s your business model built for sustainable growth beyond the online data privacy revolution and transformational shifts in online user behavior?
As paid customer acquisition gets more expensive and less effective, investing in organic customer acquisition and loyalty is the key to growth. Relationship depth now matters more than audience reach in order to sustain marketing ROI and business growth. Businesses built to survive in the post third-party cookie digital ecosystem need to flip to operating like a media company to achieve this.
Linear commerce is a framework for modeling how brands can go about achieving this, so let’s dig in and dissect exactly what it means!
What Is a Linear Commerce Model?
Linear commerce describes a concept that’s not new in practice, but was only more recently labeled as a hybrid business model that’s part media and part commerce. It’s the brainchild of Web Smith who co-founded Mizzen+Main, and is a leading voice for linear commerce through his media and consulting company 2PM.
The premise is to first build an engaged audience, then sell a product perfectly innovated for their specific needs and tastes. In its purest form, the commonly accepted business model is turned on its head. You operate as a media company with organic content as your first product, building a loyal audience that resonates with your brand values, then provide an aligned product or service solution for the premise you have built your audience upon.
As this 2PM diagram shows, a business can launch a product or service without any existing audience, right up to a captive audience that’s already been sustained for years. Linear commerce models would apply to versions 3, 4 and 5.
2PM’s blog NO. 333 explains “The most viable companies across the digital ecosystem will share a common trait: established, organic audiences. Content and community are core to that outcome. For the well-executed linear commerce brands, retention rates will be high and CAC will be low.”
While product and service features or qualities are a fundamental part of customer retention, that’s only part of it. Consumers today expect more marketing personalization and values-led resonance in exchange for their cash, meaning that this model is bound to become ubiquitous as businesses catch up. Especially with Generation Z upcoming as the leading consumer demographic. They prefer online-born, content-led brands over their legacy counterparts by 40-45%.
The Case for a Media-Led Business Model
Unfortunately for SMEs, and start-ups especially, relying on paid customer acquisition is becoming less viable as a quick-and-dirty growth mechanism. High CPMs and declining audience data quality across the board are a real sore point that the marketing community is being forced to adapt to. It’s part of the wider online data privacy shake-up, and Apple’s ATT framework in particular, which has put a chokehold on the volume of users that can be tracked, segmented and targeted accurately.
Data privacy measures are compounded by advertising saturation and user overwhelm which has fueled widespread ad-blocking, while a rapidly growing trend for values-led decision making further transforms consumer behavior. Online attention spans aren’t necessarily dwindling, but they are being redirected to higher quality content that resonates more deeply on a personal level.
The value of linear commerce goes beyond the obvious benefit of an aligned online audience that’s primed for promoting products to. It’s also in the acquisition of an audience that simultaneously have higher retention rates and LTV (Lifetime Value) due to greater resonance and loyalty. It’s not that CAC (Customer Acquisition Cost) is always lower for media-led brands. However, the differentiator is increased brand loyalty and a lower churn rate to expand the LTV of customers. The future belongs to brands that can manage their customer LTV to CAC ratio for sustainable growth. And if you don’t already track these metrics, it’s time to start.
The brands staying on the right side of these trends utilize organic, content-led strategies to acquire and retain more loyal customers. So, ultimately your goal is to create (or tap into) the perfect customers; they are called fans. Linear commerce, by way of leveraging pre-built audiences of fans, will help brands achieve this.
I’m sure you can see the benefits of having an engaged and captive digital audience that’s primed for direct marketing of your offering before you invest in supply. So, what kind of companies have successfully managed to use this model? And crucially, how would an established SME brand currently focussed on paid growth strategies go about it? Read on!
Companies That Have Successfully Adopted Linear Commerce Models
Let’s get some inspiration from businesses that have successfully led the way using linear commerce tactics. 2PM focuses on online-born and DTC brands. However, linear commerce works for practically any kind of business and media format!
DTC and B2C brands
Michelin actually put the linear commerce model to work over a century ago when they created a very innovative publication - the 'Michelin Guide'. The initial concept was a driving handbook that encouraged French people to take road trips, recommending restaurants and hotels to stop off at, and creating a market for Michelin tires in the process. It became a retailing publication in 1920, and of course, we all know the prestige of the guide today. It helped turn Michelin into a global brand.
