Month: July 2019

Baidu’s main revenue source is advertising, which accounted for 76% of its total revenues in 2018, $15 billion. The remaining revenue comes from subscription sales for iQiyi, its online video platform. In its latest earnings report, Baidu posted its first loss since going public in 2005, citing China’s overall economic slowdown and increased government scrutiny of online content. Working with more platforms on their ad sales is one way Baidu can bolster its overall ad revenue.

Sheng Hu is one of the leaders of the U.S. division of Baidu as head of U.S. strategy and partnership. After working in strategic partnerships for Baidu in China since 2012, she moved to Baidu’s office in Sunnyvale, California in mid-2016. While Baidu’s Sunnyvale office opened in 2014 as a research and development facility, focused on artificial intelligence and autonomous vehicles, Hu and a team of about five Baidu employees are dedicated to ad sales there as well.

Hu’s team at Baidu offers U.S.-based tech companies a way to sell their ads in China and across Asia without needing to invest much of their own resources. For these platforms, Chinese companies provide tremendous growth opportunities even when their platforms aren’t available there. As TechCrunch reported, Facebook works with Cheetah Mobile, Papaya Mobile and other ad reps in China. Meanwhile, Snap, Reddit and Pinterest each chose to work with Baidu after the company approached them. Hu said she had connected with Snap in 2017 while her talks with Pinterest began in late 2018 and then Reddit.

Shelleen Shum, forecasting director at eMarketer, said the U.S. platforms benefit from having Baidu advocating on their behalf to advertisers in China and other APAC regions.

“Since many of the U.S. social platforms are restricted from operating in China, partnering with a local player like Baidu allows them quick access to an existing pool of advertisers without the need to build up a substantial sales force. As many Chinese companies set their sights on expanding their brands globally, the ability to market to overseas customers is growing in demand. Baidu, despite having the majority of its traffic within China, benefits by capturing a piece of that revenue that is moving overseas,” Shum said.

Baidu helps not only onboard more advertisers but work closely with them to make sure ad campaigns are successful, Hu said. The companies declined to reveal how revenues are split. Baidu doesn’t charge advertisers to open an account but instead takes commissions based on media spend. Hu declined to elaborate on the percentage.

“We are providing support to these media partners so they can gain success and exposure in these regions like China. For advertisers, we help show there are platform options other than Facebook, Twitter and Google. By working with us we can get them a weekly webinar training of new ad features and give them creative suggestions,” Hu said.

Across platforms, Hu’s team provides local language support for ad creative. That’s especially important for Reddit, Hu said, where ads are primarily text-based and the platform’s userbase is known to use ad blockers and be critical of advertising.

“We are excited to work with Baidu as they offer a scaled way to reach many international advertisers at once and also provide new avenues of expanding businesses through Reddit advertising. We look forward to continuing our relationship with them to broaden our advertising reach in key markets,” Emily Huo, director of online sales at Reddit, said in an emailed statement.

Typically these advertisers have previously worked with Baidu on its other apps and services, Hu said. Though, any advertiser can approach Baidu. Snap’s sales team, for example, will forward requests from APAC advertisers to Baidu’s team, Hu said.

“We’ll ask where are you based. What kind of products do you need to promote? We’re seeing a lot of success from individual websites promoting in the Middle East. Women apparel is a particular category we see potential,” Hu said.

Going forward, Baidu is continuing to grow not only sales revenue on its partnered platforms but also within its own consumer apps. Hu pointed to a campaign Paramount Pictures for the movie “Bumblebee” as work they would like to do more of. Last December, Baidu worked with Paramount to create AR filters for Baidu’s Facemoji keyboard in the US, Simeji keyboard in Japan and Baidu keyboard in China.

“By working with partners like Snap we’ve improved our own capabilities of making AR ads, allowing advertisers to create compelling assets. Other ads could be for our own keyboards like we did with Paramount,” Hu said.

