Month: February 2020

Since Feb. 10, readers visiting Spiegel have had the option to browse non-subscriber content for free with ads and ad tracking still functioning. Or, they can buy a Pur subscription without ads and ad tracking for €4.99 ($5.38) a month for non-Spiegel+ subscribers. Spiegel+ subscribers can pay an additional €1.99 ($2.15) a month for no ads and no ad trackers.

In the announcement, the publisher said that with the Pur subscription some ads, like podcast ads, will remain because of the technical work to remove them. There will also be some tracking for internal analytics. The publisher did not respond to comment by press time.

While the additional revenue doesn’t go unwanted, Pur is about preserving existing programmatic advertising revenues, according to the publisher’s Medium announcement. In the coming months the Planet49 regulation, which states no cookies without consent, is expected to be drafted into German law. Advertisers and agencies requesting to target audiences who have explicitly given their consent will benefit Spiegel, who will still be able to charge premium prices for its ad slots. Without consent, the value of inventory drops.

Spiegel said Pur is a response to ad block-curious readers saying they would pay to turn off ads so they are no longer tracked. Germany experiences some of the highest cases of ad block users in Europe although the trend is stabilizing as the ad experience has improved and publishers have been more transparent and communicative about how their content is funded.

“With Spiegel Pur, this is a tiny glimpse of how the internet of the future will look,” said digital strategy consultant Oliver von Wersch. “Spiegel has become the first-mover in this instance. It has always had the willingness to be first, and now it is.”

Spiegel Pur is modeled on the Austrian publisher Standard’s consent framework. According to von Wersch, German data protection authorities suggest Standard’s consent framework meets certain regulations during ongoing discussions with German publishers about the finer points and interpretations of the law. However, the exact notion of what is compliant isn’t yet clear. Spiegel plans to iterate Pur.

Other publishers offer anti-tracking versions of browsing, but few so explicitly as Spiegel. For European audiences, The Washington Post offers and paid ad-free and anti-tracking experience.

Media analyst Thomas Baekdel questioned the legal basis for this option.

“If they are discussing ‘pay to not be tracked’, I don’t see how that would be accepted by the European Union,” he said. “It would dramatically undermine what the General Data Protection Regulation was designed to do. Publishers can offer an ad-free version for a price, but the tracking part is not legal to require payment to avoid.” Ultimately, publishers and the rest of the ecosystem are looking for more clear guidelines from data authorities about what is compliant.

Spiegel has subscriptions and ad revenue streams but ads are still the majority: In July 2018, 99% of Spiegel’s revenue came from online ads. In December it had 9.2 million monthly unique users in Germany according to Comscore stats, out of 61 million internet users in Germany.

In Germany, publishers have felt more keenly the impacts of audiences decreasing in value as browsers tighten tracking loopholes. Partly because Mozilla Firefox has a higher-than-usual market share of 14.24% according to Stats Counter Global Stats, third behind Google Chrome and Apple Safari. This makes finding new ways to monetize programmatic audiences without third-party tracking cookies especially critical. Equally, more publishers like Spiegel are creating their own logged in environments where they can monetize audiences on their own terms, making future monetization on the open web seem hazy.

The streaming market for linear channels is diverging between subscription-based streaming TV services, such as Dish Network’s Sling TV and YouTube’s YouTube TV, and free, ad-supported streaming TV services, such as Viacom’s Pluto TV and Samsung’s TV Plus. That split is pushing TV network owners to determine how they can maintain traditional linear TV’s twin income sources of advertising and affiliate revenue. “It’s a real tightrope,” said one former TV network executive.

On traditional TV, network owners typically make money in two ways. Advertisers pay them to advertise on their TV networks, and pay-TV providers, like Comcast and Dish Network, pay them a per-subscriber fee, known as a carriage fee, to carry their networks on the providers’ services. This dual-revenue model has been a boon to network owners’ businesses because the affiliate revenue is basically all profit and the dollar amounts can exceed network owners’ advertising revenue. For example, Fox Corporation’s cable networks generated nearly three times as much revenue in the fourth quarter of 2019 from carriage fees as from advertising, according to its most recent earnings report.

“That dual-revenue stream model that cable networks have is, besides search, the most incredible business model I’ve ever seen. So cable networks are in a bind because they don’t want to give that up,” said the former TV network executive.

However, the carriage fee is becoming a bit of a Faustian bargain that complicates the TV network owners’ efforts to shift their businesses to streaming. In exchange for receiving the carriage fees, the network owners agree to limits on how they can distribute their linear channels to prevent that additional distribution from undercutting the pay-TV providers’ services. The pay-TV providers “want to make sure that the content that their subscribers are paying for is not available freely. It’s totally fair,” said a TV network executive.

Pay-TV providers are certainly within their rights to protect the investments their carriage fees represent. But, with the number of people subscribing to pay-TV services continuing to decline, the TV network owners find themselves in a precarious position. They cannot afford to forgo the affiliate revenue, but neither can they afford to shun streaming, in particular the so-called FAST services like Pluto TV.

