Month: April 2020

Here’s the outline of what is hazily becoming clear:

This is a long-term issue.
There are binary camps emerging. One group believes the economy, and therefore the industry, will snap back to as it was, bruised but ultimately with strong fundamentals. The other camp sees a long, years-long grind and a sharp break. More people I speak to are seeing a scenario closer to the pessimistic camp. I haven’t heard anyone report anything less than a 20% decline in revenue from original forecasts. That is going to force further tough choices that go beyond pay cuts, as we saw with moves to cut staff by Group Nine and Bustle Digital Group.

“The world isn’t going back to where it was,” said the CEO of a digital media company. “It’s going to take a long time for it to return to normal.”

True visibility isn’t coming anytime soon.
The CRO at the major digital publisher said normally at the start of a quarter, they can tell within 2-3% where the quarter will end up. Now that variance is, conservatively, 20%. Some campaigns, particularly in industries facing existential crisis like travel, have been scrapped entirely. But many more are delayed. Production on branded content is hard. Messaging appropriate to the moment is in the works. Clients are determining basics like whether their supply chains will be fully functioning by the back half of the year. Planning in this environment is truly for the discipline of the exercise itself.

“I’ve got $15 to $20 million floating somewhere,” this exec said. “Hopefully it’s going to land this year.”

Brand “purpose” never meant much.
Marketing executives have long liked talking a big game, whether on Twitter or on-stage at industry events, about how they have a purpose greater than selling more of an undifferentiated product at a price premium. They had purpose. The epidemic of keyword blocking of advertising on coronavirus news content puts that to bed. A major publisher told me they see ad rates on average 30% lower on coronavirus content versus non-coronavirus content. What’s more, the content itself is often lifestyle and entertainment content that makes reference to the virus. No matter, brand safety vendors are blunt tools.

“The default settings matter and drive 80% of the behavior,” the publisher said.

Another sales exec put it more bluntly: “Brands haven’t just lost their purpose, they’ve lost their minds.”

The answer for big publishers: Go directly to brands themselves, one by one, to tell them what their agencies and vendors are doing. Many are simply unaware, a publisher told me: “It’s a real pain the ass.”

Nowhere is safe.
Publishers have mostly all sung from the diversification hymn for some time now. In this crisis, the impact, however, is being felt very broadly. One bright spot for publishers has been their burgeoning commerce operations. This is now getting whacked as Amazon and Walmart cut off, or sharply curtail, referral fees for some items. One publisher told me that fees for consumer electronics products dropped from 15% to 3%. On the face of it, Amazon has a good case: It is focused on essential goods. At the same time, publishers see another revenue area being hit hard just as advertising dries up. “It feels a little opportunistic to me,” the publisher said.

Another bright spot has been podcasting. There, downloads have dropped as much as 25% as people’s routines are disrupted and less time is spent commuting. The pain isn’t broadly shared here, however. One publisher theorized that podcast advertising’s large direct response base, particularly among digitally native brands, has insulated it to a degree. 

Consumer revenue is king.
Publishers are seeing a mini-boom in subscriptions. The Wall Street Journal has added 140,000 over the past three weeks. According to paywall tech provider Piano, subscriptions are up across the board. This is good and healthy. Advertising has always been too fickle, too easy to turn on and off, too dependent on whims. The abandonment of advertising is a wake-up call to publishers. One newspaper executive noted to me that a disturbing conclusion about the blocking of news sites by advertisers is this: “If it was insanely valuable to [advertise on news sites], they wouldn’t stop.” Instead, this executive wants the news industry to turn squarely to think harder about the services they can provide their audiences and advertisers, like help setting up and running “brand newsrooms.”

“The whole industry is going to change when we come out of this,” the exec said. “Yes, brand dollars will come back but there are going to be different expectations.”

“Work and life is starting to blend together and it’s becoming unhealthy,” said the account manager. “The demand is suddenly higher because you have no excuse as to why you can’t work. My father is a doctor and I find myself on-call more than him during a pandemic, which is unheard of.”

As agencies and brands adapt to the new work from home reality amid the coronavirus pandemic, a familiar issue is starting to crop up once again: Burnout. With many agencies — like other companies — nearly four weeks into working remotely due to lockdowns across the country, agency employees say they are starting to feel burnout due to agencies’ current “always on” mentality. 