The post How China’s Baidu works with Snap, Pinterest and Reddit on ad sales appeared first on Digiday.

After seeing the content Otro published on social media outside of the paywall, perform well, the company is doing away with the paywall and building out a digital content studio. This is a model that Claire McArdle, former vp of Comedy Central International Studios at Viacom, knows well.

“We’re a young business in a competitive market, and we’re not afraid to try different approaches. We want to build toward what the audience wants,” said McArdle, chief creative officer at Otro. “There’s an acknowledgment that it is a challenging and competitive market, when you are new into that and you see traction happening in another area you can investigate, be lighter on your feet and agile.”

Otro will continue to produce short-form reactive social videos as well as longer-form documentaries and originals for the app, social platforms and for broadcasters and commissioners. Publishing outside of the paywall opens it up to branded content partnerships too, plus revenue from ads sales around content on platforms, where it will also publish more than 500 pieces of back catalog content. Otro’s most popular social account is Instagram with 742,000 followers; it plans to launch a YouTube channel soon.

“The space we are really strong in is the mid-form formatted space, between seven and 11 minutes long,” said McArdle. “We’ll take a 360-approach. Before I sign off content, I want to know where it sits, the target demographic, which territory and what is the life beyond that piece of content, will this become a 22-minute-long piece?”

The biggest internal change is a restructure and growth in the in-house digital content studio so that it can respond quickly to opportunities with players and brands. Previously, the content team was set up to manage external suppliers. There are now 11 people in the content team, out of 29 in the company. The company didn’t answer directly on lay-offs but said there has been restructuring due to the different talent required for a content studio model compared with a subscription business.

According to mobile market insight company Sensor Towers, the Otro app has had 262,000 installs to date. Users in the U.S. have spent the most time in the app, 16%, followed by 11% in the U.K. The app’s largest market of installs is Brazil with 19%, which, given its love of soccer, may not be much of a surprise. Otro wouldn’t share how many subscribers it has, but those who have paid an annual fee will be reimbursed.

On the surface, a subscription model in sports makes a lot of sense. Media companies with recurring direct-to-consumer revenue lines can fetch a higher valuation than ad-supported models. Soccer itself may be too narrow a focus with too much freely accessible content to benefit from a subscription model. Part of the challenge for Otro in growing subscribers is distributing on an app where the content is invisible to Google search results, a huge driver of traffic even for subscription publishers.

Otro is not the first media company to show variations of this model, Dugout was created by the world’s biggest football clubs to create their own media brand, and Sportslobster, a now-defunct sports social network, sought to bring together fans and athletes. The Athletic scaled 500,000 paying subscribers this week, and local newspapers are unbundling their sports coverage to drive subscribers. 

“I’ve seen other businesses who think they have taken a big enough chunk out of the football community that the market of 3.5 billion global fans will feel underserved and will pay to access on another channel to consume content,” said Misha Sher, worldwide vp, sport & entertainment at Mediacom. “If you can convert at best between 5% and 10%, I don’t see how that business model would work overtime.”

The digital content studio model makes a lot more sense to Sher. “Like anything in our industry, it’s about exclusivity, what can you offer we can’t get anywhere else. It’s important for us to execute across a multitude of channels and optimize what we do for clients,” he said.

Ultimately, Otro will need to assert its position and differentiation in the market beyond access.

“There’s a shift in players taking control of their own conversations,” said McArdle. “It’s more than just watch this video, we create those exclusive experiences with fans. We are working directly with the players and the content we’re producing with them collaboratively. It is absolutely what they want to do.”

Image: courtesy of Otro via Facebook.

The post Six months in, sports app Otro pivots away from subscriptions appeared first on Digiday.

