Month: October 2019

The number of platforms publishers are investing in has increased as well. Beyond Facebook and Google, publishers have begun investing in other search platforms, including Bing, as well as different social channels including Snapchat and Instagram, to market their offers. Some have increased their spending outside of digital channels too. The Washington Post’s media spending through the first half of 2019, some $14 million, is more than twice what it spent over the same period in 2018, according to media measurement firm Kantar. Kantar’s numbers reflect digital investments in paid search and display, as well as more traditional channels including out of home, radio, magazine and newspapers.

That companies are spending money to promote products they have for sale isn’t novel. But the increased spend is a testament to the progress publishers have made in shifting their focus to consumer revenue. “There’s all this momentum around really getting serious on digital subscriptions, and part of it is realizing, ‘We need to not just have a meter, but we have to be out there asking people to pay and putting marketing resources against it,’” said Matt Skibinski, a reader revenue adviser at the Lenfest Institute.

Some of this was set in motion last year, when a number of news publishers hired different kinds of CMOs, who were focused less on marketing to advertisers and more on driving subscriber growth. The Washington Post, Hearst Newspapers and The New York Times all added CMOs in 2018; in the case of Hearst and the Post, it was the first time either publisher had had someone in the role.

Those hires were part of a broader trend of reorganization. The Post, for example, reorganized so that its print and digital marketing departments all rolled up under its new CMO. Over the past year, many publishers have begun hiring digital ad buyers and growth marketers to support subscriber growth as well, though those teams are typically small.

Most publisher subscription efforts begin, and are concentrated, on their owned and operated properties, where they have insight into what a person is reading, how often they visit and what they have read in the past. They often have a direct relationship already, typically in the form of a newsletter subscription; only about 25% of the subscriptions that Tribune has acquired this year, for example, came from marketing done on off their own platforms, Tribune Publishing CMO Mark Campbell said.

But that on-site audience is limited, so publishers have gotten more comfortable spending to market to people elsewhere, even if it means a reduction in the margin of those subscribers.

“The margin on the paid source is going to be lower than something that’s virtually free,” Campbell said. “But we’re looking for those paid channels to extend and provide incremental subscribers above and beyond what we get on the organic sites.”

Most of that targeting is done using first-party data the publisher has gathered; email addresses of newsletter subscribers, for example, are frequently used as audience segments for targeting.

But the data publishers gather from their audiences’ on-site behavior — what they read, what kinds of topics they are interested in — can be used to target lookalike audiences. But there are trade-offs. While reaching a broader audience might be cheaper than aiming at a hyper-specific one, it requires investing in more varied, different kinds of messaging.

“The better the lookalike, the smaller the audience,” said Jason Sylva, gm of consumer revenue at New York Media. “And as you make that world [of possible subscribers] bigger, you can’t just assume that making it larger with the same approach to creative will drive the same results.”

While publishers will often emphasize their mission or the impact of their reporting when marketing on their own properties, on third-party platforms, the focus is often on cheap introductory offers and discounted pricing.

“There’s a lot of virtue in using promotions to build your subscriber base, especially when you’re converting them from never having paid for something,” Skibinski said. “On an introductory basis, it makes sense to price it where it’s not really a decision at all.”

While some publishers are more comfortable dropping the price of their subscriptions than others, most see merit in it, particularly if they feel confident that they can keep customers engaged. Through the first 11 months of 2019, New York Media has found that its subscribers read more after they’ve converted.

That observation has given New York confidence in its current strategy, which offers discounts on yearlong subscriptions but not on its monthly rate of $5 for a digital subscription.

“I’m not interested in a rush to the bottom with introductory pricing,” Sylva said. “If you think the biggest barrier is between someone paying you and not paying you, that’s not a great place to be.”

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With an economic downturn looming, ad tech experts said they foresee further similar announcements on the horizon as cable companies, broadcasters and publishers assess which of their valuable assets they can flip in order to pay down debt before a recession hits.

