Month: April 2019

Similar to Hulu, Quibi will launch with two monthly subscription tiers: $5 for an ad-supported plan and $8 for an entirely ad-free plan. The ad-supported plan would have a limited ad load and would include less intrusive advertising such as sponsorships and six-second ads, sources said.

If Quibi gets to 20 million subscribers, the company expects advertising to account for nearly 30% of total revenues — as much as $665 million annually, according to a pitch deck shared by Quibi with investors (back when it was still called “New TV”) last year. If Quibi got to 70 million subscribers, advertising would account for 24.9% of revenues, bringing in nearly $1.6 billion annually.

Those are lofty ambitions. But the key hurdle for Quibi is still whether there is any consumer demand for a “mobile-first” video streaming service.

“Don’t bet against [Katzenberg],” said an entertainment talent agency executive. It’s a common refrain from people in the industry — and it’s true, Jeffrey Katzenberg has the storied background and the relationships to not only raise a ton of money, but also create some compelling original programming for Quibi. And if a show on Quibi made by a famous director such as Guillermo del Toro is good enough to get people excited, why wouldn’t they subscribe?

Quibi also has a strong executive team in place. For instance, Connolly was the former svp of partnerships and distribution at Hulu. Along with helping build Quibi’s ad business, Connolly’s job is to also find distribution for Quibi — which the company is expected to do by focusing on bundling/wholesale deals with wireless carriers such as AT&T and T-Mobile, connected TV device sellers such as Roku and gaming consoles. And staying with that Hulu theme, Quibi might also do a promotional bundle with Spotify, according to the investor deck. Connolly certainly has the background to land these deals.“He knows the ins and outs of how to get those deals done,” said the talent agency executive.

Fundamentally, though, if Quibi succeeds, it’s more likely to do so as another subscription video streaming service with great content, versus its “mobile-first” nature. As one longtime entertainment executive recently told me, he’s not sure he wants to spend 10 minutes on the subway or in line watching a scripted show that requires a ton of attention. He’d prefer to watch that on a TV.

It appears that Quibi is already expecting this to some degree, as even its investor decks from last year includes plans to launch streaming apps on Roku, Apple TV and gaming consoles — all of which are connected TV platforms.

Confessional

“There’s some deja vu [at NewFronts this year]. To be honest I don’t think there’s a lot new to talk about from the partners. Twitter again is rolling out a set of content partnerships, but that’s what they’ve done the last few years. There’s nothing mind-blowing.” — Ad agency executive

Numbers don’t lie
950: Number of Twitter’s content partners

$1.7 billion: The amount Amazon spent on content in the first quarter (spanning music and video.)

What we’ve covered
TV networks are blurring the lines between upfronts and NewFronts:

• TV networks are selling digital inventory as part of their upfront deals.
• “TV networks are taking digital more seriously,” said an ad buyer. “There’s way fewer people going [to NewFronts.”

Read more about TV networks and the NewFronts here.

Publishers test alternatives to annual NewFronts:

• Group Nine Media and Refinery29 are among the big digital publishers sitting out of this year’s NewFronts show.
• With TV and digital platforms gobbling up upfront ad dollars, the decision to host a splashy NewFronts event can be tough for publishers.

Read more about publishers and the NewFronts here.

What we’re reading
BBC admits iPlayer has lost streaming fight to Netflix: Due to tight regulation, BBC says its streaming service, iPlayer, has lost market share to Netflix in the U.K. Five years ago, iPlayer had a 40% market share, which has now dropped to 15%. The BBC wants to make changes that allow shows to be on its service for a year — right now, some episodes drop off after 30 days. But even if the proposal is accepted by regulators, BBC doesn’t expect that to reverse the tide in declining market share; the broadcaster has ceded ground to Netflix and is now just trying to pause or at least slow down its declining market share.

Cheddar has been acquired by Altice for $200 million: Digital news network Cheddar has sold to cable operator Altice in an all-cash deal. As part of the deal, Cheddar CEO Jon Steinberg will become president of Altice News, a unit that will oversee Cheddar as well as Altice’s News 12 channel and i24News.

