Resurrecting The Geek Squad

The following is a (slightly amended repost) of a guest column I ran last week in Jacob Donnelly’s outstanding publication, “A Media Operator.” If you are at all interested in the business of media, Jacob’s newsletter is an absoulte must.

This is the Mikey’s version— the draft I sent to Jacob before he prudently and expertly edited it down. I’m reposting here for two reasons:

1) I don’t think our audiences have much overlap so should be new for most of you . For those who have seen it before, you can now appreciate the value of a good editor.

2) Jacob cut one or two of my zingers that I want to bring into the world.

As always, “Amazonia” and a cocktail recipe follows.

As first reported by Axios, CNET is on the block, a marlin among relative minnows in the flurry of commerce media firesales. 

For Red Ventures, the time is right to swallow their pride and offload CNET to a strategic buyer that needs the jolt of panache that quality media provides. CNET’s core asset is brand and that brand erodes every day that it lives under the wrong steward. 

But the question remains– who would spend north of $200M to buy a media company with a chart that looks like this?

Existential angst around SEO-driven media is at an all-time high, putting search dependent media valuations at an all time low. If ever there was a right time to fade semantic search hype and place a contrarian that the core search experience is one of the “what won’t change in 10 years” Bezos isms, this is it. While renting 65% of your traffic is a precarious foundation, CNET’s value if leveraged correctly extends far beyond the 25 million eyeballs Google throws its way each month. 

To recenter their grand strategy back to the Geek Squad roots, build the best retail media platform in the space, and acquire the preeminent source of training data for an AI assisted shopping experience, Best Buy is the company that should make the move. Let’s dive into why. 

Overcoming inertia 

Nearly five years into CEO Corie Barry’s tenure, Best Buy is in a state of corporate ennui. The stock is up only 20% since January 2019— a timeframe where Walmart is up 68%, Amazon 85% and Target 90%. And for my favorite narrative violation, Home Depot, Lowe’s, Ulta, Tractor Supply and DICK’S Sporting Goods are all up more than 100% in that time span.  

When former CEO Hubert Joly first took the leadership post at Best Buy, he staked the retailer’s claim to remain relevant in Amazon’s world:

Ten years later, Best Buy is no longer meaningfully differentiated against any of these vectors. In the decade ahead, there are three existential challenges that Best Buy must solve and plugging in CNET addresses all of them. 

Re-centering the brand around expertise 

To still have a raison d’etre in the modern retail landscape, Best Buy’s brand has to be synonymous with consumer electronics expertise. Short of that, it’s a subscale retailer with near impossible margins and no cloud computing business attached to it.  

From a tactical perspective, this largely comes down to effectively answering the longtail of esoteric SEO queries poised by shoppers, the domain of commerce publishers. Post Google’s updates,  CNET– as a standalone entity owned by an arbitrage driven media consortium– has less unique value. But CNET– as a repository of high quality content– can accelerate Best Buy’s suddenly very realistic efforts to own page 1 of Google and whatever version of search may follow.  

Both chasing the same consumer search trends, Best Buy’s merchandising strategy has followed in lockstep with a lot of new product areas CNET covers, including skincare, furniture and parenting gadgets. There’s a whole top nav header on Best Buy’s website titled “Yes, Best Buy Sells That.” Here and perhaps only here, Red Ventures’ thirsty expansion of the brand into questionable adjacent verticals could prove a feature, not a bug as CNET’s archive of expertise extends to the vast majority of the Best Buy catalog. 

Growing a best in class retail media platform.  

More importantly, CNET plugs in brilliantly to Best Buy’s retail media network. While retail “media” is generally an overromanticized misnomer– half the market size is sponsored product ads in Amazon search– Best Buy has arguably the most robust product offering in the space beyond simple search driven demand capture.  

Best Buy Ads already include activations with influencers, affiliates and experimentation in onsite product reviews. Adding CNET’s wealth of inventory and customer data would allow for some very complex packages to be built for brands that advertise on the network, focused around accelerating discovery for high ticket items.   

Building the most novel AI-driven product discovery engine

Last week, Amazon rolled out Rufus, its genAI powered shopping assistant to….let’s just call it tepid acclaim. The earliest demo use cases are not particularly impressive– suggesting flowers and candy as Valentine's Day gifts isn’t exactly the type of bespoke shopping concierge we’ve been promised. As I wrote here two weeks ago:

Amazon never hurts for lack of data, which often becomes its achilles heel in overcoming the paradox of choice for shoppers. For years, Amazon attempted to solve discovery by injecting publisher content into the core search experience via the Onsite Associates program. Via direct relationships and partnerships with third parties, Amazon amassed a wealth of content that ranged immensely in quality and ultimately became tuned out by customers as Amazon overzealously embedded mediocre “expert” reviews into search. The company’s earliest attempts at AI suggest a version of the same mistake. 

With CNET expert recommendations as its main training data, Best Buy could outflank its largest rival. For inspiration on how to do this, look to travel media firm Skift which rolled out an AI chatbot, trained exclusively on its library of well reported content. 

Most product recommendation algorithms still suffer from presenting shoppers with too many uncontextualized options– layering AI on top of a plethora of garbage in, garbage out review data and pay to play affiliate makes the experience worse, not better. Backed by CNET’s library of articles and product guides, Best Buy could aim to build a true best in class deployment of AI that actually shortens the purchase funnel and ultimately recreates the in store expert online.