When Quibi debuts in April 2020, it will be neither a horizontal video platform like Netflix nor a vertical video platform like Snapchat. Instead, it will be a hybrid of the two. Viewers will be able to watch Quibi’s shows vertically or horizontally and switch between the two while watching a video on their phones. That may sound like Quibi is hedging its bet by neither following Snapchat’s vertical-only model nor risking ridicule by asking audiences to “Go90” and turn their phones horizontally. However, entertainment executives who have seen demos of Quibi’s product said its horizontal-vertical hybrid viewing experience may help the platform to stand out in an increasingly crowded market. A Quibi spokesperson did not provide a comment by press time.

Quibi has been an object of fascination for the entertainment industry since Katzenberg said in 2017 that he planned to raise $2 billion to build the mobile video platform. Ahead of the platform’s launch next year, conversations tend to center on whether Quibi will be able to convince people to pay $5 a month for its ad-supported service or $8 a month for its ad-free tier, especially as it will have to contend with not only Netflix, Hulu and Amazon but also Disney+, HBO Max and NBCUniversal’s streaming service for audiences’ subscription budgets. While being able to swap between horizontal and vertical versions of shows is unlikely to be what convinces people to subscribe to the service, the feature combined with programming from Oscar winners like Guillermo del Toro and Steven Spielberg may suffice in piquing their interest to at least give Quibi a try.

In private meetings with producers, Quibi executives have demonstrated how shows can be designed to offer different experiences based on whether people are viewing a video vertically or horizontally. In one example featuring a thriller series, the horizontal version of a scene shows a character sitting on a sofa in her home, and switching to the vertical version reveals someone standing outside her front door. “It’s both shockingly instantaneous and shocking that it’s taken so long for someone to figure out,” said one entertainment exec who has been given a demo.

While platforms like YouTube and Facebook adjust their video players based on whether someone is viewing a video holding their phone vertically or horizontally, the difference with Quibi is that the app is not reorienting a single video but switching between two separate videos (the dual assets). When people hold their phone vertically, the vertical version of the video plays, and when they turn the phone to hold it horizontally, Quibi’s videos player switches to the horizontal version. “There’s no pause in the audio or lag. It just catches right up,” said a second entertainment exec who has seen a prototype of Quibi’s product.

Editing the two clips alone to work seamlessly requires companies allotting an extra day’s worth of post-production work, according to the second exec.

Producers cannot simply crop a vertical version from a horizontal clip and call it a day, though. “They will not be okay with that,” said the first exec, who viewed Quibi’s dual-asset demand as a “brilliant” move because it “necessitates all productions to be original.” Quibi is pushing producers to come up with horizontal and vertical versions of videos that add to the viewing experience. Fortunately for producers — and despite what Quibi’s demo might suggest — that doesn’t mean that show makers have to go so far as shooting entire scenes specifically for the different versions of a video.

One company that is making an unscripted program for Quibi is focusing on shooting the horizontal version and editing it together with extra footage to create the vertical version. For example, the vertical version may feature a split-screen of a scene where the top of the screen shows the center frame from the horizontal clip and below it will appear a clip of the same scene but from a different angle. “It’s like the director’s cut,” said an exec from this company.

Quibi appears to recognize the extra work that it is asking producers to put into their programming by factoring it into production budgets, according to entertainment execs. As Digiday has previously reported, Quibi is paying companies as much as $125,000 per minute for scripted shows and $50,000 per minute for unscripted shows. That’s shy of the $200,000 to $300,000 per minute that Katzenberg has said Netflix and HBO pay for shows like “House of Cards” and “Game of Thrones,” but it exceeds the $40,000 to $50,000 per episode that Snap has been willing to pay for original shows. According to entertainment execs who are producing shows for Quibi, the company’s high production budgets more than compensate for the extra work required to produce two separate versions of each video. “I don’t think they’re asking for too much,” said the first exec.

However, while Quibi may not be asking too much of producers, there is a concern among entertainment execs that the company may be asking too much of viewers if too many programs offer too different of a viewing experience between their programs’ horizontal and vertical versions. “I think the audience is a lot lazier than people give them credit for,” said an entertainment exec who is not producing a show for Quibi.