Inside Walmart’s original programming push: The retailer plans to make a “half-dozen” original programs, which will be released on its Vudu streaming service. Walmart is focusing on family-friendly programming, including a reboot of the 1983 comedy “Mr. Mom.” The company is also pitching advertisers on “shoppable” video, giving them the opportunity to drive sales from ads that run during these programs on Vudu.

Samsung is making vertical TVs: Because millennials.

The post Jeffrey Katzenberg’s Quibi is looking to score big ad dollars appeared first on Digiday.

“E-commerce and direct-to-consumer are growing,” P&G chief brand officer Marc Pritchard told Business Insider in January at Davos. “We think the small can help the big get faster, and the big can help the small grow faster.”

Acquiring DTC brands has helped P&G grow its business in new areas, learn new ways to market like performance marketing and to retool its brand teams structure to mirror startups, Pritchard told BI. The company uses the Signal Accelerator program it started in 2012, which gives it access to 275,000 startups, as a resource. Making that change to its brand teams has allowed P&G to move more quickly to solve consumer problems as well as experiment with design.

The strategy P&G is taking, according to the source, falls in line with what P&G has already been doing in the space with acquisitions. In February, P&G acquired feminine-care brand This is L for reportedly $100 million. In December 2018, it acquired Tristan Walker’s Walker & Company, scooping up hair-care and grooming brands Bevel and Form for an undisclosed amount. This past July, P&G picked up First Aid Beauty for a reported $250 million price tag, and in February 2018, it acquired skin-care brand Snowberry New Zealand. P&G, back in 2017, even added a natural deodorant brand, Native Cos, to its brand roster. If you visit any of those brands’ websites there is no obvious P&G branding to make their ownership known.

As for its in-house brand creation, most recently, in March, P&G announced that the lifestyle brand Home Made Simple would no longer be a just television program, but it would release a new plant-based product line of cleaners. Before that, it revealed a partnership with venture firm M13 to find, fund and launch DTC consumer businesses. And curiously, last June, P&G used an Indiegogo campaign — it raised $18,38 — to fund an environmentally friendly cleaning brand, DS3.

Having more of a hand in the DTC landscape is crucial for P&G. “They’ve always dominated the traditional sales channels, but the world is moving to online. And if they don’t have their own way to directly connect with consumers, they’re going to be playing at disadvantage,” said brand consultant and Metaforce co-founder Allen Adamson.

In 2009, 39% of online consumers were willing to try out new brands and products; today, that number has increased significantly to 56%, per Forrester data. “We’ve reached this tipping point,” said Anjali Lai, senior analyst at Forrester. “Consumers are desperate for something new.”

“Big brands are strained to show their innovation effort and to convey to consumers that they are doing things differently,” said Lai. “That embrace of change goes a long way.”

The push into the DTC space for P&G involves a few facets. For one, DTC brands control their customer data, something that P&G’s wholesale heritage simply didn’t allow. DTC brands also tend to be associated with certain “values” at a time that brand purpose becomes more important as a marketing strategy.

“The biggest change that we’re seeing with the DTC disruptors is that they have established a close relationship with their consumers and particularly a dialogue,” said Lai.

P&G is already borrowing the DTC marketing playbook, using influencers, PR and social, as well as a more data-centric approach to marketing for brands like Olay and SK-II. It is also focusing less on brand awareness campaigns and more on driving sales for Olay and SK-II brands, taking a performance marketing approach that has been popular with DTC brands.

“They’re late to the party, but it’s mission-critical,” said Adamson. “They have to buy a lot of small things to get enough scale here to make a difference in their overall performance.”

The post Procter & Gamble is looking to add more direct-to-consumer brands to its roster appeared first on Digiday.

