Month: October 2019

While publishers still have some time to find solutions — AB5 does not go into effect until the beginning of 2020 — most expect that they will address it simply by getting rid of California-based writers in favor of people based in other states.

“All this does for digital publishers is add even more headaches to our daily existence,” said an executive at one California-based media company. “Our more prolific writers have already reached out and said, ‘What do I do now?’”

AB5 was originally designed to take on Uber and Lyft, which quickly and cheaply scaled their fleets by designating drivers as independent contractors, rather than employees; by some estimates, the added cost of treating those drivers as employees will cost the ride-sharing companies a combined $800 million per year.

While a large number of freelance writers and content creators live in California — around 30,000 are designated as writers, editors, journalists, correspondents, or media and communication workers, according to the Bureau of Labor Statistics — AB5’s strictures will not apply to all of them. In the case of some publishers, it will only affect a small number of workers. For example, a source at one publisher said that only about 20% of its freelance writers were from California, and that fewer than half of them produced more than that 35-article limit.

But those workers tend to be particularly valuable ones: A source at a second publisher said that just a small handful of people, under 10 people, accounted for a third of the content produced by its freelancer writers, who total close to 80 people.

That group has begun to panic about it. A private Facebook group for California freelancers created at the end of September has already piled up over 300 members, who have begun exchanging advice on how to handle the changes.

The group members’ biggest worry — that digital publishers will simply stop working with Californian writers, since it isn’t worth the logistical headache of capping reporters — is somewhat justified.

“There’s no mechanism for us to defray these costs,” an executive at the first publisher said. “Our readers are not going to absorb that cost. I don’t think our advertisers are going to pay us more because we have ethically sourced journalism.”

People are exploring loopholes. A business-to-business exemption in the law has some publishers considering arrangements that would require freelancers to operate as sole proprietorship businesses or as limited liability companies, a loophole that some think might get them around AB5. But the conditions that allow that to work are complex, said Randy Dotinga, the former president of the American Society of Journalists and Authors.

Others are considering simply flouting the law and hoping nobody notifies authorities. While there is a state office, Labor Workforce Development Agency, responsible for regulating and enforcing AB5, “how vigorously they go out and try to enforce it is going to come down to agency and legislative priorities,” said Steven Katz, a partner at the law firm Constangy Brooks, Smith & Prophete.

“If nobody wants to sue you, and nobody’s ever disgruntled, the odds of the regulators coming independently and inspecting you are quite low,” Katz said.

The bigger risk, Katz said, is opportunistic lawyers taking on contingency cases like what’s been common in medical malpractice and worker’s compensation.

“There’s a whole bunch of private enforcers out there,” Katz said. “I would expect with AB5 that these lawyers are also out looking for these issues.”

The post ‘Even more headaches’: Publishers brace for fallout from California’s ‘gig worker’ law appeared first on Digiday.

Nearly every publisher posts to digital platforms.
Social and news platforms have burned publishers before. But most publishers, reliant on advertising and subscription revenues, still need platforms to drive users to their content. In fact, 92% of publishers — including every large publisher we surveyed — post at least some content to digital platforms. The most popular: Facebook News Feed, Instagram, and Google AMP.

But platform ROI remains elusive.
Publishers may post to digital platforms, but that doesn’t mean their efforts generate revenue. Barely half of the publishers who post to platforms say they’re happy with any platform partner, and publishers say the ROI on some key platforms is getting worse rather than better. Large publishers, who use digital platforms most aggressively, also reported the lowest platform ROI.

In 2020, optimize your platform investments.
Test different strategies on different platforms to find which combinations work best for you — and which platforms simply aren’t worth your time. And don’t overlook “tier 2” platforms; some publishers report that small platforms can deliver big results.

The post Digiday Research Report: The state of publisher-platform relations appeared first on Digiday.

The programs are taking a page out of the growth guides of early direct-to-consumer brands. In fact, both Morning Brew and The Hustle’s programs were inspired by a blog post on GitHub that shared code from Harry’s Razors’ referral scheme, one of the first brands to digitally implement this kind of program.

