The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Millennials — one of the largest generations in history, comprising people born between 1980 and 2000 — are about to enter their peak purchasing years. In the US alone, the group already accounts for an estimated $1.3 trillion in direct annual spending, a number that's set to increase by 15 percent in the next five years. That's not counting the 86 percent of millennials who live in emerging markets like China, India and Brazil. Nor does this take into account the impact this culturally influential group has on the spending decisions of others.
It’s no surprise, then, that a wide range of brands are gearing up for fierce competition for millennial mindshare. But tapping the opportunity is easier said than done.
In many ways, millennials are very different to previous generations. For a start, they grew up with the Internet and are hyper-connected. “It’s really the tech overlay that is the catalyst that lights a fire under this whole story,” said Lindsay Drucker Mann, a vice president in global investment research at Goldman Sachs. Indeed, the media-technology habits of millennials are reshaping everything from the way we communicate with friends (Facebook) to the way we listen to music (Spotify). Publishing is no exception, creating significant opportunities — and challenges — for a new generation of fashion media brands.
“We want to build a brand that’s as iconic as MTV or ESPN for this generation,” said Philippe von Borries, co-founder of Refinery29, a fast-growing, New York-based, fashion and lifestyle media company targeting millennial women. “But it’s not just 18 to 35,” he clarified. “For us, millennial is not about age bracket. It’s about a mindset. The things coming out of the millennial generation impact everyone from teenagers to people in their 40s,” he continued. “Building a media company today is a vastly different thing than it was five years ago.”
For millennials and “millennial-minded” people, “mobile and video are primary modes of media consumption. You want to be there,” said von Borries. But, critically, the majority of mobile and video consumption takes place on third-party platforms, like Facebook, YouTube and Snapchat, rather than on publishers’ own websites. “Video is a distributed medium. Mobile is defined not by websites or apps, but by the mobile ecosystem and that includes places like Snapchat,” he explained.
“There is a new age of media upon us,” said von Borries. “The paradigm of the last ten years — built on traffic to websites — is changing to a distributed ecosystem. It’s going to be a little bit harder to get people to come to your front door directly.” This means publishers must learn to attract and engage audiences on third-party platforms. “But that takes a very different strategy to what most publishers have been doing in terms of growing direct traffic.”
A month ago, Refinery29 launched on Snapchat Discover, a section of the app where publishers can share short videos or news stories that expire after 24 hours. Most of the content is being created specifically for the platform, for which Refinery29 hired a dedicated 10-person team. “You have to be able to scale up teams out of nowhere for new platforms, where all of a sudden you find millions of new users consuming content,” said von Borries. “And that takes a ton of resources.” In April, Refinery29, which launched in 2005 and now attracts 25 million unique users per month, raised $50 million in a funding round led by Scripps and WPP. Refinery29 plans to use the money to become “a fully distributed media company that speaks to women globally.”
In one small step on the path to becoming "fully distributed," Refinery29 is set to launch on "Instant Articles," a feature which allows Facebook to host stories from publishers on its own servers, so they can be delivered to users more quickly. Although media reporter David Carr famously wrote that hosting stories on the social platform's servers would make publications "serfs in a kingdom that Facebook owns," forcing them to publish content directly to the social platform, only to share the resulting advertising revenue, a slew of major media brands, from BuzzFeed to The New York Times, have signed up, illustrating just how much the landscape has shifted.
Refinery29 also has its eyes on opportunities in traditional media, namely television, with which millennials currently spend less time than previous generations. “Millennial audiences — here, defined by age group — are shrinking and traditional media companies are now looking to digital media companies to help program the future of television,” said von Borries. “I think you’ll start to see a half dozen or more purely digital companies enter the fray and become TV brands.” (Last week, Vice Media announced a deal with A&E Networks to take over one of its cable channels.) “It’s sort of one more very huge, tick the box, I’m going to reach a huge new audience milestone.”
But Refinery29 isn’t the only fashion media company gearing up to meet the challenges and opportunities presented by the millennial generation.
In September, the London-based publisher formerly known as Dazed Group rebranded itself Dazed Media, signaling key shifts at the company, which attracts 3.5 million unique users per month to channels including Dazed, DazedDigital, AnOther, Another Man, Anothermag.com and Nowness (run in partnership with LVMH). For one, the publisher has hired Will Hayward, BuzzFeed's former vice president of Europe, to the newly created role of chief commercial officer to help restructure the company for its next phase of growth. "Each channel now has its own editor-in-chief, its own creative director, its own team. And each channel is able to innovate independently," explained Jefferson Hack, who founded Dazed with the photographer Rankin in 1991.
"This business is doing extremely well, but Jefferson's brief to me is how can we now pour petrol on that," said Hayward. "When Jefferson and Rankin started this 25 years ago, each month they'd get together and they'd select themes and explore these and put everything in one bundle," he continued. "Dazed now has 20 bundles at least. What's changed is that media has simultaneously been unbundled and atomised, but then reconstituted into these new feeds."
British style bible i-D, which was acquired by Vice Media in December 2012, is also targeting the millennial opportunity with a strategy that has completely transformed what was once a digital dinosaur into a next-generation publisher. At the time of the acquisition, i-D’s online audience was under 200,000. Today, the company attracts 6.5 million unique users per month.
