Month: January 2019

Television today can be broadly defined as spanning what people watch through a cable box as well as what they stream to their connected TVs, computers and phones. However, advertising still makes a distinction between linear TV and digital. NBCUniversal is looking to change that by taking the technology that decides when video ads should run on its digital properties and applying it to linear TV.

The Comcast-owned media company is working with its corporate sibling FreeWheel to use the latter ad tech firm’s digital ad server to schedule the ads running on its linear TV networks. Having FreeWheel’s ad server decide when an ad should air is meant to improve NBCUniversal’s ability to slot ads where they’ll reach the audiences that advertisers are aiming for, cut down on unfilled slots and generally rake in more revenue. To be clear, FreeWheel is only scheduling the ads already earmarked to run on linear TV; it is not pulling digital video ads and putting them on linear TV — for now.

More importantly to the future of NBCUniversal’s business — as viewership shifts from linear TV to streaming but the bulk of revenue remains with linear — connecting the digital ad server to its linear inventory sets up for a day when its linear and digital inventory can be treated equally so that “a video impression can go anywhere I can deliver video,” said said Mike Mayer, evp of sales solutions at NBCUniversal.

“We are creating the future foundation for NBCUniversal to be able to manage their advertising inventory as a single unified, fluid pool between digital, set-top box VOD and most importantly linear,” said James Rooke, gm of FreeWheel Publishers.

TV networks currently rely on legacy technology called linear trafficking systems to schedule their linear ads. Think of it as a high stakes version of Tetris. The linear trafficking systems’ primary objectives are to ensure that a Coca-Cola ad does not air next to a Pepsi ad or another Coca-Cola ad and that the ads run when viewers in the advertisers’ desired age and gender targets are likely to be watching. However linear trafficking systems are pretty rudimentary and often only able to fill 60 to 70 percent of the available ad slots automatically, Mayer said. As a result, a human has to manually fill the remaining inventory, which can lead to a portion of that inventory going unfilled and money being left on the table.

What NBCUniversal and FreeWheel have done is hook Operative’s linear trafficking system up with FreeWheel, which NBCUniversal and other media companies have relied on for years to fill their digital video inventory.

“We’re leveraging an algorithm to do the Tetris better,” said Rooke. FreeWheel can figure out how best to fill TV networks’ linear inventory by taking advantage of information that the legacy system is not privy too, like viewership ratings, said Mayer.

NBCUniversal and FreeWheel began testing the ad server’s ability to schedule linear ads in the fourth quarter of 2018. In that two-week testing period, NBCUniversal saw that FreeWheel was able to do a better job of filling its inventory than the linear trafficking system, said Mayer, who declined to quantify how many more spots and how much more revenue per spot the company was able to achieve through FreeWheel. In February NBCUniversal will officially switch to the new scheduling set-up for one of its smaller networks, and by sometime this summer the company will have done the same for all of its other networks, Mayer said.

Using FreeWheel to improve how linear ads are scheduled is only “the first stage” of NBCUniversal’s eventual goal to bridge the gap between NBCUniversal’s linear and digital inventory, said Mayer. NBCUniversal has been trying to bridge that linear-digital gap through efforts like CFlight, the ad measurement program it introduced in April 2018 to account for impressions served across its linear TV and digital properties. However unifying that inventory still requires a lot of back-end work, such as monitoring ad delivery and adjusting where ads run, to make sure CFlight campaigns are hitting their goals.

“This is the last piece of that. As we continue to do more CFlight [deals], rather than have to look at how things are pacing and move things around, let the ad server do it,” said Mayer.

Ad buyers are generally on board with TV networks’ unifying their linear and digital inventory. People may be tuning out of linear TV, but they are often streaming traditional TV shows to their connected TVs, computer and phones, so commingling linear and digital inventory helps TV advertisers to hit whatever reach objectives they may have. But ad buyers also recognize the unification provides them a business opportunity. TV networks need advertisers to accept the unified inventory in order to help the TV networks manage their businesses’ migration to digital while losing as little money as possible. “A lot of networks are pushing for more unified deals where it’s one price and the ads are delivered wherever people are consuming a program. It’s an opportunity where we can try to push down the price,” said an agency exec.

