Commerce data unlocks rich insights into consumer behavior, preferences, and purchase patterns, meaning brands can now craft programmatic strategies with more precision than ever before. The integration of commerce data with programmatic represents a new inflection point for digital advertising, arming brands with a competitive advantage that drives more personalized campaigns and better results. For media companies, this means partnering with the right DSP so that you can access and leverage these data signals to help your advertising partners reach their goals.
Why traditional data providers are falling behind
The first question you might be asking is: Why does the industry need commerce data at all? Don’t we already have plenty of data providers in market right now?
In short, yes. But not all data is created equal.
Traditional data providers have historically faced significant challenges which, over time, have undermined the quality and effectiveness of their insights.
Incomplete data. Modeled data often leans on partial information, leading to inaccurate insights.
Outdated data. In fast-changing markets, stale data can lead to ineffective targeting.
Data silos. Data often lives in silos, making it hard to create a cohesive model that works across platforms.
Algorithmic bias and transparency
Biases in data. If the data used to build models is biased, it can lead to skewed targeting that reinforces biases.
Discrimination. There’s a risk of unintentionally excluding or targeting specific groups, leading to unfair practices.
Transparency. A lack of transparency around how models operate can erode trust from consumers and regulators.
Introducing commerce data—a new approach to data-drive marketing
In today’s digital world, commerce is everywhere.
Shoppers generate a wealth of information at every touchpoint, from their first product search to their final purchase. This rich data reveals not just what people buy but how and why they make decisions.
Commerce data combines consented purchase and intent signals, built on real-world consumer behaviors. It covers everything from demographics and location to product views, last purchases, offline sales, and ad clicks. Layer in some AI, and patterns begin to emerge which can supercharge audience targeting and ad strategies.
In the context of programmatic, commerce data is made up of various events and signals based on consumer behavior, including:
Product views and cart additions
Purchases and ad clicks
Contextual data like URLs, categories, and keywords
Product details like categories, SKUs, prices, and descriptions
Identifiers like hashed emails and visitor IDs
Offline sales
Putting commerce data to work
When combined with commerce-focused AI, commerce data powers some of the most effective advertising strategies for today’s modern marketer. That includes:
Identifying in-market consumers: Knowing who’s ready to buy and the best time and place to reach them.
Product recommendations: Suggesting products and bidding based on the value-to-cost ratio of each impression.
Audience building: Creating lookalike audiences to find new prospects and zero in on people actively shopping for specific products.
How to get the most out of commerce data
When you’re evaluating a commerce data provider, asking the right questions is essential to getting the best results. You’ll want to dig into a few key areas to make sure you’re making the right choice.
First, consider data collection and sources. It’s important to understand where the provider’s data comes from and how it’s gathered. Is it collected directly, such as onsite, or inferred through modeling? Knowing this helps gauge the reliability of the data you’re working with.
Next, think about data quality and accuracy. You’ll want to ask how they ensure their data is accurate and complete. Are they refreshing it in real-time, daily, or on another schedule? Consistency here can make or break the effectiveness of your campaigns.
Then, there’s data segmentation and customization. How is the data broken down, and what criteria are used for segmentation? Can the provider integrate data across multiple devices and channels? Flexibility here can be a big win when you’re targeting your audience across platforms.
Of course, data privacy and security is the cornerstone of any digital activation. You need to know how your provider protects the data they handle. Is personal data anonymized or pseudonymized, and can they offer you transparency into how they’re collecting and processing that data?
Time to leverage the commerce data opportunity
There’s no doubt that commerce data presents a huge opportunity for brands to enhance targeting, personalize messages, and drive better results. By working with the right DSP, you can quickly and effectively leverage these new data signals in order to help your advertising partners more effectively achieve their objectives.
Commerce media—advertising that connects shoppers with products and services throughout the buying journey across both physical and digital touchpoints—is on the rise.
Advertisers are set to spend $125.7 billion with retail media properties and networks in 2023 according to GroupM, growing to represent 15.4% of total ad spend by 2028—even surpassing TV. And that’s just a subset of the larger commerce media opportunity, which McKinsey puts at $1.3 trillion in enterprise value in the US by 2026, which includes $50 billion for publishers.
While it’s not immediately apparent on the surface, this trend spells big opportunity for non-retailer media owners, too. But what exactly is that commerce opportunity, and how can publishers start to take advantage of this shift in media buying?
The three strategies below—all being pursued by Commerce Media early adopters in the publisher space—highlight a potential path forward.
Strategy #1: Adopt a funnel mentality
Commerce media fuses data intelligence with digital advertising to reach consumers across their shopping journeys. As experts in attracting audiences, aggregating their attention, and securing their trust, publishers play a meaningful role in this process. Their properties represent critical stopping points at every stage of a buyer’s path to purchase. To capitalize on this opportunity, publishers need to start applying a funnel mentality to content planning and creation.
At the top of the funnel is product discovery—where consumers first learn about a new product or service offering. “Editor Finds” and “Today’s top picks” work well at driving upper funnel awareness, and because you already have your audience’s trust—they are a natural accelerator for advancing readers to the next funnel stage: consideration.
In the consideration stage, consumers are deciding whether they want to make a purchase, or, if they have already decided, weighing their options about which product to go with. Product reviews, comparisons, and unboxings are all effective at influencing consumers during this stage, providing them with more in-depth information to shape their decision-making and potentially even pushing them further down the funnel, to the purchase stage.
At this stage, highlighting time-based deals (e.g., “Best Prime Day Deals”) can create urgency for customers, reminding them about products they have had their eye on, but had not yet added to their cart. Similarly, bestowing credible and high-praise designations to products (e.g., “Our favorite Smart TV of 2023”) can give unsure shoppers the confidence they need to advance beyond window gazing to making a purchase.
Making sure you have content for all stages of the funnel is critical to building trust with users and attracting the audiences that advertisers and retailers are looking to engage. Many publishers also use this content (and in some cases build it purposefully) to power affiliate marketing programs, where they receive commissions from retailer partners for the sales generated from the traffic being sent to the retailer’s site.
Strategy #2: Convert commerce content into commerce data
As you build your commerce content library and start to attract more visitors, you will notice you are simultaneously generating a tremendous amount of incredibly rich commerce data. This data is collected based upon important buying signals such as which visitors are reading what content, clicking on which affiliate links, hunting for deals and more.
With the right collection and management tools in place, this data forms the seed of a first-party commerce data strategy. You can then segment this data in all sorts of ways to create value for advertisers. For example, users reading multiple reviews of different smart TVs are highly likely in-market for that product category. Users who consistently read content about Smart TVs, gaming consoles, and green autos are likely “high-tech enthusiasts,” as well as “high price point shoppers.”
Knowing how commerce advertisers want to buy should inform how you shape your data strategy. In addition to wanting granular product category interest and in-market data, they are also always on the lookout for reliable data on life events (e.g., “new homeowners,” “new baby,” “recent retiree); brand preferences (e.g., Nike loyalists); purchase frequency; and shopping habits (e.g., deal-based shopper, frequent online buyer).
Such granular first-party audience signals collected on the publisher side are already considered more accurate and relevant than similar third-party data and will only become more in-demand with the deprecation of third-party cookies. Publishers with direct sales teams should be leveraging this data for deals-based selling as well as offsite reach plays, leveraging audience extension programs and tools.
Strategy #3: Think like a retailer
Once you have started to invest serious energy and resources into leveraging your unique editorial voice and trusted expertise to create high-value commerce content, you will begin to attract more visitors in a purchase mindset. Combine that with a growing and increasingly rich commerce data asset, and, in some cases, it may make sense to start acting like a retailer in your own right.
For some publishers, that mean building editorial-powered storefronts off your main digital properties. There, you can aggregate top editor picks, fan favorites, and best sellers for direct purchase by your site visitors. Others can embed relevant links within their commerce content and leverage their growing commerce data insights to drive in-market audiences to their storefront to create a flywheel effect.
Pushing that concept even further, some publishers might start to embed storefronts at the product level within individual article pages, newsletter communications, or social posts, which brings one-click purchase possibilities to consumers at every touchpoint and stage of the funnel.
