Month: March 2020

In January 2009, the carmaker revealed the new program, letting its customers know that the company was looking to help them out amid the economic downturn. The program later led Hyundai to be named Marketer of the Year by AdAge, which reported at the time that by mid-2009 Hyundai had its highest market share in the U.S. of 4.2%. (In 2019, Hyundai reportedly had an 8% market share in the U.S.)

Michael Stewart, senior group manager, corporate and marketing public relations, Innocean USA: John Ewanick, vp of marketing at Hyundai Motor America at the time, saw that automakers were offering some of the best financing deals [in 2009], and amid the growing concern over job safety, brought the program to life.

Sean Gilpin, svp, managing director at Innocean: Hyundai had a clear understanding that the fear of losing your job, was a universal one, felt not only by their customers, but by everyone, including themselves. They wanted their customers to feel comfortable and to recognize that they, too, were on the same boat.

Stewart: [Ewanick] pitched the idea to Hyundai’s board, and within 37 days, the program’s ads ran during the 2009 Super Bowl.

Gilpin: [At the time] focus groups were a huge element in understanding customers, particularly as it related to buying habits and purchase decisions.

Stewart: Hyundai paid close attention to what auto brands were doing, and saw the need to surpass them by acting quickly with the changing economy and competitive marketplace.

Gilpin: They recognized the value of having their customers’ backs, especially in a time of fear, in a way that was easily recognizable.

Stewart: The initial Hyundai Assurance plan was well received by our customers. By July of that year, Hyundai found that seven out of 10 respondents on an in-house survey conducted had a positive or neutral perception of the brand and that more and more, Americans were looking to Hyundai for future car purchases.

Angela Zepeda, CMO, Hyundai: There’s a lot that we’ve done as a company to respond to the marketplace as crises have come about [given that] our brand positioning is “Better drives us.”

The positive response to the program in 2009 helped inspire the company to continue to create similar initiatives. 

Noah Mallin, chief brand officer, IMGN Media: [At the time] I was at was Reprise Media. We did all their search marketing. There was a huge response in our search campaigns — we felt lucky to have them out of all the auto clients out there. They were coming off of a down slope and that message was so different and timely.

Rob Schwartz, CEO of TBWA/Chiat/Day: Hyundai Assurance was a disruptive idea. It gave people the chance to consider the brand and they were protected if they lost their income. Another disruption? Hyundai launched the idea on the Super Bowl.

Zepeda: We’ve done a lot of programs that also fall under this idea. It really started with America’s Best Warranty in 1998, which was a collaboration between Hyundai and the agency. After that, there’s been other crises we’ve tried to help out with [other than ‘08]. For example, there was a furloughed federal employee payment deferral that happened in 2013. 

Stewart: [The 2009 program] prompted the Assurance Gas Lock offer, promising that if owners of certain new models were paying over $1.49 per gallon on gas, the automaker would shoulder the difference.

Zepeda: The programs seem easy to come up with when you read them on paper but they’re not. You have to really stand behind what you’re offering. It’s not a cheap thing to do. And you have to be sure that it’s the right thing to do at the right time.

Those working for Hyundai believe the company’s founding and history play a role in the programs of 2009 to today.

Zepeda: [It goes back to the history of] the company, which was founded by an incredible man, [Chung Ju-yung]. He started Hyundai to help South Korea get back on its feet again, give the people of South Korea a chance to get back to work and help build a better life for them and their families. This can-do spirit, this sense of better has always been part of the company. They’ve always been willing and able to reinvent themselves. That’s why we’ve found ourselves being very responsive as the world changes. 

In recent weeks, the company also worked to quickly turn around an ad letting its customers know that the program returned. This time, it was to help people dealing with the impact of the coronavirus on their lives. 

Gilpin: Seeing the writing on the wall [with the coronavirus it was clear] that there were things Hyundai could do as a corporate citizen to help customers by bringing back a program like the Job Assurance. When it first launched, [the intent] was the same. There were obviously different reasons for the job security and income concerns with the consumers. 

Zepeda: It was really obvious for us, in many ways, that we would bring back this idea of Job Loss Assurance. We called it Hyundai Assurance this time because the program is a little different in the way it’s actually built. It’s a little more hearty, offering coverage for people who want to buy a new car but have that fear that they might lose their job over the next year. We also wanted to reach out to current owners who may be finding themselves in a difficult situation, so we’re offering deferred payment. That kind of idea was well-needed this time, too. We’ve gotten an incredible response so far. 