The post ‘We are creating the future foundation’: How NBCUniversal is marrying TV spots with digital ads appeared first on Digiday.

This is part of a series examining agency culture, compensation, workplace environment and job security. The following data were collected with surveys of 446 agency professionals from holding agencies, independent shops and consulting firms, conducted in January 2019. Check out our research on agency compensation here.

The majority of staffers at advertising and marketing agencies believe their current jobs are safe, according to Digiday research. Seventy percent of the 446 agency professionals surveyed by Digiday this January said they believe their jobs are secure, while 15 percent said they thought their jobs stood on thin ice while another 15 percent said they were unsure.

The post Digiday Research: Most agency staffers think their jobs are safe appeared first on Digiday.

Hyundai has had a strong tradition of humorous Super Bowl ads. After taking a break from comedy the past two years, the automaker is back with a new ad starring Jason Bateman as a wry elevator attendant dropping people off on floors that represent things in life considered painful. “The Elevator,” a 60-second ad that…

The next version of BuzzFeed is being whittled into focus.

Over the past week, the venture-backed publisher has been gripped by a very public multi-day round of layoffs. The staff cuts, which hit almost every corner of the organization, were designed to reduce headcount by 15 percent. The company more or less hit its $300 million revenue target in 2018, but higher-than-expected operating costs doomed its efforts to turn a profit, said one source familiar with the matter.

In a memo sent to employees Tuesday evening, BuzzFeed CEO Jonah Peretti revealed the company is embarking on a substantial reorganization designed to reduce costs while enabling the company to invest in what’s working. Many different teams, including BuzzFeed Originals (home to quizzes, as well as original series such as the Try Guys), BuzzFeed Media Brands (home of Tasty and Goodful), Market (home of its commerce content), Branded Production and Publishing are all being grouped into a consolidated Content group, designed to better capitalize on BuzzFeed’s distribution.

BuzzFeed is also scaling back centralized resources for its international bureaus, the memo said, and simplifying its Studio division to focus purely on developing and selling shows to other platforms. BuzzFeed’s commerce business is being merged with its marketing business under Ben Kaufman, now named CMO.

“We restructured to reduce our costs and ensure our future,” Peretti wrote in the memo. “But, knowing we had to do that, we made strategic decisions on how to reshape our organization — so we can operate more efficiently while continuing to deliver for our audiences and grow.”

What’s obvious is, despite the course charted by BuzzFeed CEO Jonah Peretti a year ago with his “9 boxes” diversified revenue strategy, BuzzFeed needed to significantly rein in a cost base that ballooned on the back of nearly $500 million in venture funding. Overall, the cuts have left behind a publisher that is less global and less invested in producing text-focused content or video supported purely by platform advertising revenue. The relatively spare cuts to its commerce and video licensing operations reveal a commitment to those lines of businesses. It also raises fresh questions, both internally and externally, about BuzzFeed’s commitment to news as a category. (A year ago word leaked that BuzzFeed News chief Ben Smith held talks with Emerson Collective about an investment.)

A BuzzFeed spokesperson declined to comment on the record for this story.

A new era for BuzzFeed
In some ways, the layoffs represent the end of an era for BuzzFeed, which pursued breakneck growth for years, often at the expense of short-term profitability. Fueled by a test-and-learn ethos (and boatloads of VC cash), BuzzFeed expanded from user-generated content to deeply reported news and long-form video. It poured a revenue foundation with sponsored quizzes and built a more sophisticated advertising operation that included sales, creative services and a commerce unit that has helped brands launch their own products.

Those businesses, in some form or fashion, will all continue — but in a reduced form.

BuzzFeed Originals, which is the group responsible for the quizzes as well as producing original series such as “The Try Guys,” saw its headcount reduced by 40 percent, according to sources familiar with the matter. BuzzFeed News let go of nearly 20 percent of its reporters, per a report in The New York Times. The company’s creative staff saw significant reductions as well. The week’s layoffs also continued BuzzFeed’s retreat from international markets — everybody at BuzzFeed News Mexico, BuzzFeed Spain, BuzzFeed Russia, nearly half of BuzzFeed UK and the entirety of BuzzFeed Australia’s news team were let go. In total, BuzzFeed is letting go of almost 220 employees; the company had 1,450 employees prior to the layoffs.