Linear commerce brands often employ some kind of blog format. Social influencers are an example of the Linear commerce model in action, promoting sponsored brands and products to their audience. With the emergence of online content creators revolutionizing media consumption trends, linear commerce models can be rapidly outsourced via partnerships with content creators that have pre-built aligned communities. ButcherBox is a prime example. Their online meat subscription service delivers ‘100% grass-fed beef, free-range organic chicken, humanely raised pork, and wild-caught seafood’. They achieved rapid early success by focussing on partnerships with health bloggers who wrote in support of grass-fed or organic meat, then lining up an Instacart partnership as a source of additional growth.
Glossier is a $1.8B DTC cosmetics brand frequently held up as a linear commerce paragon, born from founder Emily Weiss’ blog ‘Into the Gloss’. Or take Gary Vaynerchuk. He used a video blog, WineLibraryTV, to build an audience that helped transform his father’s liquor store into one of the first alcohol e-commerce platforms. It reached $60M AR within 5 years.
It works with traditional publishing methods too. Tim Ferriss became a content king. He started an online business selling nutritional supplements before writing ‘The 4-Hour Workweek’, not expecting much from it. It was received incredibly well and quickly became a must-read for entrepreneurs and CEOs the world over. He turned that initial following into a self-improvement brand with millions of fans that sells a number of products and sponsorship placements.
2PM has ten more great examples of content creators turned eCommerce gurus for you to check out in blog NO. 252, including Goop, Buzzfeed, Barstool Sports, Gear Patrol and the New York Times.
Businesses that are able to invest in insights, original research and thought leadership can quickly rise in prominence in new sectors. Consider the ‘Big 4’ accountancy firms. They are collectively diversifying and repositioning themselves as strategy, data and digital technology consultants through content marketing that establishes topical expertise. Publishing original industry research generates broad media coverage, building brand awareness for them in this space. Check out the EY global homepage as an example, or the Deloitte Digital website. You’ll see how the featured content is focused on shifting established perceptions beyond their traditional accountancy offering. The initial focus is put on creating awareness through a series of periodical research reports and consistent PR outreach, using experienced leaders as the public face for interviews and blogging. After winning clients, the project scope will determine how they recruit or train project delivery staff.
Niche B2B magazines can also perform brilliantly, carving out a loyal audience for a brand. For example, The Furrow magazine was created by farm machinery manufacturer John Deere in 1895, setting their brand apart. And it’s still going strong today in face of the decline in print publishing by catering to the needs of its audience; it has a circulation of 1.5 million readers and is published in 14 languages.
How Can An Existing Brand Adapt?
Linear commerce is usually a primary goal for dedicated content creators who build audiences via social, blogs or podcasts - often achieved through DTC sponsorships. But how can existing B2B or B2C brands adapt?
- Like the Big 4 account firms example, you can create demand through your own organic channels and PR before investing in the supply to meet it.
- Alternatively, you can rapidly manufacture more predictable demand to meet the supply you already have by tapping into existing audiences pre-built by someone else.
Here is a shortlist of tactics to execute, focused on improving your audience's experience and connection with your brand:
1. Define a goal-oriented strategy - Develop a formal content (or media partnership) strategy that continually tests and adjusts. The aim is to create genuine connection with your customers and keep them coming back for more. Select the best-fit channels, media formats and partners to match your target audience’s online behavior. Less can be more in terms of audience volume, as long as you’re reaching the right quality of customer that will deliver the LTV you need.
2. Resource your strategy - Be realistic about the requirements needed to achieve your audience building goals. Get the right content creators on board, or build integrated marketing delivery with aligned media partners’ platforms. Remember that you’ll never be able to outsource your audience building to a partner completely. Your media partners may introduce you to customers, but it’s still up to you to develop the relationship using your own branded content.
3. Follow your audience - If you want your audience to follow you, you’re going to need to understand them, meet them where they are, and deliver exactly what they need or desire. Authenticity or genuine topical expertise is essential to resonate with your audience and provide enough value to keep them digitally engaged over time. Join existing social communities to see what they talk about, and what language or communication style they use. If they are moving onto new channels, be there early so you are one of the first relationships they develop on that platform or community. Can you use these communities to find a star content creator already part of the target audience to oversee or contribute to the creation of authentic and insightful content? Resonating with your audience's values is everything.
4. Be easy to find - Get your brand in front of potential fans on search, social and media platforms by being easy to find. Platform-specific search volumes, hashtags and trending topics will help you find compatible trends to tap into - evaluate them regularly. For search, if competition for the most relevant keywords is high, focus on related long-tail search terms to boost your listing up the rankings. Long-tail search terms tend to come from users with higher intent.
