Month: June 2019

“As we look ahead, our strategy with Studios will mirror what we’re doing throughout the larger organization: we’re focusing on what we do best,” Peretti wrote. “That means strengthening our focus on developing innovative content for platforms. Making TV is great, but we’re even more interested in figuring out the future of TV.”

This doesn’t mean BuzzFeed will stop doing traditional movies and TV shows, said a source at the company. The company still has a film in development with Warner Bros. stemming from its once-viral “Brother Orange” story; and it has two other film deals with New Line Cinema and George Clooney’s Smokehouse Pictures based on BuzzFeed articles.

But when Peretti, in the memo, says “it’s time to pioneer new models for a post-TV world,” it’s clear where he thinks BuzzFeed’s strengths are. With shows such as “AM to DM” on Twitter and “Worth It” on YouTube, BuzzFeed has been building out a platform programming business that can sustainably deliver revenue for the company. BuzzFeed plans to produce 20 digital shows this year, including upcoming projects with Facebook and Snap. When it comes to film and TV projects, the publisher will seek to work with a traditional Hollywood partner, according to The Hollywood Reporter.

BuzzFeed’s decision to prioritize TV-like programming for digital platforms comes at a time when it’s becoming harder and harder for entertainment studios to operate the way they used to. There has always been the threat of lost revenue from show cancellations, of course — and it’s something which both BuzzFeed and Vice Media have experienced this year with the axing of “Follow This” by Netflix and “Vice News Tonight” by HBO. But most studios and producers are increasingly facing a future where revenue will be tied to production fees (margins) versus the ability to develop franchises that can deliver long-term revenue.

For years, BuzzFeed has been investing in building out its studio division, seeing a path to new revenue by selling TV shows and movies to outside buyers. But the studio business presents a thicket of challenges, from show cancellations to business models that make producers increasingly rely on thin production margins. This hasn’t stopped BuzzFeed from producing for film and TV, but the publisher has been placing a greater emphasis on creating profitable digital programming that it has greater control over. And as other publishers look to build their studio businesses, they will likely have to figure the answer to a key question: What kind of studio do you want to be?

We have covered the issue of “intellectual property” ownership in the past: Netflix is increasingly moving the production of its own original movies and TV shows in-house, and when the streaming giant does buy from outside producers, the company prioritizes long-term, globally exclusive licenses. New global streaming services from Disney, WarnerMedia and others will still buy projects from external producers, but will likely seek longer terms as they, too, try to add subscribers.

Is there enough business value in being a production company for hire? And what sort of selling volume would be required for that to become a meaningful contributor to the overall business?

Another prominent digital media company made $10 million from studios-related revenue in the past year, according to a source. While the exec at this company declined to specify how that translated into profits, a typical 10% or 15% margin would mean profits were in the low millions.

There might be additional profits if the producer is able to amortize costs or is able to attach additional fees, said a longtime entertainment producer. “The bigger win is if you’re retaining and selling the rights,” said the producer.

IP ownership is not necessarily the end-all, be-all of building a successful studio business. In a previous Digiday interview, Vox Media’s head of entertainment Chad Mumm called it a “red herring,” arguing that Vox Media has slowly and steadily built a studio business by focusing on landing more deals, which create a flywheel toward more deals.

But the question of IP does tie back to what kind of studio a publisher wants to build. For BuzzFeed, the answer is in spending more time on platform programming that it can own. The company has determined that there is greater long-term value in building franchises that way — some of which the publisher could ostensibly license to outside buyers down the road in the way that Complex Networks has done with its digital programming. And if it’s able to land some movies or TV shows along the way, that’s a nice cherry on top.

Vice Media, meanwhile, reportedly has 60 film and TV projects in some stage of development. The company sold “The Report,” a feature film starring Adam Driver, to Amazon for $14 million. That doesn’t make the loss of “Vice News Tonight” hurt any less, but Vice Media certainly has the volume to manage the loss until it’s able to find another home for the news show.

There is not necessarily one correct approach for publishers when it comes to studio sales. But it’s clear that the road to film and TV is anything but straight and smooth.

The post BuzzFeed’s tweaked studio strategy showcases challenges for publisher studio units appeared first on Digiday.

CEO Drew Green, who’s been in the role since 2015, said that it’s important for the brand to “control its own destiny,” particularly during important interactions with the customer.

And for a costly category, control becomes even more critical. Building a direct-to-consumer brand is an expensive business, but a custom one even more so. Earlier this year, custom footwear brand Shoes of Prey liquidated after it ran out of money to keep building the business, and was unable to find a buyer.