Even if retail marketers are wary of Facebook and repelled by rising costs of customer acquisition, other platforms simply aren’t cutting it: Pinterest, according to attendees, hasn’t built out successful customer conversion rates to justify ad spend, for instance. If anything, execs spoke to closer attention on traditional channels like TV and out-of-home to pad out paid marketing on digital channels.

Sometimes the answer isn’t in digital or traditional marketing channels at all. Zak Normandin, the founder and CEO of Coca-Cola-backed Iris Nova, which owns the beverage brand Dirty Lemon, said that after building his brand off of the backs of Facebook and Instagram, he shut off spending to spend more on “experiences.” Specifically, that means putting products into owned stores as well as partnerships with stadiums and movie theaters.

Channel diversification is increasingly important, particularly for direct-to-consumer brands that have had success in finding new customers on Facebook but are now running out of steam thanks to saturation and rising costs.

“We’re moving on from Facebook and Instagram. It is crowded and competitor brands can replicate you easily,” said one head of growth at a DTC brand. “Control is being taken away as platforms flex their muscles — we’re seeing less control over our target audience, meaning it’s becoming increasingly harder to reach a core audience. At the same time, CPMs and costs are rising.”

Facebook, meanwhile, is increasing its available ad products. At its F8 conference on Tuesday, the company announced new ways for brands to advertise: In addition to the main feed, lead-gen ads will be available on Facebook Messenger and Stories. For brands seeing success with influencer marketing but not paid ads on Instagram, there’s an update coming that should help: Influencers on Instagram can now enable in-app shopping with product tags in posts.

More attention will also soon be Facebook Groups, where brands have the opportunity. Noah Palmer, the general manager of Gap, Inc.-owned Hill City, said that starting a Facebook Group of “wear testers” (influencers that receive products for free in exchange for social posts and feedback) led to valuable insight for designers and developers as well as a more organic, community-minded conversation about the brand and products.

“Community is more often than not contrived,” Palmer said of the conversation that started in the brand’s Facebook Group.”But if you have a strong brand that people are really passionate about, people build their own community about it.”

Overheard at the Digiday Retail Summit
“A lot of people are going to Amazon rather than Google for reviews right now, so we want to be there, just to be there.”

“We’ve hesitated to sell on Amazon because, for us, the customer interaction piece is so important. I’ve seen so many brands get killed with inventory and reviews on Amazon.”

“We had to move a store location, so we actually took the opportunity to add more hands-on experiences in-store. Our baby boomer and older audience couldn’t care less — they wanted to go there and buy something. Millennials and Gen X (shoppers) were the ones that utilized the experiences piece.”

“We’re just starting to implement ship-from-store in a multi-year project. Our stores have not been as strong as our online business. The idea is that it gets people in-store, but what does that mean from a logistics perspective? We’re just trying to figure out what capacity each store can handle.”

3 questions with Michael Wystrach, co-founder, Freshly
The prepared-meal category is a difficult one to win, but New York-based Freshly is hoping to reach customers who want to eat healthy food but are short on time. Unlike Blue Apron or HelloFresh, Freshly’s meals come fully-prepared and ready to eat in three minutes. The 7-year-old scompany, which now has distribution in 48 states, has so far raised $107 million, including a $77 million Series C round led by Nestle. Digiday spoke to co-founder Michael Wystrach on Freshly’s roadmap.

What customer problems are you trying to solve?
Food is a massive market. You’re buying products from multiple different places depending on the use case that you’re looking for. In general, our customers are replacing [behaviors] almost equally: 30% are replacing grocery, 30% are replacing eating out, and 30% are replacing a delivery. Now, within those different [segments], we’re solving for different problems.

Food delivery businesses are saddled with challenging cost structures. What’s the advantage of your business model?
We benefited from starting in Phoenix, Arizona without any venture capital. We had to bootstrap. And when you have to do that, you become very good operators and you make sure that you focus on whether this a real business or whether this is basically us giving free food away. The dangerous thing you hear is, “Oh, we’re going to make margin and scale.” The beneficial part for Freshly was that it took us a long, long time to get capital. We didn’t raise money until the middle of 2015.

