Month: October 2019

Lee was one of a number of agency execs at Digiday’s Media Buying Summit in Key Biscayne, Florida, last week who said his agency is putting more effort, time, resources and dollars into training new employees. Finding qualified workers is routinely a major issue at agencies but with unemployment rates currently so low — the Bureau of Labor Statistics recently said it was 3.5% in September — and demand for media skills so high agencies are feeling the pressure. And according to a survey by The Creative Group earlier this year, 92% of advertising and marketing leaders say a skilled new hire is difficult to find now. 

“Media traders and platform specialists are in very high demand, similarly to how engineers are in very high demand, so these are individuals who know that and as a result, they can move on quite easily,” said Kait Boulos, vp of marketing at Varick. 

While accepting that people leave is the mantra of many agency execs now, there’s also a sense of unease among some others agency execs who say training can take roughly six months for a new hire and, often, once that’s finished new hires often expect a raise and a promotion that isn’t necessarily available to them. The result is that, without reaching that next level quickly, that new hire will likely leave six months after the agency has trained them, which can be frustrating for agencies. 

While it can be a difficult pill to swallow, some agency execs now believe that agencies need to get used to a new reality where they are allocating more time and resources to employee training even if those employees leave after a year or two.

“It’s OK to spend time and money on people knowing that your staff can be a fleeting workforce,” said Gila Wilensky, svp and head of media activation at Essence. “It’s a big part of my job to give our people the tools and resources they need to successfully do the job, and ensure they are learning while here. If you don’t train them while they’re here, you don’t get the best work output. It’s a win-win.”

Training for many media agencies can be six months or more. It encompasses how the agency approaches media, getting up to date on platforms like Facebook, Twitter, Instagram and other in-demand technical skills as well as soft skills like teaching new employees how to be a manager.  

Being OK with being a stepping stone for employees rather than their long-term professional home isn’t a new reality for execs. But the shortened tenure and rising demand for promotions after a few months can be difficult to grapple with. 

People are even looking outside the box, especially at agencies not in big markets. One buyer who asked to be anonymous said his agency hires former insurance brokers, food service employees and finance types: “We have to look outside traditional paths.” (The problem then becomes that they’re less likely to be “forgiving” for clients, said another buyer who has done the same. “They get fed up easily. They have to be trained in patience.”)

Another issue for media agencies, in particular, is that it’s harder now to suss out what skills employees say they have and what skills they actually have. For example, candidates often have experience with organic social but need to be trained on how to run campaigns on various platforms. Building up an employee’s skills takes time and resources that agencies have to dedicate, but it doesn’t mean the employees those agencies train will be loyal or stick around. 

“There’s not a ton of room to grow up at a fast pace,” said one media agency exec who asked for anonymity. “There’s a lot more lateral moves. We’re trying to combat that with projects internally for people who are hungry. What are they passionate about? How can we grow that passion point horizontally if there are not openings vertically?” 

For Metric Digital co-founder and president John Pellinghelli, accepting that people will leave after a year or two has become just part of doing business. While the agency works to retain top staffers by finding ways to keep them engaged and learning, people who advance quickly often get opportunities that he doesn’t fault them for taking. 

“They get recruited by our clients, which are high-growth direct-to-consumer brands,” said Pellinghelli. “If you’ve developed this skill set, that’s a really cool opportunity. Maybe you just accept that people will only be there for a year or two years. We’ve come to recognize that may be the case and our job is to be gracious about that and be happy for the people we develop.” 

Using agencies as a training ground could be a new norm for agency employees who see the lure of being client-side, especially as more clients are eyeing in-housing. One media agency employee who has also been client-side and spoke on the condition of anonymity said that part of the reason employees jump ship is that they have a demanding job, with little room for growth and low salaries.  

“My friends that work in-house at brands. Occasionally they’ll work late or on weekends, but I work every night late and on weekends, but they get compensated more than I do,” the employee said. “Once you have the experience working at an agency and have that under your belt, I don’t see the value in staying there unless they change the model. A lot of agencies care more about the bottom dollar than their employees, and that needs to change if you want to keep employees.” 

One change that could help agencies keep staff around longer would be the ability to properly staff as needed for the clients they have, according to one exec. But with agencies strapped due to more project work and longer payment windows, it can be hard to accomplish. 

“It’s a little tougher now, but there will always be a talent crisis,” said one media agency executive who asked for anonymity.

The post As retaining people gets more difficult, media agencies focus on training appeared first on Digiday.

