Month: March 2020

These conversations appear to be exploratory. Some producers who have discussed original programming with Roku have left those meetings without a clear idea of what Roku’s original programming plans are. Roku has not detailed in meetings with media and entertainment companies what types of programming the company would be interested in or how much it would be willing to pay for shows, the people said.

“We aren’t creating any original shows and don’t have any plans to do so,” a Roku spokesperson said in an email without denying the talks.

Roku could be using the conversations with producers as due diligence while weighing whether to commit to spend money on original programming. Original programming can be a big investment with no guarantee of paying off.

“If you’re spending under $1 billion on originals, then you’re not really in it,” said one entertainment executive who has not discussed original programming with Roku.

With new services like WarnerMedia’s HBO Max, NBCUniversal’s Peacock and Quibi set to debut over the next several months, the amount of programming available across subscription-based and ad-supported services is only expanding. That can lower the odds that any given show will break out and appears to have contributed to Facebook’s and YouTube’s reported decisions to lower their respective ad-supported services’ original programming ambitions.

The conversations with producers are not the first time that Roku employees have privately raised the prospect of the company getting into the original programming business. Roku employees have previously floated the notion of Roku funding original shows to ad buyers, Digiday previously reported. One entertainment executive said they had spoken with executives from Roku’s content acquisition team about producing original shows more than a year ago but that nothing came of that conversation.

If Roku were to get into the original programming business, it would join a growing number of companies that are loading up on original shows to attract audiences to their ad-supported streaming services. Walmart-owned Vudu — which NBCUniversal is reportedly in talks to acquire — debuted its first original show in 2019 and plans to premiere a dozen original programs in 2020. Meanwhile, Amazon’s IMDb TV is offering to pay hundreds of thousands of dollars per episode for scripted and unscripted shows.

“For every platform, if you’re trying to have [viewers] come to you, then you’ve got to offer something like originals. Roku is earlier in this process” than Vudu and IMDb TV, said one person familiar with Roku’s original programming talks.

Assuming that Roku would distribute the original shows on its ad-supported Roku Channel — which features 24/7 streaming channels and programming, such as old movies and TV shows, that the platform licenses from other companies — the programming could boost the platform’s pitch to advertisers. “Without content, it’s hard to make big plays on investment, and they are one player where there’s no content that’s unique,” said an ad agency executive of Roku.

Since then, Gonchar and Wilsona also crafted an unorthodox new physical way to say hello: “[We] agreed to greet other people with a ‘foot’ handshake instead, aka tap one foot to the other’s foot.”

As COVID-19, the strain of coronavirus spreading across the world, continues to rattle companies and industries, life inside ad agencies is also changing. Agencies are among the many companies figuring out newer rules of social behavior amid the threat and fear of the virus. 

In the meantime, avoiding handshakes, hugs or other personal contact that could spread the virus is common, as is coming up with alternatives like fist or elbow bumps. Though, figuring out those alternatives to those has proved awkward, according to agency employees. “Everyone gave very odd air-kisses to me today,” Alfie Green, director at Monty Digital, said.

Beyond hand sanitizer, signs about coughing and hand-washing etiquette as well as encouraging employees to work from home, hold meetings digitally via video calls as needed and to avoid travel unless absolutely necessary has become the norm.

Judging others’ washing habits may also become a norm. 

“Not much [has changed] except I glare longer at people in the bathroom who still think an appropriate hand wash is just splashing their hands with water,” said Victoria Roselli, art director at FCB in Chicago.

Holding companies updated travel policies for agency employees last week, restricting travel to affected countries, particularly China and South Korea. The holding company agencies also enacted a 14-day self-quarantine policy for employees who have traveled to affected areas. The 4A’s has yet to release guidance on how agencies should handle coronavirus, according to a representative, but the group is “monitoring the situation closely.” 

Employees say warning signs are now pasted in offices detailing not only what to look out for with symptoms of the virus but also the proper way to cough. Many have also noticed an uptick in cleaning and sanitizing products in the office; some said they’re now on every desk or in every common area. Other agency employees note that while day-to-day tasks are still being completed, communication is more likely to happen digitally now and that more employees are taking the option to work from home with offices emptier than usual. 