Publishers who command serious trust from their readers may decide to parlay their editorial influence into curatorial prowess, in the form of product recommendation and discovery subscription services. Birchbox might have invented this category, but media owners are its rightful heir. They can leverage their trusted editorial perspective to hand-pick and distribute innovative, new, and best-of-breed products to consumers constantly in search of their next obsession. This is as applicable to beauty products as it is to kitchen utensils, books, video games, cooking spices, socks, and fragrances.
Publishers have been merchandisers for a long time, even if they did not know what that function meant in a retail context. Thanks to an acceleration in digital shopping comfort and technology, now they can be both influencer and retailer.
The commerce opportunity
For publishers looking to bridge the gap between media and commerce, building a commerce strategy that spans content creation, data collection and segmentation, product merchandising, retailer engagement, and user experience, will be key.
The relationship between media and commerce has historically lacked a clear strategic connection. Viewing commerce in isolation neglects the huge synergistic potential of content, data, and user experiences. This limitation has traditionally prevented publishers from securing a strong footing in this segment of the digital advertising ecosystem—but things are changing.
The new chapter ahead presents a wealth of opportunities for publishers. By focusing on the convergence of content and experiences through a commerce lens, publishers can forge meaningful and long-lasting relationships with advertisers and retailers alike.
What do all these numbers tell us? Today’s shopper journey looks radically different from just a few years ago. From in-depth consumer research, multi-platform purchasing, online and offline touchpoints, and high-ticket purchases taking place on mobile devices, it all adds up to a new consumer paradigm.
So how can publishers capitalize on these changes to create new revenue opportunities?
Retail media 101
To understand the full extent of the commerce media opportunity for publishers, it’s important to first understand retail media.
Retail media—ads placed on a retailer’s e-commerce site or app at the point of purchase—enables brands to boost their visibility in the digital retail space and link ad spend directly to digital retail sales. In 2022, GroupM reported that retail media already represented $101B of global ad spending, with $37.39B in the US (eMarketer).
Commerce media takes retail media one step further, bringing together advertisers and commerce data to engage consumers where they are actively researching, browsing, and buying on the open internet, in addition to retailer sites. This means that brands can pinpoint consumers wherever they are in the customer journey, and wherever they are on the web.
It also opens the door to bring brands and media owners closer together to deliver immersive experiences for consumers and drive commerce outcomes for media buyers.
Partnering with retailers to drive commerce
Another crucial aspect of commerce media is how it brings publishers and retailers together.
Forward-looking publishers are choosing to integrate commerce-focused content with their existing output, while retailers are making it easier for consumers to complete transactions by placing commerce experiences directly on publisher sites.
Commerce media is becoming the new business driver for media owners. They’re tapping into the commerce boom to create new revenue streams and grow advertiser value. For example, Buzzfeed reported $92 million in affiliate revenue, growing 26% YoY through sponsored content. Hearst newspapers saw 675% growth in digital revenues tied to commerce budgets with first-party data growth, while Future reported $1 billion in commerce sales for advertisers, up 56% YoY, by leveraging shoppable ad units.
The anatomy of a publisher commerce media strategy
As budgets from other channels, such as trade marketing, shift online, commerce media will open up new revenue streams for publishers, allowing them to monetize their valuable first-party data and capture additional brand spend.
This also creates an advantage for retailers, whose inventory is limited on their own sites. And it’s here that commerce media really comes into its own.
In tomorrow’s commerce media ecosystem, retailers are the new media owners, with publisher partners fueling the customer journey. Publishers need to understand the position of their content within the shopper journey before starting a commerce strategy: Who is their audience? Can they influence user purchases? How close are they to retailers’ landing pages?
Once a publisher has a complete view of their audience, they can easily gauge their affinities with product categories. Publishers can then use these commerce affinities to tailor their content and affiliate marketing strategies to their particular audience while integrating relevant commerce placements, like native product recommendation widgets, shoppable creatives, and embedded purchase links.
Above all, a commerce media strategy will minimize disruption to the publisher’s user experience, ensuring relevant, tailored advertising without compromising on return visits.
Connecting commerce and content
So, what does the road ahead look like for publishers looking to tap into commerce media?
Looking at the industry, especially in light of the upcoming cookie deprecation, the die is cast: content and commerce will continue to converge.
How publishers capitalize on this paradigm shift remains to be seen, but it’s likely that many will orient themselves toward commerce-focused content. Expect to see more ad formats, like shoppable ad units, which drive users back to retailer experiences, as well as affiliate programs to push incremental revenue. Innovative publishers may also choose to use sponsored listings and curated digital storefronts tied to retailers which align with the unique interests of their users.
According to GroupM, global advertising revenues directed to retail companies already accounts for 18% of total digital advertising and 11% of total advertising spend. “We expect retail media advertising to increase roughly 60% by 2027,” GroupM’s 2022 E-Commerce & Retail Media Forecast noted back in September. Globally, that will make it a $168 billion market.
These are big numbers. So, given media companies continued reliance on advertising revenue, any emerging player in this space is one to watch. Retail media is no exception.
Here’s what you need to know about its growth, potential impact on digital ad revenues, and what publishers stand to learn from this booming market.
What is retail media?
As Zenith explains, retail media refers to display and search advertising that appears on e-commerce websites and/or the online platforms of brick-and-mortar retailers.
Retail media networks (RMNs), such as those operated by Amazon, Walmart and Shopify, offer multiple opportunities to deliver targeted advertising. They also provide the means to deliver other forms of sponsored content to consumers, both on their own sites and increasingly off-site, too.
Why is it growing?
Retail media isn’t new. But it is in its ascendancy. GroupM estimates that global advertising revenue for retail-based companies was worth $88 billion in 2021, growing to $101 billion in 2022.
This uptake, eMarketer says, can be attributed to “the death of the third-party cookie–as well as retailers’ ability to leverage their first-party data on customers.”
Alongside this, we also must consider the continued impact of the pandemic in shifting consumer behaviors and driving more people to shop online. As e-commerce has grown, so has the desire of brands to be in spaces where we are increasingly spending more time. And money.
Not surprisingly, brands and manufacturers are using retail media to reach customers at the point of purchase, or when they are most likely to make a purchase decision. That’s often on e-commerce sites and on online shopping channels.
Threats
There are several clear challenges here for media companies. The first lies in the worry that retail media will further contribute to the cannibalization of publisher’s advertising revenues. As advertising markets continue to grow, there’s a very real concern that publishers will not get a bigger slice of this pie, as monies flow to other platforms and providers.
For agencies and brands, the volume of first-party data that retail media platforms have access to makes them highly appealing. It also makes them potentially difficult to compete with.
Alongside this, these platforms also offer the opportunity for both highly targeted ads and advertisements that may trigger trackable purchase decisions there and then.
Of course, publishers offer this functionality too, often packaged through – and around – compelling content. This can also inspire purchases, but the journey to transaction might be more complicated, or less immediate. For example, online shopping through an affiliate partnership might take you offsite to complete a purchase. In contrast, seamless, frictionless, transactions are the bread and butter of traditional e-commerce sites. Unlike on many publisher sites, transactions can be completed within their walled garden, without the need to visit a partner’s site.
New data from the Reuters Institute notes that nearly a quarter of media leaders in 53 countries around the world described e-commerce as an “important,” or “very important,” revenue stream for their company in the year ahead. As these media companies seek to grow their e-commerce revenues, the UX and targeting that retail media networks can potentially provide, may offer some stiff competition to these ambitions.
Lastly, we should also note that retailer’s media activity is not just about advertising. Some retailers are also investing in traditional content too. This includes time-honored staples such as in-store magazines through to live shopping experiences, developing relationships with influencers, and running their own in-house media companies, like Target’s Roundel.
Image: Screengrab from a presentation by New York performance marketing firm Tinuiti
Opportunities
As eMarketer explains, “the most important benefit that retail media offers brands is a closer relationship with retailers, followed by creative services, access to owned and operated media/properties, first-party sales data, and personalization opportunities through creative.”
That makes for a compelling case for many brands and advertisers. But, of course, some of those characteristics are applicable to media companies too. Moreover, retail media isn’t a sector that publishers are locked out of. Far from it. There are multiple possibilities for media companies to tap into this market.
For example, Grocery Dive notes that retailers are increasingly looking to add shoppable video, live streams, and other multimedia content on their sites. Some do this in-house and have large creative teams. However, this increasing demand for content presents opportunities for creative and publishing partners. They might range from start-ups like Firework – a video commerce solutions provider – through to the content studios at large publishers such as The New York Times’ T Brand Studios and Bloomberg Media Studios.