BuzzFeed is now focused on controlling costs rather than experimentation. That will cut close to the BuzzFeed core. Peretti’s founding story revolves around how his own experimentation with online virality played a crucial role in BuzzFeed springing to life.

To make up for some of the loss in manpower, BuzzFeed will lean more heavily on unpaid contributors and editorial fellows to make quizzes, sources said. This year, BuzzFeed will resurrect a fellowships program, but in an expanded form. Fellowships will last 12 months instead of three, and the number of fellows BuzzFeed plans to hire – up to a dozen, one source familiar with the matter said – represents a substantial increase from previous years. Though it’s unlikely those fellows will be tasked with producing hard news, they will be expected to produce a lot of the personality-focused content that BuzzFeed has long been synonymous with.

BuzzFeed also does not expect the layoffs to reduce its overall editorial output, said a source familiar with the matter. The publisher will look to hire freelancers to help with increased demand for video output.

Plagued by platform struggles
To some extent, the week’s cuts were affected by the same platform struggles every media company has experienced last year. One former BuzzFeed employee noted that the changes Facebook made to its news feed in 2018 had a substantial impact on the reach of BuzzFeed’s content, from BuzzFeed News to its branded content; stories that once reliably gathered 200,000 visits through Facebook were suddenly lucky to get 20,000, this source said. That loss of distribution made covering many topics unsustainable, particularly in foreign markets.

BuzzFeed News content was hit especially hard by Facebook’s changes, sources said. But “this was something literally the entire company was facing,” that source said. “I think management did a good, if not convincing, job of telling us that we shouldn’t be obsessing about traffic. But our numbers just plunged.”

In other ways, some experienced staffers were the victim of BuzzFeed’s own success at building a publishing platform. Departing director of quizzes Matthew Perpetua noted that “a LOT” of BuzzFeed’s quizzes traffic came from content produced by unpaid contributors.

‘What is BuzzFeed?’
With the direction the layoffs are taking, some current and former BuzzFeed employees fear the company is losing a core piece of its identity.

Though layoffs are traumatic for any workforce, many BuzzFeed employees were also shaken by the specifics of who was let go. Staffers who were responsible for some of the company’s most defining moments — a breakout viral post about a dress; the hands-in-pans recipe video format — were shown the door, leaving many wondering if some essential ingredient in the company had been let go.

“The mood is: with these people who make the internet weird and interesting gone, what IS BuzzFeed?” one current employee said. “It’s not so much, ‘Hey, are we doing less news and more x.’ It’s like, ‘OK, what are we now?’”

“If you look at the layoffs, what happened is the people who cared about the quality of the content, not just the raw numbers, lost a fight,” said one former staffer.

New direction
Based on the changes, BuzzFeed going forward will prioritize areas that can bring back meaningful revenue for the company — as well as areas that don’t require expensive upfront costs.

Over the past year, BuzzFeed has sought to focus more on video production deals where it’s paid to make shows or has some type of monetization partnership in place with the platform distributor. “AM to DM,” a daily news show it produces for Twitter, was recently renewed for a second season and is profitable. BuzzFeed was also paid by Netflix to produce “Follow This,” a 20-episode documentary series centering on its newsroom. This show had its own dedicated staff, many of whom were hired on a freelance basis. When Netflix canceled the series, the crew was let go, as is typical of Hollywood TV productions.

It also remains committed to commerce, which it has turned from a source of curiosity into an almost $50 million source of advertising and sales revenue, thanks in part to big-dollar projects where it helps advertisers develop a product, in exchange for a substantial commitment of ad spending.

“You’ve got to think about focus, especially when you’re facing hard times,” said Bernard Gershon, president of Gershon Media. “If you’re struggling, you’ve got to focus and make one piece of your business work.”

