If Alexa only surfaces a paid option, it may come across like a hard sell. If Alexa recommends a mix of paid and unpaid yet relevant options concurrently, it would be too cumbersome for users. Either way, it will impair the Alexa user experience, according to Nicholas.

“If the first and only brand position is paid, why do I trust Alexa? Meanwhile, a paid result is not necessarily the most relevant, so you can’t rely on Alexa to make the decision,” he said. “There may be a way to do voice search, but as far as I know, Amazon hasn’t yet found a balance between what brands want to pay for versus what is natural to Alexa.”

Thomas Stelter, vp of emerging solutions for agency Possible, echoed that sentiment. “It’s a house of cards situation for Alexa,” he said. “There’s a strong [ad] demand, while consumers don’t want marketers to interrupt their experience.”

An Amazon spokesperson said that the company is not bringing advertising to Alexa.

It may be too early for Amazon to introduce ad products on Echo, but Amazon has focused on and will put more effort into skills discoverability this year, according to agency executives. There are tens of thousands of Alexa skills, but there’s no way for brands to advertise their skills on Echo or the Alexa app and further direct people to install their skills.

“As far as I know, Amazon is working to find ways to make discovery [of skills] easier, but a paid model is not the solution,” said Gela Fridman, managing director of technology for Huge. “The value proposition of Alexa is not an advertising platform — it is a voice assistant that provides utility on how brands engage with consumers.”

Nicholas, on the other hand, thinks Alexa could promote skills discovery by directing users to the Alexa app, where search advertising occurs. For instance, if an Echo user asks Alexa to order a pizza, Alexa could say, “Should I enable the Domino’s pizza skill, or do you want to order from other restaurants?” If it’s the latter, Alexa would direct the person to select a pizza skill on their mobile phone.

“Based on my conversations with Amazon, ultimately I think a lot of [search advertising] will happen on the phone,” he said. “[The Alexa app] will then be optimized like an app store with organic rankings and paid placements.”

We recently launched an Amazon Briefing newsletter featuring news, quotes and stats all about Amazon, e-commerce and more. Subscribe here.

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For beauty brands, pop-up stores aren’t about product. Some of them don’t even carry physical inventory.

Instead, they’ve become event spaces. Frequently seen on the schedules at these industry pop-ups are hair and makeup masterclasses, influencer appearances, fitness classes, panels and Q&A sessions.

“As brands shift their marketing budgets from media to stores, they need to create a retail experience that’s both memorable and emotional,” said Elizabeth Layne, the chief marketing officer of Appear Here, a company that facilitates pop-ups for brands like Nike and Marc Jacobs.

The latest comes from The Nue Co., a beauty supplement company that launched exclusively on Net-a-Porter last year. Its first pop-up opened in New York’s Soho neighborhood on Thursday and, alongside letting customers test and purchase 11 products, it will offer yoga and meditation classes by Sky Ting Yoga and Inscape, respectively. Panels focused on the future of beauty will also be held in the space, with speakers like W Magazine editor Jane Larkworthy. The goal is to get the most bang for the brand’s buck, before the pop-up closes on Jan. 30.

Founder Jules Miller agreed with Layne that the temporary story is “more of a marketing initiative than it is about pushing product,” going so far as to call it it a new media platform to exploit.

But it’s also a great way to rope in new customers who may shop the brand down the line. From the event sign-ups and ticket purchases, to online orders made in store, there are a number of opportunities for the company to collect valuable consumer data.

“Brands can best create a conversation with customers in real time by offering shopping experiences that drive community engagement and prioritize personalized attention, so that interactions don’t begin and end with a purchase,” said Layne. “Partnerships also help to bring in additional audiences, rather than just promoting to the current base of customers.”

In December, Clique Media’s beauty property, Byrdie, and the online retailer Revolve also put their own spins on the format.

Byrdie’s Beauty Lab, opened in partnership with Nordstrom, ran for 15 days in New York and offered a total of 10 events, including a Q&A with celebrity hairstylist Jen Atkin and a fireside chat with Carisa Janes, the founder of Hourglass Cosmetics. Although Nordstrom beauty products were shoppable via iPads on site, there was no physical inventory — the industry figures were the main draw.