So, Indochino focused on both growth and retention, according to Green. Last year, the company did more than nine figures in revenue, and Green said that 56% of purchases came from customers who were buying Indochino were buying for a second, third, or fourth time. After building the brand in the U.S. and Canada, Indochino is now expanding internationally. Last month, the brand launched an Australian website, as it looks to open its first showrooms outside of North America. Although just 2-3% of Indochino’s revenue today comes from outside of North America, Green thinks it could eventually climb to 30-35%.

Green spoke with Digiday about how the brand’s marketing and showroom strategy has evolved as the company seeks to become a more global brand. Answers have been edited for clarity and length.

Have you found that certain types of marketing channels are more effective for driving sales to online vs. in your showrooms?
Even though we have an ever-growing sort of quote-unquote “retail business,” we truly are a digital retailer. Sixty-eight percent of all transactions last year were driven through our site, either by an online transaction or by an appointment into a showroom. So I think it’s important for us to test and learn.

We’ve got a fairly sophisticated media buying team in-house, we’ve got an attribution system that really allows us to look at each channel and see what’s having success, and we do know that there are certain channels we have that are more successful for driving online behavior, or the online behavior that we want, and we’ll prioritize those. 

For us, lifetime value is really important. It allows us to plan our budget appropriately, and so we know the costs per acquisitions of each channel, we know the cost per order from a media perspective of each channel. And, importantly we know the lifetime value within a 12-, 24-, 36-, 48-month window of each channel. So for us what we’ve focused on within the last four years is making sure that we attract the right customer with our media dollars, our pricing strategy, etc. So our attribution model, which we built ourselves and use internally, really focuses on that.

The right customer isn’t exclusively the one with the highest lifetime value — our No. 1 core demographic is millennials. They’ve taken ahold of the brand, made it their own and created their own garments through the brand. One of the demographics we have, such as grooms and wedding parties, is not the highest lifetime value. Usually they are just buying for one special event. But we still see that market as a huge opportunity, and that would be one example where we’re not just focused on lifetime value, but what comes into play is order value of the first transaction, which is quite large.

The rising cost of Facebook ads is something that’s affecting many DTC brands. Is that something that’s affected your marketing strategy and where you put your dollars?
One thing we’ve worked hard at and are good at is being diversified from a media perspective. We’re not reliant on any one channel, and we often shut channels off if they’re inefficient. We’ve seen the rising costs specifically in Facebook, and before that on Google. Frankly, if it hits our caps from a customer acquisition standpoint, we simply don’t spend there anymore and turn the dollars to other channels. The important thing for us and for others is to not be reliant on one, two or three channels, and to have a diversified approach. Facebook takes up well less than 20% of our marketing budget.

Why did you decide to create a proprietary point-of-sale system versus go through a Shopify?
Because we are custom apparel, and the checkout process for us is very different than a standard checkout process. We have customers who are choosing between dozens and dozens of customizations that they can make to their garment, and that’s something that needs to be captured effectively and efficiently — it needs to be stored in a certain way, it needs to be transmitted to our factories in a certain way. So it was important for us to control our own destiny, as it related to a really important interaction with the customer, which is the point of sale.

Custom apparel takes longer to manufacture and ship — how long does it take Indochino’s suits to ship now and how have you been able to cut down on that?
In 2017 we launched a three-week delivery promise, in November 2018 we launched a two-week delivery process, and later this year we’re launching a one-week delivery option for customers. We’ve entirely re-engineered and recreated our supply chain these last four years in China to be able to do that .

It’s something that we’re super proud of — when we start to get into one-week delivery, for a custom perfectly fitted garment, that for certain segments like suiting is even further ahead than off-the-rack. Because with off the rack you buy it, and get it tailored, and then hopefully you get it back in one week to 10 days. We feel like it’s going to inspire our customers to transition away from off-the-rack and ready-to-wear into custom apparel.

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The post Indochino CEO Drew Green’s plan for building a global custom apparel brand appeared first on Digiday.

For the last two years, the publisher has been working towards serving different units featuring more relevant content based on user behavior data on the Dagbladet homepage, the group’s daily newspaper, which puts certain content, like its exclusive, investigative, in-depth articles, behind a paywall.

Rather than displaying content chosen by its editors, the fourth, fifth and sixth stories on Dagbladet’s homepage now show content personally relevant to individual readers based on their behavioral data. For instance, whether a reader has seen the same post more than three times, whether they have read similar articles, and metrics like dwell time determine whether a reader will see content that needs a subscription, an editorial video or an ad. People who are less likely to subscribe are instead shown an editorial video or an ad so that the publisher can further its ad revenue goals without over-prioritizing subscriptions.