Of course, the burnout isn’t simply a result of the “always-on” mentality. While it has reached new heights during the pandemic, with employees adjusting to working from home, working longer hours, feeling the need to reply whenever they’re messaged and having to hop on Zoom calls so often that they’re spending more time in front of their screens than ever, those aren’t the only issues employees are dealing with.

And they don’t exist in a vacuum. Employees are worried about their families’ and friends’ safety as well as their own safety during the pandemic. But without much else to do, some are leaning on work to help them feel a sense of control amid the future unknowns. And that doesn’t work out so well. Plus, there’s more work than ever before as clients demand changes, marketing is pivoting on a dime, and the fear of losing business is very present.

The account manager isn’t alone in feeling the need to be responsive anytime. Agency employees across a whole host of roles — agency executives, media buyers, copywriters, art directors, account directors, even consultants — report that they are working longer hours to help clients reshape how they are marketing due to the pandemic. 

“It’s kind of like you have to constantly be available,” a copywriter previously told Digiday, adding that communicating over messaging apps like Microsoft Teams or Slack can exacerbate the issue, making it feel like responding immediately whenever someone messages you is necessary. 

The feeling of needing to be “always on” isn’t necessarily coming from agency leadership, according to employees who say that leadership has reiterated in town halls for employees to take time for themselves. The problem is that “there are teams that aren’t following that,” said the account manager. 

While burnout isn’t a new issue for agency employees — per Digiday+ research 32% of agency employees are worried about their mental health — the need to be in constant contact and working extended hours to meet clients’ needs mixed with the uncertainty of what’s to come has led to increased stress and anxiety for some. “Not knowing when this is going to end is very difficult,” said the copywriter. “That and the demand to deliver as much if not more than we would normally is hard. There’s a lot of pressure. And there’s no out.” 

Another new issue for employees dealing with burnout is the threat of being furloughed or laid off due to reduced client budgets as marketers reign in spending to manage fallout from the pandemic. Per Digiday+ research, 73% of ad buyers have clients who’ve paused spending — which will likely hurt agencies bottom lines and lead to more furloughs or layoffs. With that being the case, employees say they are less likely to bring up burnout as an issue. “The difference now is I feel helpless and I fear that if I bring up my burnout to my boss that I’ll lose my job,” said the account manager. 

That fear coupled with clients working more has led to employees feeling the need to keep working after hours and on weekends. “I had multiple calls over the weekend,” said Dan Fietsam, founder of consultancy Lotus Coterie. “That wasn’t happening before the crisis. My clients changed their work habits so I’ve had to adjust for them.” 

Agency employees and execs say that part of the problem is that without being able to leave home or do much else, clients and employees are turning to work for a sense of control in a time full of unknowns. “It’s a way to manage the lack of control over this thing,” said Fietsam.  “Everyone feels like they don’t know what will happen, how long it will last and haven’t been through this before. What can I do? Work.” 

Charlene Coughlin, managing director at Twist Creative, agreed. “People can’t do much else right now,” said Coughlin, adding that she hasn’t been asked to work more but is currently working over the weekend and on nights because there’s not much else she can do. “It’s not like you can go to a happy hour or restaurant or go leisurely shopping at Target. So some people are looking for something to fill their time that they feel good about. But it’s very easy to get very consumed very quickly.” 

While not all agency employees currently feel burnout, the possibility of getting burnt out is top of mind as employees navigate working remotely, working longer hours and the uncertainty of the weeks ahead. Agency executives say they are working to reiterate to employees that they should take time for themselves to avoid burnout. 

“Left unchecked, the intensity of work will break our clients and our people – we have to provide leadership on the issue of mental health, and live it through our own behaviors,” said Amanda Richman, CEO of Wavemaker, adding that the shop has been pushing people to find a balance. “[We’re] challenging ways of working, focusing on outcomes vs. tasks, developing a team communication charter, and setting boundaries to our day. Leaders need to create space for our people to cope with the crisis outside.” 

“Agencies must put their teams’ mental wellness at the forefront, by providing access to counseling services and other resources,” said Greg Stern, founder and co-chairman of BSSP and board chair of the 4A’s. “To avoid burnout, we need to structure the day to avoid an expectation of 24/7 accessibility. Limiting meetings and calls, providing a ‘meeting free’ lunch hour, for instance, maintaining virtual human contact outside of work-related calls will help maintain culture, and provide extra attention to those who may be home alone.” 