“They add that exciting element of real-life expertise from the creators of the products the consumers are already using or would love to experiment with,” said Courtney Wartman, Clique’s senior vice president of marketing. Wartman said that almost all the ticketed events during the pop-up sold out.

Revolve’s beauty pop-up in Los Angeles also ran for 15 days and included live demonstrations by beauty influencer Marianna Hewitt and celebrity makeup artist Patrick Ta, as well as meet-and-greets with Atkin and fashion blogger Arielle Charnas.

“They are experts in the space and really educated our customers — and their followers — on the product and application,” said Raissa Gerona, Revolve’s chief brand officer.

Customers were also able to shop specially-curated product boxes by the influencers involved.

While the trend is being spearheaded by younger brands, traditional luxury brands are taking notice: A YSL Beauty pop-up in New York last month tapped into the follower counts of top beauty influencers including Manny Gutierrez (4.2 million on Instagram) and Sarahi Gonzalez (3.7 million on Instagram) by featuring them in masterclasses.

As more and more brands launch these experiences, simply pushing another opportunity to shop, or even test, a product may no longer fly.

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To broaden its audience, British left-leaning news site The Canary has been converting all its text articles to audio since last September. In time, it plans to make its audio articles available on voice assistant devices like Google Home and Amazon Echo, where publishers are increasingly making more content available.

The Canary converts 50 to 70 articles a week. Up to 2,000 people listen to The Canary’s audio articles daily, according to data from SpeechKit, the technology platform used to convert text to audio. The Canary’s audio articles, which typically last up to five minutes each, have been played 29,000 times since November, with 20 percent of people on average listening to the end, per SpeechKit.

The Canary hopes to widen its audience by converting its text articles to audio, according to Nancy Mendoza, director of communications and membership. “For people with visual perception disorders, text on the site is difficult to access,” she said. “We were aware we were missing an important group of people. As an organization that values diversity, we need to reflect the world we’re reporting on.”

The Canary was started in October 2015 to fill what Mendoza claims was a gap in the “Westminster bubble.” “We have a vision where the people and planet are nurtured,” she said. “If you look at most of the politics in the Western world, they are operating pretty contrary to that.”

The site’s main focus is news, with pieces about topics like the possibly sinister implications of British Prime Minister Theresa May’s reshuffled cabinet and why the government’s approach to drug legalization is irrational. But satirical stories like one about May appointing media mogul Rupert Murdoch as a government minister and clickbait headlines have gained it attention.

The publisher has a lean team of fewer than 10 people, mostly in editorial, with 15 regular freelance writers. It makes half its revenue from programmatic advertising; the other half comes from paid membership. Approximately 2,000 members pay the publisher from £3.75 ($5) to £50 ($68) a month in exchange for merchandise, which varies depending on how much they donate.

Other publishers like the Financial Times have experimented with how people listen to their articles, and the FT plans to make all its articles available in audio format. City A.M. and Norwegian business daily Dagens Næringsliv are also working with SpeechKit to convert their text articles, according to the technology platform. The company plans to integrate its audio ad exchange with publisher partners in March so they can start monetizing their audio articles.

“Radio and audio is such a vivid medium,” said Mendoza. “Podcasts have had such a resurgence that more people are thinking about accessing content through listening rather than reading. Improving that accessibility has a massive benefit.”

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CES is a relentless beast as media companies, marketers and tech giants spend the week in Las Vegas rotating through countless meetings, tech activations and parties. The official story of this year’s conference has been around Google and Amazon’s battle over voice assistants, over-the-top video streaming and one poorly timed blackout. Confidential chatter, however, centers on media companies’ fear of platforms, the difficulties plaguing the video industry and the ultimate value in coming to this trade show.

On Facebook and Google:
“Facebook has infinite talent. They have all the money in the world. Yet somehow, they can’t figure out how to make mid-rolls work. This is something that others figured out years ago!”

“At some point, Facebook is going to give up on Watch. Or they’ll stop funding shows. But there’s no way that lasts.”

“I don’t know how you can continue to hope that Facebook will figure things out for publishers. That’s not their business. That’s never been their business. So why now? Because we’re more upset than we were last year?”

“YouTube’s finally getting serious about its ‘adpocalypse’ issues — and guess what? YouTube’s going to win out in the long run.”