Best Buy already has the right ethos here– the chatbot on its website immediately attempts to set you up with an in-store appointment with a rep or opens a chat window where you can ask a customer care agent questions. To test this out, I did three open-ended chats with a rep, looking for recommendations on a “work laptop to replace my Lenovo Thinkpad X1”, a 24” electric dryer that can run on 110V” and “a good starter smartwatch to track my workouts.”  In each case, the rep did a solid job, asking smart questions and narrowing down to 2-3 solid recommendations but it took 10+ minutes and the content/justification for each recommendation seemed limited to exact sell spec information on PDPs. The customer care agent was tactfully persistent and tried to push me well down the funnel but ultimately couldn’t add that extra layer of qualitative help that well, this article did. 

A brighter future for CNET 

If CNET gets absorbed by another media rollup or private equity firm, there will be no way off the desperately thirsty programmatic and affiliate hamster wheel. Increasing the pure cashflow CNET can throw off will depend on cranking out more content in hopes of fincreasing traffic, opening additional programmatic inventory or recapturing SEO juice that Google has minimal interest in returning,  Sisyphean tasks in the current environment. Under Best Buy, the main KPI can be the customer trust that CNET provides for the mothership. Said another way, for the CNET <> Best Buy deal to work, the #1 thing CNET will have to optimize for is creating great journalism. That's a rare healthy incentive alignment. 

Ironically, becoming the first media domino to fall to a retailer gives CNET the best chance to go back to its free-wheeling, editorially sacrosanct roots. 

The bigger picture: 

Even as commerce media has grown considerably over the last decade, retailers and media companies have remained two fundamentally distinct business models, linked solely as strange bedfellows by affiliate marketing.  Long a bullshit-industrial complex punchline, the convergence of content and commerce is happening-- as Hemingway would say, "gradually, then suddenly”.

With a loud splash at NRF and some quiet updates to select titles, Hearst has proudly declared itself a true commerce marketplace. We now live in a world where the world's largest publishers are fancying themselves as retailers and FORTUNE 500s and late stage startups are building real media entities. The bar for these projects is getting higher– Sherwood Media has assembled quite a squad. 

While much is made of CAC increases for brands in a post iOS 14.5 world, profitable customer acquisition for retailers is an even tougher conundrum. Amazon isn’t giving brands a 10% referral credit for subsidizing traffic to their website purely out of the goodness of their heart– it's a tacit admission that the unit economics of customer acquisition just don’t work for marketplaces anymore. Add it all up and this is the year that a major retailer makes a splash and buys a media property.   

Ultimately, success for non media companies (or media companies for that matter) buying vertical media brands always comes down to culture. You’ve got to as Logan Roy would say, “f***ing love” whatever aspect of news you cover. In this light, Wired was never gonna get the chance to be truly weird under Conde just like CNET was never going to get the chance to properly geek out under Red Ventures. 

That’s why I’m hyper bullish on Eric Church and Morgan Wallen buying Field and Stream out of Recurrent– I have no idea if their people can operate a media brand but I have high confidence that Church and Wallen f***ing love fields and streams in a way no spreadsheet jockey ever will. That counts for a lot.  

I’ve never been deep inside Best Buy– what I can’t say for sure is if they still have enough unabashed tech nerds in the organization to pull this deal off. Let’s hope there are still a few geeks in the squad.

Amazonia 

My quick take on the week’s most interesting story in the Amazon ecosystem

Pants That Show Dong: The Major League Baseball uniform fiasco is by far the best story going in America. I wanted to make it the feature this week but when you’re following up a story on a brand called NUTSAAKK, you can only go so far before the motif goes limp.

At its core, Major League Baseball messing up pants is a story of inflated corporate power in commerce. Fanatics, the exclusive distributor of MLB apparel, is the comsummate example of an artifiically protected monopoly getting old, fat and not giving a crap in the wake of nonexistent competition.

Years ago, I worked with the eCommerce leads at Liverpool and Tottenham Hotspur in the UK where the full eCommerce experience is handled individually by each of the clubs. Both Spurs and Liverpool employed two of the smartest teams I’ve met in my time in commerce and delivered unique merchandise and digital optimization strategies that rivaled any of the most sophisticated apparel retailers in the game. And most importantly, you could see anything through the shorts.

Cocktail of the Week: The At Home Espresso Martini

There are few things in life I like more than an espresso martini. It’s a Four Loko with elegance and panache. I liked them before they were cool, while they were cool and love them long after. As Frank Turner would say “this shit wasn’t fashonable when I fell in love, if the hipsters move on, why should I give a fuck?”

I make a few variations including a hazelnut (ft. Frangelico), a caliente (ft. Ancho Reyes) and an “oh crap, I’m out of coffee liqueur” (which uses maple liqueur). But for you all, I’m sticking with my classic. Here goes:

• 1 oz vodka

• 1 oz Mr. Black coffee liquor (some notes on this below)

• .25 oz Cometeer condensed ice coffee (more notes on this below)

• 2-3 dashes Black Walnut bitters

• A hint of vanilla extract (hint, ALWAYS get this at Costco)

Shake like an absolute maniac and enjoy.

Cometeer is highly concentrated so the flavor here is going to be strong. That’s what you want. You won’t get quite the perfect silky texture you get from using proper espresso but you also won’t have to brew espresso and I think the flavor is even bolder.

On the coffee liqueur, St George’s NOLA is by far my favorite for drinking on its own but it isn’t quite sweet enough to cut through here. Kahlua is a garbage sugar bomb syrup. Mr. Black splits the difference for me— too sweet to enjoy neat but perfect at balancing all the flavors in this drink.

Have three of these tonight and write your memoirs.