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The Ad Industry Has High Hopes for Direct-to-Consumer Businesses
June 17, 2019 | WSJ | By Nat Ives.

Advertising has turned its attention to what it hopes will be the next new engine of growth for the industry: direct-to-consumer marketers.

Direct-to-consumer businesses, which offer everything from mattresses to toothbrushes to home workouts, start by cutting out middlemen such as physical retail distributors. And they relentlessly focus on measures such as the cost to acquire a new customer—while relying on advertising, usually on social media, as the main way to grow.......ad executives hope that the booming DTC business can become a major new revenue source for the industry.....DTC brands play in an apparently unlimited range of products and could have rapid expansion ahead.

A varied field
Measures of DTC activity vary, but all indicate rapid growth. For a picture of U.S. ad spending by DTC companies, Magna tracks a basket of 13 companies that it considers disrupters, including footwear seller Allbirds Inc. and bedding marketer Casper Sleep Inc. Their spending increased 35% last year to $378 million, and is likely to grow another 30% this year and 25% next year.

And they’re spreading out from their usual advertising havens such as social media. The 13 brands’ national TV spending soared 42% in 2018 to $137 million, for instance, and is expected to rise 34% this year and 25% in 2020, Magna says........For some DTC brands, diversification is partly about protection.....Bombas LLC decided to move a big chunk of its marketing budget away from Facebook .....fearing its strategy could be hurt if the social network unexpectedly changed an algorithm or shifted a policy......Diversification is also a matter of taking growth to another level. DTC brands are “reaching the scale where they want to talk to the mass market, to consumers everywhere in the country, not just the trendsetters,” ......After a certain point for a DTC brand, increasing spending in the same place begins to produce diminishing returns, says Heidi Zak, co-founder and co-chief executive at DTC bra company ThirdLove Inc. The company says it has sold more than four million bras since it started taking orders in 2014, and has had annualized revenue growth of 180% over the past four years. It declines to disclose its sales figures or ad budget.

“Today, when people ask me where we are, I say pretty much everywhere,” Ms. Zak says, rattling off advertising channels including Facebook, Pinterest , search, podcasts, radio, direct mail, print and TV. The company ran its first national branding campaign last fall to advance a theme of “To Each, Her Own”—with a longer-term goal rather than immediate sales.
advertising  advertising_agencies  booming  brands  customer_acqusition  direct-to-consumer  diversification  out-of-home  self-protection  social_media  store_openings 
5 days ago by jerryking
How a private equity boom fuelled the world’s biggest law firm
June 6, 2019 | Financial Times | James Fontanella-Khan and Sujeet Indap in New York and Barney Thompson in London.

Jeff Hammes took the helm at a Chicago-based law firm called Kirkland & Ellis in 2010, with the aim of turning it into a world-beater, few in the industry thought he stood a chance.......known as a good litigation firm in Chicago with a decent mid-market private equity practice, in the blockbuster dealmaking world, however, the firm was largely irrelevant. Nobody took them seriously on Wall Street.....Fuelled by explosive growth in private equity, aggressive poaching of talent and most of all, a business model that resembles a freewheeling investment bank, Kirkland has become the highest-grossing law firm in the world.....This rise reflects the shift in the financial world’s balance of power since the financial crisis. Investment banks, the dominant force before 2008, have been eclipsed by private equity firms, which now sit on hundreds of billions of dollars of investment funds.