Some agencies are working to not only tell employees they can log off but give employees more resources to manage stress. At Twist Creative, Coughlin and agency leadership are encouraging employees to take half-days, use teletherapy, meditate or take virtual yoga classes to help manage the stress. At The Many, the agency has given employees two extra personal days to give them more time to log off to deal with their own needs during this unprecedented time. 

“Agency leaders have to remember that at some point we’re back in the office and you don’t want to come back with employees that are burned out or aren’t passionate about the work or clients anymore,” said Coughlin. “That’ll just lead to more turnover or client turnover. Just because people are at home that doesn’t mean people can be on all the time.”

BBC News has suspended 450 job cuts in order to keep up with the demand for covering the story. Politico has made at least four key editorial hires to its 500-plus global staff since working remotely. Although other department heads are not extending job offers until they can interview in person.

“The world can change overnight, as we’ve seen these last few weeks,” said Brad Dayspring, vice president of communications and marketing at Politico. “As it stands right now, when we have an immediate need, or we have a great candidate eager to join Politico, or when it makes sense to move more quickly, we will do so.”

Naturally, whether companies are hiring or firing during the pandemic depends on the company business model and health of balance sheets. For a lot of media businesses, headcount is a large cost.

Over the last few weeks, all companies have faced tough staffing decisions. This week Bustle Digital Group and G/O Media Group both laid off 5% of staff. Streetwear publisher Highsnobiety has cut 25% of its staff. Digital media publishers, such as Vice, Group Nine Media and BuzzFeed announced last week pay cuts. In the U.K., news publisher Reach has furloughed nearly 1,000 staff while Daily Mail publisher DMGT has announced salary cuts.

Politico has a strong business-to-business division funded by corporate accounts and is required reading for many to do their jobs. The publisher surpassed its first-quarter revenue targets both on the business and consumer revenue lines, according to an internal memo sent by CEO Patrick Steele and seen by Digiday.

The New York Times has transitioned all recruiting efforts online, according to a spokesperson. The publisher is conducting interviews via phone and video calls. A newly-developed remote on-boarding program lets new hires get to grips with the company, people and practices from home. The publisher was unwilling to share details and how many new recruits it has.  

Remote hiring is not new for The Washington Post. “We have always leveraged the intersection of behavior-based interviewing with skills tests and have reiterated the importance of this combination to help to chip away at the barriers of not meeting people in person,” said Wayne Connell, vice president of human resources.

Broadly, senior media executives acknowledge that deep employee cuts are strategically unwise and a short-term business decision. When the economy rebounds, social restrictions relieved and the virus under control, media companies want to have enough staff to be in a position to capitalize on consumer and client demand. Unfortunately, not all publishers have the luxury of making that choice to protect long-term strategies.

“Everyone is cutting the cloth of short-term costs,” said Ashling O’Connor, head of European media practice at global executive search firm SRI. “The longer-term view is that media companies have been around for hundreds of years, the existential threat of digital has been around for the last 20: This is more of a hiatus. It will have accelerated direct-to-consumer and digital transformation.”

For the most part, the search for media leadership roles remains in play. While some of O’Connor’s searches have been put on hold until a company’s economic circumstances are more certain, none have been canceled. The average search for senior execs can take between four and six months, companies starting now could hope to interview in person when social restrictions ease. 

“The uncertainty is the difficulty. If it’s a business-critical hire, clients are forging on,” she said. “If this is the new normal, businesses cannot stop. If you need a chief commercial officer or a chief financial officer, this doesn’t change that. It’s a temporary disruption.”

In the U.K. the hiring growth for the media and communications industry is -8.7%, which is above the national average of -15%, according to LinkedIn data. In the U.S., hiring was down 1.1% across sectors during March compared with the same month the year before, although declines in specific industries were much higher.

“We’re seeing an awful lot of pragmatism and reflection,” said O’Conner. “It’s a good time to recruit CEOs for companies in times of transformation because there’s more time to think about the needs.”