Read Peretti’s full memo below: 

The post Dented by layoffs, BuzzFeed charts a path to a sustainable business appeared first on Digiday.

Cracking down on digital ad fraud may seem like a hopeless and expensive game of whack-a-mole, but there are ways marketers and publishers can arm themselves better to fight it.

Digital ad fraud is a volume game. There are two core types: fraudulent ad impressions on any device, and click fraud — aka CPM and CPC fraud. Each type relies on volume, and that’s why there are a whole bunch of techniques used to drive large volumes of fraudulent impressions and clicks. That’s where the long list of confusing terms comes in — anything from click installs to ad stacking, and ad injection.

“Marketers feel paralyzed by the fear that fraud is so hard to unpick that they can’t do it, and it’s easier to believe it doesn’t affect them,” said Augustine Fou, anti-fraud and security researcher. “Or they think it’s priced in, but it’s not. There is so much misconception out there.”

Fraudsters follow the money, and with an increasingly large chunk of the digital ad budgets going to mobile globally, marketing teams need to ensure they’re fraud-savvy. Currently, 28 percent of global mobile media budgets are wasted on fraud, according to mobile marketing analytics AppsFlyer’s latest report. Meanwhile, 74 percent of that is conducted by ever more sophisticated and scalable fraud tactics, said the same report.

“Even advanced AI can be fooled at times,” said Karen Cohen, head of product marketing, at AppsFlyer. “That’s why it’s crucial that in addition to having automated fraud protection tools in place, marketers become well versed in the art of fraud and advanced fraud schemes, so the good guys can work together symbiotically to keep bad actors from harming the ecosystem.”

Here’s a primer on the core techniques used to generate CPM fraud.

General invalid traffic bot
Believe it or not, these are all good bots. That’s because GIVT bots are disclosed by the companies using them. For instance, Google has tons of bots on the web like spiders that crawl pages and organize its index. These are honest types of bots, because the companies using them disclose what they are. Non-human traffic and invalid traffic are the exact same thing, by the way; they’re just confusingly called the same thing.

Sophisticated Invalid traffic bot
This is the type to watch out for. SVIT is harder to detect and requires humans to properly analyze and identify, according to experts. Examples include hijacked devices, malware, and falsely identified viewable impressions.

Domain spoofing
The kind that sends premium publishers into a fury. It’s when a fake site masquerades as a bona fide publisher in order to trick buyers who bid on their impressions. The Financial Times, New York Times and News UK all cracked down hard on this in 2017. Ads.txt was invented to help with this. That said, some anti-fraud and security experts don’t think ads.txt is bulletproof, and that fraud is still occurring. “Ads.txt would work better if buyers bothered to check it,” said Fou. If the buyer sees a premium publisher in there, they need to look for the seller ID, not just the domain, he added. “The buyer needs to cross-check it’s definitely that publisher by looking at the seller IDs and cross-checking them with ESPN’s seller ID.”

Data center traffic
This is a low-entry point for fraudsters. Unlike malware fraudsters, this is cheap and relatively easy to do, according to Fou. This is where traffic originates from servers set up in a data center, rather than actual companies. It is made to look as though audiences are seeing the traffic generated when they aren’t. In order for a human to see an ad, they need a screen. But data centers simulate what an impression would look like, including details such as screen resolution for example — anything that makes it look like a browser. Mobile emulators do the same thing.

Fake device IDs
A big problem in mobile. Fake mobile devices create fake IDs — a random string of numbers and letters (called alphanumeric code) — designed to defeat frequency caps. Another type is the copying of real device IDs from human devices and replaying them so they escape detection by telecom providers, so they can’t determine fraudulent ones from their own.

Ghost sites
These are sites that don’t exist, like blank pages. A blank page with no content is set up, and some ad tech code added and pushed into a low-quality exchange to start generating money from fake impressions. Legitimate exchanges block this. But it’s hard to fully clamp down on because sometimes by the time the inventory gets to the end exchange it’s been through so many others that it’s harder to spot.

