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Watch your back: 3 major U.S. retailers are rapidly moving into the content business

This month, we’ve been looking at examples of publishers leading the way in eCommerce, from Buzzfeed to POPSUGAR and Marie Claire.

But just as publishers are seeking to pivot to eCommerce, leveraging their connections with audiences to diversify their revenue streams, so retailers are diversifying their strategies, using content as a means to grow their bottom line.

Here are three of the most prominent examples:

1: Amazon’s continued march into the content jungle

Amazon’s move into this arena is well documented, having first launched Amazon Studios (with a $2.7 million budget) in 2010. 

Nearly a decade on, according to Rich Greenfield, a Partner at the New York based TMT company LightShed Partners, amd previously the Managing Director, Media and Technology Analyst at BTIG, the company will spend $5 billion to $6 billion this year on content. This includes original TV series and movies, pay-per-view sports, third party subscriptions (e.g. Showtime) and acquisitions. 

“Core to Amazon’s strategy is the use of video to convert viewers into shoppers,” Reuters explained last year. “Fans access Amazon’s lineup by joining Prime, a club that includes two-day package delivery and other perks, for an annual fee.”

Image via CNBC

Amazon’s original programming is estimated to have encouraged “as much as a quarter of what analysts estimate to be total Prime sign-ups from late 2014 to early 2017.” 

As Jeff Bezos revealed in 2016:

“We get to monetize [our subscription video] in a very unusual way… when we win a Golden Globe, it helps us sell more shoes. And it does that in a very direct way. 

Because if you look at Prime members, they buy more on Amazon than non-Prime members, and one of the reasons they do that is once they pay their annual fee, they’re looking around to see, ‘How can I get more value out of the program?’ 

And so they look across more categories — they shop more. A lot of their behaviors change in ways that are very attractive to us as a business. And the customers utilize more of our services.” 

Furthermore, Amazon also has the ability to leverage video content – and revenue, including eCommerce, opportunities – beyond its core website, due to its ownership of other media properties such as Twitch, IMDb (through which it launched – in early 2019 – a free, ad-supported, TV streaming service called Freedive), and GoodReads

Meanwhile, on the core site – which is already the third largest digital advertising platform in the United States – Amazon.com audiences can also watch the QVC-like Amazon Live, a channel with live-streamed video showcasing products which can be purchased underneath. 

Amazon’s advance into the content space; through Prime Originals, reruns/acquisitions and sports rights (such as live Thursday night NFL games, Premier League soccer, and the ATP tennis tour), as well as their deployment of video content across their other platforms, shows no signs of abating. 

The synergies between the content and retail sides of their business are already potent; and the value of their data – and the relationships Amazon has with its customers – will only grow.

Image: Screengrab of Amazon Live, September 2019

2: Walmart wakes up from a content slumber

Despite Amazon’s dominance, and profile, they are not the only major retailer operating in this space. Other players are also leveraging content, or looking to do so, in a manner which can help their core business. 

Walmart, for example, acquired Vudu – an on-demand TV and Movie service – in 2010. Although there were rumours at the end of October that they might be looking to offload the platform, the main narrative of the past year has been Walmart’s exploration of how this venture could potentially support other parts of their core business.

The service – which currently does not require a subscription – allows users to stream content across a range of devices, Consumers can buy or rent over 100,000 movies and TV shows, or watch titles for free with limited commercials. 

And for those who still have – or still buy – DVDs, Vudu’s app enables users to convert a Blu-ray or DVD into a portable format that can be watched directly from the cloud or downloaded to a digital device. When new discs are bought at Walmart, then the retailer makes these available in a digital format to be watched through Vudu.

Image: Vudu/Walmart’s InstaWatch service. Via: Vudu website

Looking ahead, Walmart has begun to expand their capabilities in this arena, launching their own advertising network earlier this year. Using Vudu and other properties, Walmart creates opportunities for advertisers and partners who work with them online, and instore, to take that relationship into new places and spaces. 

As AdAge noted, in a first look at Walmart’s new ad network, “Walmart thinks it has the advantage over Amazon because of its wealth of data on the 250 million people in the U.S. who shop in its stores and online properties every year.” 

The company also sells half of all the TV’s purchased in the United States, another datapoint they may be able to leverage, not least if their own service comes baked into those products.

Alongside this, Bloomberg reported earlier this year that the company also has plans to commission small amounts of family friendly original content. 

The new shows (12 are slated for 2019) will test the potential of “shoppable” content — programming that can directly lead to sales in stores or online,” they wrote. “Not only will viewers see ads, they will have the option to buy products seen in the shows, such as paper towels or soft drinks.”

Image: ‘Mr. Mom’ is Walmart’s first Vudu original

3: Target’s media network expansion

Another large American retailer, Target, launched an in-house media company in 2016. 

Originally designed to support Target’s own assets – including it’s website, app, their in-store TV network (Channel Red) and integration with Target’s content on Facebook, Twitter and Pinterest – the company has partnered with over 1,000 brands, including Disney, Dyson, Mastercard and Unilever.

Target announced in 2019 that they were rebranding – and expanding – their media network. 

The newly renamed Roundel will create campaigns and content for its clients, including brands and agencies (and not just those that work with Target’s stores) for Target’s own platforms or “more than 150 brand-safe external channels like Pinterest, POPSUGAR and NBC Universal.”

In doing this, Target will be producing content for social, video and linear TV, harnessing their first-party data. 

These insights will enable them to deploy what calls Kristi Argyilan, president of Roundel, calls a “customized approach [that] works not only for products our guests can find at Target, but also for other businesses that align with their interests and needs, from financial services and automotive to travel and more.”

Image: Roundel’s new logo. Via Target

Why this matters

The significance of these moves, as Business Insider’s Audrey Schomer outlines, is that “e-commerce businesses, like Target — or e-tailers, like Amazon — are increasingly building out data-driven media businesses based on their first-party consumer shopping data.” 

Schomera, a media analyst, predicts that Amazon, followed by Walmart, will be the bigger winners here. 

“That’s because Amazon and Walmart each own and operate media properties beyond just their e-commerce site and app, providing additional ad environments they can exploit — Target does not.”

Publishers need to be aware of these developments and the potential implications for this business; identifying opportunities for partnership (as seen with Target’s references to PopSugar and NBC Universal), as well as new media markets that these players may be seeking to muscle in on.

These are markets where retailers proprietary consumer data could be wrapped around content to provide a targeted advertising experience – or routes to purchase – that few media players can compete with.

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