Erin Griffith’s article on content and commerce in PandoDaily got me thinking about the space, now that I’ve had a couple more years of observing players in the market.
Some initial observations:
Great e-commerce businesses are not affiliate businesses. Rather they have their own products to move (whether branded or third-party vendors). Commerce businesses want growth and engagement, but most of all they want profitable transactions.
Written-word and video content businesses are typically advertising plays that amortize the cost of content creation across multiple vendors (advertisers), most of whom could or would not bear the entire cost of production themselves. The best digital content players are not relying on generic CPM ads but are coming up with more creative and higher-margin ad campaigns. These media companies also diversify revenue streams with content transactions and events. As the music industry has learned, the hard truth is that content businesses might simply be forced to have a very diverse set of revenue streams.
I do not view Gilt, Etsy, Birchbox, Fab or Williams Sonoma as content plays, but all of them have used content effectively to grow and retain their audiences. It is relatively easier for these businesses to invest in at least some content as long as they view this expense as net-profitable.
I suspect that it is much harder for an advertising-driven business to start driving their traffic to commerce transactions without hitting conflicts of interest and rupturing their advertising revenue stream. The question is, can they build their commerce engine big enough and profitable enough to support the content engine?
Further, can you really be the best at both?
Focus matters. It helps to be able to choose what you are the best at, and what cost centers you need to scale. Are you really good at funneling shoppers to the right product, sourcing and shipping product, customer service, and dealing with credit card fraud? Or are you better at coming up with stories that resonate, a UX that keeps the reader clicking for more, and an ad sales and execution team that can push the boundaries (and the dollars) that make the business side hum?
And if you are not the best in both, can you recruit the best talent to a portion of the business that is viewed as second-fiddle?
I believe that Birchbox has a content team that *could* create a world-class content “play” (ed note: the word “magazine” feels anachronistic in this era of multi-platform distribution), but should they? To really succeed as a content site, they probably need to have their own branded property rather than be tucked away within the birchbox.com site. They would need to expand the team even more and have their own technology resources. Is the ROI there?
To finish this thought exercise, I have to disagree with Erin’s quote: “Media outlets can do commerce because they have established credibility with their audiences, but commerce sites can’t create good content, because their priority is always to close a sale first and foremost, and inform the reader second. It’s harder for them to gain trust.”
Media sites that have been positioned as objective arbiters and story-tellers have a lot of trust to lose by shifting to e-commerce.
Erin’s argument is probably more true for brands than for retailers, but good companies of both types build trust with their customer base as well. But their type of trust is different from that of content companies. These commerce businesses have a lot less to lose. People trust Williams-Sonoma, and enjoy seeing more recipes in the catalog. People trust Fab’s design sensibilities and would likely welcome more inspirational storytelling.
Can you merge the two together? I think yes, but I suspect not equally. The combination is proving harder than anyone imagined, and especially so at scale.