Yahoo! meanwhile has created a tech stack to support RMN’s run by Lowe’s and Marriott, which includes enabling ad buyers to use anonymized data to target customers using Marriott’s app and websites. In the future, that will come to TVs in their hotel rooms too. It will be interesting to see if additional content layers – such as local news, weather and sports – will be added to these spaces in the future, so that consumers are served content related to where they are staying from trusted publishing partners.
There are also opportunities to double-down on some of the partnerships between retailers and media brands. Walmart has already partnered with BuzzFeed to offer Tasty branded kitchenware and shoppable recipes. Inspired by a recipe idea, users could have the items needed to create it added to an online basket, picking up the items later in the store or having them delivered to their homes.
But given that retailers are also offering food inspiration on their own sites, that model could be flipped on its head in which case, RMNs would send traffic to publishers’ sites (e.g. NYT Cooking) to continue their journey.
Thanksgiving-themed shoppable videos on Safeway’s website, via Grocery Dive
Lastly, it’s worth noting that some retail media providers offer offsite, often co-branded ads. This means that some of RMN’s ad dollars may still flow towards media companies. In fact, they already are, according to Gavin Dunaway from The Media Trust.
As he explained to DCN readers last summer, “When retailers buy off property, they need high-quality inventory in well-lit spaces.” That might mean marquee publishers with large audiences, or more targeted niche outlets. Within that, the ability to offer contextual ads, and to do so in a less crowded space than a typical online shopping space, is potentially very appealing.
Moreover, given concerns about brand safety, quality publishers can also be a safer bet for retailers and their advertisers, than some of the vagaries of the programmatic marketplace. That too makes them attractive for RMNs and their advertisers.
Looking ahead
The rise of retail media represents a significant shift in the advertising landscape and one that publishers cannot afford to ignore.
Retail media is expected to exceed $50 billion in the United States in 2023 alone. That represents 20% of total U.S. digital ad spend, AdWeek reports. It is daunting to face another major competitor in the digital ad marketplace. However, it’s an area that publishers should consider exploring and learning from. With companies like Amazon and Walmart already generating substantial advertising revenue, media companies should be paying close attention to the strategies of these companies, if they are not already.
As part of this, trends such as shoppable videos and the intersection of retail media and connected TV (another advertising channel that is also growing rapidly) are worth watching.
And, if nothing else, the emergence of retail media highlights the importance of a strong first-party data strategy, and the potential power it holds with advertisers and consumers alike. This once again reinforces the need for publishers to ensure that they do not get left behind when we move to a cookie-less world.
Areas that retail media are already majoring in – first-party data, shoppable video, sponsored content, and contextual ads designed to spark purchases – should be reviewed with this new competition in mind. There is also much to learn from their efforts in these arenas, as well as opportunities to partner with RMNs on everything from e-commerce strategies to ad inventory.
As the retail media market continues to expand and evolve, it looks set to play a growing role in the advertising industry and in shaping consumer habits. Subsequently, it’s a space that publishers must pay attention to by continuing to revisit and check out. After all, just because you’ve seen one retail media network, it doesn’t mean seen the mall.
The channel has arguably revived Criteo’s fortunes as the third-party cookie dwindles into irrelevance. Walmart, Target, Kroger, Best Buy, Home Depot, Gap, CVS—it seems like every other week another major retailer carts out a brand-spanking-new retail media network.
All that ad spend sure sounds great for retailers. But what about publishers? Are retailers siphoning spend away from the already beleaguered publisher set?
Quite the opposite, in fact. The retail media revolution is helping line the pockets of premium publishers.
Cautious journey to digital advertising
In a nutshell, retail media is when retailers offer advertising access to their customers on-property (or off-property). It’s not a new concept by any means, but it’s been mainly relegated to advertiser campaigns in actual brick and mortar stores. (Think about specialty brand displays at department stores or supermarkets.)
While retailers’ online traffic grew with the rise of ecommerce, many were reluctant to plunge into digital advertising because of their hyper focus on user experience. A 2006 Amazon study famously found that every 100ms in extra load time cost 1% in sales; a 2017 Akamai followup suggested that every 100ms of latency cut conversions by 7%.
Unfortunately, digital advertising has a bad reputation for latency, as well as other factors that ruin user experience: gauche creative, code that breaks a page, open doors to device-infecting malware, etc. All those issues can arise before programmatic enters the picture. With bad user experience being detrimental to online sales, digital advertising simply wasn’t worth the risk for most retailers.
Yet they no doubt had their eye on Amazon’s flourishing ad business. There should be an asterisk by eMarketer’s $41 billion in 2022 US ad spend figure: about 78% of that goes to Amazon. However, the $9 billion left over is nothing to sneeze at, and you may have noticed Amazon does a fair deal of third-party media buying.
U.S. retail mainstays like Walmart, Target, and Kroger have been ramping up their digital retail media operations for the last five years. And then came the Covid pandemic: Suddenly consumers weren’t in stores; they were flooding websites and apps and racking up online orders. The opportunity to monetize this traffic was just too good to pass up, especially as major retail brands had proven that integrating ads wouldn’t necessarily harm user experience.
Advertiser appeal
Retailers have the kind of high-quality audience data that make advertisers swoon. Through tools like loyalty programs, many retailers boast comprehensive customer profiles that can be used for precise targeting. Retailers are stocking up on data scientists to drive customer insights and behavioral trends, and for many advertisers measurement goes all the way to point of sale.
In addition, retail sites and apps are a data oasis in the increasingly untargetable mobile ecosystem. The presence of emails and other deterministic identifiers make retailers ideal partners for identity solutions like LiveRamp and LiveIntent in finding audiences on third-party properties.
On-property advertising is really only the jump-off point. The huge gains are in audience extension, or when retailers start finding their customers on third-party sites and apps.
Quality quest
That’s where premium publishers come in. When asked at the IAB Annual Leadership Meeting in January if she felt that retail media networks were a threat to revenue, BET EVP and CMO Kimberly Evans Paige replied, no—we’re partnering with them.
Advertising revenue is incremental for retailers. Therefore, advertising must be accretive to the core revenue business. On-property, this means high-quality, brand-safe ads that don’t cause latency. Landing pages can’t send customers to competitor sites and only authorized vendors can be allowed through the pipes, lest data leakage become a concern.
Going off-property is not just extending the audience, but also the retailer brand. During an AdMonsters Ops session in June, Christine Foster, Vice President, Media Operations at Kroger mentioned that a great deal of their offsite ads are actually co-branded. So, retailers with big advertiser budgets in tow may be reticent about appearing adjacent low-quality ads, scam ads, or ads with questionable content, which could range from gambling to marijuana to even crypto.
When retailers buy off property, they need high-quality inventory in well-lit spaces. To ensure brand safety—both their own and advertisers’—retailers are pursuing guaranteed direct deals with premium publishers as well as private marketplace arrangements. Certainly, major publisher brands with massive traffic are already benefiting. But there’s definitely room out there for niche publishers with ties to specialized retailers.
Lifting all boats
The excitement around retail media stems from the fact it’s beneficial for just about every party in the digital media ecosystem: Advertisers reach key audiences with confidence; ad tech companies like Criteo and CitrusAds develop new business; publishers gain revenue; and of course retailers are able to further monetize their customer data.
Publishers of all sizes need to investigate retail media opportunities. However, they also need to understand that their ability to rake in revenue here greatly depends on the quality of their environments.
Leilani Han Executive Director of Commerce, Wirecutter
Affiliate marketing is a dynamic endeavor, with myriad factors driving strategic decisions on how to sustain a healthy revenue stream while maintaining consumer trust.
In this Q & A, Leilani Han, Wirecutter’s executive director of commerce, shares her insights on strategies driving Wirecutter’s success.
DCN: There appears to be a renewed or intensified interest in affiliate marketing as a revenue diversification strategy. How do you see it?
Han: There’s always been a keen interest in affiliate marketing, but the space has certainly evolved with who was investing in the channel over the last 10 years. In our space, we’ve seen many media companies realize this was a smart strategy for engaging with your audience more deeply while providing a service to them that could evolve into a revenue stream.
