By: Peter Houston
Jeff Bezos has been getting some pretty decent PR recently and not just around his transformation from mild-mannered bookseller to muscled-bound Master of the Universe. If you see the no-longer-nerdy CEO’s style shift as a corporate metaphor, Amazon has gone from selling books online to selling whatever the hell it wants.
The world’s retailers and consumer brands are feeling Amazon’s presence the most. Bloomberg’s Seeking Alpha reported mid-August that the company had been referenced in one-fifth of the S&P 500 constituents’ quarterly earnings calls in the previous 90 days, from Michael Kors to MacDonald’s.
But the world’s publishers should maybe start paying attention too: Business Insider reports that Amazon will be the third-largest digital advertising provider on the planet by 2019, with ad revenues around $2.6 billion.
Google and Facebook are still far ahead in revenue terms, but Mediashift business columnist Dorian Benkoil suggests ‘Amazon is Poised to Kick the Media Industry’s Ass’. He says while we’ve all been complaining about the Duopoly, Amazon is ‘the giant sneaking in the back door’.
Whether Amazon’s ad revenues will grow at the expense of publishers, a balanced SWOT analysis would have to note as many opportunities in the Amazon-led growth of ecommerce as there are threats in the online giant’s creep into advertising.
Half of online shoppers start their customer searches with Amazon and, by 2021, half of online sales are predicted to be with the business. The company currently has about 300 million active customer accounts and a sophisticated programmatic ad program to target them and yet… the online retail giant still sees value in publisher content and associated audiences.
Inherent in Amazon’s appetite for working with publishers is a recognition of the value in the attention of their audiences and more and more publishers are working to leverage that advantage.
I wrote in June about the development of voice controlled content and possibilities emerging for publishers on the firm’s Alexa platform. And the business recently turned to publishers to help ignite ‘Spark’ its ecommerce inspired social network. Described as a mash-up of Instagram and Pinterest, the image and video sharing feed lets users tag products available for sale on Amazon, and click through to buy.
The “Amazon Associates” affiliate program, already provides commission revenues to publishers that link to Amazon products from their content. At the launch of Spark Amazon was offering publishers a flat fee for posting to the network, but it would make sense if Amazon eventually moved publisher recommendations to its existing affiliate-commission model.
Away from Amazon, Nick Hugh, the new boss at the Telegraph newspaper group in the U.K., has predicted that ecommerce will overtake advertising revenue in three to five years.
In a long examination of Telegraph Media’s fortunes, Colin Morrison says ecommerce will help them grow faster than the news brand ever can. The group is reported to be staffing up for a financial ecommerce division and already has a 50-person travel team to handle content creation, advertising, affiliate booking links, and reader offers.
Better known for magazines like Mental Floss and The Week, Dennis Publishing is selling between 250 and 300 cars a month through its buyacar.com website. With growth pegged at 60%, ecommerce is the fastest growing business sector for the business and cash from selling cars currently accounts for 16% of the company’s total turnover, expected to rise to 25% by the end of this year.
Buyacar revenues come from an affiliate network of car dealers who hold all stock. Leveraging its motoring content, Dennis focuses on promoting dealer inventory and takes a cut of all sales. The company also makes money from the add-ons associated with each sale – financing for example.
Back in the U.S., most major publishing groups are well down the ecommerce path, some on to second or third generation sites and selling everything from branded mugs to pet products. The rationale (besides cold, hard cash) is to find new ways to deliver value to advertisers and engage audiences ever more closely with their brand.
Hearst has its own affiliate ecommerce laboratory – Best Products -- where it trials content marketing and page optimization to sell ‘the best’ tech, fashion, fitness, and food. Products that do well can be distributed across other relevant Hearst properties.
In the spirit or ecommerce-driven engagement, The New York Times will sell you branded sweatshirts, t-shirts, and caps, revising its offering and holding its own stock in the name of quality. Condé Nast, relying on a print-on-demand set up, touts hundreds of branded products in its recently launched store, from shower curtains emblazoned with magazine covers to iPhone case printed with New Yorker cartoons.
Time Inc. recently announced the PetHero program to leverage audience data to offer readers pet products and discounted health care for their pets for $20 a month. The PetHero project will be the first time that the business has sold around services rather than content and is one of the first projects to leverage centralized customer data from across the company’s titles.
But before you rush out and commission a shopping cart for your website, there have been some ecommerce failures. Most notable recently was the closure of Style.com after just nine months and an investment by Condé Nast estimated at $100 million. Even with the supporting firepower of heavyweight fashion tiles Vogue, Vanity Fair and GQ, Style.com couldn’t deliver the goods.
At the time of the closure, Matt Starker, general manager of digital strategy at Condé Nast, told The New York Times that the skill sets required to create content and those required to run a seamless shopping site were different.
Of course, there’s a real truth there, but the skills for managing an audience and a customer base are pretty closely related. Here are a few things to think about if you want to make ecommerce work for your audience:
- Start with your own stuff – Selling subscriptions and site licenses to your existing readers is an obvious starting point. And as Andy Kowl pointed out earlier this year, you can also sell data, webinars, training, market reports, books, CDs and even T-shirts.
- Cherry-pick partners – If you are developing an affiliate network, focus on fewer, better suppliers. They are more likely to look after your customers. If something goes wrong, it will look bad on you not them.
- Add value – Make sure that the products that you are selling from market reports to shower curtains, align well with your brand and deliver real value to your audience. There’s a good reason The New York Times sells personalized birthday books but no longer sells personalized wooden pie boxes.
- Be data ready – Data matters throughout every modern publishing operation, but where data-driven changes to content may impact traffic but not revenue, changing ecommerce pages to consider audience behaviours can have an immediate impact on revenue and profitability.
- Be careful with content - Content is an important part on the online shopping experience, both in terms of discoverability and in decision making. But a hard sell will damage your credibility with your audience. Think carefully about the how you use content to support ecommerce sales.