These programs are more than a nice-to-have for loyalists, as the referral programs at all three publishers now account for a large part of their list growth. The Morning Brew, which launched its referral program in 2017, now relies on referrals for 35% of the growth of its newsletter lists, which have 1.6 million subscribers for its daily newsletter, 125,00 for it’s Emerging Tech Brew newsletter and 75,000 for its Retail Brew newsletter.

TheSkimm, which pioneered email referrals starting word-of-mouth call-to-actions in 2012 that was later formalized into its reward-based Skimm’bassador program in 2014, now attributes 20% of the Daily Skimm’s growth to the referral program. Now, the newsletter publisher has more than 30,000 Skimm’bassadors, which are community members that have referred 10 or more people to sign up for the daily newsletter. 

The Hustle, which has referral programs tied to both its free daily newsletter and its paid product, created its first iteration of the program in 2015 to sell tickets to its events before its newsletter even existed. Because the referral scheme grew the email list pretty significantly, in 2016 Parr said he decided to launch a newsletter business, capitalizing on that base, and now the referral program accounts for at least 10% of the free newsletter list’s growth and has north of 10,000 ambassadors, or subscribers who have referred at least four sign-ups. He also said that the majority of growth for the paid product is just through the email list.

“We keep open rates high, which makes deliverability better,” said Denk, who continued that the company’s goal has shifted from prioritizing growth to driving up open rates — now 42% for its daily product, 50% for its tech newsletter and 55% for its retail newsletter. And he said that the referral program, once implementing a double opt-in system to verify referred subscribers, has contributed a higher-quality crop of readers that tends to click more. 

At Morning Brew, 225,000 of its subscribers have referred at least one person. Denk said that the aim is obviously to keep the cost of acquisition as low as possible, with the average CPA across channels being between $2 to $5, but the referral program costs significantly less. Some of the rewards are merchandise, like the stickers which are awarded to referrers who achieved five sign-ups, and Denk estimates that it comes out to $1.25 per mailed item, equating to about a 25-cent CPA. And the larger the pool of referrals that are required for each bracket, the cheaper the CPA is for Morning Brew.

“We strategically placed the awards where they are, so the first award at three referrals is our premium newsletter, and that costs $0 for us to produce outside of human capital,” said Denk. “It’s free on our end, but it still encourages people to share.”

At the moment, 85,000 users have reached the three-referral benchmark, giving them access to the exclusive Sunday newsletter, 8,500 have 10 referrals, allowing them into the closed Facebook group, and close to 1,000 have 25 referrals, which is the T-shirt stage. Denk said that close to a dozen have made it to the top bracket of 1,000 or more referrals, that reward being a trip to the company’s headquarters in New York. 

“The cost of the investment of getting the swag shipped to us and then shipping it out [from the office] is marginal compared to the amount of growth it is resulting in,” he said. “It’s more of a logistical issue than anything else,” though he’s looking to outsource those operations soon.

The Hustle, which has a referral program tied to both its free daily newsletter and its paid product, created its referral program in 2015 before its newsletter even existed. CEO and founder Sam Parr originally created the first version of the referral software in 2015 to sell tickets to its events, with perks like discounted tickets or being flown out to a conference. Then, because the referral scheme grew the email list pretty significantly, in 2016 Parr decided to launch a newsletter business, capitalizing on that base.

Morning Brew also created software to support referral tracking and then added integrations to their email platform that brings awareness to readers about the program and tells them how many referrals away they are to the next reward. 

Now, Parr said the free Hustle newsletter has over 1 million subscribers, with an open rate close to 50%, and this summer, the company launched its paid product (at $299 for an annual subscription), which he said has “several thousand” paying members. The referral program’s code was adjusted to work for these two businesses, but the rewards for each are different. For its paid product, referrers are incentivized with $50 for every paid sign-up, which works for the company because Parr said it gets $250 without having to do any work. 

The rest of the brand’s growth can be attributed to a mix of paid acquisition, PR and search, with the company’s first 200,000 users coming completely organically from search traffic.

The post How publishers use free swag and perks to keep email acquisition costs lower appeared first on Digiday.

“We worked on a pitch for two large global banks and in both scenarios, the client acknowledged that the two leading agencies banked with their company,” said a pitch consultant on the condition of anonymity. “One bank made the implicit suggestion that the nature of the relationship could change if the agency relationship changed.”

