The intersection of Content and Commerce

Jan 09, 2013

Table of contents:

1. What is a Content based Commerce company?
2. Why is this a good opportunity?
3. How does the business break down?
4. Who are the players in the industry?
5. Others
6. The difficulty in going from commerce to content
7. How to build a content based commerce company
8. Conclusion

An interesting online business model that has surfaced over the last couple of years is the merging of content and commerce. Traditionally, content was strictly only supported by advertisements (with a clear dividing line between the two) and commerce only used content for marketing purposes. However recently, a number of interesting companies have started to combine the two adjacent areas to create a more seamless integrated strategy.

In this post I will be looking at this opportunity, what are the characteristics for making it work, and how you can go about creating a content based commerce company online too.

What is a Content based Commerce company?

A content based commerce company can be categorised as a company that focuses on both revenue from traditional commerce transactions as well as producing curated and editorial content. This means the company generates revenue from either commerce, content or more often than not, both. Typically the content section of the business will be both a blog and an Email newsletter. Blogging will organically pick up Search Engine and Social referrals, whilst Email Marketing can offer targeted content straight to the user that has a higher level of engagement.

Whilst there are many edge cases of commerce companies that also regularly blog, or content based companies who are active affiliate marketers, the new intersection of content based commerce companies focuses more on curated, editorial based content and a related commerce based opportunity. This means you don’t fall into this category if you are an ecommerce site with a blog, or a blog with affiliate links.

Why is this a good opportunity?

Content based commerce is an excellent opportunity for a number of reasons.

Firstly, traditional ecommerce is extremely difficult. In order to constantly grow revenues, you need to build brand loyalty. A traditional transactional model can often mean one off purchases and a complete lack of a relationship with the consumer, traction or growth.

Secondly, generating revenue from content is also extremely difficult. Online banner based advertising is based upon generating a huge number of page views. This means you need to constantly be generating new content and on an increasing basis in order to increase revenue. Online CPMs are very low and so this industry has notoriously low margins.

By combining these two separate businesses you aim to solve both of the problems. Commerce is supported by relationships with the consumer that can be generated through frictionless content. Content revenues can be supported through the much higher profit margins of traditional commerce. There are many opportunities for creating premium content on the Internet. Subscription or Paywall type business models are the obvious two. But commerce supported premium content is another, where premium content is provided for free, and revenue is generated from targeted advertisements and cross promotions within the content as well as the higher margin opportunity of in-house commerce.

Whilst this is obviously easier said than done, it is also a really good opportunity to grow your online business organically.

How does the business break down?

Whilst there are many variations of the commerce and content intersection, the majority of the companies that fit this profile usually have at least multiple components from the following list.

1. Curated content

Probably the most important characteristic of this type of business is they invest heavily in high quality curated content. Premium content becomes a core discipline and is critical to making this type of business work. The Internet is awash with free content because it has become so easy to become publisher. However, there is still a hunger for high quality premium content.

Many commerce based companies will try and fake curated content by either outsourcing or by trying to maximise output whilst minimising investment. This is a bad strategy because the difference between good content and bad content is extremely evident. With a content based commerce company, you are trying to build an audience that wants to consistently engage with your content over a long period of time. Content is not a means of flipping traffic into customers it is a means of building a strong relationship with the consumer.

2. Email marketing

Email marketing is a great way to build an audience of engaged consumers and directly publish content to them. RSS is one of the most undervalued technologies of the Internet because only a core set of users actually know what it is. Social distribution from Facebook or Twitter is crowded because there is so much noise. Email marketing offers an opportunity to build a direct relationship with the consumer.

It is difficult to build up an audience in the early days, but email marketing has become one of the best ways to build content based commerce companies.

3. Relationships and trust

The differentiating factor between traditional commerce companies and content based commerce companies is that commerce based content companies have an inherently better relationship with the consumer and a higher level of trust.