Gilpin: [With the new ad] we really weren’t thinking of this as an ad campaign. We always stand by the belief that’s what’s good for the customer is good for the business. This was really about helping people. The campaign and the message is just letting people know that the program exists.

Zepeda: We got on air with a spot [quickly]. We had been running promotions of our Spring Sales Event. Of course, felt like that was inappropriate to say that we’re on sale. What we needed to do was let people know that if they needed a car, which some people do, that we were there for them and would give them this protection. So we pulled down our Spring Sales Event and we put this Hyundai Assurance message [out]. We really wanted this idea that Hyundai was this sense of family, community and that we did have their backs.

Eager to maintain positive free cash flow as the coronavirus crisis enters a new month, every publisher or agency CFO is looking to prioritize two things: 1) Ensuring clients pay up any outstanding bills as quickly as possible. 2) Moving fast to pare down the bills flowing out from their own businesses — or finding a way to kick those cans down the road.

The pressure is on. An Interactive Advertising Bureau survey of 400 decision-makers at advertisers and agencies conducted last week found almost a quarter (24%) are pressing pause on all their ad spend for the first and second quarter of this year. Between March and June, “digital” spend is expected to drop by 33% and spend on “traditional media” is predicted to fall by 39%, according to the survey. Agency leaders are preparing for revenue hits of anywhere between 30-50% this year, according to a senior U.K. agency source who declined to be named in this piece.

Clearly dominos are going to topple, it’s just a case of when and how many knock each other over. Media and advertisers executives I’ve been speaking to this week said companies in the sector will likely need to get creative about their cash flow management and seek novel lines of credit — include government help where applicable — to mitigate themselves in the short to medium term. Some sources even predicted a surge in popularity of good old-fashioned barter.

Pleading for forgiveness is another route. Google, Facebook and Amazon are also expected to experience dip in spending on their platforms — but they’re also sitting on billions of dollars of cash to cushion the blow. A Change.org petition urging tech firms to be patient and “extend generous payment terms for existing and new advertising purchases” has drawn just over 300 signatories since it launched last week.  The firms have pledged some relief. Facebook has created a $100 million grant to help up to 30,000 small businesses and a separate $100 million in grants and ad spend to help news companies affected by the coronavirus pandemic. Google is offering $340 million in ad credits to small and midsize businesses. Amazon said earlier this month it will offer $5 million in grants to small businesses based in Seattle, where its headquarters are situated. 

Payment terms are an age-old issue between buyers and sellers in the media space. “We’re not…a bank,” then-WPP CEO Martin Sorrell, now S4 Capital CEO, bemoaned of slow-to-pay clients in 2013. No doubt concern over delayed payments will be exacerbated further in 2020 as advertiser clients with evaporating sales seek to manage their own cash flow concerns. In these unforgiving times, a client shifting from paying within 60 days to 120 days could push a struggling publisher or agency over the edge.

“Invoice factoring” is rather unsexy mechanism that could gain more prominence in the coming months,  particularly if media and advertising firms struggle to extend traditional lines of credit from their banks. 

Agency and publishing businesses tend to be reactionary and ebb and flow with client demand,  said Bernard Urban, CEO at Silverblade, a company that offers financing solutions to advertiser and media clients. “Unfortunately, in the case of a black swan event like this … your options become more limited,” he added.

Generally speaking, factoring companies work by buying a publisher’s (or agency or an ad tech company’s) accounts receivables and paying an immediate cash advance to the publisher, minus a fee. The factoring company has the reserves at hand to be comfortable waiting a little longer for the money to flow in and settles the advertiser invoices itself.

Barter also doesn’t often get a lot of attention in ad land, despite the fact that most holding companies have a barter division. Those operations typically work by helping brands unload unsold products or other assets — like a fleet of corporate cars, for example. In exchange, the barter agency can offer for media inventory, which was usually bought by the holding company at a discount. Barter gained traction during the 2007-2009 financial crisis and experts in the space told me it’s likely barter could gain prominence during this difficult economic period too.