Anxiety is running high within ad tech right now. Among the laundry list of concerns: the new California privacy regulation, the ICO’s decision on whether real-time bidding can legally continue in its current form under the European General Data Protection Regulation, increased moves from browsers to tighten user privacy, and the perennial Google-Facebook duopoly.

Each acquirer has its own nuanced reason for reassessing its ad tech plays. But the recent moves suggest acquiring companies are rethinking whether wholly owning ad tech assets is a winning strategy.

Teads, SpotX and Unruly were never fully tucked into their parent companies. They primarily functioned as standalone units and continued to serve other publishers as well as their corporate owners. While there was lofty talk of mutual benefits when the deals were first announced, it’s not clear those were fully realized and the assets could have more value elsewhere.

“I think the strategic rationale for those acquisitions was never clear,” said Ratko Vidakovic, founder of ad tech consultancy AdProfs. “Aside from just owning the asset, what was the greater vision? To me, there was no obvious rhyme or reason why a Dutch telco, a European broadcaster and a media conglomerate would want to own any of these companies.”

Ad tech platforms also don’t have the “margin profile or [revenue] predictability” that larger subscription or pure-play software businesses have, said Sam Thompson, senior managing director in the media, marketing and enterprise technology division at advisory firm Progress Partners. That’s a particular concern in a downturn, when ad spending tends to take a hit — though at least 2020 is an election year and ad companies, especially those operating in the TV space, are likely to see a revenue bump.

RTL-SpotX
RTL took full ownership of U.S. video ad platform SpotX in August 2017. At the time, the rationale for the deal was to help the Luxembourg-based broadcaster become a global “total video powerhouse,” RTL said when announcing the deal. SpotX was to work with its European ad tech video unit Smartclip to create a platform for other broadcasters and premium publishers — as well as itself — to monetize their over-the-top content.

But while SpotX continued grew as a standalone independent platform, (and overall, RTL Group’s ad tech revenue was up 40% to €67 million in the first half of the year) RTL has no U.S. broadcasting operations of its own.

RTL decided it needed a U.S. partner to invest in the platform, and in August 2019 said it was reviewing opportunities, which would likely see it downsize its stake in the business (but probably not sell it completely). From August, Mediengruppe RTL Deutschland took over the running of the company’s European ad tech businesses under its Smartclip brand, aside from the U.K., which remains SpotX’s European hub.

The decision on SpotX is likely to be announced before the year’s end.

News UK-Unruly
News UK acquired Unruly in a deal worth around $90 million (plus up to a further $86 million in future, performance-related payments) in 2015. It gave Unruly, a U.K.-based video platform, exclusive access to sell outstream video ad inventory across News Corp titles. Outstream ads appear in articles but don’t sit within publishers’ video players — offering lucrative video ad dollars without having to create actual video content.

Unruly also continued to work with other publishers and offers a marketplace that connects both buyers and sellers to video inventory. All the company’s three co-founders had stepped down from their operational positions at the company by 2018.

In August, Sky News first reported that News UK had hired an investment bank to oversee an auction for Unruly. The report said the publisher had received unsolicited inbound interest for a takeover of the U.K.-based ad tech company, which was confirmed by Digiday’s sources.

News UK does not split out Unruly’s financials. Unruly says on its website the company employs 350 people across 20 locations.

Altice-Teads
In June, French financial newspaper Les Echos reported Dutch telecommunications company Altice was looking to unload Teads, the France-based video ad tech firm it had acquired for just over $300 million in 2017.

Teads Executive Chairman Pierre Chappaz had previously said he was looking to arrange a leveraged buyout backed by U.S. private equity to take control of the company from Altice, Bloomberg reported. In July, Bloomberg also reported that three private equity firms had made bids for the video ad tech company, which could have valued it at north of $1 billion.

Two sources said the unicorn price tag put off some possible buyers.

In an emailed statement provided to Digiday, Chappaz said, “Altice is not selling Teads. Altice and Teads are always exploring our options concerning the optimization of our capital structure.”

