purple ceo joe megibow at commercenext event
Joe Megibow, CEO of Purple, speaking at the CommerceNext event in New York City, July 2019.

The Purple mattress brand went from a Kickstarter campaign to a public company with close to $300 million in sales in under three years with the help of viral videos that have been viewed 1.5 billion times.

Now, for the next stage of its growth, Purple is looking to reach smaller audiences, but highly targeted ones.

The strategy is shifting from millions of views to “how do we tell the right stories to the right people,” by using data and analytics, CEO Joe Megibow said at the CommerceNext conference in New York City in July attended by CO—.

The move comes as brands increasingly turn to data analytics to drive business by marketing to consumers in more targeted, personalized and relevant ways.

“Data is the new brand planning,” said Dave Grzelak, chief strategy officer of marketing agency The Shipyard, in eMarketer’s report, “Audience Segmentation and Targeting: The Building Blocks of a Better Customer Experience."

Indeed, “Companies are now looking to move beyond the homogenous model that existed in the past where you have one or two personas and then the big ideas and campaigns to execute across those audiences,” Grzelak said in the report. “People are different, and data providers give us the ability to see those differences, get to much more niche audiences and understand what those audiences are interested in.”

It doesn’t matter if some of them don’t work, because the lift and the leverage that we would get from the ones that did work more than offset the ones that didn’t.

Joe Megibow, CEO, Purple

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Standing out in the disrupted, crowded mattress space

Purple’s explosive growth, Megibow said, reflects its ability to tell a good story, and a funny one.

As the first CEO appointed since Purple became a public company in 2018, Megibow must also tell a convincing story to investors and Wall Street in the face of competition from a fast-growing list of other direct-to-consumer mattress companies.

He is now also Purple’s chief storyteller, having joined the company as its CEO in October. He had previously worked for American Eagle Outfitters, where he was chief digital officer, at Expedia, and as a consultant for private equity firm Advent International.

In 2018, Purple posted revenue of $285.8 million, an increase of $88.9 million over 2017 revenues, according to its annual report. A good portion of that — $35.9 million – came from growth in the wholesale channel, as Purple mattresses are now sold in over 1,000 retail stores, including chain stores like Mattress Firm and department stores such as Macy’s, as well as online.

The company’s operating loss doubled in 2018, from $8.7 million in 2017 to $16.9 million, due to additional costs associated with the reverse merger that made it a public company. (With a reverse merger, a private company can become public without filing for an initial public offering.)

Direct-to-consumer mattresses are one of the hottest categories on the Internet, with over 100 of them in competition, and marketing costs have skyrocketed, Megibow said. Amazon has also gotten into the game, and is one of the largest online sellers of mattresses.

Most of the new digital mattress sellers have the same message, he said: We can give you a better way to buy a mattress.

But with so many online brands all promising a better mattress shopping experience, looking for a mattress online has become as confusing and frustrating as the old days of walking into a mattress store, Megibow said.

 woman sleeping on purple mattress
Purple's marketing strategy is focused on how the brand can "tell the right stories to the right people," instead of just focusing on the amount of views. — Purple

Purple took a different approach, he said. Instead of making its story be, “We have a better way to buy a mattress,” the company asked, “How about making a better mattress?”

The founders of Purple, two brothers in Utah, had been inventing ways to manufacture special cushioning pads and bed mattresses for wheelchair users and hospital patients since the 1990s.

When they launched the Purple brand, they hired a Utah marketing agency Harmon Brothers, creators of viral videos for the Squatty Potty and Poo Pourri brands. Harmon Brothers produced a four-minute video featuring an actress dressed as Goldilocks demonstrating how eggs don’t break on a Purple mattress, even when you drop a heavy plate of glass on them.

The video “took off like wildfire,” and inspired the company to make more, Megibow said.

Not all of the videos were hits, but Purple kept putting them out there, he said. “It doesn’t matter if some of them don’t work, because the lift and the leverage that we would get from the ones that did work more than offset the ones that didn’t.”

More recently, Purple has been working with partners like Facebook Creative and digital marketing firm Agency Within to use data to better connect with consumers. With the Facebook team, Purple created a video series inspired by data that phone usage spikes on Sunday nights, presumably as people are dreading going back to work. The videos feature comedians Tim Heidecker and Eric Wareheim, as the Purple Boys, talking about how to conquer the “Sunday scaries.”

Over 12 weeks, the campaign received 8.5 million views, 35,000 shares, and 32,000 comments, and had a 3.4 times return on ad spend, Megibow said.

Now, he said, the company is using data to understand who is buying Purple and who else can benefit from the mattress, and target those customers.

Despite the viral videos, Megibow said, most customers hear about Purple through word of mouth from people who have bought the mattresses.

The story Purple needs to tell now, he said, is about the benefits of its mattresses, and also to let those satisfied customers be its storytellers.

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Published September 03, 2019