AMEX is tuning into “shoppertainment.”
On Tuesday, American Express Ventures, the credit card company’s venture capital group, invested in Firework, a live shopping and video ad tech company that works with brands and merchants to create TikTok-style videos featuring products with direct sales and add-to-cart functionality.
Terms of the deal were not disclosed.
Firework was founded in 2018 with the ambition of being its own standalone app featuring short videos focused on shopping, said Co-Founder and President Jerry Luk. The company watched TikTok take off and major platforms like Facebook and Snapchat invest into the same snackable-video feed concept.
But “competing directly with the likes of Facebook and TikTok, and what they spend on marketing” is something Firework knew it didn’t want to do, Luk said. So, at the end of 2019, the company pivoted to a tech vendor business offering tools for other companies and product sellers to create shoppable video formats.
Over the past two years, Firework has been building a two-sided marketplace populated by merchants and publishers that place Firework video feeds on their sites or apps and by brands that can create videos or use their own social media content and pay to promote them on a merchant’s site.
Firework also has two payment models. It can either license the tech to a merchant in a software subscription model or place promoted videos from its brands and take a cut of the ad spend.
In one recent example, Heinz created a live video promoting its Halloween merch (“Tomato blood” and ketchup-covered costumes) across the gaming and lifestyle sites owned by Evolve Media. Firework also works with merchants, such as Albertson’s and the PAG Tour’s site, to create recipe videos or club demos, for instance.
Companies largely rely on walled gardens like Facebookagram, Snapchat, Amazon and GoogleTube to support their ecommerce video initiatives, which are becoming a top priority for many, Luk said. But it’s what he called an “abusive relationship” whereby the platforms offer freebies and followers to get started, but eventually squeeze profit margins until ecommerce video is lucrative for the platforms but barely worth it for brands and sellers.
AMEX Ventures is interested in Firework as a tool it can package and sell to its own business and merchant customers. With this strategic investment, Firework will become part of the portfolio of products AMEX uses to entice merchants or make its current relationships stickier – adding ROI at minimal cost to the business.
“Video is the next generation of the shopping experience,” said Harshul Sanghi, global head of AMEX Ventures.
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Merchants try to pack descriptive language into online product pages or use to-scale mockups to give a sense of how clothes might fit or how furniture or home décor may look in a room.
“But in many of those cases a video showing someone your size walking and taking a turn to see how a dress or shirt fits while it’s worn” is what will clinch the deal, Sanghi said.
AMEX Ventures has made early investments in other commerce-related companies, such as Stripe, Instacart and BigCommerce, which IPO’d a year ago. But unlike a typical VC fund that’s focused exclusively on the exit value, AMEX Ventures is just as interested in what it can do to bring value to merchant customers, Sanghi said.
AMEX’s partnership deal with payment processor Stripe, for example, is still going strong 10 years after AMEX invested in the startup as a tool for its small business merchants. Now, those same merchants view video content and shoppable media as an important part of their overall sales strategy.
“In the last 18 months, we’ve seen the acceleration of that strategy given the change in consumer behavior during the pandemic,” Sanghi said. “We think that shift is permanent.”