Some are taking the news in stride, using humor to deal with the precariousness of the situation.

“Everyone has been using [more hand sanitizer] than average and we’ve started referring to it as employee of the month,” said Dan Schepleng, president and creative director of full-service creative shop Kopowza, adding that otherwise it’s par for the course for the agency. 

But others say they have been dealing with a potential loss of business from clients, with pitches canceled or delayed as well as planning for anything related to events like SXSW, the Cannes Lions y or any other experiential marketing efforts put on hold until there’s more clarity on the impact of coronavirus. As reported by Digiday, major marketers like Procter & Gamble, Anheuser-Busch and Unilever, among others, are rethinking how to allocate their media budgets to deal with the effects of the virus. 

“We had two pitches cancel yesterday,” said Mark Pytlik, CEO of Stink Studios. “Clients are super apologetic but everyone is playing it safe and choosing to wait rather than invest in events or large scale activations that might not happen.” 

Long-term planning for clients is currently more difficult, agency sources said.

“Everything is up in the air,” said Green. “It’s difficult for client and agency sides [of the business.] Brand launches, public activations, running sponsorship packages at big festivals… Basically anything that includes bringing a big group of people together they’re currently putting on high alert to be canceled.” 

Direct-to-consumer companies with supply chains in affected countries are also looking to reduce ad spending and halt campaigns. “

We’ve had a few DTC brands we work with either delay starts to new campaigns or significantly scale back budgets because they have supply chain issues,” said Jeremy Sonne, managing director of Moonshine Marketing, adding that this issue started to arise last month for the DTC women’s apparel and travel brands the agency works with. “It’s been a bit tough but most of the folks we’re working with have communicated that they’re going to just shift their budgets rather than outright cancel so it’s mostly just a waiting game at this point.” 

Many are waiting to see what the long-term impact will be. But others say that the potential damage to their agency business is unsettling. A copywriter who works on travel brands at a holding company agency shared that the potential reduction in her clients’ budgets has made her nervous that her shop could lose the business and, in turn, her job could be less secure. 

The uncertainty of coronavirus may also impacted recruiting talent for agency jobs, according to advertising recruiter Christie Cordes. “Right now there’s just an uneasy quiet,” said Cordes, adding that she anticipates a hiring freeze across the industry will soon happen. “When markets fall, the advertising industry gets hit first.”

“It’s far too early to see the impact the coronavirus has had on the global ad market as there are only a small number of territories where the outbreak has had a significant impact,” said Daniel Knapp, chief economist at IAB Europe. “But looking at the economic history of advertising the situation doesn’t bode well.”

Coronavirus escalation could cut global economic growth in almost half from 2.9% to 1.5% in 2020, warned the Organization for Economic and Development earlier this week.

This forecast is “bad news” for advertising, said Knapp. Advertising has trailed behind gross domestic product growth for the last two years, and if it drops below 2% then the market will be flat, he said. “We could even see sluggish economic growth which could lead to an advertising recession,” said Knapp.

The economic shock of coronavirus is unique in that it affects both the demand and supply sides of the economy. On the demand side, there is less travel and likely more hesitant consumer spending. On the supply side, manufacturing supply chains are disrupted. Global policymakers are in a bind with few options to address both sides of the problem.

So far, it’s the companies reliant on manufacturers and logistics networks in China that are most likely to revise media budgets. From CPG manufacturers to carmakers, the coronavirus has shut down factories and blocked transportation routes. And if a business can’t supply its end product then it’s harder to justify driving demand for it.

“We’ve been implementing different cost initiatives since the outbreak so that our teams can use our resources in response to the changes they see around how consumers are buying our products in the market,” said AB InBev’s CEO Carlos Brito told Digiday on its earnings call last week. In China, for example, the brewer has already moved money from outdoor media owners to online ones that are seeing an uptick in traffic from those shoppers stuck at home, Brito added.

Some media owners are already bracing themselves for similar revisions to ad budgets from other companies.

“The clients who are asking us to put in place contingency plans are the ones who are struggling to get manufacturing components from China,” said a senior planner at a U.K.-based media agency who spoke to Digiday on condition of anonymity.

