Best Buy Bites into Publishers’ Pie

As if the mainstream media hasn’t faced enough competition in recent years, it seems that now major retailers want a piece of their ad revenue. And this trend could end up hurting online publishers and cutting into affiliates marketer’s piece of the pie, as well.

Consumer electronic juggernaut, Best Buy, is aggressively pushing into the content space. As AdAge reports, Best Buy is ramping up its content production both online and off:

“the retailer is […] rolling out a multichannel network filled with original editorial content spanning everything from how-to videos and gift guides to new-technology primers and behind-the-scenes looks at popular movies. The network, called Best Buy On, includes a website it bills as an “online magazine” and a huge in-store component with its content and ad messaging “broadcast” on screens across the store, including in the TV, mobile and portable entertainment sections.”

Best Buy’s 145,000+ in-store screens and online ad units will certainly eat into mainstream publishers’ ad revenues by offering advertisers contextually relevant eye balls. And its online content will also pose a considerable threat to affiliates.

Best Buy’s Threat to Online Publishers

Best Buy’s project, in “soft launch” since 2009, is poised to cut considerably into both the traffic and revenues of online publishers. And it’s poised to do so from two angles:

First, Best Buy’s content represents considerable search competition. For starters, the Best Buy domain has a lot of authority in the eyes of search engines. It’s a domain that’s (1) old and (2) operated by a trusted brand name, meaning that its content will enjoy an edge when it comes to ranking in the SERPs.

More importantly, Best Buy has been producing product reviews for well over a year. So here we have a considerable archive of the kind of content search engines favor.

Secondly, Best Buy’s content has an edge in the social media sphere. Best Buy is a household name with active social media profiles for just about every one of the national markets it targets.

So not only is Best Buy in a position to attract considerable traffic through both search and social. But they’re also in a position to leverage the personal social networks of their extensive user-base.

For instance, the Facebook “Like” button has been integrated on every one of Best Buy’s individual product pages. This means that as users trickle in through either search of social, those users can then easily share those products (and product reviews) with their personal network.

The combination of formidable search and social presence gives Best Buy a significant advantage. On the one hand, they both enjoy the trust of search engines and have the archive of content to rank well. On the other hand, they have an extensive user-base that trusts their brand — meaning that those users are that much more likely to share Best Buy content with their own personal networks.

Conflict of Interest: Consumers

With its content efforts, Best Buy faces a conflict of interest — and that conflict is a double edged sword. For starters, there’s the question of whether users will trust reviews who are written by someone who is trying to sell them something.

Furthermore, if Best Buy succeeds in producing honest, quality reviews, they may compromise their own bottom line. Indeed, perfectly candid content can end up (1) offending suppliers, (2) alienating potential advertisers, and/or (3) cannibalizing their own customer-base.

Conflict of Interest: Affiliates

Then there is the small matter of the agreements Best Buy has with the many affiliates in its program on Commission Junction. Such  an aggressive advertising model will directly impact affiliate commissions and create “leaks”.

Leaks occur when affiliates refer a sale but are not compensated for it because the transaction occurs on an additional site that the merchant refers the user to. For example, the affiliate refers a user to the merchant’s book store, and the merchant then siphons them off to their game store, and the game store tracks the referral as coming from the book store, not the affiliate site.

Running ads violates a basic tenant of the affiliate model where affiliates have external links, particularly in the form of advertising, but merchants do not. (Editor’s Note: for a great example on how damaging leaks can be to an affiliate see this article by ReveNews writer Billy Kay.)

Ironically, on its affiliate recruitment page Best Buy totes its advantages over “online-only” retailers who don’t have a physical presence in states that have passed versions of the so-called Amazon Tax (hardly a show of solidarity). In the same breath, the recruitment page urges affiliates that it is a “great time” to sign up, making no mention of how Best Buy’s own initiatives will literally siphon commissions away from those very same affiliate partners.

It’s All Business

From a business standpoint Best Buy’s content network will probably be a lucrative move for the retailer (mainly for the search and social reason listed above). The real question is whether it’ll turn into a cash-cow or a mere cash-calve.

About CT Moore

A former Staff Editor here at Revenews.com, CT Moore is a recovering agency hack with over a decade experience leveraging search, social media, and content marketing to help brands meet their business goals online. He currently provides digital strategy consulting to start-ups, SMBs, enterprise level companies through his consultancy Socialed Inc.. CT is also an accomplished blogger and speaker who educates groups and companies on how they can better leverage different online channels.

3 Responses to Best Buy Bites into Publishers’ Pie

  1. Jonathan says:

    "Such an aggressive advertising model will directly impact affiliate commissions and create “leaks”."

    Maybe Best Buy is just trying to get into the Exceptional Merchant category of the Pinnacle Awards with Buy.com. Was wondering if anybody could explain how that merchant keeps getting nominated when it's one of, if not the most leaky merchant out there. Or are affiliates just easy manipulated with good marketing?

  2. Billy Kay says:

    The IS a solution to these things, but most affiliates don't use it: DROP the merchant! I KNOW that sounds hard, but every time I've made the hard choice to drop a merchant, 1) I slept better at night/less stress 2) There was always a suitable replacement, and 3) I did not go bankrupt as I thought I would. Two months down the road, when I read that the merchant is doing something tricky and affiliates are complaining about it… I smile knowing I don't have to deal with it.

    It's a simple rule: We put up affiliate links to make money. If a merchant does something that takes away from your earnings, drop them. And don't look back!