“There’s going to be a lot of swag [left over] for events that never happened,” said MDC Partners CEO Mark Penn told me. “We are trying to put together bartering operations around all those things that were generated and then not used — I do think [MDC’s barter operation] Trade X will see more activity.” 

Vacuous marketing catchphrases like “content is king” usually make me cringe so hard I get jaw ache, but as the coronavirus crisis grinds on, it’ll become clearer than ever that cash should probably have always been king. And, over the next 90 days, cash is everything.

Or as Mark Chippendale, U.K. managing director at corporate barter advisers Active International, put it to me:  “Covid on the individual is no different to Covid on a company. It will weed out the weak, leave some with lasting damage they may or may not come out of,” he said. “The fittest people, or those who happen to be immune — [who] have cash — will come out of this probably stronger.”

The moves are seen by many as a first step, buying more time for publishers to understand just how much their businesses will be affected by the fallout from the coronavirus — and, just as importantly, for how long.

“Pay cuts are symbolic,” said one former media CEO. “It’s a shared sacrifice. [A 5% decrease on a $60,000 salary] is not going to move the needle much, but everyone is taking a little bit of the pain.” 

While salaries can be the top expense for publishing companies’ operational budgets, David Plotz, former CEO of Atlas Obscura, said that the total impact of pay cuts on the bottom line can be much smaller than anticipated because of benefits, so they have to be done in conjunction with squeezing the other areas of a business.  

“There have been times where I’ve been tempted to do across the board pay cuts versus layoffs,” said Plotz. “In normal times, I wouldn’t recommend pay cuts,” due to staff pressures to cut the weakest links from the team versus having the entire staff take a hit, “but in this time, they would be my move.”

Publishers are attempting to free up cash in an uncertain environment. How advertisers will react over the next few months is a big unknown. The rash of keyword-blocking of coronavirus content does not bode well. For now, the biggest digital publishers appear to be taking a piecemeal approach to await more signals from the ad market — and the overall economy

Paul Greenberg, current CEO of Butter Works and former CEO of Nylon and College Humor, said he’s led teams through three big recessions in the past (in 1987, 2000 and 2009) and the patterns that emerge are all the same. 

“An economic downturn will sharpen your focus dramatically” on the expenses companies have and don’t need, he said, and in these cases, the last thing that should be cut back is staff, unless the company is on the verge of shutting its doors. “Human capital is so important and once you let someone go, it’s really hard to get them back.” 

At Time, CEO Edward Felsenthal sent a notice out to his staff pledging that there will not be any layoffs for 90 days and the company will continue hiring. (Time is now owned by Marc and Lynne Benioff, giving it the luxury of billionaire backers.)

Not every publisher can afford to wait. Gannett, publisher of USA Today and many local newspapers, announced on Monday it was implementing both a furlough of all staffers below the executive level and a 25% pay cut for executives. In that announcement, CEO Paul Bascobert said he wouldn’t take a salary until the furlough was over. W Magazine was also reported to have furloughed much of its staff while its print magazine was put on hiatus. 

From Greenberg’s experience, a measure that all businesses can take right now is renegotiating its fixed existing costs, whether that is rent or deals with critical vendors. He said that while vendors have to earn their money too, likely they’ll recognize that if a company is unable to pay its full balance now, it won’t be around to pay next month either, so taking half a payment for the time being with a payment plan in place might be easier to negotiate now.

“Most places will find a way to tide over for three months with a combination of these things,” Plotz said.

The question is what comes next.

David Steinhafel, publisher of private equity firm Regent, which owns three publishing companies (Sunset, Sightline Media Group and World History Group), said that of the combined staff of 150, approximately 70% have been furloughed for a minimum of two weeks with the possibility of extending, while 30% are still working. 

“The U.S. economy is paused so we have to do the same thing,” Steinhafel said. “The business was in serious jeopardy if we didn’t do it.”

“We have very high subscription sales and then we have a low churn and then we have very high engagement on the sites,” said Tor Jacobsen, svp consumer business at Schibsted. “We may have a higher churn again in April and May, if it will be a very tough economic period with high unemployment.”

Publishers like Bloomberg, The Atlantic and Axel Springer are seeing subscription bumps as readers want to consume more news. Axel Springer is also selling twice as many subscriptions each day to its two titles — Bild Plus and Welt Plus — than planned. But, publishers’ advertising revenue is being squeezed by between 30% and 40%, according to sources, in-person events are on pause and commerce revenues face hurdles from stock shortages. Subscriptions are a small bright spot as long as publishers can keep hold of them.   

