As Content and Commerce Merge, Gilt Comes Out Ahead

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I’ve been pretty harsh on some of the daily deal services — and with good reason. The pressure to fill their pipeline has foisted upon the public a litany of laser hair removal and Lasik surgery offers, lame spa days, and restaurants that I probably wouldn’t want to go to — even with the deal.

Then there’s Gilt Groupe. My understanding is that of all the deal companies, Gilt is among the most successful. A quick look at my inbox explains why: A Bastille Day Party at the De Young Museum in San Francisco is followed by a one-year membership for Private Jet MD, a global 24/7 emergency medical referral service. Dive into their website and soon I have no idea when I’m reading editorial or when I’m clicking on a deal. Gilt City feeds Gilt Taste feeds Gilt Men (I have no idea if that’s the official name but it’s where they sell men’s clothes). Steven Alan shirts at more than 50% off! Sold! Naturally, there’s a Steven Alan shop in San Francisco I can walk in to, as well, to try stuff on.

The upshot is: Gilt Groupe gets that shopping and magazines are rapidly merging. Rather than make an nod to editorial with stupid puns and obnoxious copy (not naming names, but…), Gilt took a different approach, hiring journalists or writers with expertise or knowledge in the field. And they gave those writers a mandate to create useful content that not only plugs the wares but also, equally, is useful and interesting just like reading a nice shelter, lad, or lassie mag.

The proof is simple. I start clicking, forget how much time I’m spending, read articles, and enjoy the process. I’m not being sold to; I’m being entertained. For brands, association with Gilt actually builds cache, rather than destroying it. I would probably never walk into a Steven Alan store otherwise. I know his clothes are awesome and expensive, but actually, I learned from Gilt, they are expensive but not that much more than what you might buy as premium ware from Banana Republic (roughly 2X the price). So Gilt is an excellent gateway to new potential customers.  And it’s a wonderful way to span hyperlocal, national and global brands. Beyond this I call it the “Pinterestation” of the deal market. Montage presentations and collage-like interlinkages, when done right, drive real usage and browsing in a way the standard, old websites never did. Add in real service-driven editorial and I am happy to spend time on Gilt.

The company raised $138 billion at a $1 billion valuation in May 2011 from a rock star group of investors. Analysts have estimated 2010 revenues at $450 million but its probably well North of that by now. The company has largely been mum on its profitability. CEO Kevin Ryan (who also ran ad server DoubleClick to a $1.1 billion exit) has said they are focused on growth rather than profits. That can be a code word for “low margin,” but Groupon has shown us that scale in deals does not profitability make. Whatever the case, at present Gilt is one of the few deal emails that I allow into my inbox. And that’s because it doesn’t feel like a deal site; it feels like a magazine.

Alex Salkever is an executive at a cloud computing company and a former technology editor of The views expressed in his column are his own and not those of his employer. His Personal Fight column appears every Wednesday on Street Fight.

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