“That’s one of the conflicts we’re trying to address with personalization,” said Stephan Granhaug, evp of digital at Aller Media. “We’ll optimize for the broadest range of revenue capabilities that we have access to. Content marketing, regular display ads, video, sponsorship, all down to affiliate marketing. The idea is we’re not showing more than we should have to. It’s about yield management.”

Dagbladet is seeing a significant increase in core KPIs on these ad slots compared to editorially curated slots. Typically, slots led by the reader’s previous on-site behavior deliver an increase between 10% and 30% in clicks (whether that’s subscription conversions, video views or click-through rate) depending on the target set for that section of the page. Ultimately this also saves money by reducing waste: If someone has seen a sponsored content unit more than three times they are unlikely to act, instead, they will be shown a regular display ad.

“We’re controlling for frequency,” said Kjetil Laumann, product owner, personalization. “The idea is not to show content if it doesn’t give value, for commercial that’s money, for editorial, it’s other, more complex things.”

Dagbladet has increased the number of these automated units since October when its tech layer was in full swing. Since February it has applied this tech to its other magazine titles. It will continue to apply this to more units lower down Dagbladet’s homepage, where there’s still content that people aren’t reading.

In Norway publisher homepages generate high volumes of direct traffic, more so than in the U.K. and U.S., where a lot of publisher traffic comes from social and search side doors. According to SimilarWeb, 78% of Dagbladet traffic is direct. For that reason homepages in Norway play a key part in building editorial-led algorithms and audience profiles.

Dagbladet has 85,000 digital subscribers, up from 70,000 last October. Over the last three years the publisher claims it has grown subscriptions 100%, but from a low base, so sustaining this rate will become harder. Around 10% of digital revenue comes from subscriptions, the rest from advertising. The publisher wants to make this split more even, although it wouldn’t disclose churn rate.

Dagbladet Plus pulls its content from three sources: Aller Media print magazine content, original content from journalists and stories from the free version. A subscription costs 99 Norwegian Kroner (£9.02/$11.48) a month or 795 Norwegian Kroner (£72.40/ $92.16) a year.

For Aller Media, this is one part of taking more control over its first-party data in a world where data privacy is now the business norm, thanks to the General Data Protection Regulation. The publisher launched its centralized data platform in 2016 primarily to drive up the value of inventory both on the advertising and subscription sides of the business.

While there are plenty of vendors eager to help publishers with first-party data and driving subscriptions, the publisher couldn’t find one that would cater to its more complex needs of driving subscribers as well as maximizing the amount of video and the advertising revenue.

“To manage all those things we need to have control,” said Granhaug.

The post How Norwegian publisher Aller Media balances subscriptions and ad revenue appeared first on Digiday.

British Gas has been using Flashtalking since last September.

“With the likes of Google, due to their sheer size, they are able to simply price other ad servers out of the minds of advertisers,” said Matt Thorne, media account director, at media agency Agenda21. “Facebook, alongside Google, are also able to provide their attribution offering for free. So there is an obvious commercial element, especially if there are contractual agreements in place.”

For advertisers, the commercial savings associated with working with the walled gardens don’t always stack up against the potential costs of not being able to sense-check campaign data — which is harder to achieve using parts of Google’s ad tech. Last July, Google clamped down on how much of that data advertisers could take from its walled garden, in order to comply with the General Data Protection Regulation. But that put some advertisers in Europe in a tricky spot. For instance, prior to the data crackdown British Gas had planned to use Google’s wealth of user data, which spans a huge pool of synched cookies across publishers and advertisers, as the backbone of its own programmatic buying, from cross-site frequency management to attribution.

“Google then made their changes to remove log-level data which made us re-evaluate the way we were going to do attribution,” said Smith. “The ad server is core to where you start when it comes to making sure the data collected is correct and at a level of granularity that’s enough for us to measure the effectiveness of our media as well as know how many impressions we’re serving.”

The challenge for advertisers is how to secure transparency when regulation both in Europe and the U.S. could potentially limit the amount of data that gets verified. While Google isn’t as strict with its data in the U.S. as it is in Europe, advertisers anticipate it will be once the California Consumer Privacy Act comes into effect in January 2020.

Not every U.S. advertiser however, will look to explore alternatives to Google’s ad server in the same way British Gas did. Rather than switch ad servers, the head of programmatic at a CPG advertiser who spoke on condition of anonymity, said they would rethink how they work with supply-side platforms to create a unified ID outside of the walled gardens.

“We use Google’s ad server and because we’re a U.S.-based advertiser we still see the benefits of using the Doubleclick ID from Google,” said the same executive. “I doubt we will switch to an independent ad server. As challenging as Google can be they have the best-of-breed technology that allows our marketers to be efficient and effective in terms of how they buy our media.”

The post British Gas sees progress weaning itself off Google’s ad server appeared first on Digiday.