The wildest DTC marketing story. Ever.

Five years ago I came across an article that was far and away the best marketing lure I had ever heard. It still remains the very best.

It's a rare story about search engine optimization, affiliate marketing, gobs of money, investigative journalism, and a federal lawsuit. The original article is an amazing but long read so here’s a run down with some added background and updates from this guy (me).

Ask somebody today to name the top mattress brands and they’ll say Casper, Leesa, Tuft & Needle, Purple, Saatva, and a few more. All these brands emerged in the past 10-12 years and found their way alongside established players like Sleepy’s (1931), Simmons (1870), and Serta (1930).

This new wave of sleep struck gold during the not-so-long-ago period when Facebook advertising was cheap and e-commerce platforms were finally capable. That’s part of their success, but they also uniquely positioned themselves to disrupt a deceptive mattress industry practice that was in play for almost a century before.

These old school brands relied so heavily on real-world retail sales that they would sell the same mattress through different retailers but with different names for two main reasons:

1. To lend each retailer the brand equity but not a commoditized product line

2. To purposefully remove a shopper’s ability to comparison shop

And it’s reason #2 that actually created a white space for brands like Casper who saw the opportunity in the fact that the internet was ripe for comparison shopping in order to spark a DTC movement and the possibility of this crazy story!

Derek Hales founded Sleepopolis.com in 2014, two years after Casper launched. When Derek was in the market for a mattress he ended up buying both a Tuft & Needle and a Casper. Derek preferred the Casper mattress and posted a YouTube video comparing both. The video took off and sparked the idea of a comparison site.

Derek put was an SEO specialist and put his skills to work - Sleepopolis quickly topped Google rankings for mattress comparison searches. Search volume was so high that Derek single-handedly could drive 10-20% of a brand's referral traffic and sales based on how frequently and positively he framed their products.

One year later, Derek quit his job, and while the numbers aren’t disclosed, it’s likely that Derek was making ~$50 per sale and raking home over a million dollars annually from affiliate links on his solo-run site and YouTube videos.

Derek wasn’t alone. Jack Mitcham founded a similar site called Mattress Nerd and was also wielding influence over this new crop of brands that were beginning to take notice.

Phillip Krim, CEO of Casper wrote an email to Mitcham greasing the wheels. “Nothing would make us happier than to pay you a ton of money, but we need to do it in a context of being accretive to Casper. Currently you actively endorse a competing product on our review page. What can we do not to have you endorse another product as superior to ours? I am certain we can be a better partner to you than Leesa.”

Krim upped the affiliate incentive by 20% and gave Mattress Nerd a unique coupon code to pass on to their readers. Mitcham appeared to have taken it.

But things changed. Casper raised a shit-ton of VC money and broke away from the competition. It announced that it would shut down its affiliate program but tried to maintain its relationships with the likes of Mitcham and others. No matter what he tried Krim & co. realized that the sites that once adored Casper were now shlepping another brand, Leesa, and explicitly discouraging readers from purchasing Casper. Krim was pissed.

In 2016, a federal lawsuit was filed against Derek Hale’s Sleepopolis and Jack Mitcham’s Mattress Nerd for false advertising and deceptive practices.

Mitcham settled. Derek did not.

And this is where things get twisted.

During the discovery phase of the lawsuit it came to light that while Casper’s competitors appeared to be paying the same affiliate share as the company, Leesa had paid Derek a separate consulting fee for his expertise in SEO. It was a relatively small but meaningful amount to impact the case. It looked like Derek was going to settle.

Instead, Derek’s lawyers countersued Casper for a spam link strategy on Sleepopolis.com that just so happened to occur after an exchange between the two where Derek refused some of the incentives Casper was throwing at him.

The courtroom ping-pong was continuing until it abruptly stopped. Derek had suddenly sold Sleepopolis to a firm formed by two competitive mattress review sites.

And this is where things get twisted AGAIN!

It turns out that the acquiring firm received the funds to make the deal happen from none other than CASPER!

Yep. Casper would LOAN a firm enough money so that it could acquire the biggest thorn in Casper’s side. Hysterically, the agreement would also allow Casper to “repossess the assets” of the firm and forgive the remaining loan amount at any time!

Soon after, Derek’s face was removed from Sleepopolis.com and an ad unit was added to the site.

Here's the original article: The War to Sell You A Mattress Is An Internet Nightmare. I have to take a moment to say that David Zax, the journalist behind this story, is a fucking legend for this investigative wizardry and that you should really read it in its entirety.

I remembered this article because last week Serta Simmons filed for bankruptcy. They merged with Tuft & Needle in 2018. Over the past few years, the mattress industry was hit terribly by economic and supply chain issues. It's crazy how DTC darlings can fade but this story, for me, captured the glorified wild west days of how things used to be.