2PM - An Advertising Theory Confirmed

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Active Listening Technology (No. 1,005). The Tandym-sponsored Letter No. 1,004 was read by 41.2% of subscribers. And thank you to this week's sponsor.

Executive Membership: It starts with a click here. You receive invaluable, carefully researched weekly data and analyses. Members receive one to two member letters weekly and access to our new NATSEC Meets Commerce dispatches. The third in that series publishes on 9/7. It features an unlisted deep dive into the practice of aggregating advertising data to re-identify consumers (and how). 

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DOWNLOAD: DTC brands are only as good as their shipping processes. According to this download, "more than 80% of respondents expect to receive regular updates about the status of their products from the time the order is placed until it arrives in their hands." 

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INTRO (🔓): The digital marketing world has evolved to fit the times but it's evolving far faster than public knowledge has been made aware. The data available to the most savvy marketers far exceeds the potency of what existed at Facebook's third-party advertising peak. It leaves the latest iteration, first-party data far behind. This months old anecdote by James Heurcher of AdExchanger adequately sums up the struggling promise of first-party data:

The promises of first-party data and individual personalization are alluring, he said. What vendors don’t mention is its super-fast half-life: first-party cookies and device IDs disappear, IP addresses change, emails turn out to be placeholder spam accounts. And through it all, ad blockers prohibit many one-to-one marketing use cases.

Operations are finding workarounds using increasingly sophisticated, open-sourced intelligence-based approaches. This summarizes one of several that I am aware of. Identifiable data is acquired at a premium; one of the most prevalent forms comes through active listening, which has emerged as a solution, according to recent reports and documents. The technology leverages real-time interpersonal conversations to build precise, hyper-targeted advertising campaigns. Cox Media Group (CMG) is at the forefront of this innovation, whose Active Listening technology claims to collect voice data from smart devices and pair it with behavioral insights to target consumers who are “ready to buy.” While the concept sounds futuristic, it also raises concerns about privacy and the boundaries of data collection.

Continue Reading: Active Listening and Retail Media 

Here's the pitch deck for 'active listening' ad targeting

Excerpt đź‘€: Media giant Cox Media Group (CMG) says it can target adverts based on what potential customers said out loud near device microphones, and explicitly points to Facebook, Google, Amazon, and Bing as CMG partners, according to a CMG presentation obtained by 404 Media.

Here's the pitch deck

Valuable shoppers are connecting with brands on smart speakers

Excerpt đź‘€: And who are the voice shoppers of today? They are high-income suburbanites with smart speakers at their homes. They are almost universally streaming audio, with more than half listening to podcasts weekly.

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When considering the benefits and consequences of advertising through "active listening," refer to this recent poll on how consumer electronics devices (speakers, cameras, location trackers, etc) may impact household sovereignty. Experts suggest that not one device is entirely innocuous, not even that new, harmless gadget sold with careful copywriting, pre-ordained reviews, and cute packaging. 

Bolt threatens main investor with legal action amid $450m raise

eCommerce Finance / Fortune: Perhaps more troubling for Bolt investors is the updated financials they were also given. They reveal that Bolt’s losses had grown to $302 million in 2023 on revenues of just $27 million. The 2023 numbers are particularly bad because of a $54 million goodwill impairment but revenues had also shrank from $30 million in 2022. That’s despite Bolt axing the majority of its staff in several rounds of layoffs over last year.

U.S. launches investigation into Shein and Temu over 'deadly' baby items

De Minimis / Fast Company: The Consumer Product Safety Commission claims products that are banned in the U.S. are being sold on the site.

Here's what I've written about De Minimis, which is the basis of this lack of oversight on potentially deadly items.

These brands might be the real winners at the US Open

Brand Retail / Inc: On the second floor is the Card Member Lounge for up to two guests, which has a stocked bar, Van Leeuwen ice cream, and Ralph Lauren merchandise. Across the stadium, the Centurion Lounge is available to Platinum Card and Centurion members upon reservation for up to four guests.

The most-read links from no. 1,004:
 
🔺
 The Tandym Ad's Clickthrough 
🔺 Shopify's CEO Debates Start of The Week
🔺 An Emerging Marketing Channel 
🔺
Meghan Markle Invests in Small, Small Brand

How brands build their resale teams

Forecasted: Today, many brands have hired teams specifically to pursue resale, or have added the category to existing executives’ purviews. Secondhand fashion remains a minor sales driver for most of these companies, but with the right structure and management they can be profitable boosts to a brand’s marketing and sustainability credentials. 

