Peet’s Coffee & Tea and and digital marketing and technology company Razorfish have entered into an agreement that could revolutionize e-commerce development through profit-sharing. The pay-for-performance arrangement will give Razorfish a cut of Peet’s e-commerce division profits, and the editorial team at AdAge says the groundbreaking model is the first of its scope.
Razorfish announced yesterday that they’ve been brought on as Peet’s digital agency of record, and work has already begun at Razorfish’s West office. The broad concept is that the firm’s commitment to the success of Peet’s brand and online sales will run deeper than it would with traditional models that rely on contracted work.
“Razorfish will share day-to-day responsibility for driving growth of Peet’s e-commerce business, from collaborating on strategy-setting and road mapping to planning and executing media strategy and spend,” the company said in yesterday’s announcement. “This breadth of partnership will allow both companies to innovate, test and acquire insights in a way that will enable Peet’s to markedly enhance its online presence by holistically leveraging Razorfish’s full suite of end-to-end capabilities.”
Part of the French multinational advertising agency Publicis Groupe, Razorfish is known for pioneering work in the digital arena, and its client roster includes names like Delta, McDonald’s, Kellog, Axe and Samsung. The company says it is confident it can help quickly grow Peet’s sluggish online sales, and in turn line its own pockets.
It is worth noting that at the height of the second wave, Peet’s was known for the strength of its online sales, pulling in more than $1 million in 1998 — which greatly outpaced many of the company’s competitors — largely from California expats who couldn’t do without their Peet’s.
From the AdAge story:
“Before we even met with them we had done an audit of all e-commerce properties and marketing efforts, and we felt confident we could help take them to the next level,” Razorfish CEO Pete Stein said. “We built out a business model where we defined exactly what our expenses would be and, based on our analysis of where the program was today and what they were willing to commit in terms of media spend, where we thought we could find an upside. There’s definitely some upfront investment for us, but we’re super confident.”
This is the third major partnership announcement from Peet’s in as many weeks, as the company recently teamed up with music streaming service Pandora to create a first-of-its kind Peet’s-branded music channel to be played in all of the company’s U.S. retail cafes. Peet’s also inked a manufacturing and distribution deal with Keurig Green Mountain for Peet’s-branded K-cups.
All of this comes as Peet’s is in the midst of a massive retail expansion, much of which involves to conversion of Caribou Coffee stores to Peet’s brand stores, including revamped interior designs. Both companies were acquired by the German holding company Joh A. Bensicker in 2012.