This coincided with an evolution in the consumers’ relationship with their shopping journey. Affiliate has the unique capabilities of encompassing all channels so that it fits in perfectly with social media, the internet, and being able to provide greater value to people’s lives.
Wirecutter has been at the forefront of this trend, as we helped to prove to others this model could scale successfully. Today, millions of readers turn to Wirecutter’s advice for inspiration and making smarter shopping decisions.
DCN: What is your company’s approach to affiliate marketing, content/commerce mix, video, social?
Han: Our recommendations – and affiliate marketing – have always been at the core of our business since its 2011 launch. While we’re technically classified as commerce content, we don’t separate our work into content or commerce. We are simply focused on providing the best service journalism to our readers.
Compared to competitors, we are not in the business of worshiping products. We are in the business of helping users find out what is worth paying for and what is the best product for the price. We employ a journalistic, methodical process to uncover the right information.
We make a recommendation – not just a review. We communicate in a way that is relatable and direct – not academic. Wirecutter cuts the time and stress of shopping by providing direct and actionable buying advice.
We knew if we took care of the reader experience and prioritized their trust in us above all else, the monetization follows. That’s an indication we’re hitting the mark on being helpful to them. That’s a balance we have to strike to serve our readers and our ability to monetize. Our team does a great job of finding that balance.
As digital innovation has evolved over the years, so have the channels through which we can reach our audiences. We view video and social media as another way to introduce new readers to our advice while reaching them in the moment in the spaces where they’re organically spending their time.
DCN: What are the driving factors underscoring where to put the efforts?
Han: Our core mission is to serve our readers with helpful advice and earn their trust. Our recommendations are at the center of our efforts. We try to be thoughtful about how we engage with our audiences and whether we’re successful in meeting their needs.
We aim to be as impartial as possible from any business interests. Our approach is being transparent through every point of the user experience.
The affiliate model aligns well with our reader service mission because we do not earn commissions if we are not successful in earning trust and making the right recommendations. A successful affiliate business is a clear indicator we are doing right by the reader. The data helps inform us whether we’re meeting the mark on what readers need advice on and what to buy.
Han: One of the biggest challenges at the beginning is figuring out what resonates with your readers, how you can gain traction with them to return and click through to purchase, and then scaling that in a way that honors your service for your readers. While affiliate marketing can be a very meaningful revenue stream, it is not as turnkey as some other channels. It requires time, effort, and a lot of testing to eventually find the sweet spot of your editorial voice and how to monetize effectively.
Another challenge is in how to strike the right balance between sources that are key drivers of your business and ensuring you’re diversified enough to withstand changes that are outside of your control.
One example of this for Wirecutter is organic search and the ever-changing algorithms that can impact how much traffic is coming to your site.
Last fall, we launched a subscription product because we know that our journalism is worth paying for and we are focused on deepening our relationship with our readers. This allows us to reach these readers directly and lessen our reliance on other traffic sources to bring readers back to Wirecutter. So far, we are seeing positive results that confirm our belief that Wirecutter’s service journalism is a meaningful resource in people’s lives.
Despite our priority to grow our subscriber base, we are continuing to focus on our affiliate business as well. Our affiliate business model remains unchanged. If you click a link on our site and buy something we recommend, we may receive a commission.
As always, our writers and editors are never made aware of any business relationships we have with retailers. We’ll continue to make picks independent of all business and financial interests. Those things will never change: helping readers make the right buying decisions will always come first.
The change happening with browser updates and privacy regulations is also top of mind for many publishers and what the deprecation of cookies means for the industry. Many of the major affiliate networks have been addressing this by updating their tracking technology to help mitigate any losses from these changes, while Wirecutter has proprietary technology that has also helped us to mitigate any loss.
As online shopping habits evolve, ecommerce is becoming an increasingly attractive revenue opportunity for publishers. We can’t predict what will happen as the pandemic wanes, but prominent studies suggest that ecommerce will continue its upward trend in the coming years.
Given this rosy outlook, now is a great time to investigate the potential of ecommerce (or revisit your strategy). But ecommerce success isn’t guaranteed. It takes careful planning, smart choices, and the right technology partner.
If you’re looking for expert perspective on the key elements of a successful ecommerce strategy, take the time to read Ecommerce in Publishing: Trends and Strategies. Sponsored by Sovrn and published by What’s New In Publishing (WNIP), this new report offers deep insights into the ecommerce space to help publishers develop a winning ecommerce strategy (that goes beyond affiliate). It also provides insights on how to deliver an exceptional shopping experience and maximize revenue.
3 considerations for your ecommerce strategy
Whether you’re just starting out looking to enhance your strategy, there are certain key topics you’ll need to consider. Here are three of the big takeaways from our report:
1. Changing technologies
As ecommerce becomes increasingly enmeshed in the day-to-day digital experience, it’s easier than ever for consumers to make online purchases. And purchase capabilities now span a wide variety of channels – from traditional websites to social media outlets, mobile apps, and more. For publishers, this opens up new ecommerce opportunities that go far beyond traditional affiliate marketing, like curated online stores, subscription boxes, buy-now-pay-later (BNPL) models, and more.
Things move fast in the world of online publishing, so there’s always a new tactic or technology to explore. At the same time, tried-and-true revenue sources can fall out of favor without warning. We’re seeing this play out before our eyes in recent months, with Facebook’s first-ever decline in usage and the phenomenon of “subscription fatigue.” Publishers who tap into multiple selling channels will have more revenue opportunities — and better protection from market volatility — than those who stick with a single online platform or property.
Look for flexible, easy-to-use solutions that work with almost any type of commerce content and one that evolves along with the industry. We believe personalization that delivers a unique shopping experience tailored to readers is the right approach. Also, tools such as price comparison make it easy to cut through the noise and help your readers find the best deals on the products they want.
2. Culture and content fit
It’s important to recognize that ecommerce is not a one-size-fits-all venture. Some ecommerce tactics will work better than others for your brand, your content, and your unique audience. Gaining a deep understanding of your reader base is a fundamental step in developing an approach to ecommerce that will resonate with your audience and selecting the products and merchants they’ll love.
Make sure you analyze which products and merchants are most appealing to your readers. For example, your audience may have strong engagement with certain content, or they may prefer a certain brand that’s featured on your site.
With a better understanding of your overall affiliate program, you can continue to refine your affiliate strategy and drive more revenue. A dashboard can help you identify these trends, by displaying performance metrics and delivering insights on what’s working (and what’s not).
3. Merchant diversification
Ecommerce success requires forming mutually beneficial partnerships with merchants that appeal to your audience. Most publishers start out promoting a single merchant like Amazon or Walmart, because they offer affiliate programs that are easy to understand and implement. But these internal programs rarely offer the highest rates or the most desirable products — and when your earnings rely on a single merchant, any change in commission structure can devastate your revenue stream.
By diversifying your merchant mix, you can ensure that no single vendor has a disproportionate impact on your earnings — and you’ll be in a better position to adjust your strategy in response to market fluctuations. Of course, your target merchant list may change over time as your content and your audience continue to evolve. You may also discover that individual merchants revise their requirements for affiliate approval from time to time — so it can be challenging to maintain a steady mix of merchants on your site.
Maximize your ecommerce potential
Undoubtedly, we’ve seen an acceleration in the adoption of ecommerce that presents an enormous opportunity. Media companies, which offer content that fits seamlessly into the shoppers journey, are in a position to benefit from this trend. But to do so, our research finds that there are a number of critical factors in play (a few of which I’ve covered here). With the right strategy in play, publishers are poised to be a vibrant port of the growing ecommerce marketplace.
About the Author
Rebecca Cole is the Director of Content and Communications for Sovrn, a publishing technology platform that provides advertising tools, technologies, and services for content creators to build their businesses, remain independent, and thrive on the Open Web. Rebecca has more than two decades of experience driving increased attention through purpose-driven content. She has held communications positions in tech, energy, and consumer brands and was a journalist and editor. Rebecca has an undergraduate degree from The University of Iowa and a master’s degree in journalism from The University of Colorado Boulder.
If we’ve learned anything over the past few years, it’s that almost anything is possible. For better or worse, the future is highly unpredictable, which can make long-term planning difficult. One of the best ways to prepare for the future — whatever it may bring — is by keeping up with industry trends.
