February 21, 2024

Best Buy Should Make a Play for CNET

This is a guest piece by Mike Mallazzo, Writer & Publisher of United States of Amazon, Contributing Editor of Martech Record, and head of Business Development at Forum Brands. I hope you enjoy it.

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 who needs the jolt of panache that quality media provides. CNET’s core asset is brand, and that brand erodes every day, living 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 bet 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 a 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 listlessness. The stock is only up 20% since January 2019—a timeframe where Walmart is up 68%, Amazon 85%, and Target 90%, not to mention Home Depot, Lowe’s, Ulta, Tractor Supply, and DICK’s Sport Goods all up more than 100%. 

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: “We believe that price-competitiveness is table stakes. The way we want to win is around the advice, convenience, service.”

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. Plugging in CNET addresses all of them. 

Recentering 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 has little unique value as a standalone entity owned by an arbitrage-driven media consortium. But CNET, as a repository of high-quality content, can accelerate Best Buy’s very realistic efforts to own page 1 of Google and whatever version of search may follow.  

With both chasing the same consumer search trends, Best Buy’s merchandising strategy has followed in lockstep with many new product areas CNET covers, including skincare, furniture, and parenting gadgets. A top nav header on Best Buy’s website is 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 into Best Buy’s retail media network brilliantly. 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 on 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 aren’t exactly the type of bespoke shopping concierge we’ve been promised. As I wrote in my newsletter, United States of Amazon last week:

Broadly speaking, the biggest asset that Amazon has for Rufus is potentially also its biggest challenge. Amazon has an ungodly amount of review and purchase data…but in aggregate, will that just lead to AI suggesting obvious, lowest-common-denominator product recommendations?

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. AMO dug into this last spring

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 affiliates makes the experience worse, not better. Backed by CNET’s library of articles and product guides, Best Buy could aim to build a truly 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, though. 

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 cash flow CNET can throw off will depend on cranking out more content in hopes of increasing traffic, opening additional programmatic inventory, or recapturing SEO juice that Google has minimal interest in returning.

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 retailers, and FORTUNE 500s and late-stage startups are building real media entities. Robinhood’s new 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. And Best Buy is perfectly positioned to do it.

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