Digital-Social Agencies, and Better-Fitting Pants

David Armano of Edelman Digital has posted a thoughtful piece about the changes roiling the agency world, especially for agencies moving to compete in the “digital-social” space (that is, all those wanting to survive).

He focuses on five key vectors – adaptation of skill-sets, importing and exporting talent, supply and demand, integration, and ecosystem development. So on reading this, I naturally thought of … better-fitting pants!

That’s because of this morning’s news that Nordstrom, the monolithic high-end retailer, is leading a $16.4-million investment round in Bonobos, the upstart web-based vendor of better-fitting men’s pants. Sure, it’s a nano-sized deal by Instagram standards, but it’s a smart move by both companies, leveraging these same five vectors:

Adaptation of skill-sets – Nordstrom was founded in 1901 and had over $10-billion in sales last year, yet despite more than a decade of efforts has had trouble establishing a significant online presence. Bonobos is less than five years old, but could teach Nordstrom a lot about email marketing and online brand building. In return, with minimal expenditure on its nascent retail strategy, Bonobos gets maximum exposure, and alignment with one of retail’s most storied brands.

Importing and exporting talent – On top of the cross-pollination between the two company’s retail and online marketing experts, injecting some of Bonobos’ high-energy talent into Nordstrom’s executive suite could liven things up. And Nordstrom has a century of surviving shifts in fashion, which could prove essential to Bonobos’ rapid-fire growth strategy. Plus, on a recruiting level, it’s great for both companies.

Supply and demand – Nordstrom gains some street cred among their current customers’ adult kids, not just those who’ve bought Bonobos online, but the much larger audience who’ve been exposed to their cheap but effective media relations campaigns. Bonobos gains distribution in 20 of Nordstrom’s stores as well as on nordstrom.com, and Nordstrom customers get cool pants. Plus there’s the $16.4-million in financing for future expansion, led by Nordstrom with full participation from Bonobos’ existing venture capital investors.

Integration – Many men don’t like to go shopping, but they also don’t like to buy clothing without seeing what it looks and feels like. Both Nordstrom and Bonobos are known for being fanatical about customer service, and are gambling this venture gives them a head start on a hybrid model combining the best of online shopping and the retail experience.

Ecosystem development – This is the big question. The ecosystem Nordstrom is eager to develop isn’t Bonobos’ customer base of trendy young men, it’s the inventive data-driven email campaigns and web analytics that so effectively engage this audience. Bonobos has big ambitions, and hopes to use Nordstrom’s expertise to crack retail as effectively as it’s mastered marketing automation.

It will be interesting to watch this relationship unfold.

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