Schibsted has three core focus points for churn-prevention management: Tailoring readers’ experience when they first enter the site, maximizing the relevant products during the subscriber’s first two months and cancellation flows that offer relevant or lower-cost offers. Within these there are multiple levers it can pull to keep people reading more content and so stick around. 

“In general, the churn is now lower than usual. In the list of the reasons why people are churning, ‘I lost my job’ is in the top 20, so it’s still very low,” said Jacobsen. “But we need to follow it. It’s not a huge problem right now, but it could be in one or two months.” 

Schibsted has around 30 people working in its customer services team across its brands who aim to save people as well as staff in data and analytics teams.

Over the next year, it plans to make the experience for subscribers and members across its site much more differentiated with exclusive content like podcasts and separate user journeys to non-paying members. In the last two months, Schibsted has improved renewal rates by allowing subscribers to choose which of the publishers’ editors they want to hear from for all their email newsletters and marketing messages. The publisher has also improved its cancellation flows. 

As news of the pandemic began to spread, most U.S. subscription publishers like The Wall Street Journal and The New York Times dropped paywalls or lowered meters to make journalism accessible to all as a public service. This trend hasn’t translated as thoroughly to Europe. Instead, if people want to quit then Schibsted will offer a cheaper price.   

“Opening the paywall is not an option,” said Jacobsen. “With advertising as it is right now, we really need those revenue streams.” Because of coronavirus, on Mar. 24 the publisher said it was canceling its previously announced proposal to pay dividends as its revenues are weakened. 

Tech provider Piano, which helps publishers with subscription strategies, has been monitoring churn but hasn’t seen evidence of it yet. “The main concern we’ve heard from publishers is what happens at the end of a trial or in a few months when the news becomes less urgent,” said Michael Silberman, svp strategy at Piano.

Like other publishers, Schibsted has tweaked the content it’s publishing, showcasing more articles about old movies, managing personal finances and how to ensure healthy familial relationships in very close quarters. It’s also launched personal trainer exercise videos — publishers like Hearst and PopSugar have opened up their fitness content — and moved in-person courses online. This Thursday Schibsted is hosting a virtual wine tasting course after 1,000 people signed up in four days. It’s also had a clear boost in language courses. 

“Typically in a crisis like this, it’s about where we see an extra boost in existing trends,” said Jacobsen. “One is e-commerce, one is e-learning and the third is subscriptions. We really need to maximize the possibilities to be stronger on these sides.”

Now, gal-dem has 10 full-time employees, though she’s looking to add two additional staffers this year. And as of February 2019, Little, who is 26 years old, was finally able to pay herself as the CEO of the company, something she wasn’t able to do for a year even though she was working for gal-dem full time. 

The first iteration of gal-dem was exclusively online, but Little said that her team’s goal was always to produce an annual print edition that wasn’t necessarily a cornerstone of the publisher’s business model, but served as a themed archive of the year. 

“Launching something in the digital space is relatively cost free, which made it an accessible way to start,” Little says. “It’s a format that people can engage with and engage with the content for free, which is important to us in terms of accessibility of content.” 

Finally moving into print, however, was the one project that she couldn’t fund on her own. Little ended up raising money from her family members to create the premier issue in September 2016 that had a 1,000 copy run. Each year since then, the magazine’s circulation has gradually increased to 8,000 copies sold at newsstands in 2019. As for digital traffic, gal-dem.com is now at half a million page views per month coming from approximately 300,000 unique visitors, she says.  

Like most entrepreneurs, Little wore many hats while growing her business, initially running the editorial side until she was able to hire out a team that would enable her to pass off some of that responsibility. Now, she works closely with the commercial team as well as oversees the development of gal-dem’s video content. She is also tasked with leading the company’s investing efforts (the company had a pre-seed round of funding with three angel investors before it launched in an official capacity in February 2019) and looking for opportunities to diversify revenue.