Kirkland thrived by hitching itself to this dealmaking activity. The firm presents with a relentless — many say ruthless — focus on growth, a phenomenal work ethic and a desire to up-end what it sees as a lazy hierarchy. Key questions: can its winning streak can continue? Will its private equity clients continue to prosper? how will Kirkland cope if and when the private equity boom ends? And can a firm with such a hard-charging culture survive in the long run?....Robert Smith’s Vista Equity has grown to manage assets from $1bn to $46 in a decade while working with Kirkland.....To establish Kirkland as a major player, Mr Hammes turned his attention to recruitment. ....poaching proven M&A experts and targeting all areas of dealmaking.....To entice the best lawyers to join its ranks, Kirkland managed to exploit a structural rigidity in its more traditional white-shoe and magic circle rivals. A dwindling but still significant number of elite firms remunerate equity partners using a “lockstep” model......
Kirkland sought rising stars in their late thirties who were at the bottom of this ladder, stuck in the queue for the highest share of profits. Part of its pitch was money — “With compensation, we can go as high as we want,” says one partner — but the other part was an almost unprecedented level of autonomy.
Big_Law  booming  business_development  Chicago  compensation  concentration_risk  dealmakers  deal-making  eat_what_you_kill  financial_crises  growth  hard-charging  high-end  hiring  howto  hustle  Kirkland_Ellis  law  law_firms  litigation  mid-market  organizational_culture  poaching  private_equity  recruiting  Robert_Smith  superstars  talent  turnover  Vista  Wall_Street  winner-take-all  work_ethic  world-class 
17 days ago by jerryking
Tales from the storage unit: inside a booming industry | Financial Times
July 27, 2018 | FT| Daniel Cohen.

Across the UK, there are now about 1,160 indoor self-storage sites like it, according to the Self-Storage Association (SSA), plus 345 sites offering outdoor containers, serving a total of about 450,000 customers. The industry has an annual turnover of about £750m, and the amount of storage space has almost doubled in a decade, to more than 44m sq ft last year — equivalent to 0.7 sq ft for every person in the country. That’s more than anywhere else in Europe, though it’s still far behind the US, where the figure is an astonishing 7 sq ft per person.....The service offered by self-storage operators is fundamentally very simple. If you choose a dedicated, indoor site, as most do, all that really varies is the size of the unit and the length of occupancy. Customers tend to overestimate how much space they require and underestimate how much it will cost......Increasingly, however, the industry has come to prize new, purpose-built warehouses. ......There are plenty of triggers for putting things in storage. “We deal with the three most stressful things: moving, death and divorce,”......For many people, self-storage is a short-term solution to a pressing need. Other customers, however, simply consider it part of their daily life.....The popularity of storage can’t simply be explained by lack of space, though. If that were the case, the industry wouldn’t be so successful in the US, where it experienced annual growth of 7 per cent between 2012 and 2017, ...even though the average home there is bigger than anywhere else in the world. It’s also about how many possessions we have. Frank Trentmann, author of Empire of Things, points to the accumulation of clothing and electrical items over the past few decades. But the rise also reflects wider social changes,.....“You used to buy a table or a bed when you married, and then you kept it until your partner died. Now, you have partnerships changing much more often, more flexible family arrangements. So people end up having multiple versions of the same article.”..For business customers, self-storage is a different equation. Businesses account for a quarter of all self-storage customers in the UK, but they take up 39 per cent of the storage space.....The growth of self-storage also owes something to the surge in start-ups....There are obstacles. The competition for new sites is intense. “If we look at a site, it could well be one that a discount food retailer is looking at, car showrooms, budget hotels, student housing,”
booming  storage  self-storage  United_Kingdom  purpose-built  possessions  artifacts  warehouses  social_changes  hoarding  start_ups 
july 2018 by jerryking
The Coming Productivity Boom: Transforming the Physical Economy with Information
March 2017 | Michael Mandel and Bret Swanson.

DIGITAL INDUSTRIES VERSUS PHYSICAL INDUSTRIES

Physical Industries
Where the main output of the industry is
predominantly provided in physical form
All other industries, including agriculture;
mining; construction; manufacturing
(except computers and electronics); transportation
and warehousing; wholesale and
retail trade*; real estate; education; healthcare;
accommodations and food services;
recreation.

Digital Industries
Where the main output of the industry
can be easily provided in digital form
Computer and electronics production;
publishing; movies, music, television, and
other entertainment; telecom; Internet
search and social media; professional
and technical services (legal, accounting,
computer programming, scientific research,
management consulting, design, advertising);
finance and insurance; management of
companies and enterprises; administrative
and support services
atoms_&_bits  booming  digital_artifacts  digital_economy  e-commerce  knowledge_economy  paradoxes  physical_economy  productivity  productivity_payoffs  value_migration 
august 2017 by jerryking

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