Feb 4, 2020 - Economy & Business

FTC's move to block Harry's deal could impact ad spending

Illustration: Aïda Amer/Axios

The Federal Trade Commission said Monday it would sue to block Edgewell, the maker of Schick razors, from buying Harry's, which sells shaving products by subscription.

Why it matters: "Disruptors" like Harry's — companies that aim to reshape stable markets with new products or tactics — often end up selling to bigger, more established brands. If the FTC's move discourages that, the advertising and marketing industries might take a bite, since many of those companies rely heavily on digital marketing to grow.

The big picture: Most direct-to-consumer (DTC) upstarts launch with venture-capital investments, and aim to eventually reward investors by going public or by selling to another company.

  • The FTC's intervention could make it harder for companies to sell.
  • At the same time, DTC companies have struggled in public markets, making it less likely for some of them to see going public as a viable option.

Be smart: Most DTC companies spend lots of money on digital ads to acquire customers, and put off worrying about turning a profit.

  • If opportunities to either sell or go public seem less likely, those brands may have to proceed with more caution.

By the numbers: It's hard to directly attribute how much DTC brands spend on marketing, because the category is hard to define. The Kantar consultancy estimates that the top 300 DTC brands spent roughly $4.5 billion on advertising from January to September 2019.

Yes, but: "DTC companies which are not themselves efficiently growing (meaning: profitable at a modest scale) are always going to be relatively less attractive to buyers, regardless of the buyer’s position in a given market," says veteran advertising analyst Brian Wieser, the global president of business intelligence at GroupM agency.

  • "A bigger issue to consider is that incumbents in consumer goods are not necessarily going to want to overpay for start-ups that built scale that won’t necessarily last, or scale which is not as profitable as the traditional businesses those incumbents are in, even if they are growing slowly. "

What's next: Wieser suggests that it could be that the exits are still likely to occur if the buyers "are more broadly focused consumer and packaged goods companies who want exposure to a new sector."

Go deeper: Shaving giants sweep up the disrupters

Go deeper

51 mins ago - World

The eye of the COVID-19 storm shifts to Latin America

Data: The Center for Systems Science and Engineering at Johns Hopkins; Chart: Naema Ahmed/Axios

The epicenter of the COVID-19 pandemic has moved from China to Europe to the United States and now to Latin America.

Why it matters: Up until now, the pandemic has struck hardest in relatively affluent countries. But it's now spreading fastest in countries where it will be even harder to track, treat and contain.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 7 p.m. ET: 5,768,908 — Total deaths: 358,490 — Total recoveries — 2,399, 247Map.
  2. U.S.: Total confirmed cases as of 7 p.m. ET: 1,717,756 — Total deaths: 101,562 — Total recoveries: 399,991 — Total tested: 15,646,041Map.
  3. Public health: The mystery of coronavirus superspreaders.
  4. Congress: Pelosi slams McConnell on stimulus delay — Sen. Tim Kaine and wife test positive for coronavirus antibodies.
  5. World: Twitter slapped a fact-check label on a pair of months-old tweets from a Chinese government spokesperson that falsely suggested that the coronavirus originated in the U.S.
  6. Education: Science fairs are going virtual, and some online elements may become permanent.
  7. Axios on HBO: Science fiction writers tell us how they see the coronavirus pandemic.
  8. 🏃‍♀️Sports: Boston Marathon canceled after initial postponement, asks runners to go virtual.
  9. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  10. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Minnesota activates National Guard amid fallout from George Floyd death

A portrait of George Floyd hangs on a street light pole in Minneapolis. Photo: Stephen Maturen/Getty Images

George Floyd, 46, moved to Minnesota to improve his life and become his "best self," but instead, he is dead because of Minneapolis police.

The latest: Minnesota Gov. Tim Walz declared a state of emergency and activated the state's National Guard in response to violent clashes over the past two days between police and protesters in the Twin Cities.