Redirect traffic
When pages are set to redirect to other pages in an infinite loop, in the process creating millions of fake impressions. Prolific on desktop and mobile. It’s a tricky one because marketers may feel insulted by the fact they have bot detection tools deployed on certain pages. But it’s the hidden pages being created by this redirected traffic that are the blind spots because anti-fraud tech can’t see them.

Infected/hijacked device malware
Experts say getting malware onto a human device is a really hard, expensive technique. The meth bot fraud scandal uncovered by WhiteOps is the type of malware fraud that causes issues. It is much harder to do than spinning up a mobile emulator or a data center. There are specialists that focus on curbing these kinds of schemes. It follows, then, that those interested in committing ad fraud resort to easier and cheaper techniques such as emulators and data centers, which are, therefore, more prolific.

Inventory misrepresentation
This is a big problem for video. Fairly common practice, and like a form of arbitrage. An example is taking a 300×250 banner ad slot bought cheaply, and stuffing in a video unit to sell it for a far higher CPM. Some exchanges have had to ban the format entirely on their platforms in order to get rid of it. Used to drive up yields fraudulently rather than quantity of fraudulent impressions.

The post Ghost sites, domain spoofing, fake apps: A guide to knowing your ad fraud appeared first on Digiday.

Another year, another Super Bowl, another chance to gawk at ridiculously expensive ads. This year, running a single spot in the Super Bowl went for between $5 million and $5.3 million. Having regrets or feel relieved not to have made the huge purchase?

Maybe this will help: Here’s everything else online you could afford instead of a $5 million single spot. (See our previous tallies here, here and here.

6.3 million paid clicks on sponsored Amazon ads
Not all people will be completely tuned into the TV come Super Bowl Sunday. Some might be browsing online or buying football jerseys ahead of time. The cost-per-click rate for sponsored ads on Amazon falls between $0.80 and $3, according to ad buyers. With $5 million, you could see anywhere from 6.3 million clicks on Amazon to 1.6 million clicks.

2.5 million paid clicks on Amazon search ads
For Amazon search ads, the cost-per-click rate lies around $2. With that $5 million, you could generate 2.5 million paid clicks.

1.7 billion impressions on either Instagram or Facebook
On Facebook and Instagram, ad buyers see $3 to $5 CPMs across in-feed ads and Stories. That means with a $5 million budget, you could generate between 1 to 1.7 billion impressions on either platform.

2.5 billion impressions on Snapchat
Ad buyers say CPMs on Snapchat currently range from $2 to $3, so if you have $5 million to spare, you can get between 1.7 billion and $2.5 billion impressions on Snapchat.

172,414 Shopify storefronts
A basic Shopify account starts at $29 a month and includes a website, blog, seller support and the ability to sell on channels like Amazon, Instagram and Facebook. With $5 million, you could launch 172,414 businesses for one month or 14,367 businesses for a year. That’s a lot of online real estate.

195 ads on TED Radio Hour
A 60-second host-read endorsement during the TED Radio Hour podcast, a high-cost podcast, goes for $25,650 per episode and generates 1.4 million impressions, according to Dan Granger at agency Oxford Road. Putting $5 million toward that, you could air 195 ads on the popular podcast and generate 263.3 million impressions. For mid-tier cost podcast Best of Barstool Radio, a similar ad goes for $3,500 an episode and generates 150,000 impressions, Granger said. For a $5 million Super Bowl budget, you could air 1,429 ads and bring in 214.3 million impressions.

1.7 billion impressions on Pinterest
Promoted pins on Pinterest range from $3 to $4 CPM, according to ad buyers. A budget of $5 million can get you between 1.25 billion to 1.7 billion impressions on Pinterest.

625 million impressions on LinkedIn
The CPMs on LinkedIn might be higher than other platforms, but with $5 million, you can do a lot of damage. Ad buyers see CPMs on the platform around $8 to $12, and with $5 million, that comes to 417 million to 625 million impressions.

1.7 billion impressions on Reddit
Ad buyers say CPMs on Reddit fall between $3 to $5. With $5 million, you can generate between 1 billion and 1.7 billion impressions, similar to Pinterest, Facebook and Instagram.

