John Boris is CMO of Shutterfly, the online destination for uploading and storing photos, and creating photo-based products and gifts. But what’s most interesting about Shutterfly is how it has been able to succeed precisely where legacy companies, such as Fujifilm and Kodak, have failed: at digital.
Part of that success has to do with the fact that Shutterfly is, of course, digital-first. It’s not a multibillion-dollar corporation trying to fit new digital ways of thinking into old-school business models, said Boris, who joined the company in April 2012.
But the more interesting differentiator, according to Boris, is that Shutterfly is vertically integrated. When the company started, outsourcing was very much en vogue. Shutterfly, however, opted to control the process from start to finish. The company even has its our own manufacturing facility. "We control every step along the chain," he said.
So it should also come as no surprise that a big chunk of Shutterfly's marketing is handled in-house as well. In a wide-ranging interview with CMO.com's Giselle Abramovich, Boris discussed his approach to marketing a portfolio of brands, how he has organized his marketing team, budget allocation across channels, the changing CMO role, and more.
CMO.com: What do you attribute your company’s success to?
Boris: We have had an amazing history. We’ve been around for over 13 years. We are an e-commerce 1.0 survivor. But not only have we survived, we’ve flourished. We’ve flourished in the face of much bigger names and steep competition. Fuji, Kodak, American Greetings, the list goes on and on of much larger companies that were not able to succeed in this arena. One of the main reasons we’ve been successful is that we are incredibly focused. . .We've put all of our passion, efforts, energy, innovation, and dollars into making our singular focus the best it could possibly be and to ultimately delight the customer. That is, in a nutshell, why we’ve been successful.
CMO.com: What’s unique about the way you approach marketing?
Boris: We are an endemic e-commerce company. We have retail partnerships, but you’re not going to walk into a Shutterfly store. What’s unique is we need to live in the digital ecosystem, where you’re one click away from getting to Shutterfly, engaging and ultimately purchasing. But we have to find a way to live in the offline ecosystem. We need to hit people in their living rooms, where they are in the consideration set to buy holiday and birthday cards, photo books, and gifts.
So the way we approach marketing is an 80/20 split. The 80 percent is spent on optimization of our tried-and-true channels: display, customer acquisition, affiliate, partners, direct mail, and CRM. We consistently optimize each of our channel investments so we are getting our return on investment. The remaining 20 percent is really focused on innovation. Innovation is a combination of new and bleeding edge. Bleeding edge means no one else is doing it. An example would be beta partnering with Facebook on their Ad Exchange. New means new to us as a company, and a great example of that is our embracing television to elevate awareness and deepen engagement. It made all other channels, particularly Internet marketing, even more effective.
CMO.com: How much do you depend on agencies and how much do you do in-house?
Boris: We definitely continue to invest in internal capabilities, for a whole host of reasons. One is over the long term, it’s more cost-effective in many instances. Two is you have more control and more visibility. Our Internet marketing team is in-house. Our creative team is in-house. So is the CRM team. But, of course, with bringing teams in-house you also need to understand what you can do on your own, what you could and should do in partnership, and what tools you need in order to be successful. We do work with a whole slew of partners. We continue to invest in the tools that we’re not going to be building in-house.
CMO.com: How is marketing organized within Shutterfly?
Boris: As a marketing team we are organized by discipline and by channel. We’re also organized by brand, and I’ll explain what I mean by that. Within [our CRM team] you have strategy, you have operations, but you also have people who are assigned to different brands. We have a CRM team for Tiny Prints and for Shutterfly, for example. And there are, of course, brand managers that oversee an entire brand. We also have an Internet marketing and customer acquisition team. That team really embodies all the disciplines within Internet marketing. So it’s paid search, it’s SEO, it’s display and affiliate, social, partnerships, the list goes on from there.
We also have a creative services department, which is something we brought in-house. They are organized by discipline, so you have copy writers and designers, Web developers, and what not. But many are focused on specific brands. Then we have our brand team, which consists of PR, marketing research, and insights, which consists of folks that are dedicated to the bigger brand think, like keeping the brands relevant and distinct.