These deals were tolerated to a degree because they weren’t a blatant attempt to distort investment decisions. It was implied instead. The bank in this instance knew its agency was able to earn additional income from media trading including data and tech mark-ups and wanted to share in the processes. All parties involved understood the terms of engagement. It takes a smart client to manage this balance, and if it means that they pay less direct fees to the agency, it’s an additional benefit, said Nick Manning, founder of media consulting firm Encyclomedia.

“Advertisers know that there are many ways that media agencies can earn additional income from media trading, including data and tech mark-ups,” said Manning. “So advertisers want to know how they can benefit from these, sometimes on a shared basis.”

The problem is there are many instances where advertisers aren’t smart enough to exploit the grey areas of media trading.

“According to reports, Disney is saying to your agency ‘I want you to spend money from other clients on me.’ If you say it out loud it’s crazy as you would basically compromise your advice to other clients,” said Eric Snelleman, managing partner at consultancy Uncommon People.

Defunct travel company Thomas Cook would ask agencies to openly write a check to win the business as part of their pitch process six years ago, said two agency execs that contested those accounts. GlaxoSmithKline, as part of its pitch last year, took agencies into rooms at a rugby stadium in London and auctioned off the account. Microsoft had a deal with Publicis in which it had the first and last opportunity to win business from the holding group’s clients. There was even an internal process in place where the agency would provide a clear rationale as to why the software giant did not win a bit of business. It was a weekly meet, said one media exec who worked at the agency at the time.

We’ve reached out to Publicis and will update the article when it responds.

The reality is the advertiser rarely wins here. Doing any of the above demonstrates a lack of understanding of media. The agencies often have ways of dealing with it. In the case of Disney’s pitch, it’s likely the agencies involved anticipated it would get dicey at some point. Businesses going through mergers and acquisitions at a scale like Disney tend to treat media pitches like a commercial exercise. “Clients see a big number on the table like media spend and try to figure out how to get some additional savings from that money,” said the pitch consultant. Agencies have been happy to accept the demands from the likes of Disney if it wins the business and provides an additional margin.

“If their media agency is able to generate additional benefits, there is no reason why advertisers should not take advantage as long as the media trading incentives do not distort planning choices,” said Manning. “Agencies have been doing this for years, and the only real difference is the clients now know about it. At least it’s out in the open.”

But by accepting unreasonable terms from advertisers, agencies are contributing to their own undoing. If they say no advertisers will give the account to another agency. But if they say yes, the agency is under pressure to fulfil those terms and thus the race to the bottom continues. Advertisers may be getting smarter at finding the grey profit areas in media trading, but they’ve a way to go before they can catch up with the agencies who have been squeezing advertisers for decades.

The post Advertisers are pushing the limits of how they make money from agencies appeared first on Digiday.

“TV is our editorial video strategy,” said Axios co-founder and CEO Jim VandeHei.

VandeHei declined to discuss the terms of the HBO deal, including how much revenue the HBO show has generated for the company. In February the publisher told the Los Angeles Times that it generated $25 million in revenue in 2018 and broke even for the year. VandeHei declined to say how much revenue Axios is on track to make this year and whether it expects to turn a profit, instead opting to describe 2019 as “a great year.”

Axios had been producing videos for its site and other platforms before the HBO show’s debut. But now that the show has become a recurring part of the publisher’s business, the publisher relies on cutting clips from the HBO show and distributing them online. That may not appear to be the most successful digital video strategy compared to the publishers touting their billions of views across various platforms; in August, Axios received 11.4 million video views on Twitter, 168,000 on Facebook and 11,900 on YouTube, according to data from Tubular Labs. But it can be a sensible strategy for a publisher like Axios that is “not going for the masses,” said VandeHei. “If we were going for the masses, then maybe we would do something for Facebook Watch.”

Instead, Axios is doing a show for HBO. But, for as easy as Axios’ ascent into the TV business may seem, “easy” isn’t exactly how VandeHei would describe it. “TV is a shitload harder than we realized. There’s so much that goes into creating an awesome show. It takes way more people power than we had anticipated,” said VandeHei, who serves as an executive producer on the HBO show.