The planner is looking at China, where there are early signs of recovery, for a sign of how to adapt media strategies to other marketers where there’s less travel, disrupted manufacturing, reduced retail sales, and cancellations of many forms of public entertainment.

“Essentially, those plans revolve around getting clients to commit to certain deals late to try and reduce the number of upfront commitments they have in play should as the outbreak spreads,” said the planner.

When those revisions do happen, it’s usually the digital dollars that are the first to change. Marketers are usually required to return whatever money they’ve pulled from media owners back to the bottom line.

But those revisions don’t always mean budget cuts. In fact, one media company in a Nordic market has received more orders for ads on its sites, not less, particularly from various government health agencies looking to inform people of the outbreak, said its digital director on condition of anonymity.

It’s always been easier for advertisers to cut back on investment decisions for digital media than TV, where ads tend to be booked up to several months in advance. Walking away from those upfront commitments isn’t straightforward even when to do so involves incurring some financial penalty. Instead, advertisers are more likely to postpone campaigns and run the ads later in the year. This way, the media owner gets to keep the investment and the advertiser avoids a fine.

“Of course, marketers able to avoid making cuts will generally fare better given what will likely be relatively favorable pricing and reduced competition for consumer attention, said Brian Wieser, GroupM’s global president of business intelligence.

For now, advertisers seem to be locked in wait and see mode as the implications of the outbreak become clearer.

“We’ve not had any clients pushing to pull TV budgets yet, but if they did then we would try and talk them out of it,” said the senior TV buyer for a global media agency, who was not authorized to talk to Digiday. “If you try to renege on any of those commitments then you leave yourself susceptible to all sorts of financial penalties from media owners.”

Should the outbreak last longer than three months current contingency plans may flip. During the 2009 ad recession, it was brand marketing and subsequently TV budgets that took a hit, while search and other performance channels remained relatively unscathed.

“The wild card for businesses with the coronavirus is to what degree economic activity rebounds, which is hard to predict,” said Wieser. The impact on the ad market rests on whether the coronavirus lingers over the market over a 12 to 18-month cycle or has a limited, shorter impact on consumption habits in key markets, he said.

Publishers and the rest of the digital ecosystem are caught in limbo as they wait for Google to decide how to replace third-party cookies and whether they can effectively identify audiences in the open marketplace. This forces some to think more strategically about how they can “own [their] owned audience” and drive more email registrations.

News publishers are well-positioned to spin up topical newsletters in a matter of weeks at a low cost. The Economist is one of a clutch of news publishers (like The New York Times and Quartz) that is launching a coronavirus newsletter in the next few weeks. For subscription-led business models, newsletters are proven to aid subscriber retention. That’s something The Economist, with 1.6 million print and digital subscribers, is working hard to improve, said Remy Becher, vice president, product. Since December, the publisher has launched two topic-specific newsletters on the climate crisis and U.S. elections respectively. These join its three other general weekly and daily newsletters.

Newsletters offer multiple revenue streams. For the Financial Times, which has eight subscriber-only newsletters and dozens of others, as well as accruing first-party registration data it monetizes them through native ad slots which link to sponsored content on the FT.com. According to Jessica Barret, director of programmatic and commercial automation, newsletters are seen as a separate revenue stream for the publisher.

“We’re seeing a lot more readers tuned into newsletters, they are a big focus for us this year,” she said on stage at Digiday’s Publishing Summit Europe. “We talk about contextual targeting and moving away from the audience targeting…As well as sponsored content you can incorporate interesting native elements in a relevant, contextual environment. Newsletters are a perfect example of that.”

The open rates are high because readers opt into the newsletters rather than the FT signing them up automatically, she added.

Although, an abundance of newsletters is not a viable solution for all publishers, nor is it clear where the ceiling is for readers. And for all the talk of publishers striking more private marketplace deals and flexing contextual targeting options, these won’t recoup the revenue lost from yields dropping when Google Chrome nixes third-party cookies. While larger publishers will weather the storm, the distance between the haves and the have nots will grow.

“There will be a lot of blood on the floor from publishers,” said a publishing executive. “Specifically of low-value, entertainment content — people that don’t have purpose — and especially arbitrage publishers.”