Were Publishers the First DTC Brands? How 2 Areas of Marketing Align

DTC brands are hot entities. Practically any consumer product can be translated to a paid subscription business model. As a direct result, circulation and subscription marketing professionals have become very attractive new hires to the growing bevy of direct-to-consumer brands.

DTC brands are hot entities. Practically any consumer product can be translated to a paid subscription business model.

As a direct result, circulation and subscription marketing professionals — a mainstay of the direct marketing discipline for decades — have become very attractive new hires to the growing bevy of direct-to-consumer brands. In reverse, too — publishers are enriching their content offerings for their customers in service to them, acting as DTC brands, themselves.

That was a main thrust at a recent joint meeting of the Direct Marketing Club of New York and The Media and Content Marketing Association. The joint meeting, titled “What DTC Brands and Publishers Can Learn from Each Other in Today’s Subscription Economy,” allowed publishers to exchange ideas with DTC brand reps and others.

DTC brands meeting
Source: DMCNY, Twitter @dmcny | Direct-to-Consumer Brands, Publishers and their Admirers exchange perspectives around customer value and experiences.

“Magazines are the original DTC,” said Mike Schanbacher, director of growth marketing at Quip, a subscription business for toothbrushes and dental care,. He noted that traditional circulation metrics, such as lifetime value and churn rates, very much factor in the business and marketing plans of a subscription commerce company.

Alec Casey, CMO of Trusted Media Brands Inc. (TMBI, which manages 13 brands, among them Reader’s Digest), described how his business continually explores expansion of product and content — to books, book series, music and video — and potentially podcasts and subscriber boxes.

“We are always DTC,” he said, meaning that customers’ interests drive every brand extension in the company.

Data can reveal interesting patterns, he noted. Visitors to Family Handyman digital content is 50% men, 50% women, for example, while print content is dominated by men.

DTC Is High-Speed

One hallmark of the newest DTC brands is velocity.

“When bananas and avocados are sitting in the warehouse beneath you, there’s urgency,” said Tammy Barentson, CMO of Fresh Direct, who previously had had a lengthy career in publishing with Time, Meredith, Hearst, and Conde Nast. Innovations are sought for and tested constantly … and rapidly: “There’s a mindset here … ‘That bombed. What did we learn?’’ ” she said, which is a marked change from her previous publishing posts, where testing was more considered.

Barentson also noted that the Fresh Direct executive team meets every morning to listen in collectively on each department’s dashboard of metrics — and that can inspire action.

“There’s a lot I can learn from operations and customer service data,” she said. “For example, how many deliveries are made per hour might tell me geographies where I might focus more customer acquisition.” Her own team pores through subscription data — who orders groceries one, two or three times a week, or just for special events — “how do we bring them up the food chain?” she quipped.

One of the first publishers to capitalize on digital was Forbes and Forbes.com, said Nina LaFrance, who is Forbes’ lead for consumer marketing and business development. Today, the corporation’s digital sites generate 80 million unique visits per month — but it’s the drill-down on the data that is perhaps the most exciting, enabling Forbes to help advertisers connect with customers across print, digital, programmatic display, brand voice, social channels, live events, apps, webinars, and more. Forbes has its own in-house studio to help brands develop content for marketing across the portfolio.

“We adapt and embrace,” LaFrance said, responding to the all the challenges and opportunities presented to publishers and DTC brands alike — issues, such as coping with “walled gardens,” tech giants, privacy laws, data restrictions and regulations, and the Cookie Apocalypse.

Communities Are Sticky

A common theme expressed by the panel was the desire to create a sense of “membership” and “community” — going beyond the transaction to create “stickiness.” That’s where content development matters. “

At Quib, we try and give a membership feel,” Schanbacher said. “Data is the goal,” noting the better consumer understanding and insights that come from content engagement, data collection, and analysis.

However, not every piece of content translates equally to profit, LaFrance reports.

“Visitors to our home page, or who respond to direct mail, may be more profitable to us than those who link to an article from a social post,” she says — and the ability to measure that customer value across channels is a success, in its own right.

