Content or Commercials? Retailers Not Yet Hostile to Natives

Even though marrying branded and editorial content is hardly a new concept, the battle over native advertising, which closely mimics surrounding editorial content, continues to cause agita in the ad world. Marketers and publishers are portraying native advertising as either a deal-with-the-devil dumpster dive or a seamless content bonus for readers.

The American Society of Magazine Editors recently weighed in on the issue by updating its guidelines for editors and publishers for the first time since 2011. It now suggests that magazines include the term “sponsored content” to make advertising more conspicuous, and encourages prominently posting a statement or “what’s this?” link above each post, in order to explain the origins of the article. Thus far, publishers that have posted sponsored posts have more or less set their own standards. Forbes, for example, runs posts from paying advertisers that mimic the look and feel of unsponsored content, but all feature a “BrandVoice” label above the marketer’s logo along with the text “Connecting marketers to the Forbes audience,” and it also puts a finer point on things by adding a “what is this?” link that takes readers to a more detailed explanation. Even these multiple measures are not enough for the ASME, which pooh poohs using fonts and graphics that resemble those used for editorial content, and suggests visual separation as well. They aren’t the only ones weighing in. The Federal Trade Commission, Interactive Advertising Bureau, and other bodies are also expected to convene on the issue, and it remains to be seen whether universal standards will be set and what the repercussions might be for any violations.

Examples of Forbes BrandVoice

Examples of Forbes BrandVoice

Retailers have a stake in this as well, of course. After all, they are also brand marketers and arguably have more to lose, particularly as they accelerate their content marketing efforts across multiple mediums. Irate subscribers who feel as though their trust has been violated are one thing, but attempting to avert a steamrolling consumer backlash is quite another. In a recent interview, Macy’s Group Vice President of Digital/New Media & Multicultural Marketing, Jennifer Kasper, shared Macy’s belief that consumers are sophisticated enough to know when they are being marketed to, and affirmed the retailer’s interest in exploring new native advertising opportunities. Kasper cited a recent Macy’s campaign produced in partnership with StyleHaul as one type of content model that will be part of its “arsenal” going forward. StyleHaul is one of many companies that have recently launched production houses, and its StyleHaul Studios will develop professionally-produced YouTube videos for marketers (the rash of start-ups, studios, agencies, and others that are pushing into custom content is a robust topic in and of itself).

For now, sponsored content is a light at the end of a very dark tunnel for publishers as print profits plunge, and an option that marketers are all but demanding. eMarketer predicts that marketers will spend as much as $3.1 billion on sponsored content in 2017, up from a projected $1.9 billion this year.

Will retailers join the party or sit on the sidelines?


Separation Anxiety

“It just doesn’t make sense anymore to have separate staff to handle a separate area which is inherently impossible to separate from anything else.”

Walter Naeslund, CEO of Stockholm-based advertising agency, Honesty, recently made the above statement in a corporate missive explaining his company’s contrarian decision to eliminate all digitally-focused specialty roles such as “digital director.”

Just as retailers like Walmart, Macy’s, and Tesco have taken to acquisitions to address new technologies, the agency world has cobbled together solutions under a self-imposed mandate to pump up their digital prowess. Rather than following other agencies by bolting on capabilities as separate entities or using dedicated titles for new media functions, Naeslund decided to take a new approach. He broke down organizational silos to create a fully-integrated agency with a single account director and one creative team. Integrated approaches foster agility and collaboration, but also drive what Naeslund refers to as “new learning” as members of cross-functional teams are forced to gain insight into each other’s processes and challenges.

Naeslund’s decision removed all excuses for staff to not become acquainted with, and accountable for, digital and mobile initiatives. Retailers are leveraging this dynamic when they intentionally cycle personnel through positions across their organizations. Suppliers may not like the lack of continuity that results from working with new decision-makers on every visit to retailer HQ, but it’s all by design.

In contrast to retailers, the majority of licensors and licensees still operate under a specialization mindset. Marketers are marketers and salespeople stay in sales, while staff focused on technology, analytics and other left-brained functions are in another world entirely. In the best of situations, coworkers from different functional areas collaborate and draw from one another, but are not expected to learn from their peers and brand partners. In my experience, this leads to the very scenario that Naeslund has sought to mitigate – excuses are made, fingers are pointed, and no one gets much smarter. This is less than ideal under any circumstances, but potentially deadly as new technology, digital initiatives, and advanced data analytics become inextricably linked to supply chain and product development processes and to sales and marketing success.