In 2020, one of her main priorities for continuing on gal-dem’s path of growth is to put an emphasis on video, including working on a collaboration with Channel 4 TV in the U.K. for Black History Month. Additionally, while there isn’t a paywall on the site and she doesn’t intend on changing that anytime soon, Little said she wants to figure out a membership model that offers additional perks like event access and curated content. Finally, since she said a quarter of gal-dem’s readers are in the United States, she wants to figure out how to grow the publication’s footprint overseas. That will likely include hiring editorial support in the U.S., but she said that might be a 2021 goal. 

Adam White, founder of Front Office Sports 

During that time, he started placing the interviews on a Wix website that he built himself, which was originally called Executive Report, but later rebranded to Front Office Sports. While the company was incorporated in late 2014 and he made some advertising money in 2016, White says that he viewed it as a hobby for most of college. 

As he was approaching graduation in 2017, Front Office Sports had already launched its Rising 25 award program and had earned some advertising revenue, but he said that it still felt like a hobby for him. With little savings and no full-time job opportunities lined up, he decided to pour his time into his website. 

To date, White’s company raised $750,000 through one round of funding, which closed at the end of 2018. He said that those resources were immediately put toward hiring since at the time, there weren’t any full-time employees. Now the company has 14 full-time staffers. 

White says the site now gets between 400,000 and 500,000 pageviews per month, up from closer to 100,000 at the beginning of the year. Its newsletter grew from 8,000 subscribers to 21,000 in 2019 and the Rising 25 awards received more than 500 nominations. And last year, the company went from low six-figures to almost seven-figures in revenue and White said they are on pace to more than double that number this year. 

Advertising and events are the primary revenue drivers for the company at the moment with the latter part bringing in a mix of sponsorships, ticket sales and licensing revenue. The Rising 25 awards were created after White heard feedback from lower-level industry people who say they worked the hardest but were the most under-appreciated. Now, that event franchise is estimated to be a mid-six-figure business for the company in 2020. 

Currently, White, who is now 25 years old, says the goal is to continue growing his audience by keeping content free and accessible, but he said that if in the next two to three years the audience has been maxed out and his team has tapped out all of its ad channels, the idea is to create a membership model, similar to the likes of Politico Pro. 

“I would rather build something I can sell for $5,000 to every team league, organization or investment company than try to sell $250 individual subscriptions to people,” White says. 

Nushin Rashidian and Alyson Martin, cofounders of Cannabis Wire

From there, both Martin and Rashidian couldn’t let go of the nagging feeling of wondering what the differences were between local, state and federal cannabis laws, which led to an over six-month-long road trip after graduation across all of the states that had legalized medical cannabis to learn about the budding industry. Out of that came a book titled “A New Leaf: The End of Cannabis Prohibition,” which they published in February 2014 and a month prior to that, recreational cannabis was legalized for the first time in Colorado. 

Understanding that there was much more left to the story and beyond what they were able to fit into their book, since book publishing is very slow, they decided to continue writing about this industry in a more nimble format. 

“Book publishing can be quite glacial and the landscape of cannabis law reform is moving so fast,” said Martin. 

From there, they got a small grant from the Brown Institute for Media Innovation that enabled them to play with the editorial model and led to them receiving another grant in 2015 from the Made in NY Media Center, which is when Rashidian says the idea really began to take shape. That is when they realized that they were interested in covering the business of cannabis and pursuing a reader revenue model because they were unsure of where the ethical lines were in terms of accepting cannabis advertising dollars, she says. They might entertain sponsorship revenue in the future, but for now, reader revenue is the focus for monetization. 

Then a more robust grant came in 2017, bringing their total amount raised to six-figures, that enabled them to launch in their current iteration of a daily newsletter in the summer of 2018. The paywall finally went up in fall 2019, which allowed them to monetize the business fully since they’ve never monetized the newsletter. In the meantime, before the revenue began coming in, Martin says that operating off of the remaining grant money and keeping their day jobs teaching at Columbia University gave the support they needed to run their business. 

Now, Cannabis Wire has two products; a free weekly newsletter and a paid daily newsletter. Their team consists of four full-time paid staffers, however they operate with a network of a dozen or so contributors at any given time who are on the ground in the areas that are experiencing changes in their cannabis laws. 

While they wouldn’t disclose the exact number of subscribers that they have, the free weekly is in the thousands range and has an open rate between 30% to 35%. The daily has been changing pretty much every week but has an open rate of essentially 100%, considering the cost that readers are spending on it. 

