Internet Christmas paves the way for media owners' e-tail future

This Christmas is set to be an internet shopping extravaganza, with a predicted £1bn spent online on Sunday 5 and Monday 6 December. So how are media owners capitalising on consumers' e-tail boom?

Telegraph Fashion mixes editorial content with e-commerce
Telegraph Fashion mixes editorial content with e-commerce

What did you do on Christmas Day last year?

Did you a) Sing carols, eat turkey and bond with family members in front of The Sound of Music or b) Join the 4.3 million people who engaged in online shopping, spending £132m in an attempt to snap up the first of the New Year sales?

A sad indication of the spiritual health of the nation, perhaps, but one that has advertisers and media owners’ eyes lighting up at the huge revenue potential from a market that is estimated to reach £57.8bn in 2010, up from £49.8bn in 2009.

Monday 6 December, now dubbed "Mega Monday", is expected to be the busiest online shopping day of the year, with online retail association IMRG estimating more than £1bn will be spent online next Sunday and Monday. Total online spend for December 2010 is predicted to be £6.4bn, up from £5.5bn in December 2009.

Jeremy Langmead, the former editor of Esquire, put it best when he moved from print to run the men's arm of online runaway success story Net-a-Porter, whose founder Natalie Massanet recently sold her share in the firm to Richemont Group for £50m. On his decision to join the online fashion site, Langmead said: "The role combines the three elements that excite me most: digital, content and commerce."

Barely a day goes by without a new advertiser - Gap, H&M, Stella McCartney, Polo Ralph Lauren, to name but a few - launching transactional websites, and media owners have also earmarked e-tail as the next area for expansion.

Andy Barnes, sales director at Channel 4, which is looking to appoint a director of e-tail to oversee its fledgling e-commerce operations, including its beauty retail site 4Beauty, argues the consumer is already ahead of media owners.

"Look at a site like Asos. That should be something broadcasters set up rather than a third party," he says. "E-commerce would also allow us to move away from the cost-per-thousand/gross rating income model that dominates trading and to find a way to make revenue from a viewer’s close relationship with a particular programme."

He adds: "The point is, that relationship and that person’s spending are already tied together - people buy the stuff they see in TV programmes and spend billions via this channel. We know we have to be in that market – everyone is just trying to work out exactly how that would operate."

Changing the media model

Elsewhere in broadcasting, Channel Five’s owner Richard Desmond has announced plans to launch offeraday.co.uk, and even ITV is looking hard at e-commerce. Chief executive Adam Crozier has stated the broadcaster is over-dependent on spot ads, and has announced plans to invest £75m in online projects over the next three years, introducing micropayment charges on ITV.com.

"Our priority for the next 18 months is to make ITV a … fit-for-purpose organisation while maintaining strict financial controls," Crozier told investors, adding that he eventually plans to derive 50% of ITV’s revenue from non- TV advertising sources.

In print, Telegraph Media Group has relaunched its fashion site to allow consumers to buy products (pictured), while Trinity Mirror and News International are busy building their e-commerce empires and Red Magazine is relaunching its website on ‘Mega Monday’ [6 December] with e-tail at the heart of the new online proposition.

The reasons are obvious. "The UK is leading the world in e-commerce," says Paul Zwillenberg, partner at Boston Consulting and author of The Connected Kingdom report. To a degree it’s recession proof - people shop online for convenience and value, with a careful household able to save about £1,000 per year through shopping online. There’s no reason why media companies can’t take a share of this - all you need is to drive some high-quality eyeballs and generate a response."

Jean Paul Edwards, executive director of futures at Manning Gottlieb OMD, says: "The old media model had money moving in a single direction, from advertiser to agency to media owner to content producer. Today, it can move in almost any direction, whether that’s advertisers providing content or agencies like Brooklyn Brothers selling merchandise.

"How that plays out over the next few years will be important - there’s a general sense of overlap and meshing, so it’s important for consumers and businesses that expertise and dividing lines remain clear."

Chris Duncan, group marketing services director at News International, agrees. "We’ve spent time building the Times+ brand, so there’s loyalty there. If we bring offers to consumers we have to be sure we’re only recommending products because we genuinely like them, not because we can sell them.

"We’ve all spent time building websites based on search and, if you have search at the core, it’s tempting to build your proposition around that thinking - I can put the product in front of consumers based on what I know they’re looking for.

"Instinctively you think, I need as many products as I can get. But if we can offer a LoveFilm deal for 30 days then anyone can. You go onto Google and you see tons of similar offers. Why come to me and where’s my margin? We’ve found the best way is to focus on fewer products that are really tied to your brand."

For instance, Duncan maintains Sun Bingo is "a strong brand with a good reason to purchase and a game right at the heart". "With books we can provide click-through to Amazon," he says. "That won’t make us rich - Amazon’s margins won’t allow that - but over time, and with the right scale, it’s a useful revenue stream.

"We have a slightly different challenge to most newspapers in that we already charge a fair price for the content through subscription revenue, so where we push offers and e-commerce we have to be sure it adds to the benefit of the subscription."

Online supermarkets

Rumours abound that the Daily Mail plans to launch an "online supermarket" to take advantage of its 50 million-plus online readers. Although Associated wouldn’t comment, Martin Clarke, publisher of Mail Online, told a conference this summer: "We’re planning a few experiments next year that could be very exciting.

"I don’t have lots of retail experience, but even I know I’m going to have more chance of selling things in a shop visited by three million people a day than one visited by a few thousand who’ve already had to pay for the privilege of getting in the front door."

Clearly, solutions are diverse. Supermarkets or boutiques? Serving all or selecting a niche? Michael Steckler, managing director of personalised retargeting firm Criteo, believes media owners’ greatest strength is acting as "editor brands".

"People will pay a premium for Vogue because they want Anna Wintour’s vision. There’s so much fashion out there, especially online, that people want help choosing.

"Media owners should provide curated content and then click through to a retail partner to buy - it’s a complicated business becoming a retailer, so partnerships are the best way forward."

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