When a potential customer lands on a traditional commerce based website, the customer can only really browse products. If that potential customer does not convert into an active customer, no relationship is formed.

On the other hand, when a potential customer lands on a content based commerce company, the potential customer can spend weeks, months or years consuming content before ever actually making a purchase. Whilst this might seem counterintuitive, the life-time value of that customer will be greater because they are far more likely to become loyal and repeat customers.

When you build a relationship over a sustained period of time, both parties gain an understanding of the other person in the relationship. The consumer begins to trust the judgement of the brand, enjoy the content, and wants to actively return because they feel part of the movement. The brand can build up data on what is popular, where the demand is and what their consumers are interested in so that they can provide the related commerce opportunity.

Building a content based commerce company is all about creating that bond with the consumer. The editorial voice of the company must feel like that in-the-know friend everyone has that always knows the latest trend or the must thing to do. By building this relationship, the company is able to build a sustainable and defensible bond with the consumer. By not damaging or exploiting this relationship, the average life-time value of the customer will be extremely high. The company should feel like the consumer’s sincere best friend.

4. Targeted commerce

Content based commerce only works when the commerce and the content is highly targeted to one another. Content based commerce works when you target a very particular niche that has potential to grow. For example, you might target a profile of affluent men who are aged 21 - 29 and have an interest in fashion. The content that you would create would be highly targeted to that persona, and the commerce opportunity would be to sell products that would interest that demographic.

Many commerce companies try to cast their net too wide to try and capture a larger market. In order to build a following, you need to be hyper focused on one particular profile. Only after you have become the number one brand in that particular niche can you look to expand into adjacent opportunities.

5. Subscriptions

Subscription models can work well with content based commerce companies because it offers benefits for both parties. Consumers become part of “a club” that gets access to curated content and products that are recommended by the brand. These kinds of companies often feel like lifestyle brands, where the consumer is buying in to, or aspiring to live the lifestyle vision that the brand represents.

Subscription based business models also work for brands because they bring in a regular and predictable form of revenue as well as a wealth of data regarding what actual paying customers want.

6. Social commerce

Social commerce is also very important to content based commerce companies. When you create high quality content, you want it to be shared to people that also fit your targeted demographic. Social sites like Facebook and Twitter have become huge distribution channels for Social and content based commerce.

This viral distribution is a huge opportunity for content based commerce companies to grow organically, but it is also an opportunity to grow through paid media. When you buy advertisements on Social sites, you can target only very specific demographics. This enables you to maximise your marketing budget by only showing advertisements to people who fit your profile.

Who are the players in the industry?

The content and commerce intersection is not a new one as there is already many established companies who target this strategy. Here is an overview of some of the leading brands that have already built content based commerce companies.

DailyCandy

DailyCandy started out as an insiders email newsletter in New York in March 2000. DailyCandy was one of the first businesses that combined this editorial style content with commerce. DailyCandy has since expanded to other cities across America.

DailyCandy offers content on fashion, entertainment, beauty, kids and the home and is known to be highly influential in trend setting for affluent women.

Thrillist

Thrillist started out as another New York based newsletter in 2004. Whilst DailyCandy targeted affluent women, Thrillist targeted the young, urban male. The Thrillist newsletter has quickly grown in subscribers by regularly producing high quality content that target their specific demographic. By building a relationship of trust, Thrillist can recommend products and experiences that their audience will like based upon their previous buying habits and engagement in their content.

In May 2010, Thrillist acquired members-only online retailer JackThreads. At the time of the acquisition, JackThreads was a tiny company that was spending their entire marketing budget at Thrillist because they targeted the specific demographic of Thrillist’s audience. Since the acquisition, JackThreads is now considered one of the fastest growing online brands in America.

Thrillist can produce highly targeted content and product recommendations because of the high level of trust they have with their audience. The acquisition of JackThreads gives Thrillist members exclusive access to one of the hottest online fashion brands around. JackThreads is a significant competitive advantage because no other company can supply their products.