The paid product is priced at $960 annually or $100 per month, though Rashidian says landing on that price point was a challenge. “Pricing is the hardest part of putting up the paywall,” she says. “You have to look at other comparable products and we were in-line with a lot of other similar paid cannabis products out there, in fact, cheaper than several of them.” 

Daniella Pierson, founder of The Newsette

Within a day of coming up with the idea, she launched her first newsletter that went out to a total of eight people and was riddled with typos, she says, but felt like a relief that she finally found something that she cared about doing. While she wasn’t a writer or had any background in journalism or blogging, she says she consumed every book, podcast and YouTube video that she could in order to learn how to successfully launch her own media company. 

By the time she graduated from college in 2017, she says The Newsette had 100,000 subscribers and then she started hiring people, solely on the profits the media company was making on its own and a small familial loan of $15,000 that she says she paid back in the first month that the newsletter made money. 

“We never took an investment,” she says. “But we’ve always been profitable.” 

Now, it’s been five years since its launch and The Newsette has more than 500,000 active newsletter subscribers and over four million views per month. Pierson, who is now 24 years old, says that her company is set to receive its first-ever investment, which will be a seven-figure investment at an eight-figure evaluation for the company. 

Other successes that Pierson and The Newsette have had to date include hiring a full-time staff of eight people, gaining fashion designer Diane von Fürstenberg as a mentor and earning the entirety of its 2019 revenues within the first month-and-a-half of 2020. This is partially thanks to her emphasis on reimagining sponsorship campaigns beyond display ads, which includes a  significant partnership with Amazon featuring female-founded businesses and creating an editorial product for von Fürstenberg’s brand called The Weekly Wrap. 

The format of The Newsette newsletter hasn’t changed much from the premier issue, but now the media brand has its own website and is produced by an editorial team of two and Pierson can spend her 7:30 a.m. to 10 p.m. days focusing on ways to grow and diversify the business. 

“It’s unhealthy, but if you want to be an entrepreneur, you have to look at yourself in the mirror and say, ‘I will not have a life for the next at least two years,’ and be OK with that. Because in order for you to succeed in this volatile and crazy world of business, you need to dedicate every ounce of energy you have inside of you to growing your business,” she says.

Alex Lieberman and Austin Rief, cofounders of Morning Brew 

After hearing that 50 or so times, during the winter break going into 2015, it dawned on him to create his own news delivery product that would help to storytell the business world in a way that engages and inspires students. He didn’t have an editorial background, but each morning, he would create a daily round-up of the top business news called Market Corner and email it out to a listserv that people individually asked to be signed up for. 

Then, after reaching out to that audience base of just a few hundred readers for advice on what the product could do better, Austin Rief, 25, reached out and offered to help. “Austin single handedly pushed forward the product more than anyone else who was a reader,” he said. He then came on as a cofounder and helped to construct the vision of the updated newsletter, which was retitled Morning Brew and officially launched in March 2015. 

Lieberman graduated in 2015 and moved on to his full-time job, which prohibited him from writing for Morning Brew, and Rief was facing a full course load, so in order to keep the newsletter afloat, they said they had to rely on a network of college-student interns. 

Then in 2017, once Rief graduated, Lieberman resigned from Morgan Stanley and they both took the leap to make Morning Brew their full-time jobs. They raised the first round of funding for the company that same year, bringing in $750,000, and made their first editorial hire with that money. 

Since then, the company has experienced rapid growth, increasing its revenue to $13 million in 2019 and expanding its subscriber base on its main daily newsletter to almost two million as of the first quarter in 2020. Additionally, the company now has over 30 employees and expanded beyond the Morning Brew business vertical and now has two additional business-to-business newsletters along with a podcast and a pop-up political newsletter. The plan is to also launch two other business-to-business newsletters this year. 

“It was difficult at times for people to take us seriously when we walked into a Fortune 25 or 50 company, but the numbers spoke for themselves,” Rief says. “Now, I see age as an advantage because we don’t have that legacy media background. We come to this with a fresh point of view and we’re not as biased by 10 or 15 years of media experience.”

But whenever agencies strike these sorts of deals with ad tech vendors, they run the risk of being called out for either trying to make money on the side or being incentivized to buy from one SSP over another. And yet the rewards of digging up these controversial issues seem to outweigh the risks for agencies.