And then we have what’s called the imperative marketing team, which are the folks that bring it all together across all the channels. We have a business development unit that is out there procuring best in breed to increase exposure and engagement with the Shutterfly brand. Then we have something that we call voice of the customer, which really helps bridge the gap between what customers are saying, customer service and the marketing strategy as a whole.
CMO.com: How important is big data?
Boris: Data is incredibly important for any organization. And it’s even more important for an e-commerce organization. And so we rely heavily on data. Data helps inform all of our decisions. It makes us smarter and more confident about the decisions that we make. I give us a lot of credit for being an extremely analytical team--we harness the true power of data to make informed decisions, but we do not have analysis paralysis. We look at the data, but we are cognizant that data doesn’t always tell the whole picture. And so you have to look at data for what it says, but you also have to look at the bigger picture: What is the data not saying? What is experience and intuition saying? What does basic understanding of customer behavior say that might not be reflected in the spreadsheet?
CMO.com: Who’s your target audience?
Boris: It’s different by brand. Each brand has a slightly different and totally defined addressable market. But, in general, our sweet spot is families with young kids--in particular, moms. If you look at who is making the decisions on holiday cards, stationery, photo books, and other photo gifts, it is typically driven by the mom. And obviously we engage with men all the time, but that is really our sweet spot.
CMO.com: What percentage of your marketing budget goes to digital?
Boris: With regard to our overall budget, being an e-commerce player, a large percentage of our budget does go to Internet marketing. And that’s a combination of working and nonworking. Paid search, affiliate, display, all of those fall into the online bucket and is where we continue to not only invest heavily in, but really optimize and get the greatest return. We look at ROI, we look at the LTV for each of those various components. And we also invest a lot in nonworking. We need the best possible team internally to make sure we are harnessing the power of those channels. However, we do continue to invest more into offline, whether it’s with direct marketing, a catalog, television, or radio. We are continuing to push the boundaries to grow our overall awareness and engagement with a larger population of people.
CMO.com: What channels/platforms are working best to attract more eyeballs?
Boris: We look at it as a funnel, which is not dissimilar to many companies out there. So it’s about getting the best qualified buyers through that funnel, converting them, and then continuing to remarket to them if they’ve joined one of our family of brands. Of the Internet marketing channels that I had mentioned before, paid search is working extremely well, and we’re seeing very good results as we continue to invest more into Facebook. We continue to see strong results with display and affiliate marketing as well.
We’re also seeing some great results in newer initiatives such as catalog and television. Television, for example, not only generates awareness and exposure, but it helps make all of those other Internet marketing channels that I just mentioned more efficient. Not only are we getting exposure, but we’re gaining efficiency through those other channels, and then we reinvest those efficient dollars back into our core or new programs. It’s not just an individual channel that works best. It’s the combination of all the channels in the portfolio and finding that right balance.
CMO.com: As a digital-first brand, you don’t have to deal with forcing digital into old business models. But I bet there’s a whole new set of challenges you deal with from a marketing perspective. What are they?
Boris: We’ve been doing this for a while, and we’re also an inquisitive company, and every time you continue to grow, there are new platforms and technologies that come into play. Getting those to play harmoniously is always a challenge. Also continuing to scale your infrastructure to meet the demands is a challenge. We continue to add millions of new customers a year, and we continue to invest in creation paths because with the advent of new technologies, whether it be tablets or mobile phones, we need to continue to be at that forefront.
A great example of this: People love to create photo books. About seven weeks ago, we launched a photo book app for iPad. Here we took an emerging technology, which is now a mainstay technology, and took one of our best-in-breed products and brought it to that medium. And we continue to advance in elements like that. Mobile’s another great example. We have more than 2 million downloads of our app. People love to take photos on their mobile phones, and we give them the opportunity right then and there to create a keepsake using their photo, whether it be prints or a photo gift, and that’s hugely powerful for us.
CMO.com: What are some of the advantages of being digital-first?
Boris: There are many. We are a digital-first player, and over the years we have certainly built a very robust database and loyal set of customers. That is nice, whereas in the traditional bricks-and-mortar environment you don’t necessarily have the ability to capture customer data and customer information. The other thing is we are founded on technology. We are a leading technology company with over 20 billion photos stored in our cloud. We have multiple petabytes of data. And as a result of being a technology company, and a digital- first company, we have a great infrastructure that is scalable.