That said, one looks to be a sure bet: ecommerce. Undoubtedly, this is a revenue trend that will only grow in importance for publishers. According to GroupM, “By 2024 retail-focused ecommerce will amount to $7T in annual sales activity or 25% of all retail sales.” And the effects of the Covid-19 pandemic have only continued to accelerate the adoption of online shopping and the move away from traditional brick-and-mortar retail.
For publishers, creating an ecommerce strategy that is optimized for impact is more important than ever.
If you’re looking for expert perspective on the trends that are shaping ecommerce and their implications for publishers, take the time to read Ecommerce in Publishing: Trends and Strategies. Published by What’s New in Publishing, the report offers deep insights into the ecommerce space to help publishers deliver an exceptional shopping experience and maximize revenue.
3 trends to watch
Ecommerce is evolving rapidly, as new technologies emerge, and consumer expectations continue to rise. We’re already seeing the impact of these three trends, but they are likely to become increasingly more prominent.
1. Friction-free experiences
Publishers and retailers alike are focused on creating smooth, seamless ecommerce experiences. That means empowering consumers to complete a purchase quickly and easily, in as few steps as possible.
For example, an inefficient ecommerce experience might send readers from your content to a merchant page where they must search for the featured product, visit the product page, add the item to their shopping cart, and finally check out. Shoppable technology can streamline the process, allowing consumers to go directly to the desired product page — or even add merchandise to their cart from a link in your content.
Reducing friction is beneficial for both publishers and merchants, as it lessens consumer frustration and increases conversions. And consumers increasingly expect this type of functionality, so they can shop whenever, wherever, and however they prefer.
2. New payment methods
The practice of buy-now-pay-later (BNPL) is growing in popularity among major retailers, who are eager to provide consumers with easy payment options. This trend is beginning to catch on among publishers as well — especially with those who already leverage ecommerce as a core part of their business.
BNPL is essentially a type of short-term financing that allows consumers to make a purchase now and pay for it in the future — often in multiple, interest-free installments. As consumers get accustomed to this type of payment option in the retail world, it’s likely that publishers will need to follow suit to avoid missing out on valuable ecommerce revenue.
On the outskirts of the payment method trend, a few publishers are experimenting with purchases using cryptocurrency or even text-to-buy — although these are far from common.
3. Social commerce
A frictionless experience is integral to social commerce, which allows consumers to make purchases through apps and social channels. This segment of the ecommerce market is growing rapidly, from $89.4 billion in late 2020 to a projected $604.5 billion within seven years.
With numbers like these, it’s no surprise that publishers are exploring new ways to monetize user engagement on social media. Ecommerce opportunities are the next logical step for influencer-focused channels like Pinterest and Instagram, so users can immediately purchase the products they see.
Channels like Instagram, Pinterest, Facebook, and Snapchat are rapidly expanding their shopping tools and functionality, which can help publishers tap into this trend. After all, research shows that finding inspiration and products to buy is cited as one of the main reasons today’s consumers use social media.
The continued growth of ecommerce has become a potential revenue stream that is too big for many
publishers to ignore. By partnering with platforms, retailers and other service providers publishers can create rich ecommerce experiences, offering the type of online shopping experiences that consumers now demand. Those that don’t risk being left behind, leaving much of ecommerce’s potential unrealized.
About the author
Rebecca Cole is the Director of Content and Communications for Sovrn, a publishing technology platform that provides advertising tools, technologies, and services for content creators to build their businesses, remain independent and thrive on the Open Web. Rebecca has more than two decades of experience driving increased attention through purpose-driven content. She has held communications positions in tech, energy, and consumer brands and was a journalist and editor. Rebecca has an undergraduate degree from The University of Iowa and a master’s degree in journalism from The University of Colorado Boulder.
Video shopping is being hyped as the next big thing in video and shopping. But it is kind of hard to believe that livestream commerce, which has its roots in the home shopping experience we know from cable TV, will be truly transformational. Now reconsider it as a new paradigm that combines information, entertainment, and retail. And, even if you count live callers to shopping shows, livestream shopping provides a whole new level of customer connection and conversion. So maybe activity and investments are booming for good reason.
This year will be remembered as the biggest year yet for video commerce revenue. Research firm eMarketer reckons the global market for livestream shopping will rake in a massive $500 billion this year.
Break this down by region, and China accounts for the lion’s share of earnings ($480 billion). But more astounding than China’s percentage of global revenues is the speed at which livestream commerce completely has transformed the country’s retail industry. Global management consulting firm McKinsey reports it took less than five years for livestream commerce to develop into an innovative sales channel and one that regularly attracts more than one-third of Chinese Internet users.
Western companies ramp up to revenues
The U.S. market may be nascent in comparison, but the pay-off for early adopters is impressive. Data from management consulting firm Activate’s Technology Media Outlook 2022 pegs revenues at $11 billion this year, up from $6 billion in 2020.
Big names need little convincing. From online retailers Amazon and Alibaba to big tech and social giants Facebook, Pinterest and TikTok and Twitter, companies are “jumping into livestream shopping hard.”
The pandemic provided a big push. At one level, strict lockdown measures have accelerated the trend of shopping online and in-app. At the other end of the spectrum, isolating at home has increased the desire of consumers, who crave connection and diversion, to interact with a new breed of creators and influencers lining up to make shopping informative and fun.
Media companies engage audiences primed to purchase
Right now, the most popular combination to power livestream shopping is social networking platforms and retailers. However, media companies offer ideal partnerships. They alone can position offers where they matter most: the point of inspiration where customers are consuming content and open to suggestions.
“It’s really about creating an experience where content meets commerce,” Bryan Moore, co-founder and CEO of talkshoplive, a live streaming, social sales network, told me in an email interview.
He believes that the ideal intersection occurs by “connecting the retail and media landscapes.” His company has worked with Conde Nast and Hearst, retailers like Walmart, and creators from Oprah Winfrey to Dude Perfect on live commerce. Which maximizes distribution and, he says, “converts the most sales by cutting out all friction.”
This month BuzzFeed was the latest media company to announce a partnership with talkshoplive. The live stream with creators Carolina Reynoso and Vivian Nweze celebrates BFF-entine’s Day, highlighting product recommendations, gifts and much more. It follows a string of more than 50 livestreams on destinations, including Amazon Live, the retailer’s shoppable livestream offering.
Another fast-mover in livestream commerce is NBCUniversal. The media company launched its commerce capabilities on its One platform in 2020. Since then, the company reports it has created over 250 different pieces of shoppable content and counts over 200 active retailers on its platform.
From experimentation to execution
The number of media companies doubling down on livestream commerce continues to grow. But so does the competition.
New data from Sensor Tower, a company providing market intelligence and analytics for the mobile app economy, shows that one-third of the top 15 apps (measured in downloads) in the U.S. have “either already experimented with livestream shopping events or have announced plans to test livestream shopping in the near future.”
To up their game, media companies will need to be brave and broaden their approach beyond just driving affiliate conversions. The real power of livestream commerce is not about pushing products or driving sales.
The deeper goal should be to build affinity for an interactive shopping experience – not just drive a purchase. Done right, whether the consumer purchases or not, the experience continually and consistently delivers something far more valuable: memorable and meaningful engagement.
How to do live shopping right
On the face of it, livestream commerce is a perfect match with campaigns to sell beauty, fashion, decor and other items where brands and merchants pay the highest commissions. But this opportunity goes far beyond lifestyle. There are opportunities in many other verticals, including B2B software and services. Whether you opt to target consumers, or cater to business professionals, your first task is to enable the conversations and interactions that power commerce.
Cultivate creators to add authenticity
Encourage niche creators who can enhance the experience (and the reach of your retail partners) and open the aperture of how you view opportunities in the Long Tail. Reams of research show the engagement rates for nano-influencers are up to ten times those for mega influencers and major celebrities.
Expand capabilities to create customer value
Position your company to present shoppable products to your audience in a way that maximizes convenience and minimizes friction. Choose platforms and partners that will allow consumers to enjoy the programming and the purchase experience. If possible, don’t just align with a livestream partner. Build the talent and tech in-house to run your own livestream platform. It can be a significant investment, but it also positions you to go after brands and opportunities that value access to your audience and are willing to pay a premium for it.