Perpetuating the myth of separateness removes accountability and deprives teams of new-world learning opportunities. As Naeslund stated, that just doesn’t make sense.

This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) website.

Retailers Future-Proof Their Fleets

“The Internet changes everything, but it doesn’t replace everything.”

Jerry Storch, Toys “R” Us chief executive

Toys “R” Us chief executive, Jerry Storch took pains to defend the relevance of brick-and-mortar retail at a media presentation last week; however, the recent refurbishments, ground-breakings, and expansion plans hitting physical retail have made the ongoing relevance of brick-and-mortar clear. As retailers put away their patch-up kits and take a stand on the future of their land-based fleets, brand marketers will gain a glimpse into the future of physical retail.

Leading with Luxe

August’s U.S. retail sales rise of .9% represents the best numbers in six months, but the modest increase would not seem to justify major vaults into high-end goods. However, making an ambitious impression early on can have its advantages since shoppers tend to get in a spending mood when the aspiration is dialed up. Just as an über-expensive bottle of wine on the bar menu drives patrons to mid-priced options rather than all the way to the bottom, retail pricing contrasts also provide context.

Macy’s massive makeover of its Herald Square flagship store in New York will feature a 19,000 square foot, multi-level “luxury hall” that will house branded shops from the likes of Louis Vuitton, Gucci, Burberry, and Longchamp. In stark contrast to its formerly safe ground-floor assortments, Macy’s can’t-be-missed luxury statement will greet customers at every major entrance. Shoppers’ unavoidable journeys through Macy’s luxury hall will make the rest of the store seem like a value.

According to Holt Renfrew’s president, Mark Derbyshire, the 175-year-old Canadian luxury retailer’s customers are currently spending 26 percent more than they did in 2010. Derbyshire obviously isn’t resting on his laurels. While high-end retailers such as Neiman Marcus are experimenting with introducing lower-cost items in order to broaden their appeal, Renfrew’s recently-announced refresh will see it almost literally doubling down on opulence. The retailer’s $300 million expansion plan centers on growing its footprint by 40% in its existing stores, and making its already-successful designer spaces even more impressive. Given Canada’s relatively small and dispersed population, Renfrew’s focus on increasing the size and productivity of existing stores makes sense. If you’ve already grabbed the big spenders, why not just sell more of the best to them?

Programmed for Prosperity

What’s old is new again. Retail-tainment is coming back on the scene, only with a major digital twist. Burberry has once again ratcheted up the wow factor in its just-opened Regent Street store which, in addition to the now-expected iPad-toting sales associates, will incorporate a number of digital entertainment elements. Burberry has even declared the store “future-proof.” Sporadic weather “moments” of digital rain showers, accompanied by the sounds of a thunderstorm, have been programmed into the environment. The store features a huge screen on which it plans to live-stream Burberry fashion shows, as well as a permanent stage that will feature one-off gigs from Burberry’s pick of the best music talent. Many retailers have started to talk about bringing online excitement to the in-store experience. Burberry is delivering and influencing others to do the same. Holt Renfrew has also mentioned incorporating “digital moments” into its Yorkdale remodel.

Site Synergy

Although Macy’s will no doubt learn a lot from the drastic departures in store design and brand choice that characterize its Herald Square makeover, the changes are primarily intended to capitalize on the luxury gap in the neighborhood and what CEO Terry Lundgren refers to as the “tourist element.” Macy’s isn’t incubating ideas for other locations, but is putting a stake in the ground by hard-wiring the location for luxury. In Lundgren’s words, “we decided we were going to do this just one time.” The store’s significance goes far beyond that of a traditional brand-brag flagship for Macy’s and the brands that are participating in the shop-in-shop re-visioning. It will create a new luxury corridor for the Herald Square neighborhood and participating brands will benefit from designer adjacencies that wouldn’t exist in a standard storefront. The shop-in-shops will actually act as hyper-local mini flagships.

The shop-in-shops currently rolling out within J.C. Penney accomplish much the same thing, though on a chain-wide basis and with more middle-of-the-road brands. Given Macy’s major move, bestowing credit to CEO Ron Johnson for creating what he called the “first specialty department store of its kind” may be splitting hairs, but clearly the model is catching on.

This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) website.