A Teads spokeswoman said the company is now at 830 people. Teads booked $430 million in gross revenue last year, and revenue growth this year is at 30%, the spokeswoman said.

Sources said more than $1 billion might be optimistic, given multiple revenue comparisons to other public companies in the space like Criteo (although Criteo is ironing out its own issues at the moment and its shares have dropped dramatically this year).

What’s next
The recent ad tech unwinding and macro concerns aren’t to say M&A in the space has slowed down. There were 67 ad tech deals in the first three quarters of this year, according to advisory firm Results International, which defines a deal as any transaction where a company takes at least a 40% stake in another. That was up on the 47 deals in the same period in 2018.

Where might some ad tech companies find new homes? Sources suggested private-equity firms are once again circling around ad tech outfits that are still growing. And ad tech companies working within the growing advanced TV space are seen as attractive assets.

The other traditional strategic buyers — other ad tech companies and media owners — are unlikely to have completely turned their backs either as they seek scale in a digital ad market dominated by Google and Facebook. Take the recent Taboola and Outbrain merger, which the companies positioned as a way to offer advertisers another scaled alternative to the duopoly.

“Most large companies tend to be very conservative in how they make decisions; at the same time, they want to pursue growth,” said Brian Wieser, GroupM global president of business intelligence. “They often don’t know the best way to find it, but something that tends to provide comfort is when you see other companies taking an action going in a certain direction.”

“That tends to explain why you see a lot of multiple companies making similar choices,” Wieser added.

The post The great unbundling: Why some high-priced strategic ad tech deals could unravel appeared first on Digiday.

The collection will be on sale from Oct. 17 at the Esquire Townhouse, the magazine’s annual three-day event which features panels, talks and masterclasses, sponsored by watchmaker Breitling. After that, items can be bought from Esquire and the participating brand sites for the next nine months.

“We’re leveraging all different platforms and channels, launching the range on Instagram, digital galleries and shots in the print magazine,” said Alun Williams, managing director, men’s lifestyle and health and fitness for Esquire. “This is part of our revenue diversification strategy and growing the Esquire ecosystem where we can interact on a personal, close level with our very affluent, desirable readers.”

Hearst has prioritized diversifying revenues to cater to downward pressures of print circulation, along with the volatile digital advertising market. Licensing has proved fertile ground. Hearst UK has a long history of brand licensing, some on the more creative side, like beef jerky from Men’s Health and hotels from Country Living. Having the internal systems and existing partnerships set means it has been able to increase its margins and ways of working over time.

The publisher plans to double the revenue it made from the Esquire Edit collection last year. Hearst didn’t reveal hard figures, but its overall diversified revenue streams (licensing, events, accreditation and content marketing agency) make up nearly half of its digital revenue; the other half comes from advertising. Print is still around 60% of Hearst UK’s total revenue, according to comments from the publisher in April. Print circulation for Esquire fell by nearly 6% year over year to 59,000 copies, according to the Audit Bureau of Circulation figures from July to December last year. According to Williams, digital ad revenue is growing.

Last year, several items from the collection sold out within a few months, although the publisher wouldn’t share which due to confidential clauses with its merchant partners. The number of limited edition items it produces for the collection varies on the price. For accessories it will produce hundreds, said Williams, but fewer for a £420 ($513) pair of shoes. Erring on the conservative side in terms of production has the benefit of giving the collection a sense of elitism, he added.

The collection has been a three-way partnership between the Esquire editorial team, each retailer and brand licensing firm IMG, and took between six and nine months to create. Licensing has a longer lead time and a different cycle to selling ads in order to thrash out details like designing the product, packaging, launch and marketing plans.

“It’s fairly time intensive, but it’s a great offering for our consumers which are really engaged with the brand, those who look to Esquire as the arbiter of style,” said Williams.

The collection fits in with Esquire’s push to be a luxury lifestyle brand rather than only a magazine. This is revealed more clearly in events like the Esquire Townhouse — which hosts a diverse range of events like talks with author Salman Rushdie and interviews with R.E.M’s Michael Stipe and Mike Mills — as well as digital and print channels: Last year Esquire invested in better-quality paper, reduced issues from monthly to bi-monthly, increased the cover price to £6 ($7.33) and doubled marketing spending.