Executives who are producing shows for Quibi acknowledged the possibility that viewers may gravitate to one orientation over another and be unwilling to flip back and forth between the two. While they plan to include signals within shows, such as graphics, to indicate when a viewer may want to change a video’s orientation, they also plan to produce the programs so that viewers don’t feel like they’re missing anything if they only watch one version. And if it turns out that the horizontal or vertical versions of their shows go almost entirely unwatched, that might be okay too, given how producers will be able to repurpose those videos for bonus revenue down the line as they did with their Go90 shows.

Producers also see an opportunity to make more money from the dual assets in the long run. Two years after a show premieres on Quibi, the show’s producers will be able to reformat the program, such as cutting it into different episode lengths, to distribute elsewhere. By having horizontal and vertical versions of a program, a company could tweak the horizontal version for YouTube and the vertical version for Snapchat and generate ad revenue from each platform, or it could edit the horizontal version into more TV-like lengths to license to a streaming service looking to fill its library.

“Whether or not this actually leads to a new generation of video storytelling, who knows. But there’s a chance for it to happen,” said the first exec.

The post Katzenberg’s Quibi’s makes ‘dual asset’ demand of show producers appeared first on Digiday.

We break it down.

WTF is Lighthouse, anyway?
Lighthouse is an open-source tool integrated into Google’s Chrome browser that allows web developers to evaluate the performance of their sites across several different metrics, including page speed, SEO, accessibility (as it relates to visitors with disabilities), the page’s functionality as a progressive web app, and a list of best practices compiled by a community of developers. Each of the five metrics is rolled up into an overall score, which can range from 0 to 100.

How is it different from other page performance tools?
There’s no shortage of tools, both free and paid, that developers can use to evaluate those things. But most other performance tools tend to specialize in one or two things. Instead of using multiple tools to evaluate a site’s speed and its accessibility, Lighthouse allows users to check everything in a single interface, for free.

But does that make it better?
Depends on how you look at it. While some tools will consider more factors when evaluating a site — Lighthouse only uses five things to provide a site speed score, for example — Lighthouse offers an ease of use that most other tools don’t. A developer can check a page’s score inside Chrome’s browser using DevTools or a Chrome Extension, from the command line on their own server, or as a Node tool, which makes it easy to integrate into almost any workflow or move.

Does having a good Lighthouse score guarantee that a site will perform well in a Google search?
It probably doesn’t hurt. As with many other Google products, the scores are a bit of a black box. At minimum, they help developers make their sites load more quickly, which helps.

Why are people so obsessed with site speed right now?
Because site speed affects search results. Speed has played a role in desktop search results for almost a decade, but Google didn’t make site speed a factor in mobile search results until last summer. And with most sites now significantly more reliant on mobile visitors than desktop ones, speed is more important than ever. Perhaps not coincidentally, Lighthouse started becoming more of a topic of conversation around that time.

Should everybody be trying to get a perfect score?
Everybody likes to get a good grade on their work, but the realities of ad-tech make it pretty much impossible for an ad-supported publisher’s site to get a perfect score. For example, sites that use lots of Javascript to serve the ads on their pages may find themselves losing lots of points. Similarly, a developer that wants their site to run smoothly on the widest range of browsers might not want to use next-gen image formats, even though doing so can improve a Lighthouse score.

A site’s willingness to use Google’s tools affects a score too. If a publisher decides they don’t need their site to work as a progressive web app, for example, that will dent the PWA score that factors into any site’s overall Lighthouse score.

The post WTF is a Lighthouse score? appeared first on Digiday.

P&G’s challenges have been exemplified in recent year’s by Gillette’s struggles to fend off digitally native brands like Harry’s and Dollar Shave Club. Neither Gillette nor the grooming category itself accounts for the bulk of P&G’s sales, but Gillette had a lot to lose because it was the leading men’s razor brand for decades. Research firm Euromonitor International estimates that Gillette had up to 70% of the men’s global shaving market in 2010; now Euromonitor estimates that number fell to 47.3% in 2018. Procter & Gamble said in its 2018 annual report that it believes its share of the global blades and razors market — which includes sales from both Gillette and other brands like Venus and Fusion — to be 65%.