Which is probably the most valuable insight of all. These professionals — DTC brands and publishers — revere how data serves, bolsters, and builds the customer relationship, and they have all pursued a shared culture for measurement, insight, and application to build the brands, build the business, and connect to consumer experience. As subscription commerce grows — it has doubled in the past five years — we know how invaluable such data reverence can be.

How Does Native Advertising Survive in an Age of Transparency?

Native advertising goes by many names including: sponsored content, sponsored posts, paid posts, brand services, custom solutions, branded content and probably dozens of other titles. Regardless of the name, the product is essentially the same.

Native advertising goes by many names including: sponsored content, sponsored posts, paid posts, brand services, custom solutions, branded content and probably dozens of other titles. Regardless of the name, the product is essentially the same.

Native ads are pieces of paid content ranging across articles, videos, infographics or images delivered in the flow of editorial content and consistent with the editorial style and tone of the publication. Typically, they have a teeny, tiny stamp that marks them as advertising or sponsored content — if you know what to look for. However, not everyone does know what to look for and research suggests that most users don’t recognize it as advertising.

The implicit agreement of the Web is that content is largely free and that ad exposures pay for the significant costs to create and deliver all that content to users. This keeps it simple — church and state, advertising and editorial — and maintains a mutually beneficial balance. Native advertising subverts that trade-off for the benefit of publishers/advertisers in much the same way that ad blockers tip the scales for consumers.

In fact, many assert that native advertising arose as a publisher solution to outsmart ad blocker software allowing growing numbers of consumers to remove ads from their online experience.

The rise of native advertising under its multitude of names has been impressive. Higher click and engagement rates compared to other forms of online advertising have driven brands on board with flexible formats across social and mobile platforms, in particular. Business Insider Intelligence predicts that spending on native ads will rise to $21 billion in 2018 from just $4.7 billion in 2013. Almost half of online advertisers have adopted native ads into their plans as of 2016, according to a recent survey.

But the widespread usage of this format is not without its costs. A recent Penn State study found there may be negative perceptions attached to publishers who blur the lines of advertising and editorial. Brands using the tactic apparently get more leeway since they are expected to promote themselves.

Still, publishers chasing much needed revenue have almost universally adopted this highly effective approach, including expected sources like Buzzfeed, Outbrain and Facebook plus other, more traditional and mainstream, publishers like USA Today, The New York Times, Conde Nast, The Atlantic and The Wall Street Journal.Forbes cover with native advertisingForbes actually devoted part of its cover to a native ad for Fidelity in its latest issue, prompting AdAge to proclaim “Another Taboo Broken.”

Smart algorithms drive the money machine that is native advertising even as popular criticisms emerge in voices as unexpected as John Oliver and South Park:

https://youtu.be/IVfslRsNXUc

The reproaches vary but tend to reflect the core concern that users may mistake paid content for unpaid content.

Well, yeah. Native advertising done well will blur the line between content and ads. That is the goal of the format — to keep readers in the stream of their content experience and not disrupt them with a blatant ad. But, if we don’t disclose the commercial intent in a visible and noticeable way, we are using trickery that runs counter to the transparency that users demand in their Web experience today.

How do advertisers capitalize on the opportunities presented by these new innovative ad vehicles without stepping over that thin line? The Federal Trade Commission published specific guidelines late in 2015 to help brands avoid deceptive practices, and the IAB has weighed in as well (opens as a PDF). Guidelines reduce to simply how visible and clear the disclosure needs to be.

Web users demand transparency and punish brands that aren’t truthful at the same time they reward brands that succeed in delivering honest ideas and communications. #Fails abound for hapless brand campaigns that ring false with their audiences.

But, marketers lured by the promise of improved results may minimize or rationalize their deception and probably don’t even consider the broader possible impact on the industry. Like most things, the danger is in the aggregate.

There may be increased backlash coming as more and more consumers come to recognize and resent the frequent sleight of hand integral to many native ad executions. And it won’t just damage the already challenged reputation of the advertising industry, but will also tarnish publishers and brands making it harder for even forthright ad executions to gain acceptance.

For the industry to continue innovating successfully, the public trust must be prioritized with both publishers and advertisers acting responsibly. For native ads, that means a minimum of clear naming and prominent labeling. It’s the law, it’s the right thing to do and it’s smart business.