Typically, TV networks have sold three-quarters of their national advertising inventory for a given month before that month begins. However, as of late March, only roughly one-quarter of that inventory had been booked for April, according to a TV advertising industry executive familiar with the matter. Then less than a week into April, more than half of the national TV ad inventory for the month had been booked, said this executive who took the shift as a sign that advertisers are prioritizing flexibility when spending their money at the moment.

Although the pandemic has altered the TV ad market in April, it is unclear how long the change will last. In contrast to the April inventory surplus, May and especially June are slated to see an overload of advertiser demand, the agency executives said. “June is completely tight right now because everyone shifted to the end of the second quarter,” said a second agency executive.

Advertisers and their agencies may find they prefer the TV ad market’s current flexibility and look to codify it in their next upfront deals. This year’s upfront negotiations are already up in the air because of the pandemic, and advertisers may be wary of making long-term commitments even after it has subsided. But if advertiser demand returns to pre-pandemic levels after this period has passed, that would likely push ad prices back up and inventory availability back down. Should that happen, TV ad buyers may feel pressed to return to securing networks’ inventory through long-term upfront deals because of the lower prices those deals provide.

The prolonged inventory availability created by advertisers withholding money “leaves the market open for advertisers who are ready to pounce on deals,” said Brad Geving, vp of media at  TV ad buying firm Tatari. The company had already seen discounted ad prices in mid-March when TV networks that had lost sports programming offered inventory for 20% to 30% of the normal price. Now Tatari is seeing TV ad CPMs discounted by 30% to 40% on average, Geving said. 

TV advertising’s supply-demand dynamic began to shift in March as advertisers with businesses more directly impacted by the pandemic, such as travel-related companies, pulled their ad dollars from the market. In April, it has shifted up a gear. “For the most part, the bigger clients started to cut in April, and I think April will be the biggest [inventory] holes for the networks. In some cases, clients shifted back [to run campaigns later in the year]; in some cases, they cut in totality,” said the second agency executive.

TV networks have scrambled to deal with the current supply-demand dynamic. They are working with advertisers to redirect ads meant to air during live sports. They have filled programming holes left by the live sports hiatus with re-airings of classic games and live specials. They are having their internal creative services teams work with advertisers to create new ads for advertisers that are better suited to the current cultural context. And in the case of NBCUniversal, they are reducing the volume of ads on their networks, though an NBCU spokesperson declined to provide figures for that reduction.

“All of my members are basically in 24/7 rework,” said Sean Cunningham, president and CEO of industry organization Video Advertising Bureau, whose members include major TV network conglomerates, such as Disney, NBCUniversal and ViacomCBS.

The influx of available inventory has created an opportunity for certain advertisers. Because the TV ad sales waterfall prioritizes advertisers who commit money in upfront deals, direct-response advertisers that buy ads in the so-called “scatter,” or remnant, market typically have trouble accessing sufficient amounts of TV inventory. However, with so much inventory available, these advertisers are seeing higher clearance rates, according to agency executives. Additionally, advertisers who otherwise cannot afford to advertise against prized programming, such as broadcast networks’ primetime shows, have seen that financial barrier to entry drop and the opportunity to test out inventory for potential future campaigns.

“The advertisers who are able to [spend money on TV ads right now] are seeing this as a really good opportunity to bring more dollars in that they may have put in another channel and try something new. If we can get a primetime special at 80% off, that’s a fantastic opportunity to see what is the real value of this spot…when it returns to normal prices,” said Geving.

Agency executives also see a potential long-term benefit to buying ads in April. “If clients are staying on air during March and April, that gives us a better opportunity to go back later and say, ‘Look, we partnered with you during the tough time. How about helping us out in the last part of the year?” said a fourth agency executive. This person said that clients will look for either programming upgrades or lower CPMs “just to make it fair that we continued to be partners during the tough time.”

So much so that the company’s media plans are being revised weekly as the business responds to the impact of the pandemic. As the chief media officer said: “When you’ve gone from a €25 million ($27 million) media plan and it goes down to €12 million ($13 million) then that’s a different plan in the sense that a channel like TV is no longer affordable.”

Usually, the chief media officer is in control of those revisions or at least has more influence over the final outcome. But with so many unknowns on the horizon, the CEO and CFO are the ones in control of advertising and media dollars, said the chief media officer. Now, the chief media officer acts more like an advisor to those execs, similar to what agencies do for the company’s in-house media buyers.