Licensing can be lucrative for publishers. In the U.S., Meredist generated $25.1 billion in retail sales of licensed merchandise in 2019, second only to The Walt Disney Company’s $54.7 billion, according to License Global.

According to Alice Pickthall, senior research analyst at Enders Analysis, licensing is unlikely to grow into a major revenue stream. “At a minimum, brand licensing clearly requires you to keep the brand prominent,” she said, “and so at most can only be seen as a small piece in a wider holistic strategy that looks to maximize their brands.”

Licensing is not yet a large part of Hearst U.K.’s revenue stream; otherwise, it would be broken out in its accounts, said Pickthall. But it’s still crucial for a balanced revenue mix, and Esquire, with a strong community of engaged consumers built through its print legacy, suits that, she added.

There are also pitfalls to be wary of. In some cases, product licensing could jeopardize existing or future advertising relationships if publishers start creating competitive products to their advertising partners. In other instances, licensing opens up more avenues for advertising partnerships. For Hearst, it’s hoping these deeper partnerships will open up more advertising opportunities.

Image: Courtesy of David Lineton via Hearst UK. 

The post Hearst pushes further into brand licensing with an Esquire capsule collection appeared first on Digiday.

Group Nine CEO Ben Lerer told me he thinks a rising tide lifts all boats and that a handful of companies — BuzzFeed, Vice, Vox and Group Nine (of course) — are “stepping out and moving into leadership positions.”

At one time, the digital media playbook was to attract as much buzz and VC investment as possible and then to use that money to buy audience growth. Digital winter soon followed: a season of discontent, layoffs and media companies selling for rock-bottom prices, far below their previous valuations.

Now the strategy is less to “outrun” the industry and moving more to an “outlast” mentality, Lerer said. The new digital media operators are now looking for acquisitions that can offer revenue diversification, companies that can fill gaps in their advertising client lists, and a smooth and quick path to profitability.

As DotDash CEO told Digiday’s Max Willens last week, after its acquisition of Liquor.com: “We are a media business. We believe in cashflow…if they don’t make any money, currently, we need to figure out how to fix that. We have a fairly old-school view. Just because we’re on the internet doesn’t mean that the historical rules of media don’t apply to us.” — Lara O’Reilly

Agencies to DTC: We’re just like you!
Agencies will go to some great lengths to get in on DTC action. When it comes to proving to DTC brands, naturally averse to too much agency outsourcing and focused on control, ad agencies are doing everything from buying smaller shops outright, to proving their mettle in other ways.

In late August, iProspect acquired indie agency MuteSix, which works with DTC brands like Theragun, Burst Oral Care and Grunt Style. That was right after Wpromote bought San Francisco based GrowthPilots, which works with Instacart. For smaller agencies, that have essentially managed to make Facebook and Instagram marketing a focus, making them attractive partners for these small consumer startups, it’s a growing up of sorts as well.

These agencies are also beginning to do more than Facebook and Instagram, now advising clients on more prolific e-commerce strategies, for example. As DTC brands grow up, so do they — and they’re now running up against big holding company-owned shops in pitches. This has, of course, led to a little bit of restructuring in what is offered: Agencies open to more equity-based on outcome-based arrangements are able to pitch themselves more as partners than as agencies.

In the most extreme version of this, DTC agency darling Gin Lane last month closed up entirely, in favor of relaunching itself as Pattern, a DTC holding company that just came out with its first brand, a line of cookware called Equal Parts. Others, like Decoded and The Engine is Red, are making yoga mats and CBD-infused water.

