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Affiliate marketing is the easiest form of generating revenue from selling things before breaking into traditional e-commerce. You don’t have to have relationships with manufacturers, drop shippers or, really, think about logistics at all.
But there is a natural progression for some publishers as they go from affiliate marketing to more of an owned commerce play—the scenario where companies start to create their own goods to sell.
GQ is beginning to take that step, though very tentatively. Last week, it launched the GQ Shop, in which it will sell branded t-shirts and sweatshirts. When I say it’s dipping its toe, I mean that it’s really just starting to sell some limited run branded merchandise.
According to Digiday, this expansion is because of data collected by GQ regarding its GQ Best Stuff Box and Recommends (affiliate marketing) products.
Year to date, revenue earned from the Best Stuff Box is up 162% over 2019. On average, the box’s retention rate for one-off purchases is more than 85%, while the average annual retention rate is more than 75%, according to the company. What’s more, the publishers’ affiliate sales hub, GQ Recommends, is up 105% in revenue year to date over 2019.
A third of the people who purchase the GQ Best Stuff Box comes from editorial content promoting the box, like unboxing videos on YouTube or a newsletter. And the past five boxes have sold out completely, some selling out just six weeks after being released.
GQ has the right approach here and it’s one that other media companies have taken before.
Step one is to test whether your readers actually trust you to make recommendations. That’s the affiliate marketing. Here’s a bit of what you’re tracking:
What sort of products are they buying?
How are they finding their way to those products?
Are the buyers random or returning over and over?
If you find, like GQ did, that your content is specifically driving people to make purchase decisions, then you’re onto something. It shows strong brand affinity.
Step two is to produce something that people might want to purchase. GQ took an interesting approach by creating a bundle box where a bunch of thematic, but random stuff is put into a box for a flat fee. Honestly, I didn’t know these still existed, but I do recall a time when this was an exciting business to be in.
Step three is to commit. GQ isn’t quite there yet. It’s only printing limited edition versions of the merchandise; likely hundreds of each item. However, should they all sell, that’ll be a good sign for GQ. The question then becomes how does it expand? Does it start to create non-branded goods?
Ava Seave of Quantum Media told Digiday that this could be an opportunity for GQ to test brand affinity so that it could then license it to another company. Doing owned commerce is difficult, so why not earn a cut on your brand and rely on another to do it?
Either way, these steps are replicable by other media companies. Start by recommending other people’s goods to determine whether people are actually buying them. With all the data you’ve collected, expand into your own products.
The critical part is knowing when your audience is loyal enough to the brand that they will buy almost anything. That loyalty is worth its weight in gold. GQ may not be there yet, but by focusing on data collection, it might find its way there in the future.
Facebook intensifies battle in Australia
Things appear to be getting a little rough in Australia between the government, publishers and Facebook.
As you may recall, the Australian Competition and Consumer Commission is working on a bill that would effectively mandate platforms and publishers negotiate in good faith over compensation for publisher content appearing on platforms.
To simplify: the government is trying to mandate that platforms pay publishers for the right to send traffic to those publishers.
Suffice it to say, Facebook & Google aren’t exactly happy. According to The New York Times:
Facebook warned on Monday that it would block users and news organizations in Australia from sharing local and international news stories on its social network and Instagram if the country passed a proposed code of conduct aimed at curbing the power of Facebook and Google.
Google also hinted that it might have to cut off its services in Australia in an open letter to users on Aug. 17. Google said the government’s draft legislation would give large media companies “special treatment” so they could make unreasonable demands that would make it difficult to keep Google search and YouTube videos free. Google, which owns YouTube, didn’t indicate how it would respond, but said its free services would be “at risk.”
I understand the argument that Facebook & Google have a disproportionate amount of power and, therefore, are using that oligarchical influence to try and beat back this regulation. I get that.
However, we need to bring this back to basics…
Publishers have relied on platforms for audience development for years. Platforms have people, publishers have content and then we trade. If publishers are not doing a good job at building a business on those users, that’s our fault.
My stance has always been very straight forward. Mandating a company to pay a publisher for the right to send users to the publisher is not logical. Additionally, this sort of a bill is only going to help big publishers. Facebook and Google will write some checks to News Corp Australia or Nine Entertainment Co (largest newspaper holders in Australia) and then all the little players will suffer. They’re not going to get any money. The economics don’t work.
It’ll be interesting to watch how this plays out, but publishers that believe extracting money from Facebook & Google will save their business are in for a rude awakening. It won’t. Ever.
I’ll leave you with this Twitter thread that, I think, really sums up the debate rather nicely.
Chrome targeting heavy ads
Ever gone to a news website and heard the fans on your computer start to spin like they were a plane taking off?
That’s likely because of the heavy ad load on the page with publishers trying to eek out a few more pennies per person coming to their site.
Google is finally rolling out changes that it announced in May to protect against this sort of bad ad behavior. In the announcement post, Google said:
We have recently discovered that a fraction of a percent of ads consume a disproportionate share of device resources, such as battery and network data, without the user knowing about it. These ads (such as those that mine cryptocurrency, are poorly programmed, or are unoptimized for network usage) can drain battery life, saturate already strained networks, and cost money.
In order to save our users’ batteries and data plans, and provide them with a good experience on the web, Chrome will limit the resources a display ad can use before the user interacts with the ad. When an ad reaches its limit, the ad's frame will navigate to an error page, informing the user that the ad has used too many resources.
Google included this chart to show the impact of of heavy ads:
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Those changes went into effect this week. This really affects those of us that sell video advertising or really fancy banner ads with video built in. That said, ad ops executives told Digiday that they’re still a bit confused:
The ad operations executive said it’s difficult to determine just by looking at an advertising asset how “heavy” it might be and whether it could be blocked under the new filter — a situation made more difficult when certain campaigns have different renditions to suit multiple devices. They added that while Google has a reporting API that notifies publishers when interventions have taken place, it would be useful to have more granular details as standard about which line items are causing interventions without having to deploy their own internal developers. And, they said, it’s unclear whether an ad subject to an “intervention” — but rendered as a grey box on the page — would still count as an impression on Google Ad Manager.
As with most things Google related, getting answers is often not easy. However, for those publishers that traffic in video and media rich banner ads, it’s probably a good idea to make sure none are heavy. Have a conversation with those advertisers that are pushing heavy ads and explain that they need to compress them.
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