2PM - No. 709: DTC is Being Disrupted

Linear Commerce / The Drum:  L’Oreal has created its own TV show that it hopes, by season two, may be picked up by the likes of Netflix or Amazon. Pepsi, AB InBev and Nike have also been exploring their potential as production companies in recent months. Ambitious marketers have tried similar experiments in the past, but experts say the battle for original content between streaming services might finally mean brands have the chance to make it a success.

In addition to The Drum's article featured above, AdAge looked at how legacy brands with deep pockets are putting more money into Amazon marketing, making it harder for smaller brands to get discovered. It’s a combination of factors culminating at once. With stores closed during the pandemic, big brands poured money into channels like Amazon where customers were shopping. With more people forced to shop online, demographics skewed toward older shoppers less inclined to bet on discovery brands. And with more brands betting on the channel, prices in general have gone up, boxing out newer brands that previously had space and budget for visibility.

At the same time, brands are finding they have to get more creative to reach customers. For some, that means investing in content studios and production that turns ad spots into full TV shows. L’Oréal is the latest to create its own competition show in order to reach both casual and professional customers. TV ads are dwindling, making it harder to win space. This isn't new. In fact, it's covered at length in the 2PM essay on the birth of Michelin's marketing strategy and Procter & Gamble's mid-century media strategy

The bottom line: ad spaces are clogging up, and to get seen, brands need to invest more money and find new strategies that differentiate them from the competitors. The answer will be found in diversification. The more brands diversify their ad mix, the better positioned they’ll be. That will look different for every brand, but the lesson remains the same: DTC brands can’t hack online channels anymore. The result will mean going to traditional channels and finding ways to connect with customers that doesn’t look like ads. Just consider what's happening in mobile marketing, today: 

Creating the connected mall of the future

Retail Real Estate / PYMNTS:  eCommerce efforts are largely merchants’ own doing and creation in house, a reality that means larger merchants have the edge when rolling out services like buy online, pick up instore (BOPIS) or curbside and other digital upgrades. Ideally, Mall of America would like to find a way to level that playing field by offering a single digital platform through which their merchants can easily hook into offering those digital upgrades to their consumers, she said. 

Here is 2PM's original thesis on this concept: now unlocked

Long before retail was impacted by social distancing, the American mall was fighting for survival. Early signs of this were everywhere: perpetual discounting and promotion, insufficient staffing, stale inventory, and outdated storefronts. A number of these retailers are highly-leveraged assets, a culprit even a junior financial analyst could identify. As a result, a deluge of layoffs and closures began within two weeks of foot traffic falling. What will a healthy retail ecosystem look like when normalcy returns?

Editor's Note: it's wonderful watching these ideas take shape

Warby Parker founders explain why they are adding 35 stores after pandemic

Digitally Native / Wall Street Journal: Messrs. Blumenthal and Gilboa recently spoke with The Wall Street Journal about how Warby Parker adapted during the pandemic, the future of eyewear shopping and their potential IPO plans. Here are edited excerpts.

How poultry and a pandemic put Tractor Supply ahead of the pack

eCOmmerce / Fortune: A COVID-driven exodus of Americans to the country, along with unprecedented demand for chicks, goats, and other farm pets, made Tractor Supply one of the hottest retailers of 2020.

Editor's Note: Tractor Supply CEO Hal Lawton will go down as one of the retail pioneers of the last decade. 

The metaverse will radically change retail

Community / Business of Fashion: As we spend more time in the Metaverse, status symbols like the virtual home you own, the virtual clothing and jewellery you wear or the virtual cosmetics you use will become every bit as important as those same real-world purchases and possessions are today. Brands will capitalise on this demand by creating an ever-growing assortment of virtual products at real-world prices. Indeed, the sheer amount of time that one can spend in the Metaverse, as opposed to the real world, may in itself be viewed as a status symbol.

From the archives: Enter The Metaverse 

DoorDash, Uber Eats, Instacart challenge major eCommerce retailers

Third-Party / Supermarket News: In grocery retail, the on-demand delivery market stands to grow nearly 150% to $76.27 billion in GMV sales by 2025, even after COVID-19 restrictions fade and economies reopen, Edge Retail Insight said. DoorDash is expected to account for about a third of U.S. grocery delivery platform sales by 2025, with Uber and Instacart next with about a 20% share apiece.

This recent memo by 2PM gives you a practical example of how Instacart will challenge larger marketplaces. 

Good collaborations are art, great ones are kitsch

Brands / The Sociology of Business: Collaborations like Dunkin x Backdop, MOON x Heron Preston, Aimé Leon Dore x Porsche 964, McDonalds x Travis Scott or White Castle x Telfar are often dismissed as stunt-y, tongue-in-cheek, garish and lowbrow. Be that as it may, most of them aim to be appreciated in an ironic and knowing way. Good collaborations are art, great collaborations are kitsch. They fit into the definition of kitsch perfectly: a replica that’s purposefully fake, and that’s where the joke is. Take it seriously, and you are a goon.

Fashion's new favorite sports: Tennis and golf

Trendspotting / Vogue Business: Manors is a new golf-inspired brand that has identified a gap in the market for cool golf wear for Gen Z. "The bigger brands were trying to lean towards the market trends and technical performance," says co-founder Jojo Regan. "It was all about white guys at the professional level swinging golf clubs, hard and fast and trying to shoot low scores.”

There isn’t a playbook for this niche media era affectionately coined “The Passion Economy” by visionary investor Li Jin. That means, on occasion, mistakes are made. This is about one of those mistakes. And hopefully, it’s a guiding lesson for any of you looking to build your own media operation.

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