Draw from data and consumer behavior
Livestream commerce requires deep commitment and insights. Be prepared to set up a team to manage these activities and “own” the customer. More importantly, equip them to build personas of potential customers and segments to understand the audience. This will also help you understand which interactive perks (games, giveaways, quizzes) are likely to keep these consumers engaged and entertained.
Experience, engagement, and (yes) earnings
Content is king. But it takes more than compelling and trustworthy reviews and recommendations to enhance the livestream shopping experience. While incremental – or even significant – revenue is a compelling reason to move into live shopping, it offers other meaningful rewards.
Today’s consumer enjoys an end-to-end experience that media companies are uniquely poised to offer. From the moment of interest, to inspiration and even investment, the media ecosystem can truly engage consumers in a way few others can. Live shopping experiences offer a new way to leverage content-based customer experiences to increase engagement and, yes, feed the bottom line.
The ecommerce boom was far and away the biggest trend to have come out of the pandemic – at least for digital media companies. Unsurprisingly, media organizations that had already invested in ecommerce infrastructure and affiliate revenue partnerships reaped big benefits. They made hay while the sun shone.
Good Housekeeping, for instance, saw an increase in ecommerce-powered sales of 567% in March 2020, compared to the same period in the previous year.
Some, like Dennis Publishing owner Exponent, even spun off parts of their businesses that were outperforming in terms of ecommerce. Its automotive-based properties were made into their own dedicated business – Autovia – in March of 2021. It was, as its chairman Peter Plumb noted, an opportunity “for those with the broadest and most engaged reach, the richest audience data and the most trusted brands and content.” They were poised to benefit from the rapid growth in ecommerce.
Meanwhile, Dennis’ future owner Future plc has absolutely dominated the ecommerce space. As countless analysts have pointed out, its long-held aim to own every part of the ecommerce journey from ideation to recommendation to purchase has proven to be a lucrative strategy.
But Future was not content to rest on its laurels. After announcing over $1bn in ecommerce and affiliate revenue in 2020, Future made a number of acquisitions to own even more verticals from top to bottom. As a result, it is set to push into the U.S. Overall, it sees a lot of headroom for its ecommerce ambitions.
And it is ecommerce-focused media companies that continue to grow ecommerce revenue even in the tail end of 2021. So, what do Future and the other huge media ecommerce successes have in common? The answer is down to that end-to-end ownership of a vertical. Though it remains to be seen how long that this strategy will suffice when platforms are also banking the benefits of ecommerce growth.
Putting the ease in ecommerce
One thing that needs to be pointed out is that it isn’t all that hard to simply launch an ecommerce strategy. Forbes has started selling branded items and called it its entrance into the ecommerce space, for instance. Meanwhile BuzzFeed has been loud and proud about its expansion into ecommerce partnerships as well. The company predicts that 18% of its total revenue will come from commerce over 2021. Even the companies whose print holdings are the main point of contact have doubled down on ecommerce technology, with fashion magazines like Grazia including scannable images in their pages.
And since the headroom for growth is so great it is also possible – or even likely – to report success in that area. That is itself cause for celebration. Diversification of revenue streams should be encouraged wherever possible. Even the recently announced tie-up of Vox Media and Group Nine was based in part on their shared investment in ecommerce, with the release stating that “both companies have proven success in bringing their brands to life through commercial licensing, affiliate partnerships, and collaborations with major retailers like West Elm, Target and Old Navy and producing premium capsule collections with, for example, Marc Jacob.”
But the corollary of that is that, in order to be one of those huge successes, you first need to be, well, huge. You need a big audience to sell to. You also need a stockpile of existing content to both demonstrate expertise and to repurpose as affiliate sales material. Hearst’s Kristine Brabson, executive director strategy and editorial insights, elaborated on this to Damian Radcliffe. Of its ecommerce growth, Brabson said “We didn’t suddenly create a bunch of new content…” Instead, the company ensured that the products being recommended on its best-performing pages were actually available for sale. It’s difficult if not impossible to do that from a standing start.
Top to bottom
Just as important as enormous scale and longevity, though, is ensuring that your ecommerce operation is layered throughout the entire operation. Meredith, for example, earned $27.7 million from its affiliate operations in Q2 this year, a 26% year- over-year increase from the same period the year before. And it did so without sacrificing any other revenue strands in service of providing the best possible ecommerce environment.
By contrast – though it has been a boon to the bottom line – the integration of Wirecutter into The New York Times’ wider business does not appear to have been quite as successful. Last month the staff of the affiliate publishing business (acquired by the newspaper in 2016) went on strike and actually urged readers not to make any purchases through the site itself. As NYMag explains: “Wirecutter was always treated as a second-class citizen, isolated in its own Slack, its own offices, and its own reporting structure under Perpich. It never joined the newsroom, and its work was openly sneered at by some long-time staffers. Many Times staffers don’t believe their work is journalism at all.”
A similar omission of an ecommerce-focused division occurred at Vice’s 2020 Newfronts. The company barely mentioned Refinery29, which pre-acquisition by Vice in 2019 had been lauded as a trailblazer for the burgeoning ecommerce space.
As with Forbes’ efforts, mentioned above, simply owning an ecommerce business does not mean that you can take the full advantage of the ecommerce boom. It has to be threaded through the entire business, treated as an integral offering, and allowed access to the entire breadth of the media company’s content. That’s what empowers Future’s success.
The reintegration of platforms
So where does that leave the media companies without the scale to own a vertical or the ability to build ecommerce through the entire business? One early clue comes from LadBible’s recent foray into the space in partnership with TikTok for a two-day “live shopping event”. Sam Oakley, director of social video at LadBible Group, said: “We are always looking for new ways to entertain and give our audience new things to discover and experience. We are proud to work together with TikTok and look forward to seeing our community enjoy a virtual shopping experience.”
While those of us with memories of over-reliance on platforms may balk, the reality is that ecommerce and affiliate revenue already rely in no small part on Amazon and other retailers. It is a growth industry not just for the newspapers and magazines, but for all players. You only have to look at the sheer amount of investment platforms as varied as Snap and Pinterest are putting into their ecommerce tech to spot their intentions are the same as media companies’. In many ways they are outpacing those publishers mentioned above: Pinterest now automatically updates products that are sold out with those that are available. But those publishers do have something platforms can’t replicate so easily – a history of curation and recommendation. Trust, basically. Provided we recognize the value of ecommerce and don’t shunt those teams to the side, we might not end up with the power imbalance between publishers and platforms that we did with advertising. Long may that growth con
Mobile is a massive opportunity only heightened during the pandemic as audiences turned to their smartphones for the comfort food of apps and entertainment. Significantly, though, throughout this period consumer tastes and appetites changed. Users had both the time and the desire to discover new apps and content, a dynamic that allowed many niche apps and content creators to gain mainstream appeal and profits. In some markets, it created a perfect storm of opportunity for hyperlocal news and entertainment that meets consumers where they are.
Continuing with our series of industry interviews [video below], I talk to Jani Pasha, Founder and CEO of Lokal, who is harnessing hyperlocal content in a play that has the potential to make it the NextDoor of India. With a model built on monetizing connections and transactions at the intersection of community, content, and commerce, Lokal is making the most of a booming opportunity.
The model is smart and replicable in other markets. However, Lokal also benefits from a seismic shift in the fabric of its addressable audience. For the first time, India now counts more Internet users in rural areas than cities. And rural users typically aren’t as interested in national and international news developments. Instead, they crave information about civic, political and social issues that impact their towns and villages.
But India isn’t the only country experiencing these shifts. The explosion in the number of Internet users, accelerated by the pandemic, reveals opportunities in regions such as Central and South America. While we might think that growth has slowed, in the last 12 months alone, the total number of Internet users globally has grown nearly 8% to reach 4.72 billion. That’s more than 60% of the world’s total population.
From silver surfers to app initiates, new users in these regions rely on mobile and apps as their personal lifeline for news and information (even education). They turn to them to make daily decisions about how they live and what they buy. Tapping that potential requires companies to micro-segment audiences and tailor content to the needs of towns and communities, not cities. It also helps to focus on fundamentals.
Understanding that new users are likely to be low on the learning curve, Pasha made a bet on voice that paid off. Bypassing bell-and-whistle tech features for a dead-simple interface like voice fast-tracked new users to frequent app use and interaction. Ease of use also increased trust in the app. And that trust allowed Lokal to acquire new users easily through the most effective advertising on the planet: word-of-mouth.
