“Lounge” Price on the State of Digital Media
We spoke recently with Steve “Lounge” Price, founder of digital media and data science agency 85SIXTY with offices in Del Mar, CA and Denver and known to many from his days as co-owner of Killer Dana Surf Shop. Lounge was cruising up CA 395 on his way to Mammoth – for meetings.
85SIXTY’s clients have included ASICS, SIMPLE Mobile, Laird Superfood, Philips, DC, Blundstone, Visit Big Bear, the Surf Ranch and many others. They also work with Alterra Mountain Company’s destinations such as Mammoth, Squaw Valley Alpine Meadows, and Big Bear Mountain Resorts as well as the Ikon Pass.
We talked about 85SIXTY’s recent strategic partnership with Digital Operative of San Diego, a data-driven digital commerce agency for direct-to-consumer brands. And we touched on the current state of e-commerce and marketing, plus Lounge’s take on what digital means for the action sports industry today.
Here’s our conversation.
Shop-eat-surf: What are you going to do in Mammoth in the fall?
Lounge: It’s a collaborative meeting we do every year with Mammoth Lakes Tourism and the mountain — to see where there are opportunities to work together.
Shop-eat-surf: So, speaking of working together, tell us about your new partnership with Digital Operative and how it came about.
Lounge: Our partnership is strategic, not equity. I’ve known the founders, BJ Cook & Adam Levenson, and the team for about five years. We’ve always gotten along — and trust is such a big component of successful partnerships in this business.
We’ve been on parallel paths: Our focus is very marketing specific, and theirs is around user experience design and development optimization. We both saw that some clients might be using 10 different agencies, and with the amount of effort they’re spending to coordinate all those partners, there’s a loss of effectiveness.
So with BJ and his team, we can offer a best-in-class experience in a really coordinated way. Instead of a client spending all their time managing different agencies and reading reports, we can work together and they can put that time into their strategy and analytics.
Shop-eat-surf: Can you tell us how that’s worked for some clients?
Lounge: Not by name, but I can tell you about a client who Digital Operative has been working with for about a year, who has a complex CPG brand.
For the brand to understand the effectiveness of their marketing requires significant analytics work. Well, we’ve built that out. We were able to put a toolkit in place, so they’re very comfortable putting 5x their historical media spend into the market.
The attribution piece, the media analytics piece — because we were able to bring that to them, that gave them confidence to put a ton more money into it, particularly next year when they will launch a big campaign. And without a lot of pain of having to manage yet another agency on the call because we are well integrated with Digital Operative.
Shop-eat-surf: That all sounds like a long way from Killer Dana.
Lounge: My evolution started almost 10 years ago. I went from my Killer Dana days, where in my world every dollar of spend had to be accountable in a direct way to online sales. I’d never thought of a digital marketing spend for brand awareness. However, I quickly realized the value of that channel for branding.
I really had my eyes opened due to the brands I worked with. However, because of my background running an eCommerce business, from Day One, we always put an analytics framework in place, and it’s just evolved from that. I went from being a consultant, telling people what I thought they should do, and they started saying, “Why don’t you do it?” And so the (85SIXTY) agency was born. And the people I hired, I’ve always looked for who would I want doing this work for me, if I was the client. As a result, we have built an amazing team of digital marketers. I never intended to build an agency. I was just working with cool companies almost like their outsourced digital team. We’ve always thought of ourselves as partners with our clients. We’re really built to function like an extension of an internal team.
Digital Operative shares that value with us, of putting themselves in the client’s shoes. Bigger agencies, they make decisions based on how the agency can make the most money. We make decisions based on what’s best for the client and that’s not always the same thing. I mean, we make money, but I have so much empathy for what it takes to be a business owner that we do consistently over-invest.
Shop-eat-surf: Let’s pivot and talk about what all of this means for the marketing and media world.
Lounge: One thing I see for brands, from my perspective that comes out of performance marketing, is that they’re fixated on “every dollar has to be immediately accountable to revenue.” I think people forget that they have to build strong brands first.
Digital means we can measure so much, but it can be paralyzing. They want to look at every dollar’s return, but they misunderstand, you still have to get people interested in your brand.
You have to do the work of making people aware of your brand. Differentiate your brand.
The people who understand that, and are willing to invest in that, are winning.
That being said, technology can give you an advantage. Smart companies make sure that they have their data together in a way that they can use it to understand what’s happening. Often, companies have misunderstandings about data. There isn’t always a magical insight. Analytics doesn’t guarantee success, but getting data consolidated allows you to ask questions which is how you get smarter. I’m amazed that even large entities often struggle with this. Building a strong analytics foundation is generally a requirement for success. Imagine that you build a strong brand and people are buying from you but you don’t have a good sense of who is buying which products and why? What’s the right investment for branding versus response? You may be growing, but there is a ton of waste and you can’t make good decisions because your information is in 8 different platforms. You have to clean that up. Good data structure also sets you up for the kinds of personalized interactions that will define marketing in the coming decade. Relevance is crucial. Technology is making that more easily accessible.
Shop-eat-surf: It sounds like the people, the companies, that understand that you need to invest in brand building are still few and far between.
Lounge: We see a lot of people who think they can turn on Google, Amazon, Facebook on Day 1 and just print money.
They forget that you still have to do the hard work. We see a lot of businesses out there that are a lot alike, but they hit a wall, and they can’t grow beyond it because they haven’t done the hard work of building the brand, of building a great product
Shop-eat-surf: What do you see for new brands in the action sports world?
Lounge: It’s an exciting time, but understand that for brands it can be scary.
You can’t fake it. You can get lucky, but I still feel like for the majority of people, they still have to be prepared to do the hard work.
If I’m a brand new brand and I want to sell you a product, first I have to get you to my website, then look at a product, and then get you into my cart. You have to make me care before you can sell something to me.
The innovators today, they are looking at it from the lens of how are you going to spend the first six months explaining your product to people, and then the next six months getting them to buy from you. They are investing in brand-building, just in a more targeted and digital way. I do think though that as distribution models have changed, the economics can be more compelling for new brands. In my early surf shop days, there was no e-commerce. Brands could only grow by increasing points of distribution. Big points of distribution also put pressure on margins. Now, for many brands, direct-to-consumer is their primary point of distribution. I wish I could play back some of the conversations we had with the big brands about how eCom was just an annoyance. For any brand today it’s likely their most profitable channel. You can make a decent amount of money being a $5MM business. You can also get to profitability much faster with a little discipline and luck. The industry got in trouble largely because of a drive to unsustainable growth – mostly in the interest of creating shareholder value which was ultimately destroyed. Retail distribution created a lot of barriers. Today, it’s much easier to go guerilla and there is some incredibly creative stuff happening. It has to be scary for big brands. A small brand can reach a huge audience so fast. The days of new billion-dollar action sports brands are probably over, but that doesn’t mean the business isn’t healthy. Surfers are still buying tee shirts and boardshorts. There is a lot of smart marketing happening from brands people care about.