As one exec puts it: “They have to show that they’re not agencies, they’re business owners too. We get you, we do!” — Shareen Pathak

Arriving at a cookieless future will be a bumpy ride
If there was ever a glimmer of hope that the death of third-party cookies was not set in stone, yesterday Google slammed that door firmly shut. The tech giant has come up with a way to solve one of the pressing questions circulating the ad industry: how to frequency-cap ads without third-party cookies. It’s a clear sign that Google recognizes third-party cookies are highly restricted in certain environments and browsers, and that’s not likely to change. Providing such a tool will keep things simple for buyers, and likely be difficult for other demand-side platforms to replicate — all handy arguments to convince advertisers why Google’s tools are the only ones safe enough to use in the current data-privacy-strict landscape.

Yet, getting to a point in which third-party cookies are not the core currency underpinning all advertising buying, selling, targeting, tracking, measurement, and capping, is going to be a bumpy ride. Granted, publishers are embracing the change with gusto (because they must.) Apple’s removal of the ability to monetize ads programmatically on Safari was a big blow to publishers, as was Mozilla Firefox’s anti-tracking changes in countries like Germany. Those that can get ahead on scaling audience IDs that don’t rely on third-party cookies, which can then unlock monetization opportunities, will stand to gain. But it doesn’t change a cold hard truth: media agencies simply aren’t ready for the switch. They still need third-party cookies to create audiences and continue campaign hygiene factors to meet client objectives.

“The risk with moving to focus solely on first-party cookies is that all cookies are on Apple’s radar and they are likely to shut them all down on Safari eventually,” said Matt McIntyre, head of programmatic at Essence for EMEA. “As buyers, we have to ask ourselves: Do we want to spend time incorporating these new practices into our strategies if we know they are likely to change again in the near future?” Publishers and agencies will likely be at odds on this for some time. — Jessica Davies

The post The Rundown: Media consolidation wave is an effort to outlast, not outrun the industry appeared first on Digiday.

“We were a little turned off by the idea of doing a show howe that was too designer- or interior decorator-focused. We wanted to have the consumer be able to shop the home and not through an interior designer,” said Leslie Yazel, editor-in-chief of Real Simple. “It’s too early to tell whether [commerce] will rival what we’ll make in sponsorship, but we’re optimistic.”

Domino general manager Tracy Cho got the idea to add shoppable technology after a holiday partnership with Amazon in 2018, where Domino transformed a loft space in Manhattan into a lounge featuring curated products that attendees could purchase by scanning codes with their phones.

“It’s contextual shopping,” Cho said. “It’s reaching a very targeted user and targeted customer, because they’re looking at the home to buy it and they’re seeing in the moment how they can set up the space.”

Domino’s winter issue will have a feature on the home, which will also include QR codes for those products that readers use their smartphone to scan.

Brands were included in the home through product placement, and affiliate links were used in the shoppable content as well as in the house itself. But the primary revenue driver for the project still comes from the content created surrounding the home, including its print spread and digital elements. And while it’s an ongoing franchise for the brand, Cho said that Domino isn’t leaning on that revenue, but is looking for constant iterations of how to make the project better and a bigger piece of the puzzle. 

Hunker, a home-design brand recently acquired by Leaf Group, launched its first Hunker House at the end of last year. But instead of focusing on commerce opportunities, vp of content Eve Epstein said Hunker looks at the house as an extension of its publishing platform and treats the house more as a branded content studio.

Jason Lepore, vice president and general manager of Hunker, said that about half of the conversations Hunker now has with its partners when they’re building a campaign involves the house in some way. Therefore, he said it’s been a significant revenue contributor since its launch, though he wouldn’t share specifics.

Epstein said that the house has transformed Hunker’s branded content capabilities, giving it more flexibility with creating experiential functions like panels and workshops, or even inviting influencers that brands want to be affiliated with into the space overnight to create a collection of content for their own social channels. Hunker doesn’t rent out the space for partners to use on their own, but it will work to create both public and private partner activations in the space that are produced by Hunker staff.

The idea was first hatched about a year ago and the soft launch of the space occurred at the end of 2018. But in order to save both time and money, Hunker rented an already existing house in Venice, Calif., rather than building a location from the ground up. This allowed all of the design and planning to occur in-house, with creative director Paul Anderson leading the editorial staff of 10 to ideate the look of the home, though vendors were called in to do the heavy lifting.