BirchBox

BirchBox is a women’s lifestyle brand that mixes content, commerce and subscription. BirchBox is primarily a subscription service where women can sign up to be sent sample products from some of the biggest named brands in beauty. The products are supported with targeted content that offers advice and guidance for using the products. BirchBox members can then buy the full product from BirchBox at discounted prices and earn loyalty points.

BirchBox has been aggressively expanding over the last couple of years by expanding into a men’s grooming subscription service, as well as their acquisition of their european competitor, JolieBox.

Others

There are also many other companies that fit as either content based commerce companies or who are taking a slightly different path in this same vision.

Fab

Fab is one of the quickest growing Social Commerce companies that has jumped on the opportunity to grow through Social Media. Whilst Fab does not produce the kind of editorial style content that the other companies do, their curated product selection is a kin to browsing a high end glossy magazine.

Gilt

Gilt is a popular flash sale website that has expanded into other verticals such as local deals (Gilt City) and travel (JetSetter). Gilt is an example of a commerce based company that is looking to add content to their brand.

Refinery29

Refinery29 portrays itself as a first and foremost as a media company. Refinery29 makes the majority of it’s revenue from traditional advertising and advertorials, but it is also generating an increasingly growing amount from commerce.

Brit + Co

Brit + Co is a online women’s brand that is combining lifestyle content, videos, tutorials and commerce. Brit + Co is one of the newer of these types of companies, and is targeting the more technical savvy female demographic.

Red Tricycle

Red Tricycle is an email newsletter that sources fun things for parents to do with their kids in cities across America. Red Tricycle also produces content on their website and recommends targeted things to do or see for parents and their children.

The difficulty in going from commerce to content

One of the main problems with this business model is, it is extremely difficult to seem genuine if you are a commerce company that is adding content. Content in commerce based companies has traditionally only ever been in the pursuit of a sale and so it is difficult to make it feel authentic. It is much easier to build a content company that is then able to build the commerce part of the business because they already have a strong relationship with the consumer.

If you are starting out trying to build a content based commerce company, focus all your efforts on the content side first before trying to prematurely build the commerce side of the business.

How to build a content based commerce company

One of the reasons I decided to write about this online business model opportunity in particular is how favourable it is to people just starting out. The whole business model revolves around a genuine relationship with the consumer. As with all good relationships, time and constant engagement are the two key ingredients. This means that building this type of company is going to take a long time. If you are looking for a get rich quick online business, this probably isn’t for you.

A business that requires an engaged and loyal audience will take a long time, but it also does not require significant capital expenditure. A single founder can build this type of company whilst still in full time employment and without investing a lot of money. Many of the tools and services I’m listing below are either free, or are free to begin with.

However one trait that is incredibly important to building this type of business is commitment and the ability to work hard for a long time without any instant gratification. You are going to be pouring your heart into your content for a long time before you build your loyal audience, so if you can’t make that type of commitment, you are probably better off not starting this type of company.

If you are looking to start this type of company, here are the steps that I would take to get going.

Pick a demographic

The very first thing you need to do is to pick a very specific target demographic and a couple of areas that you are going to be tackling at first. This should be an extremely easy first step because you should be the archetype example of a person in this demographic.

In order to build a content based company, you need to be able to genuinely write in the voice of that demographic. You are going to have to spend thousands of hours immersing yourself into that niche, reading related material, understanding the wants, needs and desires of the demographic and you need to have an intuition for taste in order to make recommendations.

If you try and do all of that without being in the demographic yourself, you are crazy.

You might have read some research about how lucrative it is to target new mums, or over 50s men, but you won’t stand a chance of building a company around that demographic if you are not in that demographic yourself.

So write down 5 of your interests, aspirations, influences and established companies you admire. This is your target demographic.

