With Facebook and Google taking the lion share of digital advertising dollars, and online shoppers migrating to Amazon over more traditional e-commerce sites, both the media and the retail industries are scratching their heads trying to figure out how to drive more traffic, acquire more customers, and deliver a superior experience over the biggest online players in the world.
Traditional models are dying in both industries. Media can’t be saved by programmatic advertising, and retailers simply can’t compete with the quick service and massive selection of Amazon. The answer for these companies, of course, is diversification. But what exactly does that mean?
As more organizations are dipping their toes in alternative business and revenue models, blended businesses made up of a combination of commerce, content, and events are surfacing as the new 360-degree experiential brand. And these businesses are changing the game for digital audiences.
From audience to affiliate and beyond
Monetizing media is hard, and more media organizations are turning to opportunities to make money in the commerce space. This includes affiliate e-commerce as well as online stores and direct sales. Time Out, for example, leverages affiliate relations with booking agents. According to a Digiday article, “its model pairs restaurant and event reviews written by its journalists with feeds from companies like OpenTable and Encore Tickets, so people can easily carry out a purchase, with Time Out taking a cut.” In 2016, Time Out’s e-commerce revenue reached $6.1 million, and revenue continues to grow year over year.
TheSkimm, a popular daily email newsletter with over 4 million subscribers, has been collecting affiliate revenue for the past two years, “by suggesting books, wine, wearable tech, luggage and the like to their loyal ‘Skimm’rs’, according to Forbes. In 2016, the website expanded its affiliate program and now offers its own original products, including gift boxes, proprietary calendar apps, and more.
By growing a loyal audience first, both Time Out, theSkimm and others have been able to diversify their revenue models, and reach an already engaged, trusting digital audience, which then converted naturally to digital e-commerce customers. Perhaps the most notable success story in the content-to-commerce space is that of Food52, the recipe and food-centric website launched in 2009 by Amanda Hesser and Meryl Stubbs as a weekly recipe contest site. Several years after gaining a strong online following, Food52 launched its online store, originally comprised of cooking and kitchen tools. It has since expanded into a full homeware and lifestyle shop. In 2014, Food52’s revenue hit $6.2 million, and totaled $15.6 million by 2016, as the company continued to expand both its content and product offerings.
But is building a loyal audience first necessary for a successful transition into commerce?
With the current challenges of media, new companies are looking to deliver diverse offerings to their audience at launch. Southern Kitchen, a content and commerce hybrid launched by Cox Media Group in 2017, set out to build both a media and retail brand simultaneously. While the editorial team got a slight head start on the shop, the organization built the two silos of its business in parallel, resulting early in an integrated and seamless user experience. Within months, the site reached over 2.4 million readers, driving 16 percent of site visits to the store, and generating $300,000 in gross revenue.
A better retail story
The benefits of blending content and commerce lie not only in driving readers to become customers, but also in delivering a more personal and enriched shopping experience to potential customers. At Southern Kitchen, the editorial team works in tandem with the merchandising team to create brand stories and product detail pages, with rich content about each product, including personal narratives from the staff about what they love about particular products. These white glove touches to products are intended to create an emotional connection with customers — a missing component from the Amazon shopping experience.
Other retailers are also working toward creating meaningful content for their shoppers, including brands like Net-A-Porter.com, which was “born as a shoppable, online fashion magazine,” and “is now enriching its editorial content,” according to a DigitalCommerce360 article. Porter Digital, part of YOOX Net-A-Porter Group, creates editorial content daily on Net-A-Porter.com, including original articles, videos and photography. The group is also producing a glossy print publication, with an integrated mobile shopping experience. And with average order values of its readers 26 percent higher than for other customers, the editorial content is expected to continue to drive revenue for the business.
Huckberry, a successful outdoor retail business, has been leveraging a storytelling approach to marketing for years, according to Huckberry Brand Management and Business Development Director Micah McKay. “We always try to focus on the story, I mean, we’re storytellers at heart. We want to get people's ‘mindshare’ instead of wallet share. The entire company feels the same way. Crafting unique imagery and copy for every single touchpoint is crucial to our business,” McKay said in an interview with Sumo.com. While the products are ultimately what turns a profit, the story, deep understanding of readers and resulting emotional connection are what drives brand loyalty, advocacy and repeat engagement.
Stepping outside the internet
In addition to experimenting with alternative business models and revenue opportunities, many digital businesses are stepping out from behind their computers to engage with their customers and audiences in person.
Events, while challenging to successfully execute, can be valuable for driving revenue (from both ticket sales and sponsorships), and brand awareness. Condé Nast International, for example, has focused its efforts on niche events, “each unique to its market and targeting reader and advertiser needs in that market.” Events have included invitation-only wedding showcases from Vogue India, a GQ Comedy Extravaganza in England, and a Digital Day conference event, executed through Condé Nast Russia. While the scale is smaller, the qualified audience is where the publisher and its advertisers find value.
Both Garden & Gun and RH have stepped beyond their traditional businesses to open restaurants. Garden & Gun, the Southern culture magazine, will open the Garden & Gun Club in Atlanta in the spring of 2018, offering lunch, dinner, coffee and cocktails. RH, formerly Restoration Hardware, has a growing chain of restaurants in various American cities, including Chicago, Toronto and West Palm. According to MarketWatch, “the results [of the restaurants] have exceeded expectations,” and the company plans to open more restaurants across the country. Through these one-to-one, brand-to-consumer experiences, these businesses are able to reach a new audience and achieve brand exposure in a completely different medium.
The old adage, “if you don’t change, you die” is truer in today’s landscape than ever. In order to be successful, companies need to think of themselves beyond traditional models. No longer are you “just digital” or “just retail,” or “just a publisher.” You are an integrated brand with many touchpoints, delivering quality content, services, products and experiences to your customers, in meaningful and relevant ways.
And if you’re not, you should be thinking about how you can be.
About Southern Kitchen
Launched in 2017, Southern Kitchen’s digital publishing and e-commerce platform delivers the best content and products related to eating, drinking and entertaining with a Southern flair. In the short time since launch, Southern Kitchen has built a loyal audience, attracting large advertisers and driving traffic to a successful online shop.
Cox Media Group announces plans to sell Southern Kitchen and Mundo Hispanico:
Interested parties please reach out directly to Derick Jaros at Derick@SouthernKitchen.com