“I do feel like it’s been a turning point for us as a publisher to enable us to create high quality partner content very quickly and efficiently,” said Epstein.

While widespread, idea homes aren’t for everyone. Dotdash’s The Spruce doesn’t have a showcase home or plans for one in the near future, but it’s been looking for similar opportunities in the branded content and commerce areas, including a line of household paints that are distributed through Amazon. 

“[An idea house] is not something that we’re ruling out entirely–it’s an interesting phenomenon, but our strategy works so well right now,” said Mélanie Berliet, general manager of The Spruce.

The post ‘Contextual shopping’: Publishers are using model homes for retail experiences appeared first on Digiday.

The misconceptions around addressable TV are surprising. It doesn’t help that, as an industry, the language we use doesn’t serve the goal of clearing up what can or cannot be done with the medium. I recently sat down with my five-year-old son and explained what I do for a living. After a 15-minute conversation he said, “So Mommy, you send commercials to me for things that I like, like M&Ms and apple juice because I like them.” I’ve been working in the advanced television space for more than seven years, and it really is that simple. I explained addressable TV in simple English instead of speaking in acronyms.

The marketplace cannot truly scale until we all start to speak the same language and come together to create universal standards.

Agencies want to enter the world of data-driven television, but it’s still difficult to activate an addressable campaign in a unified way. There isn’t an abundance of tools available to agencies to allow them to reach audiences in granular ways through TV, and understanding how to reach these potential customers at scale, without duplicating ads, is tricky.

Post campaign, it is challenging to surface campaign attribution in a meaningful, uniform way. If the targeting, test design and metrics are not consistent across screens and suppliers, the data is not useful. Analytics groups/data scientists’ time is eaten up by how manual addressable advertising campaign reporting is today, taking in raw data, formatted in various ways, from multiple suppliers and/or viewing environments before they actually can analyze it.

In order to move addressable TV from a buzzword to an industry staple, a simpler execution is necessary.

Here are three addressable TV realities brands and agencies need to understand:

We live in a multiscreen world.
Around 25 years ago, TV didn’t have much competition. The internet existed, but smartphones didn’t and neither did tablets. These days, consumers have many tools with which to consume premium television content, and to get an accurate picture of viewing habits you have to take all of those into account.

Nielsen recently found that nearly half of TV viewers always, or very often, were using a digital device while they watched TV. They used devices to look up information related to the content they were watching, “using digital platforms in tandem with TV and audio to augment their overall experience.” Using a second device is a part of how people watch premium, engaging content today, making it more important than ever to focus on the entire picture of who the consumer is versus what content they’re watching.

Cross-channel attribution is the future.
It’s difficult to use a thoughtful approach across all screens today, but it’s possible to activate on data across screens fairly easily from both an addressable and indexing standpoint. Starting with an understanding of television is key. With full transparency into how TV compares to digital performance, agencies can recognize when they should allocate more to digital or more to their addressable spend.

Automation is possible and it’s changing everything.
Agencies want to focus on gleaning insights from their campaigns to have the ability to optimize their efforts. Simply knowing a campaign worked is not enough. It’s important to go beyond results and provide recommendations to optimize future addressable campaigns, linear television media effectiveness, the value of an impression by viewing environment and/or targeting audience allocation. Automation makes execution easier for both targeting and attribution, and it creates the ability to cleanly target a uniform audience and measure campaign impact.

One objection to addressable TV from agencies is that they have tried doing it manually at scale and found it to be too complicated. That’s a valid criticism. Historically, executing an addressable campaign manually has been extremely complex and very arduous.

Putting addressable TV campaigns together has only been accessible to those who put in the time to understand its nuances and were willing to take the time to manage the manual processes. Technology is starting to change that, and the partners who solve challenges through unification, automation and data science are the ones who will guide brands and agencies into a new era of TV that’s data-rich and technology-driven.

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