Monday Letter: Ads, Marketplaces, Inflation

Ads, Marketplaces, and Inflation. Mitigation strategies are top of mind as brands continue to navigate the many changes facing today’s global market. Some have been covered by 2PM including:

• Inflation and other persisting macroeconomic pressures
• A growing preference for marketplace economics over direct-to-consumer 
• Advertising preferences (data privacy and Amazon’s advertising businesses)
• Apple’s sneaky approach to its advertising platform (the Apple Property Tax)

Macroeconomic Pressures. Inflation is the most troubling issue for many in retail, though there are silver linings. In April 2022, more than half of people with household incomes under $50,000 said they already cut back on multiple expenses due to prices, and for those with income of at least $100,000, the cutback levels are similar when it comes to dining out, taking vacations, and buying a car. Over the pandemic, consumerism benefitted from the upper-middle class and wealthier Americans consuming at a pace that seemed to ignore logic. Many are still comfortable paying more for less.

Consumers powered inflation until now

Source No. 1 / Wall Street Journal: Consumer confidence, however, has softened. After raising interest rates for the fourth time this year to battle inflation, Federal Reserve Chairman Jerome Powell said Wednesday that people are going to the grocery store and finding that their budget no longer covers their usual shopping list.

Apple's latest controversy: advertising

Source No. 2 / Computer World: Depending on how you look at it, Apple may be ramping up ways developers can reach out directly to customers via its App Store - or building its own business at others' expense. Apple has had an advertising business of its own ever since Apple's then CEO, Steve Jobs, introduced us to iAds in 2010.

Amazon and Walmart have created thriving ad businesses

Source No. 3 / Fast Company: As it happens, the rise of retail media ad networks is now intersecting with a softening of the digital ad market, brought on by a combination of macro-economic factors, and more secular shifts in the online-ad business resulting from Apple tightening the ability to track user behavior across the Web. Facebook, for instance, just posted a 36% drop in profit from last year, citing ad-market woes. 

Brands are investing in eCommerce marketplaces

Source No. 4 / Glossy Research: In a survey of 46 fashion and beauty brands and retailers, more than 37% have introduced a third-party marketplace to their online stores, 35% of which did so in the last year. These marketplaces let brands sell products from other brands or suppliers through their own website without having to develop, own or ship inventory themselves

UPDATED: The new DTC Power List was updated for August 1 with new data for 700 companies and notable changes to the rankings. Custom-built sites are 12 of 20 of the top stores on the list. Over the next week, we will be replacing several brands on the list that are shuttering. Join here to access this list each week. 

The disastrous record of celebrity crypto endorsements

Web3 / Bloomberg: Celebrities from various walks of fame, including tennis, reality TV, basketball and comedy, have got in on the action. Here’s a curated list of some of the promoters, the losses since then, and what they’ve said recently. They don't talk much about the ads now. When contacted by Bloomberg News, only one, the singer Nick Carter, provided comment for this story.

eCommerce software funding slows as shoppers pull back

eCommerce / Crunchbase News: With inflation running at multi-decade highs, budget-strapped consumers are cutting back on discretionary spending. For retailers, this has translated into fewer buyers for items like clothes, furniture and gadgets. The slowdown also has extended to providers of backend software and services to online retailers.

What Nobull says about DTC Competition from the giants

DTC Brands / Footwear News: Since launching in 2015, digital-native footwear brand Nobull has built its business by going direct to the consumer and cultivating a devoted following among hard-core athletes, especially those in the CrossFit community. In recent years, though, more and more of the athletic giants - namely Nike, Adidas, Puma, etc.

Shopify didn't Deliverr

Relevant / WSJ: Shopify’s results come just one day after the company said it was laying off about 10% of its workforce as consumers step back out to shop and pull back on online orders. Shopify’s workforce ballooned from 1,900 in 2016 to roughly 10,000 in 2021, according to the company’s filings—with much of the recent head count additions in support of what founder and Chief Executive Tobi Lütke had believed would be a permanent five- or 10-year acceleration in shopping mix from offline to online.

Why Twitter still has those terrible Trends

Media / MIT: So what's important to the world right now? #ClimateScam trended last Friday and drove users to a river of memes about climate change from those who insist it's a hoax. Earlier this week, "Sodom and Gomorrah" trended in the US, fueled by far-right anti-LGBTQ conspiracy theorists.

Betting His Hat. The pandemic was supposed to change how we shopped forever and it did, for a moment. But then things began to resemble the pre-pandemic way of life. This reversion to the mean is not as simple as it seems. In March 2020, as Americans were shaken by a once-in-a-century disruption, lawmakers passed a $2.2 trillion stimulus package within days of the initial shock. Two more installments followed in late 2020 and then in 2021. (Read More)