What was Gawker? A trailblazing, piercer of pretense? A snarky, vestigial leftover of the early bloggy web? A company that early on understood the relationship between reader enthusiasm and selling stuff?
Probably all three. It's the last one though -- Founder Nick Denton's embrace of selling goods -- that may be one of its greatest legacies.
Last August, Univision surprised the publishing community with its $135 million purchase of Gawker's assets out of its legal woe-driven bankruptcy. In the eight months since, that purchase has led to a renewed Univision digital strategy, and much of that drive has been propelled by commerce, initiated by Denton and now set to widely multiply, as Univision's main Spanish-language site plans to move more deeply into the commerce game itself.
Univision has struggled mightily in its core TV business as the NBCUniversal-owned Telemundo catches up to it and younger Latinos trade TV watching for digital time spending. With its acquisitions overall, and its big emphasis on e-commerce, Univision aims to be in the vanguard of news companies re-embracing a business model rapidly enjoying a renaissance.
Though its Gizmodo site recently won a Digiday annual award for its e-commerce work, much of its strategy has been behind a curtain. Now, though, thanks to a series of interviews with Univision's digital leaders, we can better gauge its new plan as well as the experience at its core. Further, we can see within it why a widening group of large publishers also is looking to commerce for badly needed new revenue.
Call it commerce, e-commerce, the affiliate business or just plain selling and buying, news publishers now newly see the near-term potential of making money in the marketplace.
As their digital advertising growth stalls, imperiled by that increasingly recognized ad duopoly of Alphabet's Google (GOOGL) and Facebook (FB) , a wide range of publishers has turned to e-commerce, many within the past year. New York Times Co. (NYT) bought the Wirecutter review/commerce business in October, and it now plans to use it as a base for broader commerce plays. Both BuzzFeed and Vox also have announced forays, joined by Conde Nast and Hearst. Business Insider's Insider Picks, meanwhile, is another business model proved out for the Axel Springer company and has become a significant profit contributor.
E-commerce isn't ad revenue and it's not circulation revenue, but rather a curious blend of the two: reader-related revenue. And it's big. In the fourth quarter, digital commerce passed $100 billion for the first time ever, according to comScore. One in six discretionary retail dollars now goes to a combination of desktop and mobile spending, according to a recently released comScore survey. Unsurprisingly, mobile commerce now makes up 20% of all those e-commerce numbers.
Of course, Amazon (AMZN) dominates e-commerce. These publishers don't compete with the behemoth; they act as a new middleman to it.
"This year, almost a third of my total revenue comes from e-commerce," said Raju Narisetti, CEO of Univision's Gizmodo Media Group. "And we are expecting revenue to be up in the 30% or so range."
That's a great rate of growth and one surpassing his other business lines, Narisetti said. He took on the job last September, right after Univision bought Gawker's six enthusiast sites but not Gawker.com. Narisetti is one of the most known and networked people in digital journalism, connected within a few degrees to almost anyone who's anyone in the trade. A veteran of News Corp. (NWSA) and The Washington Post, Narisetti has moved on the challenge of a nonlegacy startup, and the trade wants to see what he can make of it.
The Gizmodo Media Group provides the audience for this big experiment in the expandability of shopping. GMG now encompasses eight sites. Six of those -- Gizmodo (tech/science/design), Lifehacker (software+), Jezebel (women), Deadspin (sports), Jalopnik (cars), Kotaku (Gaming) -- it bought out of the Gawker option. The Root and the recently relaunched Fusion round out the group.
"I'd like to think of them as passion points; so each of these passion points around either technology or sports or transportation has accumulated a very passionate, engaged, curious but opinionated audience, an audience that has come to trust these brands and these sites for their journalism," Narisetti said.
Univision can sum up its theory of the enthusiast audience to buying audience continuum in three words: "Truth. Trust. Transaction." The spunkiness of the sites' individual voices, in this view, is taken by readers as "truth," who "trust" its authenticity -- and thus are more likely to take the site's recommendations for what to buy. It isn't they say any allegiance to the Gizmodo Media Group or the old Gawker group but to each individual brand.