Voice also empowers every user to make a contribution. This enabled Lokal to grow its ecosystem at minimal cost. Users call in stories about developments in their local towns, creating the content that keeps other users engaged and loyal. They rely on the app to learn about offers and events nearby, sparking conversations that end in commerce conversions.
And this is where Lokal’s strategy to be a local content platform, not a content provider, makes business sense. By positioning itself as a super app — one that allows a user to access several services in one place — Lokal establishes itself as the trusted middleman in interactions and transactions. What’s more, Lokal drives in-app activities it can monetize. And let’s not forget that first-party data is gold.
In our interview, Pasha shares how Lokal is training creators to ensure its content is fresh, relevant and relatable for audiences who crave hyperlocal content on their terms. He also weighs in on the future technologies and opportunities local news apps and outlets everywhere should embrace to grow their revenue streams.
WATCH OR LISTEN TO THE FULL INTERVIEW
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Jani Pasha, Founder and CEO of Lokal:
Peggy Anne Salz: The pandemic had a massive impact on local media. In the U.S. alone, more than 300 national newspapers closed their doors. Local newsrooms also shut down contributing to the growth in news deserts, that is, cities where people depend on one local news source, if any at all.
But one company is bucking the trend big time, Lokal, a hyperlocal news app in India is not just growing its user base, it’s also making money. It’s a new twist on monetization. And we get the inside track here on Digital Content Next. I’m your host, as always, Peggy Anne Salz, mobile analyst, content marketing consultant, and frequent contributor to DCN, which is a trade association serving the diverse needs of high-quality digital content companies globally. And in this series, we shine a light on the people pushing the envelope. That’s why I’m so excited to have Jani Pasha, Founder and CEO of Lokal. Welcome, first of all, to Digital Content Next, Jani.
Jani Pasha: Hi, Peggy. Nice to be here.
Salz: Absolutely. And coming to us from a very hot Bangalore today, I understand.
Pasha: Yeah, right. It’s very hot, actually.
Salz: So let’s start with Lokal. You have described it as a hyperlocal Tinder because it cuts out the middleman in finding a date or partner. But it’s also a news service. It’s much more than that. So tell me about Lokal and, above all, the user experience.
Pasha: Yeah, Peggy. So we are not just only the Tinder of that place. We do quite a lot. But I’ll tell you the backstory of how we started. So essentially, if you take India, it’s a very diverse country with 90% of its population living in tier-2, tier-3 cities, and towns of India. And these people, most of them, have not traveled further than their adjacent district, because it’s so diverse that with every 50 to 100-kilometre radius, your food habits change, cultures change, language change quite frequently.
So they are staying in those locations of their towns and cities generationally with their parents, grandparents, their homes, and businesses. So naturally, they’re so curious to know about what is happening around them. And there is one more factor that kicked in, in 2016, Jio, a mobile operator who has reduced the prices of internet drastically to make India the cheapest place for 1 GB data for you to use mobile internet.
So then we have this, all these 90% Indians who didn’t have access to internet previously suddenly had access to internet. But essentially, these users are new internet users who are not comfortable in English language. And so then what will they do with the internet, right? So Lokal is the platform which we started it as a platform to deliver hyperlocal content, which is extremely useful for them. And that is the gateway of how they’re adapting to the internet to use internet more usefully in their life. So today, if you take this 90% Indian audience who are new to internet, they are using internet prominently for entertainment, either to… You know, we used to have TikTok. We don’t have it anymore. It is banned by the government. So there are many TikTok parallels and YouTube and Facebook. And then they use WhatsApp for communication.
Apart from that, they can’t use internet meaningfully. And Lokal is actually being that platform giving them the content that they can use and that is of importance for them. Then naturally, making them use internet for multiple use cases. And as at a location, our density of usage increased. We evolved as a platform. So you rightly said we evolved as a Tinder, a place where people find other people to get married. It’s a place for businesses to advertise about their businesses to local community. It’s a place for businesses or people to actually sell their properties. And all this is happening in their native languages of Telugu, Tamil, and Kannada. We are expanding across the country. And we have seen because we have a lot of density in that location, users are adopting platform like crazy with more use cases coming up almost every day.
Salz: But, of course, internet penetration alone doesn’t spell the profits that you’re getting. Part of it is also the experience. You talked about ease of use. You talked about local languages. What are some of the innovations in the UX and UI design that contribute to your success? What does an app with local news need to look like and offer?
Pasha: Very interesting and relevant question, Peggy. So when you talk about these new users right, so all the smartphones have the keyboards in English language. So one challenge when we’re trying to build Lokal was how can you make the content creation easy on Lokal, especially that of text format.
Like, a lot of information about what are the vegetable prices in that location to what are the updates happening in that town, not everything can be captured on video. So they have to be typed. How can you make that easy? So, the first thing that we did, or we built was, making this creation easy, where the user will input the content by voice instead of typing. So they are using voice to actually create the content. And once we started doing that, we realized that creation with our voice is much more convenient than typing on a keyboard because you have to… It’s not natural, right?
Like humans, we speak to each other. So that’s a major shift, right? So if you go on a website today like on Amazon, you have multiple navigation. There are filters, there is sorting, there are multiple pages, multiple categories, but for an interaction, like the natural interaction for a shopkeeper in our location is to go and ask to a small retail shop owner that, “You know, what is the cost of this item? And how can I get it?” It’s natural voice-based input. In India, a lot of businesses are SMEs, sort of small and medium businesses unlike in U.S. where you have a Walmart. You go and then you select. It’s a voice-based communication. You ask, the shopkeeper goes and gets the information, and we’re replicating the same because the technology has caught up.
Salz:Interestingly enough, you were talking about how your audience is very focused on local content. I mean, hyperlocal is really hot in India right now. It’s fascinating that local newspapers, right, newspapers are growing at a double-digit rate. Now, you also have impressive growth results. Now, I’ve seen numbers growing 25% roughly month on month, that’s the last I’ve read, and that’s because of your monetization model. So one is the content, but it’s also a very smart approach to how you generate revenues. Tell me about that.
Pasha: We have built a playbook, via which we launch a location, and we get local content creators in that location to create content, which is very relevant to that community, very, very hyperlocal in nature. And then you get a density of users using the application. And once you have that critical mass of density at a location level, then it becomes a platform where everyone…like, everyone relevant started coming onto the platform, and then they start doing a lot of things, which are monetizable.
Even this is true for people in the West also. Newspapers used to be the place for everything, right, at a location level. You want to do real estate, you want to do jobs, classifieds. Everything used to happen on newspaper. Internet came in. All the small, small parts became large businesses, right? Craigslist, Airbnb, they’re all part of this local newspaper, right? Had these newspapers, you know, are technology-friendly or had they been…had they had that vision or foresight, they would have been the super applications that everything is happening on them.
It’s just that the news publishers migrated their digital publishing online, but they left the rest of the parts for others to pick. In India, we have that opportunity right now, where it’s a very new audience. Internet is being built for them in their native languages. And Lokal is trying to do that with our approach of delivering hyperlocal content. So we don’t consider ourselves as a local news platform. We consider ourselves as a local content platform. So that is the different approach that we are taking compared to newspapers, Peggy.
Salz:That is fascinating because you’re showing that there is a great deal of benefit to being a fast follower here. I mean, you have purposely… It sounds like you have thought this through, Jani. How to be a content platform, keep the social media, keep the connection for yourself and not give it over to the big tech giants or the big social media platforms. That’s the focus. That’s the essence of your strategy. How do you keep the momentum? Because, of course, you’re on a growth trajectory, all of India is on a growth trajectory. And high growth usually means high competition. And how are you keeping these large companies literally from eating your lunch?
Pasha: Our competitive advantage that comes in is based on how hyperlocal we are and how much our team understands the nuances of India, which is very difficult for a tech platform sitting in the U.S. or sitting in some other place to understand and build for it. And these are very new behaviors Peggy. So, as I told you, right, how does a business establish trust digitally? What happens on Amazon is that you go and list on Amazon their ratings, and those are the places how you do it. But how will it happen for a new internet use case, right?