Member Short: Circular Fashion (3/2023)

Over time, many retail brands recognized the potential of the luxury resale market and are now embracing it as a way to connect with customers and build brand loyalty. Secondhand sales have always happened in consignment boutiques – online platforms magnified just how big of an opportunity there is for brands to own the after sale. 

Amid consumer IPO logjam, picky shoppers take the spotlight

Forecasted: Consumers’ increasing split between high-end and low-end options has left midpriced brands in a particularly tough spot. Many are trying to make their brands more stylish to keep shoppers from switching to ultracheap alternatives.

Member Short: The Gilded Age 2.0 (8/2019)

But for many hard working, middle Americans, something is lost in translation. With inflation, under-employment, rises in college tuition, mounting consumer debt, and healthcare costs – typical consumption has fallen. And families who earn a comfortable wage are living closer to the lower end of the middle-class range or below. In short, levels of wealth are polarizing and retail’s bifurcation is following suit.

ESPN eyes AI-powered SportsCenter roundups for DTC service

Forecasted: Developing and launching the full DTC version of ESPN is the broadcaster’s main focus at present. The new service will combine ESPN’s flagship channel and ESPN+, integrating a suite of digital, ecommerce, betting and personalisation options.


Memo: The Changing Meaning of "DTC" (2/2024)

The recent strategic move by ESPN to launch a direct-to-consumer version by fall 2025 underscores the shift away from DTC’s hold on physical product brands, moving beyond retail to capture media and advertising realms. This approach, aimed at reaching an audience increasingly disenchanted with traditional cable bundles, represents a broader industry shift towards offering content and products directly to consumers. 

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Latest Update (September), presented by Bold Metrics. All brands are updated with the secondary interest poll. The eleventh update of 2024 sees some major movers:

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800+ Brands Measured

i-banker turned eCom entrepreneur says social, search ad rates, customer acquisition now unviable

DTC Principles: For anyone in ecom or performance marketing, it's time to downweight ROAS and ROI and laser focus on unit economics, says former investment banker (her last big deal was the Myer float) turned entrepreneur Carla Penn-Kahn. She was early into ecom and left Credit Suisse to launch four of her own - Kitchenware Australia, A Gift Worth Giving, Everten and Buy My Thing.

How two brothers from Jerusalem found ways of dealing with chargebacks

DTC Principles: Brothers turn e-commerce woes into opportunity. Their startup, Chargeflow, tackles chargebacks for small businesses, aiming to reduce the $240B annual fraud cost in US e-commerce.

Roblox to sell physical goods through Shopify integration

DTC Principles: The popular gaming platform and Shopify on Friday announced a global partnership that will allow creators of Roblox experiences, including the many brands on the platform, to sell physical goods directly within Roblox via Shopify’s checkout.

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IN BETA: To receive the above weekly dispatch, (1) join the Executive Membership and (2) reply "Opt-In" to this letter. Join this small, roundtable of interesting people. Here's the original report that inspired this new, permanent newsletter series.

Guardian moves into eCommerce amid revenue shortfall for 2023/2024

Linear Commerce: Chief financial and operating officer Keith Underwood has revealed The Guardian will begin making product recommendations “based on the trust that we’ve got within the brand” with the aim of making revenue through affiliate links.

Simon rebrands and revamps eCommerce site with large sale-priced assortment 

Connected Mall: Simon will collect commissions based on sales generated on ShopSimon. “Given the rising cost of customer acquisition, we are only charging brands when we drive a sale,” Grover said. “On a lot of other [marketplaces], brands pay for an ad, for a click, for an eyeball, whether they drive a sale or not. With us, they can get a lot of awareness and only pay when we drive a sale. 

Here's what I've written about the "Connected Mall Thesis," which is similar in form to what Simon eventually executed. 

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More Reads (if bored): How the sport’s elite build their brands (NYT). The Consumer Product Safety Commission on Shein (CPSC). Ted Chiang is wrong about AI art (Atlantic). The Science of Public Communication (Inside Higher Ed). Salesforce buys Own (Axios). 
The Executive Membership supports 2PM
We thank you for reading it. 
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