CMO.com: Shutterfly has the following main touchpoints: Shutterfly, Tiny Prints, Wedding Paper Divas, Treat, and My Publisher, and you will be launching This Life soon. Can you talk about how data for individuals moves across these touchpoints and why this is important?
Boris: We are a family of soon-to-be six consumer brands. So having a portfolio of brands presents a wealth of opportunity because not only does each brand have a distinct voice, products, and a distinct set of customers, it gives you the opportunity to take customers and cross-pollinate them across that family of brands, which ultimately leads to deeper engagement and higher lifetime value.
A great example of this is Wedding Paper Divas. This brand is all wedding paper/stationery-related: invitations, save the dates, thank-you cards, and gifts. We know that there are approximately 2 million weddings per year in the United States. Once a customer comes onto weddingpaperdivas.com and they graduate from there, meaning they’ve gotten married, they’ve sent out the thank-you cards, there’s a tremendous opportunity to bring them to Tiny Prints, Shutterfly, or a combination of both so they can experience the wealth of products we offer. It’s challenging for one brand to meet every consumer need. So it also gives us the opportunity to better serve our customers by introducing them to the family of brands.
CMO.com: What are your tips for brands trying to make it in this very fast-paced digital landscape?
Boris: There are lots of companies out there, whether it’s a startup or an established company, that are grabbing customers at all costs, and I think that’s a very dangerous thing to do. It’s not just about that revenue that that individual customer brings in for your respective company, but you also have to look at the profitability of that revenue. Not all customers are created equal. Not all revenue is profitable, and you just can’t get revenue at all costs. There are lots of companies out there that are just in a race to get customers, and my word of advice would be to do it responsibly.
CMO.com: How is the role of the CMO changing? Why?
Boris: In the Don Draper days, it was a lot easier to be a CMO. You had far fewer channels to choose from. You had outdoor, you had radio, you had television, and you had print. Now even going back five years ago, look at what did not exist in a robust fashion. You didn’t have Facebook in the same form it is today, you didn’t have Twitter, or Pinterest. There are so many fast-moving elements in the world of marketing that not only does the modern CMO need to be entrenched in understanding brands and the power of brand marketing, but they need to be firmly entrenched in what I will say are traditional media channels, like television, print, and radio, and also understand the continued innovation of the Internet landscape.
But again, it’s not these elements in isolation. It’s looking at all of these channels and really comes down to how you take the power of an individual channel and blend it with other channels and create a 1+1=3 scenario. That is ultimately the role of the new CMO--to grow and cultivate a brand, understand the channels that are in front of them, and equally as important is understanding the channels and changes that are coming down the pike. That’s really what it’s all about. There’s an incredibly fast pace of innovation, and you need to have an eye toward the future.
CMO.com: Do you have a holistic view of marketing’s effect on the business? Do you know what your marketing is doing?
The old adage is, “Half of my marketing is working, I just don’t know which half.” At Shutterfly, we are much more in tune with our marketing spend, what it’s returning, and how it’s performing both on an individual and on a collective basis. First and foremost, I and everyone on our team treats our marketing dollars just like they’re coming out of our own bank account. I think it’s critical that people take a personal responsibility for the dollars they spend. Second, as we look at it on a channel-by-channel basis, we have a set of metrics that we analyze daily, hourly at times, and it comes down to our cost-per-new-customer, cost-per-action, our return on ad spend, ROI, and LTV. We look at that across every measureable channel.
But the reality is not every channel is measurable. TV is a great example. It’s not QVC where we have a ticker of how many items we’ve sold. These are broader-based awareness vehicles. We’re not going to extract an explicit ROI from that. So, in that instance, we do pre- and post-awareness studies to understand, did it change awareness and perception? We’ll also do detailed analyses of when we did our TV ad, did it drive up our search queries, for example, and did it drive up our brand in search? If the answer is yes, we are much more efficient as a marketing entity because we’re not spending as much on category search.
So we try to connect the dots as best as we can, and I think we are best-in-breed in doing that because it’s not just about the individual channel. It is about how you take the portfolio of channels and overlay multitouch attribution modeling to really figure out what the right sequence is and the right return is.