For i-D, one of the biggest benefits of being part of Vice has been tapping into the distribution expertise of the company’s growth team. “It’s about adapting our content to fit our audience’s consumption habits and expanding our model of distribution to platforms like Snapchat,” said Diana Good, the New York-based managing director of i-D. “But at the top of the pyramid, it’s about great content.”
Indeed, winning in today’s media reality isn’t just about mastering distribution. It’s also about getting the content right in the first place. “We can differentiate according to our platforms and our technology and all of these things, but the soul of any media company is its editorial and what values it has,” said Hayward.
Though it sounds counterintuitive, Dazed has been pursuing scale through an increasingly specialised approach to content. “The wonderful thing about the social web is that actually those two things — scale and specialisation — work extremely well together,” continued Hayward. “When you stand for nothing and are really vanilla and appeal to everyone, it’s very hard to reach critical mass on the social web. But when you have opinion-driven journalism, when you stand for something, when you make a positive difference in the world — that’s how you really light up the social web and individual communities on the social web.”
Utility is also important, added von Borries. “One thing that stands out with millennials and millennial-minded people is a wish to get involved, a wish to take action. So every piece of content that we publish comes with: Why does this matter? What can I do with this? How can I personally get involved?”
In recent years, fashion has become a major driver of popular culture, hybridising with everything from music to wellness. For this generation, “fashion and style is pop culture,” said Hack. In response, Refinery29, Dazed and i-D are all expanding their content mix, using fashion and style as a lens on other verticals. “We’ve taken style, which is where we started, and we’ve expanded that conversation, over the last five years, into many other topics — all unapologetically for women — so beauty, health and wellness, but increasingly news, culture and global topics,” said von Borries.
In September, i-D launched Amuse, a new video-driven channel, run by a separate team and offering a stylish take on a wider range of topics, from cooking to sex. “I think there are things from a lifestyle standpoint that aren’t really right for i-D; like well-being wouldn’t really fit,” explained Good. “Amuse allows us to dive into those topics.” Meanwhile, Dazed is planning a number of new verticals, though the company declined to disclose details. “We’re talking about new verticals and significant new launches over the next nine months. We’re launching more brands, basically,” said Hack.
Refinery29, Dazed and i-D are also expanding their global footprints, tapping millennials in new markets. This month, Refinery29 is launching in the UK, with France and Germany to follow. The company is also looking at India, China and other Asia-Pacific launches. Dazed, meanwhile, has its sights on the US and is currently evaluating partners to help catalyse a major expansion there. “At the moment, for every new user we’re picking up in the UK, we’re getting two new users in the US. So, I’ve spoken to potential partners to help us understand how to navigate launching there,” said Hack. “The ambition is considerable,” he continued. “Over the next 12 months, I think you will see us opening offices in places you don’t expect.”
i-D already has a presence in the US, the UK, France, Germany, Italy, Spain, the Netherlands, Poland, Mexico and Australia. “Vice allowed us to launch quickly internationally. Without having the infrastructure and great people on the ground who really understood how to build a digital media company, it would have taken a very long time,” said Good. But the company has its eyes on new markets, like Japan. “We’re continuing to pursue new growth by launching in new territories,” she added.
In terms of business model, Refinery29, Dazed and i-D are all doubling down on native advertising, which is less vulnerable than traditional advertising to the realities of a distributed media ecosystem and from which they expect to see significant revenue growth. “I think this generation is really receptive to branded content,” said Good, who is particularly bullish on branded video. “Video is definitely the largest revenue driver and I think it’s also the most impactful for brands. It’s where I see the biggest growth,” she said, citing the success of i-D’s work for Diesel, notably its popular ‘A-Z of Dance’ video, which earned over 4.6 million views on YouTube.
Dazed recently restructured its creative services arm, consolidating its MAD creative agency and Dazed White Label team under the newly christened Dazed Media Studio. “We don’t have an ‘agency’ — we don’t use that word. And we don’t produce ‘content.’ Content is meaningless to us. We produce stories,” insisted Hack. Since 2012, Dazed’s native advertising business has doubled. The company currently generates about 60 percent of its revenue through traditional advertising, with the remainder coming from native advertising. “It’s 40 percent from the studio business, but it’s definitely a fast growing part of the business,” said Hack. “If brands want to understand how to behave like publishers and do authentic storytelling across platforms and at scale, then we’ll help them do that.”
Refinery29 does “over $80 million” in annual revenue, of which the majority is thought to come from native advertising. “Native advertising is our business,” said von Borries. “It’s about custom solutions at scale. We work with brands on big, mission-based themes on an annual basis,” he continued, citing Primark, which Refinery29 helped launch in the US. The company recently bolstered its commercial team with the addition of Zach Davis, formerly of BuzzFeed, as vice president of global partnerships and video strategy and Steve Shalit, formerly of The New York Times, as vice president of strategic partnerships and ad product strategy.
But though the formats and platforms may have changed, the essence of great advertising remains the same, said Hayward. “It’s always been about telling a story, making a positive and interesting contribution to culture and society and doing that through the lens of a brand. It’s not like some new algorithm.”
Editor's note: This article was revised on November 11, 2015. A previous version of this article misstated that i-D attracts 9 million unique users per month. This number includes i-D's following on third-party social platforms. i-D itself attracts 6.5 million unique users per month.