While agencies have worked closely with SSPs in the past to understand auctions, they never got the full picture so they would often see the authorized resellers of a publisher’s inventory but wouldn’t know the cut each of those vendors would take from the media dollars they handled, for example. Now, the holding companies are using their buying power to get SSPs to agree to codes of conduct that essentially give them a clearer view of how much of their clients’ money gets to publishers. Not only does that information let agencies curate inventory from within the SSP, but they can also start to use that control to broker the same scale advantages they get from mass media like TV from programmatic.

Take GroupM’s recent deal with Index Exchange, for example.

Whenever GroupM wins an auction handled by Index Exchange, the winning bid will be higher than the actual fee it pays. In other words, if GroupM won a bid for a dollar they would end up paying 80 cents through a feature built for its traders by Index Exchange, for example.

Whenever GroupM wins an auction handled by Index Exchange, the winning bid will be higher than the actual fee it pays. In other words, if GroupM won a bid for $1 they would end up paying 80 cents through a feature built for its traders by Index Exchange, for example.

This is actually not a new trend, as bid prioritization and bid modifiers for certain agencies have been used by publishers in SSP platforms for many years. The interesting development is that those discounts now happen in the GroupM-backed exchange, set at a publisher-level by GroupM execs who know how much GroupM is prepared to spend with them if they do.  

“The intention is to have larger buyers working with their strategic publishers and realizing some economic incentives in a very similar way as would in any other media channel, said Mike Moore, director of programmatic partnerships at GroupM. 

For now, GroupM plans to extract these post-auction discounts from Index Exchange’s auctions, but eventually, it will do the same on auctions run by other SSPS. GroupM is banking on publishers being willing to lose a bit of margin on individual impressions on the promise that they will sell more in bulk.

“If a publisher awards the impression to the GroupM and Index Exchange enhanced bid, and the actual payment received is X% lower than the winning bid price, that will be an issue for many – and rightly so,” said Ruben Schreurs, CEO of digital media consulting firm Digital Decisions.

Moore accepted those concerns but said whether rival agencies lose out comes down to its ability to secure the best rates, not manipulate auctions.

“If we have better direct rates then they [non-GroupM clients] are going to be losing to our direct deals that happen in the ad server,” said Moore.

While Index Exchange developed the tool in partnership with GroupM it’s not exclusive to the holding company. Other agencies are being pitched the tool, while Rubicon Project has also built a similar feature into its own ad tech as has Xandr.

It’s not necessarily the discount itself that’s the problem. After all, publishers set specific floor prices for different agencies all the time. `but publishers control those auctions, whereas, what GroupM is proposing could loosen their influence and subsequently make it harder to see what yields they have coming in if the winning bid is different to the actual fee paid. 

“This development makes everything more un-transparent,” complained one publishing executive.

Moore argued that the post-auction discounts give publishers more control over auctions, not less. The publishers are the ones to set the auction, rather than the execs at either GroupM or Index Exchange. Indeed, publishers are being pitched the deal now.

“Post-auction discounts give publishers’ sales team the chance to go and incentivize spend with advertisers just like they do for other forms of media,” said Michael McNeeley, vp of product management at Index Exchange.

Despite suspicions from both publishers and advertisers, agencies are pushing hard to formalize their ties to SSPs. And most, if not all, these moves are motivated by the agency’s need to consolidate their media dollars into a handful of SSPs in order to get lower rates. The way each agency goes about this, however, is different. Some view deals with private marketplaces and direct publishers as the best way to negotiate better rates rather than doing so through the SSP, and are instead focused on getting data on the bids they’ve won and lost. 

Omnicom Media Group is issuing SSPs with a code of conduct as a condition of working with SSPs, with requirements to disclose practices like the fees they charge publishers for every impression they sell, according to two separate sources with knowledge of the plan. The agency will then add all those SSPs to a marketplace where its clients can buy impressions at rates agreed in the contracts. For Omnicom Media Group, the commercial upside comes from being able to charge clients a fee to plan campaigns in exchange for access to the discounted marketplace. 

“Given the sheer volume of budget invested in programmatic media, exerting buying power and influence at the SSP level is a logical next step that creates a non-agnostic yet incremental and (let’s not fool ourselves here) non-transparent revenue stream to boost agency profitability,” said Brian Leder, president of media agency Ramp97.