“YouTube is the only real game in town. Facebook’s buying stuff — and we sold them a few shows — some others might buy stuff. But for most of us, YouTube’s the only game. Not everyone can get onto Netflix.”

On video:
“I’ve gone from competing with digital companies to competing with the entire universe. And everybody just wants to make TV now. The digital entertainment world is [screwed].”

“Verizon owns how many screens and they somehow can’t get Go90 to work? It amazes me.”

On CES:
“I’m just happy it’s not a third straight AR/VR conference.”

“CES is good for business but bad for your soul.”

“I’ve been coming to [the piano bar inside the Bellagio] for 10 years. Talk to your boss; I’ve sat at this spot every year. It’s my spot.”

“The power just went out in Central Hall, and they kicked everyone out. It’s dark in here. What a disaster.”

“The lights went out at the Consumer. Electronics. Show.”

“Google had to shut their tent down because it was raining into it. There are flooded sidewalks — you have to be kidding me. It’s a sprinkle!”

On Amazon and voice:
“Every time I see an Amazon ad person here, they turn and hide their [computer] screen — like relax, these are not state secrets you’re hiding.”

“Across the four main [voice] players — Amazon, Google, Microsoft, Apple — there’s nothing that really differentiates one platform from another. We can help them fix that, with our content and our ability to promote, so we are absolutely open for business. But we want them to pay for quality content.”

“The best use case for these things remains listening to music and the radio — and we don’t see that changing, no matter how many pizzas you can order. Forty percent of usage on these types of devices is still listening to music and radio.”

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Instagram is quickly becoming Nike’s go-to social network. The brand uploaded over a third of its social content to its global @nike and London @nikelondon Instagram accounts last year, while more than half went to Twitter and 13 percent went to Facebook, according to social analytics firm Share Creative.

People are talking about the brand on Instagram, regardless of whether it has an active presence there. In the U.K. in 2017, for example, most Nike mentions from fans (55 percent) happened on Instagram, where just 35 percent of the brand’s own content was uploaded to the @nike and @nikelondon accounts, revealed Share Creative.

Nike’s social buzz isn’t reliant on its own communications, said Laura Daniells, analyst at Share Creative. “Fans want to share their love for the brand and do so regardless of Nike’s owned activity.”

As loved as Nike is, the brand is the 16th-most-liked Instagram account globally. But that consumer love is ebbing away, at least on Instagram. Between May and December 2016, the average number of likes and comments per month on the @nike Instagram account hit around 2.4 million, according to Socialbakers. Over the same period in 2017, the average number of monthly likes and comments was 1.3 million.

People seem to like fitness content on Instagram, according to Share Creative. The top-performing posts in the U.K. on the @nike and @nikelondon accounts last year were those that shared motivating quotes with ordinary and relatable people rather than celebrities, appealing to a more “niche fan base,” said Daniells. Nearly all (95 percent) of the posts from fans in the U.K. to the global and local accounts mention #fitness, per Share Creative.

Nike’s decision to post less and focus more on its fitness-related posts may have partly contributed to its lack of resonance on Instagram beyond the fitness category last year. The brand posted 50 times on the @nike Instagram page between May and December 2016, but it posted 39 times over the same period in 2017, according to Socialbakers.

According to YouGov BrandIndex, Adidas narrowly leads Nike in Impression score — which measures whether someone has a positive or negative impression of a particular brand — in the U.K., with Adidas at 37 points and Nike at 36 points.

With so little separation between the brands, product choice may depend on an individual’s perception of the specific product’s quality or value, said Amelia Brophy, head of data products at YouGov. Of course, metrics can vary across the brands’ diverse product range, Brophy added, but generally speaking, Adidas is seen as being kinder to the purse strings.

Alan Bryant, a strategist at youth agency Livity, said Nike has let its “youth culture game slip,” and, in turn, its social engagement is suffering in key areas. It has been clear in sneaker culture and in “youth culture generally that Adidas has made huge inroads into Nike’s historical ownership of this area,” he added.

Just one of the top six engaging posts on the @nike Instagram account between May and December 2017 used an influencer to promote a sneaker, according to Socialbakers. That post featured rapper Kendrick Lamar for the relaunch of Nike’s retro classic Cortez shoe. Despite Lamar’s inclusion, a post promoting soccer star Cristiano Ronaldo was twice as engaging as the one for the Cortez, per Socialbakers.