Direct-to-consumer brands are aiming to win categories through personalization. How are you approaching that?
When we think about personalization, I think the gold standard is really what you see with Netflix, which is basically doing everything they can to understand what you’re looking for in entertainment. We think about food connected with health [and] it is an amazing opportunity to personalize. Can we use the data on the goals that you have, the data that we have on the nutritional content of the food, and can we work to personalize that journey with you? Today we’re at the early stages of doing that, and we’re working with different groups to provide coaching and different aspects to build in so that we can really help you on the path to healthy, convenient eating. — Suman Bhattacharyya

What we’ve covered
Gamer Dew: Mountain Dew is spending 40% of its marketing budget targeting gamers.

Show me the money: Clients are scrutinizing agencies’ billing processes in a push for transparency.

TikTalk: Marketers are starting to spend on TikTok.

The post ‘Control is being taken away’: Retailers struggle with Facebook dependence appeared first on Digiday.

Slate was one of the first digital publishers to seize on podcasts as a source of audience and revenue — it began producing podcasts more than a dozen years ago. But in recent years, the format has grown from important to essential: This year, audio could represent “nearly half” of Slate’s revenues, up from 28% in late 2018, Slate president Charlie Kammerer said. Slate declined to comment on how much revenue it generated last year.

“We try to recast and reframe conversations that are already out there,” said Lowen Liu, Slate’s acting editor-in-chief. “We have a lot of faith in our ability to find a new way in.”

Slate’s 30 podcasts generated 180 million listens in 2018, a 78% increase year over year. “Slow Burn” piled up over 15 million downloads by itself, but it also got assists from shows such as “Decoder Ring,” a podcast about pop cultural curiosities, and “Hit Parade,” a pop music history series hosted by Billboard chart historian and Slate staff writer Chris Molanphy. A relaunched version of its daily news podcast, “What Next,” should continue to drive that growth.

Though most of Slate’s shows are conversational, the publisher has placed a bigger focus recently on scripted fare. Earlier this month, Slate rolled out the first episode of “Charged,” a scripted podcast based on the reporting done by former Slate staffer and current Slate podcast c-ohost Emily Bazelon; next month, a podcast series called “The Queen,” based on a forthcoming book written by Slate national editor Josh Levin, which began as an article on Slate, will debut as well.

It is also looking to hire people to support its scripted shows: It has open job listings for two audio producers who will work on scripted shows.

Scripted shows are typically more resource-intensive than conversational ones, but Slate has figured out several ways to pay for them. Thanks to dynamically inserted ads, a hit like “Slow Burn” can drive ad revenue year-round. But scripted shows are also a key way to drive signups for Slate Plus, a membership program with close to 50,000 members that has turned into a seven-figure revenue stream for Slate. Slate Plus members get bonus episodes of “Slow Burn” every week.

“When we look at the ROI for these shows, it’s ad revenue [first and foremost],” Kammerer said. “But that sub revenue is absolutely something we consider.”

Through its first two seasons, Kammerer said, “Slow Burn” over-delivered on the number of Slate Plus signups they’d anticipated the show would drive; he declined to share a hard number. That success, Kammerer said, “has taught us to look at our podcast business in a much more critical way in terms of how each show performs for our subs business.”

Slate is hardly alone in moving toward scripted shows, which have become attractive sources of material for film and television producers. Podcast newcomers such as PBS have debuted their own scripted shows recently, and even the podcast production and distribution company Cadence13 launched an originals division earlier this year.

But where some of the newer scripted podcast producers are eyeing the big checks that platforms such as Luminary are writing, Slate sees them as a way to build its own business. Kammerer said that while Slate has had discussions with podcast platforms about licensing or producing exclusive shows for platforms, it has declined to pursue them because it is more interested in using its shows to build Slate Plus. “We’re focusing on how we can leverage it for our subscription business,” Kammerer said.

The post Slate expects nearly half of its revenue will come from podcasts this year appeared first on Digiday.