100 Twitch campaigns
In September, Twitch becomes a little friendlier toward advertisers. Advertisers have to spend at least $50,000 for programmatic video campaigns. With $5 million, that comes to a neat 100 campaigns you can launch on the platform.

500 million impressions on connected TV
For those leaning toward the connected TV over linear TV, expensive Super Bowl ads stand as perfect examples of the peak differences in price. The simplest way to compare is to look at the cost per impressions from both formats. One Super Bowl spot can drive 110 million impressions, according to Philip Inghelbrecht, co-founder and CEO of media buying company Tatari. A $5 million spot comes to $50 CPM. A connected TV ad can be bought for about five times lower, around $10 CPM, according to Inghelbrecht. So a $5 million spot could buy you 500 million impressions. Of course, it would be difficult to even get 500 CTV impressions, said Inghelbrecht. “It will take a while to find enough inventory and then deliver them all, possibly weeks,” he said.

20 Instagram posts from Kendall Jenner
According to both Fyre Festival documentaries this past week, Kendall Jenner was paid $250,000 to post on Instagram once promoting the Fyre Festival. With a budget of $5 million, you could get Jenner to post 20 times to her 103 million followers on the platform.

The post What a $5m Super Bowl ad can buy in digital media in 2019 appeared first on Digiday.

On Mondays, there’s often a winding queue to sign into Deliveroo’s office in London. For those who don’t know why, it can be befuddling: “Has everyone in this queue forgotten their pass?” said one executive watching the proceedings one particular Monday this week.

“No, most of them look like they’re for the first time,” said another.

Mondays are induction days for new employees, and it’s been particularly protracted recently: Deliveroo is on a hiring spree, with particular focus on paid search, social and data roles.

There are over 100 vacancies at the food-delivery app, according to LinkedIn. Around a quarter of those roles will work with the marketing team, with expertise ranging from performance marketing experts to creatives to data scientists. It’s a boost the 15-person marketing team in the U.K. and Ireland.

Like other born-online brands, Deliveroo is looking beyond digital media to maintain momentum. Spiraling costs on Facebook and Instagram have pushed advertisers to consider other alternatives to extend reach and stay cost-effective. Video game-streaming site Twitch has been put on the media plan for Deliveroo for the first time this month, for example.

The company is working with Wieden+Kennedy London and the7stars to help with its advertising plans.

Developing the marketing nous that propelled Deliveroo to make £277 million ($363 million) in revenue between 2013 and its most recent reported year in 2017 is critical for the business as it looks to break with some of the direct-to-consumer marketing tropes that can no longer be relied on their own.

“It’s hard to say whether we’ll definitely bring certain parts of our marketing in-house, said Emily Kraftman, Deliveroo’s U.K. and Ireland marketing director. “In the past, we’ve done our own creative, but for the latest work, we’re partnering with agencies. We’re proud of the work we’ve done in the past because it’s delivered great results, but it was predominantly focused on being memorable but functional.”

Branding and perception scores are becoming just as critical to Deliveroo as driving app downloads and orders. “Establishing a global brand is important to us so there’s more focus on balancing how we can be famous on an international level with more hyperlocal activations,” said Kraftman.

In the U.K., this means launching a nationwide campaign on TV for the first time this week, said Kraftman. While most of the money spent on TV will go on linear broadcasts, targeted ads are being bought on Sky Adsmart and VOD players in key areas for the business. “Addressable TV is great for us to feed into our CRM plans, but it’s not going to work by itself given the scale we need to get,” said Kraftman.

Previous forays on TV were tests, with the startup focusing smaller, regional buys. “From tests we’d done last year, we realized that it was more impactful for us to TV as part of the media mix than we didn’t have it on the plan,” said Kraftman. Indeed, awareness of the brand spiked thanks to TV, particularly outside major cities, as did app downloads year-on-year, said Kraftman.

Deliveroo’s spend on TV isn’t at the expense of other digital channels like Facebook and Instagram. According to Kraftman, spend on the new campaign is up year-on-year across all channels. The business spent a reported £10 million ($13 million) annually on media in 2018 when it hired the7Stars. The commitment to digital is reflected in how Deliveroo’s marketers captured additional content throughout the production of the ad to be used on social for the first time so they weren’t having to repurpose footage people had already viewed.

