Discovery Explores New DTC Opportunities

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Cable network owner Discovery Communications Inc. hired away Patrick Gates, AOL's head of e-commerce, to increase its merchandise business in direct-to-consumer retail channels.

As executive vice president of Discovery's new Consumer Direct unit, Gates is in charge of e-commerce, emerging digital platforms and television-generated commerce. Consumer Direct is part of Discovery Commerce, the retail and licensing arm of Discovery Communications.

"The first task is to promote awareness of the consumer product offering," he said. "We have to communicate to our loyal viewers and fan base that we sell products. A lot of people who interact with our properties are not aware that, ultimately, they could find the great scientific toy or the telescope or that we have stores in numerous locations."

Discovery, Silver Spring, MD, has 14 cable networks, including the flagship Discovery Channel, TLC, Animal Planet and FitTV. But it also has 120 Discovery Channel Stores nationwide; retail and merchandising alliances; a five-times-a-year, 10 million annual circulation seasonal catalog and online shopping via and

Gates' job is to coordinate every aspect of the direct-to-consumer business. As part of his mandate, he is reviewing existing relationships with portals like AOL and MSN to explore more marketing capabilities through those ties.

Partnerships and the distribution side, which covers retailers like Amazon, are under equal scrutiny.

"I really want to look at what are the other type of third-party relationships that I should do similar to Amazon that will make sense both for Discovery from a brand perspective and also for a possible partner like Amazon," Gates said.

Another area requiring more attention is search marketing. Discovery has benefited from buying keywords that resonate with consumer searches. But it wants to compete for more organic and paid traffic.

"Obviously where it's relevant, we want to make sure we have a large presence across all search engines," Gates said. "It's such a huge driver of business. That's a priority."

He also is looking into initiatives to capitalize on the subtle placement of Discovery products on its TV shows. Merchandise often appears on Discovery properties like the Travel Channel and FitTV. There is a feeling that too few people know the merchandise can be bought from Discovery.

Discovery's most popular merchandise includes proprietary products for children and telescopes. It is the largest retailer of the Meade line of telescopes, with prices in the hundreds of dollars for each piece.

Gates will continue to leverage Discovery's various marketing assets, including exposure on the TV channels, direct mail and catalog drops as well as an e-mail program. The company also is using analytics solutions from Acxiom and Omniture to understand customer behavior.

Though direct sales' share of all Discovery merchandise revenue is not disclosed, it is sizable enough for the company to have Gates consider ways to leverage the Discovery brand and extend its revenue potential.

During Gates' six years with AOL, he led e-commerce marketing and merchandising efforts, including targeted shopping sites and consumer loyalty programs.

Also on Gates' resume are stints at Home Shopping Network, where he was senior vice president of marketing and programming, and QVC, where he was divisional merchandising manager. Other employers included Barneys New York and Neiman Marcus.

Gates sees Discovery competing with specialty retailers like Hammacher Schlemmer and The Sharper Image. He is also a big fan of Apple.

"I want us to have a tone of voice like Apple has," he said.

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