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 / Summer 2009 / Issue 55(originally published by Booz & Company)


The Promise of Private-label Media

A direct-to-consumer media strategy can help companies build brands and reach consumers in new ways.

Just about every company has a Web site. But today, many marketers are going further. They are transforming their digital presence into powerful media channels, direct to consumers. The practice is prevalent enough that, as the research firm Outsell Inc. reported in July 2008, about 62 percent of marketers’ online advertising and marketing budgets are spent on their own digital media, up from 58 percent in 2007. These marketers recognize that with the right mix of content, utility, community, and product, they can create compelling premium experiences for consumers. And they see that these efforts deliver powerful benefits in branding, relationship building, and lead generation.

The growing popularity of “private-label media,” as we call it, is one of the more provocative — and potentially disruptive — developments occurring in today’s marketing and media ecosystem. Every marketer, advertising agency, and media company needs to be aware of its benefits and, just as important, its implications for the industry. The emergence of private-label media represents both a compelling way to engage consumers and yet another challenge to long-standing media business models. The more that is spent on private-label media, the less that may be spent on conventional advertising, especially in the digital realm.

Company Web sites began directly targeting consumers about a decade ago. Since then, there have been some high-profile and highly expensive misfires. Anheuser-Busch’s was launched in 2007 with fanfare, only to be shuttered quietly early in 2009. But there have also been many notable successes. General Mills’ enjoys more than 8 million unique visitors per month, roughly comparable to the numbers at — a rival with a popular television network sibling. Kraft Foods’ iFood Assistant ranks among the most frequently downloaded applications on Apple’s iPhone. Procter & Gamble’s Olay for You platform for consumer education in the health and beauty category includes a highly trafficked Web site and in-store kiosks rolled out in partnership with Walmart. Rapid growth in private-label media has also occurred among business-to-business markets. For example the Home Depot launched to deepen its connection to contractors, offering them business management tools as well as negotiated discounts and services such as insurance, telecommunications, and printing.

As marketers gain more experience with developing and managing private-label media, we expect them to make it an expanding part of their marketing arsenal. The greatest distinguishing factor for successful entries will be the ability to create branded destinations that translate into relationships, community, and utility for consumers. These are not digital infomercials; the best private-label media connect consumers directly to brands. Consumers can design and test new products, enter online forums where other brand enthusiasts share their perspectives, and take advantage of unique brand offers and ancillary services.

The Lego Group provides a good example of innovative marketing with private-label media. The company has built an extensive set of consumer touch points using its own digital media: a fan club, a social network, online games, message boards, online movies, and soon its own massive multiplayer game. On, consumers can design their own products. By joining a network of approximately 120,000 self-identified volunteer designers, fans interact, suggest product ideas, and become “ambassadors” to spread the word about new offerings. In this way, Lego facilitates direct conversations between the company and its consumers as well as conversations among the brand’s devotees.

For Lego, the private-label media strategy is paying dividends. Lego has become a major digital brand in the U.S., rivaling traditional media players such as Nickelodeon and Cartoon Network Online in its core demographic of boys ages 6 to 11. This digital marketing innovation is one of the contributors to Lego’s recent success — the company posted a 19 percent increase in annual sales in 2008, despite a declining market for toys globally.

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