“America’s Test Kitchen made a strategic decision 20 years ago, and I think that that was atypical at the time but prescient because they built a stable business, not one that is dependent on episodic ad revenue,” said Peter Doucette, a managing director in the Telecom, Media & Technology practice at FTI Consulting.

America’s Test Kitchen’s subscriptions business, which currently has 1.3 million paid print subscribers between its Cook’s Illustrated and Cook’s Country magazines and 420,000 paid digital subscribers, makes up 60% of the company’s overall revenue, and CEO David Nussbaum said this area is experiencing double-digit growth year over year. That’s why on Jan. 2, Nussbaum said the company has a pretty good idea what the revenue will be that year, based on how many subscriptions they have. Recurring revenue is a helluva drug.

The unpredictable factors making up the remaining 40% of the company’s revenue are how many books it will sell in a year — it had 1.3 million book sales in 2018 — and the number of sales through affiliate links connected to its product reviews. In 2018, over 650,000 units were sold by Amazon based on links from ATK’s website, and so far in 2019, four years after the company started an affiliate business, just under 1 million units have been sold. Nussbaum estimates that affiliate revenue makes up 7%-8% of the company’s revenue; however, he notes that it is 100% profit because Amazon handles all of the distribution and retail overhead costs.

But Nussbaum believes subscriptions are still a lucrative business for them because the company’s editorial processes for creating new recipes and reviewing kitchen gear utilize data and consumer input. Also playing into subscriber buying behaviors, ATK released its first subscription cooking kit aimed at children this month, after seeing a strong response to the brand’s cookbooks for kids.

Additionally, in order to keep subscription renewal rates high — Nussbaum said the site’s renewal rates are around 80% and print is between 60%-65% — America’s Test Kitchen doesn’t publish a recipe or create content for its websites, TV shows, events, online cooking courses and cookbooks unless it gets readers’ seals of approval.

“Our fans make the decisions and tell us the trends. We don’t need to be influenced by advertising dollars, which makes us a true resource for consumers,” Nussbaum said.

Chief Content Officer Jack Bishop said that the test kitchen spends around $10,000 to develop every recipe before they are published, and each recipe is tested a total of 40 to 60 times by the staff. The cooking brand also relies on a network of 50,000 consumers, who volunteered to be recipe testers, and sends out new recipes to be beta-tested by readers in their own kitchens.

“If one person makes a recipe 30 times, of course, it’s going to come out perfect for them,” Bishop said. But this program allows 50 to 100 audience members, including families with kids, to test out a new recipe and contribute data on how easy it was, if it tastes good and, most importantly, if they would make it again. If the survey data indicates that fewer than 80% of readers would make it again, then the recipe goes through another round of workshopping. 

While this is a lot of effort to put into one recipe, and the company makes over 1,000 recipes per year, Bishop said that this is what helps differentiate the brand and make it worth subscribers’ money. 

The only place where advertisements can be tied to the company is in the pre-roll ads that play ahead of its videos on YouTube. However, none of the videos feature brand partners or branded content. This is a burgeoning platform for the company, and a place where both Bishop and Nussbaum see a lot of promise. So far in 2019, ATK’s channel saw a 30% increase in views year over year and a 77% increase in minutes watched, and as this continues, the team will work to draw viewers back to its site and subscribe; however, they’re still working on how best to do that.

America’s Test Kitchen’s business model is dependent on filling up the top of the funnel and then pulling readers down to commerce opportunities, like subscribing to the website, purchasing a cookbook or paying for the online cooking school. 

To do this, there are areas where the brand lives that aren’t entirely gated, including its newsletters, which are aimed at familiarizing readers with the brand before convincing them to pay for the content, and its YouTube channel, which aims to build up a new, younger fan base. 

Doucette said that because ATK has trained its audience from the beginning that its content is worth the investment, it’s had a highly engaged group of readers. But for brands that don’t have a paywall up yet, he advises learning first how engaged their audiences are and gaining as much intelligence around their segmentation and reading habits before investing in those tools. 

“There’s definitely some examples –America’s Test Kitchen is a great one — where a subscription model can work. But publishers can sometimes point to trying a paywall and it not having the results they want,” said Doucette. “It’s because they don’t have the full understanding of what it takes to do that. The real challenge for publications pursuing [a paywall] is putting the people, process and technology in place to make that transition come together.”

The post The America’s Test Kitchen recipe for profitable media appeared first on Digiday.