Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
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With the some of the same sensitivities, PBS.org, Public Broadcasting Service’s content-focused web site, initially held commerce at arm’s length when ShopPBS.com went up in 1999. The e-commerce operation was first offered as an adjunct to expanded program content at PBS.org, and a secondary channel to support PBS’s existing home video catalog. PBS e-commerce director Royce West describes the initial e-commerce effort as “a gift shop, almost off to the side,” with little direct linkage between specific programs and the opportunity to buy related PBS products.
Since then, PBS has learned more about the nature of its web audience and retailing online. The web site’s visitor audience is an educated group in search of information and interested in social causes: in short, they’re PBS viewers, though the segment skews slightly younger than the PBS TV audience at large. PBS identifies much of its audience as “social capitalists,” West says. “They’re the educators, the people who join the PTA, people who are more involved in their community in some socially important way. They’re people who work within the social structure of a community to make it stronger and better,” he explains.
They’re also people willing to pay extra for what they consider a worthy cause. PBS does little discounting of program merchandise, even for members. “On popular titles such as the Civil War series, other major retailers will beat us on price, so we push the mission,” West says. Unlike other non-profits who’ve spun off commerce businesses, PBS’s e-commerce operation remains within the non-profit corporate structure and all proceeds from merchandise sales, after costs, go into programming.
Pathway analysis shows that the overwhelming number of visitors come to ShopPBS.com only after coming to PBS.org first.
First stop TV
“Nine times out of ten, a TV program is the user’s first interaction with any material PBS offers. From there, they go to the content site to investigate more, than after that they have the opportunity to buy,” West says. For its last fiscal year ending in June, the web represented 32% of revenue from PBS’s direct marketing business, which includes catalogs that contributed 47% of revenue and on-air offers which contributed 21%. In all, e-commerce last year represented 19% of consumer product sales, which include both retail and B2B sales.
“In the beginning PBS.org wanted to make a distinction between content and commerce. It was thought that adding commerce would somehow cheapen the content experience,” West says. But more recent experience has proved the reverse. “We found that people don’t think of adding commence to content as cheapening the content, but as offering an added service to the customer,” he says.
Thus the web enables certain merchants to achieve the elusive goal of merchants everywhere: The merchandising becomes not a way to sell goods but rather a way to help customers to better understand a topic they’re interested in. “By integrating the content much more closely with opportunities to buy the products, customers see it as providing better context,” West says.