Set up WordPress

The next thing you need to do is to set up your website. Now you don’t have to use WordPress, but I would recommend that you do so because it will make this whole process a lot easier. There is already a huge amount of WordPress themes and plugins that enable you to do just about anything you want to do with your website (13 essential WordPress plugins).

Many web hosting companies also have WordPress as a one click install as part of their service. This means you can be up and running within minutes without having to have any technical knowledge whatsoever.

Creating your company’s website can be a long agonising process as you sweat every detail before putting it live. You will want to completely avoid this at all costs. Nobody is going to care about your company or website on day one, so there is no reason to not launch straight away. Find a theme you like online, and use that as a starting point. The process of setting up your website to a live site should be no more than 10 minutes.

Building your company website is fun process because you get to design or choose what you like, depending on your taste. This is probably one of the most fun jobs early on. On the other hand, committing the time and effort to produce the content is not one of the fun jobs. How successful do you think you are going to be if you do all of the fun jobs before the site is even launched? The answer is, you are going to be left with a website without any content.

Your content is going to be what gains traction, not the design of your website. Do not obsess over the design of your website until you have significant traffic numbers.

When it does become time to start thinking about the design of your website, there are a couple of important things to consider. By now you should have a significant understanding of your audience, what they are interested in and how they are interacting with your content. When designing your website, keep User Personas at the forefront of your thinking and try to make decisions based on data, rather than assumptions.

Set up an email newsletter

As I mention above, one of the most important aspects of a content based commerce company is building a highly targeted email newsletter. An email newsletter will help build an engaged audience as not everyone will check back for new content every day. A email newsletter enables you to send your followers content updates that encourage them to become repeat readers and ultimately loyal followers of your brand.

MailChimp allows you to send 12,000 emails a month to 2,000 subscribers for free and so it is the perfect way to get going straight away.

An email sign up box is one of the most important early Call To Actions for a content based commerce company. Your email list will be extremely important for the future of your company. By just setting up the list you can start collecting subscribers which will compound over time to become immensely valuable.

Read my post on The value of email lists.

Set up Social profiles

Social will play a big part in the future of the company so it’s important to snag profiles on all of the big Social sites. Try and get your company name as the profile handle on each of the sites. If you can’t get your exact company name, it will probably be a good idea to just choose a different name, rather than have an obscure profile handle.

Names are cheap and your name has zero value at the minute. Picking a name that is going to work online is extremely important, so choose carefully.

At first you probably won’t have many followers or much engagement. Don’t sweat it, again this type of engagement has to be earned over a sustained period of time.

You should also start installing plugins to your website that will enable Social utilities to support your content. Making it easy to share a post to Facebook or Twitter will be important and you will want to try and get people to follow you or join your Facebook group. Read my post on Taking advantage of the rise of Ecommerce 2.0 and Elements of successful Social Commerce websites.

Create a content calendar and work everyday

The final thing to do is simply to start creating content. You are going to have to love writing content if you are going to make this work. In order to be more disciplined with writing content, it can be helpful to set yourself a calendar. By setting a routine of how many posts you are going to post per week, you give yourself targets that you need to hit, and hopefully you will feel enough self guilt that you won’t want to miss your schedule.

This type of business is entirely in your hands. It’s up to you to make it work, but it is one of the best types of businesses to start today as it requires very little initial investment.

Conclusion

One of the great things about established content based commerce companies is that they have grown a large and engaged audience to support their business. This kind of brand loyalty is a huge competitive advantage and is a solid foundation for building a really great company. Companies like Thrillist or BirchBox are growing an audience that really love their brand. This kind of relationship with a consumer is very rare.

One of the things I like best about this opportunity is it can be started with no investment. You also get to build a community of people who are all passionate about the thing you are interested in. You might have a very unique set of interests, but you can almost guarantee that their will be people around the world who share those interests too.

Content based companies can be grown with no investment and no risk. All of the tools and services you need are all available to you free. All it takes is hard work and dedication. What’s stopping you from building this type of company too?