These free streamers have become the gateway to the connected TV market for mid-sized media companies, including cable TV networks that are not part of major media conglomerates like The Walt Disney Company or Comcast-owned NBCUniversal. More to the point, while streaming pay-TV services, such as Hulu’s and YouTube’s, have accrued single-digit millions of subscribers, FAST services count tens of millions of monthly active users. Additionally, the FAST services typically enable programmers to sell a portion of their channels’ ad inventory, which can help the programmers to build up their streaming ad businesses.

Seizing the FAST opportunity is challenging given the carriage fee trade-offs. Because network owners cannot distribute their pay-TV linear channels on the free streamers, they must create entirely new channels for the FAST services. That requires not only investing in the technology to power those channels and the talent to operate the channels, such as executives to oversee programming schedules, but also the programming. Network owners have been able to rely on their libraries of old shows that no longer air on their linear networks, but they are also finding that they need to develop new original series in order for their channels to stand out among all the other channels on the FAST services. This emphasis on original programming introduces its own challenge of balancing the cost of creating that programming with the expected revenue. “That’s the challenge: how do you make the economics work? We’re trying to figure that out,” said a second TV network executive.

What is becoming clear to the channel programmers is that they may be able to maintain their dual-revenue streams as their businesses shift to streaming, but they will need to work harder for that money. As nice as it would be for the streaming pay-TV services to completely offset traditional pay-TV declines, that has yet to prove true. “That ecosystem is limited in size and scope,” said a third TV network executive that distributes separate channels on streaming pay-TV services and FAST services. Distribution on streaming pay-TV services “is good to have, but the biggest opportunity is the FASTs,” said this executive.

Grounded will feature 10 workout classes throughout the day, host six to eight panels and will have other activations and rest areas that focus on wellness. Similar to Play/Ground, the event will be monetized through ticket sales and sponsorship, with tickets ranging from $25 for a half day or $40 for the full day. PopSugar is anticipating approximately 1,000 attendees throughout the day.

The two-day long Play/Ground festival features activations that are tied to the most popular categories on the site including celebrity, fashion, fitness and beauty. From the first year to the second year, attendance more than doubled to more than 15,000 attendees in 2019 and sponsorship revenue increased by 18% year over year. (The publisher declined to say how much money it made.) In total, the number of brand sponsors increased by 60% to more than 200 brands, vendors and activations that were partner-driven.

“Ideally once a quarter there will be one variation of Play/Ground,” said Lisa Sugar, editor-in-chief of PopSugar. Play/Ground takes place in June, or the second quarter of the year, with Grounded accounting for the first quarter.

The first time that PopSugar tested this segmented franchise model was with the Sugar Chalet in November. The event was a one-day, holiday-focused activation in New York City that touched on the same popular topics as Play/Ground, but instead of having full celebrity panels or several workout classes, it had one celebrity meet and greet and two yoga classes.

Sugar Chalet had more than 1,500 guests throughout the day, about a tenth of the total that Play/Ground had over two-day long affair.

After the first year of PopSugar’s Play/Ground, Sugar said the goal was to find other ways to expand this franchise that her team created. She said she wanted to figure out “how do we do this all the time,” to continue growing the in-person engagement between the brand and its audience, but also offer deeper avenues for sponsorship.

While Sugar said it is not currently feasible to take the entire Play/Ground model to new cities or replicate it more than once per year for cost and logistical reasons, it made sense to instead break it down into smaller, day-long experiences and were more niche in topic.

This year, in the third quarter, Sugar said the goal is to expand on the “play” portion of Play/Ground and make a one-day event revolving the other key categories of the tentpole event — celebrity, beauty and fashion. The official timing and program of this event has yet to be announced.

Fitness and wellness has been central to PopSugar’s events and commerce businesses in the past year. Last year, the company launched a series of wellness-themed events in partnerships with Samsung called the Well. In August, the publisher also created its own marketplace for fitness goods and classes called Glow.

Revenue from experiential events accounted for approximately 15% of PopSugar’s overall revenue last year, according to Sugar. Group Nine has a central experiential team of 11 people that is tasked with creating not only PopSugar’s events business, but for four other titles under the company, as well as supports the custom events business.

Scott Schwartz, the global comms planning director at media buying agency PHD Worldwide, works on the company’s Volkswagen account. He said that in order for national sponsors to be interested in smaller and more localized experiential media buys, there has to be enough return on investment beyond putting the product in front of the audience.

“What’s the next step?” said Schwartz. “Either you make it big so everyone sees it,” by getting national exposure through news coverage or content created and shared by the publishing partner themselves, or “make it smaller.” He said there is also a micro-aspect of these kinds of events where the sponsor will want to capture enough data in order to later reach back out to the attendees to close the deal.

Thomas Ordahl, the chief strategy officer of the brand consultancy Landor, said it is more and more common for publishers to be looking at the various ways they can further monetize the community they’ve built on their platforms. Similar to the TEDx model, he said that if a franchise has a significant following and interest, it makes sense to create smaller events for localized audiences.

“Before you would build a business and then attract the consumer,” Ordahl said. “Now, you’re building the community and then building the business after that,” which he said he expects will be the model that a lot of publishers will follow in the coming years.