Nike still holds around a 50 percent market share in the U.S. market, but Adidas surpassed Nike’s Air Jordan brand last September to become the No. 2 shoe brand there behind Nike as a whole. In the U.S., Nike has a lead over its rival in Impression score; Nike has 47 points, while Adidas has 41, per YouGov BrandIndex. Among 18- to 34-year-olds, the scores are higher, but Nike (56) still has the advantage over Adidas (51).

It would be wrong to call Nike’s social media strategy a failure, argued Devran Karaca, co-founder of Kyra TV, which works with Nike-owned Converse. “What Nike did with [designer] Virgil Abloh last year for the Off-White x Nike The Ten series completely revolutionized marketing around sneakers. This was arguably the biggest trainer release of 2017 and has blown the door wide open for the future of collaborations and a post-modern approach to design,” he said. “If Nike had a quiet year last year, then it probably means that we will be seeing some huge moves from them in 2018.”

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Investopedia didn’t set out to become a subscription- and commerce-focused publisher. But that’s what it’s staking its future on.

Less than six months after launching its first batch of Investopedia Academy courses, the IAC-owned publisher enters the new year focused on dramatically ramping up this nascent side of its business. On Jan. 15, Investopedia will roll out its 10th course, on cryptocurrencies.

After publishing just nine courses through the second half of 2017, Investopedia will publish two or three new courses per month this year, and it expects to grow the total number of employees working on the Academy to 50 — up from 30 last year.

The video courses, which run a minimum of three hours and cost between $99 and $399 apiece, are part of a bid to diversify its revenue away from advertising for the first time in the company’s 19-year history. The Academy is on pace to earn $5 million in revenue this year, four times the total it earned in 2017.

“This is the big bet. We are all in on this,” said David Siegel, Investopedia president and CEO. “I think that in two to three years, the revenues from Investopedia Academy could exceed the revenues from Investopedia.com.”

Investopedia earns almost all of its money from advertising. A large repository of evergreen articles, some 200,000 of them, on topics ranging from interest rates to cryptocurrency to individual retirement accounts, attracts a steady stream of referral traffic and display advertising. It also has a content studio for more involved advertising programs.

To find an alternate source of income, Siegel turned his attention to digital education, which is a $165 billion-plus market worldwide, according to Orbis Research. Siegel estimates about 10 percent of that is focused on financial topics, and while Investopedia has to compete with incumbents like Udemy and Lynda for customers, he feels the company is well-positioned.

The company decided it wanted to create the courses in-house, rather than position itself as a kind of platform. Siegel boasts that Academy courses so far have a 96 percent customer satisfaction rate and that the Academy has a net promoter score of over 50 percent.

To build a new course, one of the editorial staff’s subject matter experts will decide on a topic for a class, like options trading, futures or IRAs. It will then scour the internet, searching through YouTube and other platforms, for finance experts with the right combination of charisma and knowledge. Investopedia’s subject matter expert, along with the selected talent and a small team of education product designers, then work out the course’s subject matter.

After a few days of shooting, they spend a few weeks editing the course together. On average, each course takes between two and three months to create.

To promote the courses, calls to action and offers to sign up are put at the foot of Investopedia articles on related topics. They are also promoted through Investopedia’s newsletters and on Facebook, which has taken on an unprecedented amount of importance; while Facebook accounts for less than 5 percent of Investopedia’s referral traffic, it drives nearly 20 percent of Investopedia Academy’s revenues.

“We’re really good at retargeting people on Facebook,” Siegel said.

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Joshua Spanier, senior marketing director of global media for Google came away from CES with a very clear view of just how fast technology development is outpacing consumers’ ability to make sense of it, never mind adopt it. Spanier pointed to the huge curved screens from LG and their inevitable convergence with AI and IOT…

The importance of audio as a brand marketing tool will accelerate quickly as it is increasingly twinned with AI applications to enhance consumer journeys. That was the CES 2018 take away for Pandora’s newly minted CMO Aim?e Lapic, who is seeing more lifestyle brands becoming integrated into consumer electronics devices than ever before. “This trend…