5. Lead your audience - Fans all have something in common; they are followers. Understand how your audience perceives your offering within the wider context. Inspire them by leading the narrative within your field and providing aspirational goals. Aim to be a trend-setter or on the leading edge of evolving trends, and tie them into your values-led solutions. Values can range from the selfless to more ‘self-centered’ or anywhere in-between depending on the financial, psychological or emotional drivers your audience have in relation to your offering.
6. Engage with your audience - The goal is a lasting relationship, and no enduring relationship can be built without communication. Direct interaction with your online audience will improve their perception of your brand and keep them engaged while also providing invaluable feedback and insights. A social media engagement manager can be used to help better create a community around your brand. Provide audience interaction on your selected social platforms, plus great customer service that builds trust. Open channels to collect feedback, and of course action it where it’s helpful. Your early audience is also ideal to test and improve your offering with. If you’re still refining the offering and need customer feedback, consider offering discounts where feasible to keep them onside until you get it right.
7. Tailor your channel content - Unify your marketing content campaigns across media platforms without being repetitive. Users won’t look at the exact same content multiple times; they will filter it out. Create a consistent brand experience that is suitably adapted to distribution platforms and user devices. Universal login functionality on your website will support greater user personalization - such as a cart, recommendations or premium content - across users’ multiple devices.
8. Put PR and WOM before ads - We’re certainly not saying you shouldn’t advertise; it’s great for helping you build initial brand awareness and deliver campaigns. However, organic reviews and positive WOM (word-of-mouth) mentions are more influential to actually convert new customers. Advertise to boost brand awareness and increase audience touch points rather than as a stand-alone lead generation tactic. 2PM has also covered the impact PR can have when launching digitally-native DTC brands.
- Learn how to more accurately measure brand awareness to help you assess and optimize your investments.
9. Be patient - It takes time to build an audience and develop a relationship; no one sees overnight results. Keep at it, and track the data so you can gather the necessary insights to adapt and optimize where necessary. Consistency is key!
To round up, a note specific to B2B content. Research has shown that B2B blogs that create educational content capture 52% more organic traffic. However, your content does still need to connect with people on a personal and human level. Aim to include some personality within your brand that people can connect with while still striking the right balance with professionalism.
Are There Any Downsides or Pitfalls?
The most obvious potential pitfall is the content marketing investment required to build an audience before generating supply and cash is coming in. When starting up a new business, entrepreneurs have successfully achieved this as a side-hustle before a full launch and quitting their day job. It absolutely helps if you’re passionate about what your business delivers, which will also help shape a brand that the right target audience can really align with and develop loyalty for. However, an audience is absolutely essential. And assuming you don't run a drop-shipping business, any investment in content is likely to be less than the costs of hiring delivery staff or purchasing stock before enough predictable cash is coming in.
For an existing business, are there any profits you can reinvest, growth capital available, or a partnership you can create to lead an industry or consumer research study? You can also minimize costs in early building phases with freelancers, and focus on less time consuming content formats. Minimize the pre-launch building phase and timeframe to whatever is realistic for your business. If you’re working with social influencers, finding the right match in terms of the influencer and audience alignment is key. Trial a few influencers in your niche with smaller investments to gauge which can offer you the highest converting audience.
If your strategy isn’t working right away, don’t stop; adapt your approach or tactics instead. Use your data insights and customer research to keep testing until you reach the engagement or sales targets you need to hit.
On the other hand, if your audience generation works so well that you have a sudden influx of demand, pushing for more too quickly may not be advisable. Scaling up and ironing out growing pains is a challenging transition for any business. In other words, don’t bite off more than you can chew. Take time to build your quality processes and delivery capability sustainably. Trust in your brand can be easily lost and difficult to recover.
The writings on the wall warn that businesses which can’t adapt to a media-led business model may find themselves on the bench in the not so distant future. You will limit your new growth potential within the digital ecosystem, and bleed less invested customers who are attracted elsewhere by the standard of content personalization and UX that’s expected. And at a time when customer acquisition is getting more difficult and expensive, loyalty and retention are the key for sustainable growth.
We have more insights on the topic of flipping your brand into a media company with the help of a robust content strategy!
It’s part and parcel of switching to first-party customer data vs. relying on advertising platforms; another essential marketing tactic following the curb of third-party cookies.
The team at Half Past Nine are passionately dedicated to helping our clients ride the crest of these transformative times to take advantage of its opportunities. If you think your team might need some support, give us a holler. We’re always happy to explore whether our team are the right fit for enabling ambitious growth targets.