For the first season of “Axios on HBO,” Axios had plenty of people powering the show. Documentary filmmakers Perri Peltz and Matthew O’Neill signed on to direct and produce the show alongside Axios, HBO and DCTV, the production firm that Axios hired to staff the production. Axios also had its own employees — including VandeHei, national political reporter Jonathan Swan and chief technology correspondent Ina Fried — working on the show, coming up with segments and conducting on-camera interviews with President Donald Trump, Apple CEO Tim Cook and Tesla CEO Elon Musk.

However, Axios did not have anyone on staff who was exclusively focused on the show in its first season. That changed heading into the second season that premiered its first batch of four weekly episodes in June and will premiere four more starting on October 20.

Axios now has three full-time employees dedicated to the HBO show. Raisa Zaidi, a Producers Guild Award-nominated producer who previously worked for Al Jazeera English, serves as the show’s editorial director and works across Axios’ newsroom of 56 editorial employees to formulate story ideas for the show. Amelia Knight is the show’s project manager and responsible for handling logistical matters like organizing shoot locations and coordinating with the 30 to 40 people that can be involved in putting together any given episode. And Juliet Bartz is an associate producer on the show, charged with researching segments and prepping reporters.

Having the trio of employees focused on the HBO show helps to ensure that the story ideas that Axios’ reporters pitch for the show would actually work on TV and what all would be involved in putting together the TV version, according to VandeHei. “You couldn’t wing this. We kind of tried to wing it in season one, and it just wouldn’t work. So now that it’s becoming more of a pure show that we’re going to have more episodes — it’s as simple as you need a more mature structure around it,” he said.

Concentrating its editorial video strategy on the HBO show has enabled Axios to have its brand studio’s six-person video team — which is overseen by Vox Media and Mic alum Jimmy Shelton who Axios hired as its director of video in April 2019 — solely focus on producing videos for marketers, such as the “Smarter Faster” series sponsored by JPMorgan Chase. The idea appears to be that marketers will see not only the work that Axios’ video team is doing for marketers but also the show that Axios is making for HBO and take the two as examples of what they can expect Axios to produce for their companies.

Having a show on HBO does carry some weight with marketers evaluating publishers for branded content opportunities. “It speaks to their production and storytelling ability, but it doesn’t provide me a glimpse into how they work with brands because branded content and entertainment are different than creating their own content,” said an agency exec.

Conceivably, the HBO show would also help Axios to grow the audience for its core publishing business. The show’s interview with Jared Kushner that aired in June 2019 “broke so far and wide that it introduced Axios to some people because news outlets carried that everywhere. So we do also view [the HBO show] as a great brand opportunity for the company,” said Evan Ryan, evp at Axios and an executive producer on the HBO show.

However, Axios does not appear to have received much of a traffic bump from the HBO show. In August 2019 — the most recently available month — 7.0 million people in the U.S. visited Axios’ site, down from 8.4 million in August 2018, according to Comscore. VandeHei said that monthly site traffic isn’t the metric that matters for the publisher; “the raw number of people who randomly come to your site in a month, to me, has always been a moronic stat,” he said.

Instead of monthly traffic, VandeHei looks at its daily audience, including the people who subscribe to its email newsletters. Axios averages 750,000 daily active users across the people who open its newsletters, visit its site and read its articles on Apple News, according to an Axios spokesperson. That figure is up from 500,000 daily active users in December 2018. The subscriber base for its email newsletters alone has grown from 375,000 subscribers in December 2018 to 725,000 subscribers, and the open rate for Axios’ email newsletters averages around 43%, said VandeHei. For comparison, the average email open rate for media, entertainment and publishing companies is 17.6%, according to email marketing provider Sailthru.

Axios does not necessarily need its HBO show to be a big driver of traffic to its site or sign-ups for its newsletters. It can be its own business. With companies including Amazon, Apple, NBCUniversal, Netflix Quibi and WarnerMedia stocking up on shows amid the streaming war, “that is opening the door to companies that have high-end content and high-end audience to be able to start to explore. This could be a new revenue line for some. It’s certainly a new revenue line for us,” VandeHei said.

The post Why Axios is skipping original digital video entirely in favor of TV appeared first on Digiday.