Like competitor Unilever, P&G is trying to expand its share in the premium markets of some of its strongest categories, like beauty and shaving. It’s also not hedging all of its bets on acquiring innovation through startups, trying to both acquire digitally native brands while coming up with a process to launch new brands more quickly in-house.

Dipanjan Chatterjee, vice president and principal analyst at Forrester Research, wrote in an email that P&G’s previous advantage was familiarity — its most recognizable brands have been around for decades, and P&G itself was founded in 1837.

“You don’t think twice before you put Tide in your shopping cart, and that’s extremely potent for brand loyalty,” Chatterjee wrote. “However, when you’ve had that much time under your belt, the cultural relevance of the brands can begin to fray.”

Meanwhile, Dollar Shave Club and Harry’s saw an opportunity to erode the advantage had P&G through name recognition by selling razors direct-to-consumer or through a subscription model. That way, they could avoid the retail markup and get razors to customers without them having to visit a store.

In the shaving category, while P&G has tried to compete with Dollar Shave Club head on — in 2017, it launched a subscription service called Gillette On Demand — its focus over the past year and half has been instead to find other white spaces in the market. In 2018, it launched a new standalone brand called Gillette Labs, which is targeting the luxury market. In April, Gillette Labs released its first product, a $200 razor that debuted in the P&G-owned Art of Shaving. At the end of last year, P&G acquired Walker & Company, the creator of the Bevel line of razor blades, which were designed for men of color.

P&G has also experimented with other tactics previously emulated by other online-only brands — in April, it debuted a new brightly colored women’s razor called Joy, which drew comparisons to brands like Billie’s and Flamingo for its branding, and decided to first sell it exclusively through Walmart.

“They are definitely investing more in a personalized shaving experience,” said Andrew Stablein, research associate at Euromonitor International.

Digiday previously reported that P&G is looking to acquire more direct-to-consumer brands, to tap into their organic followings. P&G’s last reported acquisition was in February, when it announced that it was buying feminine care brand This is L, reportedly for $100 million.

P&G isn’t solely looking to acquisitions, however, to launch more innovative brands, and in 2015 launched its own startup studio called P&G Ventures. P&G Ventures came out with its first product earlier this spring, a pest control spray called Zevo that P&G claims is safer to use around kids and pets. The Wall Street Journal previously reported that P&G Ventures has a team of 20, and is focused on developing products in new categories that P&G hasn’t entered before.

“We had to change the culture internally,” Leigh Radford, general manager of the P&G Ventures unit told the Journal. “It is about taking the complexity out of the decision-making process — a decision should not take more than 24 hours.”

“When I look at P&G I see them focused on executing for today — trying to simplify their portfolio, be a little bit faster — but I also see them as leaning into future trends,” Robin Sherk, director of consumer and retail research for CB Insights said. Sherk said that P&G seems in particular to be interested in developing products that cater to consumers interested in environmentally-friendly or natural products. Last February, P&G released a line of diapers called Pampers Pure, which are fragrance, lotion and paraben-free, and in March released a line of plant-based cleaning products called Home Made Simple.

But with many of these younger lines still only accounting for only a small portion of P&G’s business, the company can’t afford another Gillette-sized mistake from one of its more incumbent brands. Thanks to the Gillette write down, P&G reported a net loss of $5.24 billion, compared to net income of $1.89 billion during the same period the year before.

“What P&G does best is to scale,” Chatterjee wrote. “Will these digital upstarts survive the old warhorses of Cincinnati? We’ll have to give it some more time.”

The post P&G is investing in new categories and product innovation as Gillette falters appeared first on Digiday.