Broadcasters are acting like walled gardens, creating inconsistency in the market
When ITV shunned Sky to sell its own targeted ads earlier this, the broadcaster splintered an already fragmented market further as much as it tried to prioritize its own commercial interests. It’s a potentially winning strategy, but it also creates another walled garden alongside Sky’s Adsmart addressable ads and Channel’s All4 VOD ads in that no vendor can access all available inventory.

As inevitable as this battle for video budget is, it’s hard for legacy broadcasters to rival the video platforms without a single buying point for advertisers to run campaigns across multiple platforms with frequency caps. While ITV’s upcoming addressable TV network around its ITV Hub VOD service platform could eventually be bolstered by other broadcasters coming on board, the challenge will be competing with Sky’s well-established data sets.

“The market is crying out for uniformity,” said Simon Bevan, chief investment officer at Havas Group Media. “The programmatic space is complex as a result of the opportunities that are driven through the different ad tech vendors. Hopefully, TV broadcasters can come to some form of uniformity to give simplicity to the way they sell their ads.”

Cost remains a big issue 
Sky owns the most addressable inventory in the U.K. thanks to having set-top boxes capable of showing targeted ads during linear broadcasts in 9.7 million households in the U.K. That number will rise to nearly 14 million later this summer when Virgin Media starts to sell its own ads through the same ad server. Between both services, advertisers could target around 40% of households in the U.K with addressable ads. The reason more advertisers won’t, however, currently comes down to price. Adsmart’s CPMs hover between £50 ($65) and £150 ($196) depending on the granularity of the audience, according to two ad buyers interviewed for this article. That’s expensive for advertisers who only view targeted TV ads as a bolt-on to existing media plans, for additional reach.

Part of the issue for Sky is not every advertiser can justify the extra cost of the rich data and analytics it offers. For others, like retailer Argos, it makes sense to spend more on Sky’s addressable CPMs. That’s because the retailer can combine weekly sales data with Sky’s viewing data to work out which products to promote, when to run ads, and how often to show them before using those insights to understand how those investments contribute to revenues and increasing margins.

The market needs time to readjust
It’s no surprise that VOD services are gathering momentum as the ad tech infrastructure around TV slowly coalesces. GroupM’s Finecast, for example, is in the process of switching from managing all the budget it spends on addressable TV from Videology’s ad server to the ad tech owned by Freewheel. The switch is expected to be completed later this year. Elsewhere, agencies like Havas Media Group and Essence are also placing programmatic traders alongside TV buyers in order to get to grips with a disparate set of technologies ranging from automated TV ad buying to connected TVs. As it stands, the lack of infrastructure has left advertisers wary of investing large sums of money on technology that’s so young.

“We aren’t yet seeing budgets divert from online to linear TV, rather as consumers spend increasingly more time online budgets are following them there,” said Lawrence Dodds, communications and planning director at UM London.

There’s a lack of a data-sharing strategy 
The mining of audience data for targeting isn’t traditionally something broadcasters have offered. Rather, ad agencies use their own or third-party tools to do so. But, with the rise of addressable advertising, ad buyers will have to rely more on the broadcasters. Broadcasters will need to create a strategy and plan for brands to use third-party verification services and not mark their own homework.

The narrative must change
Online advertising has a pivotal role to play alongside linear advertising and will continue to do so as consumption continues to fragment. The work being done by broadcasters could help grow “video” spend further. In 2018, the online vertical was the biggest buyer of TV ads in the U.K. at £760 million ($991 million), per BARB. This category expects a more data-driven, performance-based marketing environment to operate in. All broadcasters have to respond to this dynamic by accelerating their commercial strategy.

“What we now have is a greater fluidity of consumer behavior, and as a consequence of consumers’ behavior and technological developments, every major media owner has a responsibility to develop a full suite of solutions that attract a cross-section of advertising budgets,” said Chris Williams, CEO at Publicis Media Exchange U.K.

The post ‘The market lacks uniformity’: In the UK, targeted TV ads have their challenges appeared first on Digiday.