Look through the sites and you see plenty of "deals," featured prominently on their home pages. "Sunday's Best Deals" included "PowerBeats3, Zippo, Adjustable Dumbbells and More."
Each of these sites features about four deals a day, as well as separate sponsored offers for e-commerce companies such as alt-mattress seller Casper, a major podcast advertiser as well.
The company's KinjaDeals site aggregates all the deals from each site, for those who want their commerce without any editorial interruption.
Narisetti said once a shopper hits the actual "offer page," a conversion rate of 16% isn't unusual.
The company won't comment on the revenue share splits it gets from its deal fulfillers; Amazon accounts for three-quarters of its revenue. In general, though, the affiliate business fetches commissions ranging widely from 2% to 20%, varying along with a good's price, and the ability of the higher-volume sales to negotiate better deals. Most in the wider industry tell me they mostly fall between 5% to 8%. Just recently, Amazon began cutting back on some of its affiliate revenue splits, but Univision, and other major affiliates, tell me they so far are unaffected.
One often unseen reality of the affiliate business: it's, in part, a lead generation business. A Kotaku reader may click through to buy a $13 mousepad but then buy more stuff -- clothes, thumb drives or paper towels -- from Amazon. Referring affiliate sites can get revenue share credit for purchases made within 24 hours of the first sale.
If those three Ts -- trust, truth, transaction -- set up the business here, two Cs cement it, Narisetti said. That's the combination of commerce and community. Just as Amazon reviews enable shoppers to check the wisdom of the crowds, the active commenting of readers on offered deals often turns them viral.
"Our Co-Op series, where the readers nominate and vote on the best products in a category, has crazy engagement,' he said. "Eight hundred comments and thousands of votes about men's jeans," he said.
Narisetti says that engagement -- that same kind of engagement that digital subscription-selling news publishers now highly prize -- is core to this commerce business.
"Seventy percent of our commerce audience is organic, direct or recirculation from within our GMG network," Narisetti said. "We don't buy commerce audience. Our Facebook numbers are in the lower double digits, slightly higher for some, slightly lower for some, so a significant proportion of our traffic comes directly."
How profitable is this business?
"Well, it depends on how you measure margins, right?," said Felipe Holguin, now president and COO of Univision's Fusion Media Group, which includes the GMG sites and others. "This is incremental revenue. All you're doing is supporting certain articles or certain identified promotions. The cost is minimal, but the margin on e-commerce is huge.
"We've got four or five people who are writing the deals stuff; they're essentially content creators on the ad side. That's your sunk cost, and then the more you can spin this, there's essentially no additional cost. As the team gets bigger, the costs will increase, but hopefully it will be tied to increased revenues."
It is a separate-from-the-newsroom commercial writing team that puts together what add up to dozens of deals on any given day.
The widening Univision commerce strategy
If we are to understand the emerging Univision digital strategy, we first have to understand the composition of this new Univision.
There's the Spanish-language TV Univision itself, the country's fifth-largest network, which continues to move through its own set of trials and tribulations and is often rumored for sale or a public debut. It's a legacy business trying to find growth.
In less than two years, Isaac Lee, now Univision's chief content officer and overseer of its digital businesses, has crafted a wide portfolio of digital properties, in part to provide that growth engine. This evolving collection of properties -- which may still find new additions -- tells us where the mothership -- Univision itself, a company with about $3 billion in revenue -- may be going.
You may not immediately recognize all of Univision's new offspring or know how they are related.
It's a cheaper by the dozen, hard-to-recognize family that Univision has become almost overnight, and almost all by adoption.
Today, its Gizmodo Media Group contains the six properties it got from the Gawker deal and two added in to the group, which was just christened in the fall. The Root, the impressive digital-only African-American news site Univision bought from Graham Holdings (GHC) two years ago, is now part of GMG. Then there's its homegrown Fusion.net, which has seen an eventful short life. Disney's (DIS) ABC and Univision created Fusion in October 2013 as a much-ballyhooed TV/digital, 50-50 partnership (that's the fusion) site aimed at millennials, with an emphasis on English-speaking Hispanics.