For these very new people where the trust on internet is low, right? How will you do that? It’s a new challenge that we will solve probably for a small business to establish trust very quickly on our platform, and how they can do it. So it’s just that, the nuance, I would say. I would like to summarize that the nuance is very difficult for someone to understand. And hyperlocal in general, is a network effects business, right? You have large density using your platform for multiple use cases, someone coming and replacing it would be difficult.
Salz:It’s interesting that you started monetizing wishes. Tell me about that.
Pasha: It’s just crazy. We never expected all this to happen. We just thought we’re solving a problem of local content not available digitally. When we started creating content, people started coming. So that is the nuance. Like, in India, you have this behavior.
In the small town of India, especially in the southern part, this is very prominent, so that south Indian part, that if Peggy you were a friend of mine and I want to wish you a happy birthday, and I want to do this in a way that everyone in the community would know that I care for you, and we are actually close friends. And how will I do that? I used to either buy advertisement on newspaper with your photo, my photo coming and I’m wishing you happy birthday. Or I am sticking a big banner in the city or town center wishing you a happy birthday.
So the same behavior has been adopted on Lokal now, where the same people who used to do that are posting their wish, like I’m wishing Peggy happy birthday. So there is a standard template where your photo, my photo, will come and I’m broadcasting it to 10,000, 15,000 people in the town, the same purpose they wanted to accomplish previously, now, they’re accomplishing on Lokal. And they have that data to see also that how many people are actually looking at it. So this is being monetized on Lokal. And this is a very, very interesting, unique use case, Indian use case that we are monetizing. And we are seeing a lot more use cases coming like this, and we’re super excited for that.
Salz: You’re also speaking very much as the maker of a content platform. And, of course, a content platform needs creators, needs citizen journalists. It’s all local. So it’s probably very much just about empowering individuals at the local level to grow your business, how do you do that? How do you find them? Train them? How do you make it possible for them to contribute to your platform?
Pasha: The prominent content distribution platforms used to be newspapers like how it happened in the West also. And over the last three, four-, or five-decades time In India, large news publications, this content distribution platforms, have created a lot more content creators in these locations by training them, by informing them, by letting them know what is happening.
And most of these creators in this town used to work for this large distribution platforms like newspaper or television for free, most of them. Why? Because I told you, right, how important these small locations and communities are for these people.
So if I am a creator who can get the word out in a big distribution place like a largest newspaper, I get invites to events happening in the town. Anything big happening in the town, I get to know about it first. So I’m an influencer in that location. So then we have these influencers across India, hundreds of thousands of them. What we simply do is that we have this network of people. We have this digital crunch of hyperlocal content; we just connect them. And that is how we are getting this content.
Salz: You are more than a Nextdoor in India, you’re a content platform, news platform connecting, making business possible, helping merchants. And the reason I have you here today on Digital Content Next is because there are lessons here for publishers everywhere. What do they need to pay attention to if they want to succeed in hyperlocal news?
Pasha: My take is that technology is evolving very rapidly. Publishers should be open to work with new technology coming in. Like, Substack is a great platform where publishers are able to monetize their content. So there are a lot more innovation that is coming. So publishers should be thoughtful and be open to experimenting with these technology players because these new platforms are coming in. And with the creator economy coming in, I’m also very hopeful of how publishers becoming much more important than what they used to be before.
Salz:We started off by talking about the situation particularly in the U.S. where local news, local newsrooms, they are declining, there’s no question. What would be some advice to those that are there to say, “Here’s what you can do to up your game. Here’s what you can do to be sustainable and successful?”
Pasha: I think for small-level publishers, I think what is working for us is being hyperlocal and having a plan. And for us, it’s about figuring out that playbook of how you can get or make the things work at a location. So I think for publishers, especially individual publishers, I think hyperlocal play is going to work, with them also having…who are open to work with, new technology players, which essentially are tools and not platforms possibly.
So Substack is a tool for you to distribute your content. It’s a tool, right? And essentially, for payments, you can use a tool. So someone who is more open to work with these technology platforms and having hyperlocal focus would be able to build sustainable businesses. That is what our belief is. And I can’t compare clearly India to U.S., but in India, specifically, because of how the market is, the maturity of the user towards internet interest, it’s going to be very, very large play in India, especially the focus of hyperlocal.
Salz: So very, very much about being a platform, which is what you’re doing connecting people, connecting businesses, that’s what local content can do really well. The monetization model currently is about classifieds. What’s it going to be going forward as you try to be more and more a super app?
Pasha: So, yeah, Peggy, we are today connecting people, and monetizing on that for the sake of making money, for the sake of selling property, for the sake of improving…giving deals to people, small businesses advertising about their offerings. As the trust increases among these people, we would eventually go into a place where we will enable commerce as well. So that is what the plan is.
We will enable commerce. We will enable these local economies much more digitally. And we are a user-focused company, Peggy. So we have a creator who creates content, and we always think about how we can empower him or her, how can we make their lives easy. Similarly, we have businesses and how can we better help them to get more business. In that, the natural next step is to enable commerce on the platform to have additional revenue streams for them. So we will figure out how we will monetize. But we want to build that use case on our platform. It can be search, it can be something else, we’ll figure out. It’s too early right now. Probably in a year or two, I can tell you a lot more about it.
Salz: Great, Jani. And I think I’ll be back to hear it as well. Thanks so much for sharing your story at Lokal with me today.
Pasha: Thank you, Peggy. And nice talking to you too.
Salz:And thank you, of course, for tuning in and taking the time. More in this series about how media companies like Lokal are taking charge of change in their business. And in the meantime, be sure to check out digitalcontentnext.org for great content, including a companion post to this interview, and join the conversation on Twitter @DCNorg. Until next time for Digital Content Next, I’m Peggy Anne Salz.
As digital publishers diversify revenue strategies and develop ecommerce businesses, it is important to understand the consumer purchase process. For many publishers, ecommerce is more than just affiliate links, branded content, and online stores. Publishers are exploring investments in online shops, unique product offerings, wellness programs, virtual learning, and events. With new ecommerce businesses and multiple digital touchpoints consumers, expect an efficient and personalized shopping experience.
BlueVenn, a provider of tools and analytics for marketers, explores consumer purchase behaviors and engagement in a new report, Digital Divide. They partnered with OnePoll to survey 4,000 consumers and 500 marketers in U.S. and U.K.
Key findings include:
Over half (55%) of all respondents in the U.S. report that having a personalized shopping experience with a brand is important to them. Interestingly, only 27% report that brands provide a similar and cohesive shopping experience across all channels.
While marketers report that their businesses collect a lot of consumer data, only four in 10 report using the information. Clearly, it’s important to analyze the data and incorporate the findings to improve the consumer experience.
Fifty-seven percent of U.S. consumer report that they prefer to share their data directly with a brand they trust. This offers a unique opportunity for publishers to grow their ecommerce businesses since they already have a direct and trusted relationship with consumers.
Mobile ecommerce is the new norm in the U.S. Six in 10 U.S. respondents (61%) agree (32% “strongly agree” and 29% “somewhat agree”) that they’ve increased the amount of time they shop on mobile compared to last year.
The top two digital channels that U.S. consumers use to interact with brands include email (61%) and desktop/laptop web browser (51%). Interestingly, Facebook placed fifth (39%).
Close to two-thirds (63% “very important/somewhat important”) of U.S. respondents report that they think it is important for a brand to create a personalized shopping experience.In fact, 58% of U.S. consumers report that they are likely (23% “very likely” and 35% “somewhat likely”) to stop buying a product/service online due to the lack of a personalized experience.
Less than half (43%) of U.S. respondents report that brands understand their shopping need.
Browsing and browsers
When shopping for specific goods and services, U.S. consumers prefer overwhelmingly their desktop/laptop browser. Ranking and ratings:
Clothing, homeware, and exercise equipment – desktop/laptop browser (#1, 48%)
Holiday or leisure – desktop/laptop browser (#1, 54%)
TV, movies, or entertainment – desktop/laptop browser (#1, 38%)
Diversifying product offerings and revenue streams is helping publishers deepen their audience relationship. As publishers continue to build their direct-to-consumer ecommerce portfolios, it’s important to monitor the consumer’s digital shopping experience. Understanding the process of multiple touchpoints and shifts in online shopping behavior provides insight into consumer needs and expectations. There is a growing opportunity for publishers to play an important role in offering consumers a cohesive digital shopping experience.