From there, the chief media officer has to propose a certain amount of investment for a promised return, which is also known as zero-based budgeting. In normal circumstances, this approach is arduous but straightforward. The business decides how many media dollars should be allocated to each marketing plan based on the marketing team’s assessment. But the coronavirus is having an extreme effect on everything. And what little market data there is on how those effects influence media investments has a short half-life. 

“Our strategic decisions right now come down to the trade-off between the immediate costs of lost time on-air for some brands versus the long-term gains of ring-fencing media dollars for others that we need to balance to protect bottom-line numbers,” said the chief media officer.

In reality, what happens is those brands that are doing moderately well for the business will get fewer media dollars in the second and third quarters of the year to ease the company’s cash flow on the basis that more will be eventually invested in the fourth quarter to ensure those targets are met, said the chief media officer.

The risk of this approach is that it can prioritize short-term gains over long-term growth. For some businesses, however, the tried-and-tested method of of setting media budgets on a pre-allocated percentage of expected annual sales is a non-starter when the sales figures are so hard to define amid the pandemic in the first place.

“There’s no legacy knowledge or rearview mirror that advertisers can look back to help get through this period and our members are talking a lot about adopting zero-based thinking” said Robert Dreblow, global head of marketing services at the World Federation of Advertisers. “When it comes to partnerships they’re going to have to renegotiate everything.”

It’s a similar setup for a senior marketer at a beverage manufacturer. 

Digital media investments that were previously approved by its marketing managers in the U.S. now go through the region’s CEO, said the senior marketer on condition of anonymity. 

“Every project goes to the finance team, which is understandable because everyone is conscious of leaking dollars and the impact that could have on the company’s cash flow,” said the senior marketer. “Prior to the pandemic, my team had a lot of autonomy when it came to spending budgets even the larger ones.” 

Whereas those investment decisions are normally mapped out a year in advance, the impact of the coronavirus has forced them to be planned on a weekly basis. In 2020, the only certainty the company’s digital marketing team can plan for is uncertainty said the senior marketer. 

“While we plan for the next 30 days at the start of each month, people make revisions as the situation changes,” said the marketer. “I spend most of my time now having to draw up media plans, revise those plans and then revise the revisions.” 

Unless there’s a supporting business case, it will be challenging for senior marketers to justify compressing nearly a year’s worth of media dollars into a condensed period of time. When times are tough, the longer companies can hold on to cash, the safer they feel. 

“Given the economic impact thus far, I fully expect that a portion of many brand budgets will inevitably be returned down to the bottom line to defer losses or fund other business needs and priorities,” said Brian Leder, president of media agency Ramp97. 

“Even with record audience growth, the media business is not immune to the effects of economic downturns,” writes Vox editor in chief Lauren Williams in a post announcing the product. “In fact, right now, when audiences need quality, accessible journalism the most, ad revenue is on the decline as companies move to save money and shrink their marketing budgets.”

In an interview Wednesday, Vox publisher Melissa Bell said Vox has no internal targets for how much revenue the program might generate, adding that she was not looking to the program as a cure for what ails Vox and everybody else in media.

“It felt like the right time to ask for their support,” Bell said. “We constantly get requests from our audience to help support our work.”

On Wednesday afternoon, Vox Media CEO Jim Bankoff sent a note to Vox Media employees noting the launch of the program among several revenue diversification efforts at Vox Media, including a pair of Quibi shows, the launch of virtual events and growth at its commerce title, The Strategist; that same note observed that those streams of revenue were unlikely to offset the decline in ad revenue Vox Media was expecting.

As the coronavirus has forced people around the world to stay in their homes, many news media companies have welcomed unprecedented amounts of traffic, some of which they have had trouble monetizing, thanks largely to keyword blocking.

Vox is no exception: Over the past four weeks, visits to Vox.com have been up more than 40% year over year on average, according to Comscore data. A majority of the content Vox published over that period was focused on coronavirus, Vox’s editor in chief Williams said.

Some publishers, including The Atlantic and The Wall Street Journal, have benefitted from record spikes in subscription revenue during that time.

To date, Vox does not offer a standalone subscription product, though it does produce exclusive content for Apple News+. It has also in the past sought grants from nonprofits and other organizations for support on reporting projects.