Ads are also being bought through Spotify and Global Radio’s programmatic exchange Dax, which are being used to serve ads for 280 local restaurants on the Deliveroo app to 70 locations across cities in the U.K.

The decision to behave more like a traditional advertiser comes at a tricky time for Deliveroo. It hired its first CMO earlier this year to help it find a way to balance the cost of expanding into new markets like Thailand amid pressure in mature markets like the U.K. where there is more competition from rival app-based services. The food delivery and takeout market in the U.K. was worth £4.2 billion ($5.5 billion) last February, nearly double the £2.4 billion ($3.2 billion) it was a decade ago, per The NPD Group.

“Our heartland has been younger professionals in major cities, whereas now we’re looking at people outside of that area who might be using the local takeaway or other providers but not have thought Deliveroo was applicable to them,” said Kraftman.

The post Inside food delivery company Deliveroo’s plan for growth in 2019 appeared first on Digiday.

Audio fitness app Aaptiv, which provides audio-guided workouts, is figuring out a way to bring its online product into the physical space.

Two weeks ago, the app worked with Refinery Hotel in New York to open a pop-up gym. To invite people to come to try out the gym, it invited its followers on Instagram, where it has 82,000 followers who the platform has found are more engaged than its audience on other platforms.

Both current users and non-subscribers could book an hour-long workout time alone or with a friend for free. Within the first three hours, all available slots were booked, with about 80 percent members and 20 percent non-members signing up for the experience.

The digital exercise experience is a departure from its subscription-based online business model to create an offline relationship with its subscribers.

“All digital products are not the same,” said Ethan Agarwal, CEO at Aaptiv. “People have a real relationship with our trainers and other members on the app. But we wanted to create more touch points with members. From a digital perspective, we’re sophisticated in our tech and data aspects. But this is just us dipping a toe in the offline world.”

Agarwal said the gym is not a revenue driver in any form. “Typically, online companies who open physical stores are trying to find another way to sell you their product. It helps drive their revenue, but for us, it’s a relationship-strengthening exercise,” Agarwal said. Aaptiv sent emails with discount codes and free one-month trial offers to all non-subscribers who signed up for the experience. The team said that the pop-up converted people into subscribers but declined to share numbers. The app currently has 230,000 paying subscribers.

Agarwal also said that the gym was designed to be extremely Instagrammable.

The Aaptiv experience comes at the heels of most online retail brands rolling out physical store strategies through long or short-term pop-ups. Casper, Parachute and many other brands are already building their retail stores around the country. Establishing a brick-and-mortar presence has become an important base for digitally-born brands to cover to encourage stronger brand loyalty among their consumers.

“Moving from online to offline is a logical path in an environment where the lines between online and offline blur,” said Thad Peterson, senior analyst at Aite Group. “It’s happening for categories where person to person contact adds to the value proposition. Pop-ups generally fill a specific tactical need, like capitalizing on an event or supporting a specific promotion.” In terms of marketing, this experience can offer users a way to imagine the use of the product or service in their lifestyles.

The collaboration with Refinery Hotel is also open to the hotel’s guests and will stay open for a longer period for them. They can access the gym once during the stay and Aaptiv offers them a discount code if they subscribe to the app. This is also Aaptiv’s first foray into the hotel business. Following this pop-up, Aaptiv is now looking at three potential partners for more pop-ups.

“Our clients are primarily the business travelers and we know that the same demographic is consistently Aaptiv’s number one user base,” said Eric Foley, general manager at Refinery Hotel. “So we know this product is going to succeed among our clients.”

The post Why audio fitness app Aaptiv opened a pop-up gym appeared first on Digiday.

Apple Inc. posted a quarterly decline in both revenue and profit, the first time in more than a decade for the December quarter, underlining its need to reignite slowing iPhone sales and get more growth from services.

Apple scrambled to fix a bug in its FaceTime video-chat system that lets callers eavesdrop on users of iPhones, iPads, and Macs, an embarrassing setback for a company that has touted its commitment to privacy.