Month: April 2020

“We wanted to send a signal to subscribers, customers and internally that The FT events division is agile and can move quickly in any circumstance,” said Orson Francescone, managing director of FT Live. “[In a crisis] you have to move fast and react to market circumstances. There’s an element of you have to adapt. If you don’t, things get tough.”

The FT has a growing live events business, hosting over 200 events globally from breakfast briefings to two-day conferences, which have up to 600 delegates. FT Live has 100 staffers. The publisher wouldn’t share how much events generate for the business through sponsorship and delegate ticket sales. In a period of belt-tightening as advertisers pause campaigns, events — even if they are virtual and offer limited networking and lead generation — are crucial in mitigating some of the deep losses felt by advertising.

“There are two things we hear from CMOs about how they are coping,” said Francescone. “One is they want to keep their brand front of mind in times of crisis. The other is the strong need for lead generation. They need a pipeline for a few months when they want to hit the ground running.”

The first webinar wasn’t monetized. Francescone estimates it can sell 20 sponsored webinars over the next month. The upcoming series will tackle seven industry pillars — banking, capital market, transport, pharmaceuticals, personal finance — and how the virus is impacting these. Since Wednesday, it’s had over 50 inquiries from brands about sponsoring future events. Exactly how each brand is integrated is not finalized, but the FT is protective over the editorial integrity of the brand, he said.

Beyond 60-minute sessions, The FT has bold ambitions to run a two-day conference online in two months’ time, called “The Global Boardroom,” about how to manage the crisis. The event will be over two days to appeal to global speakers and delegates while fitting in enough content. This week, the FT will draft the agenda and contact potential sponsors and speakers. 

The tech capabilities for a two-day online conference are much more sophisticated. In an ideal world, The FT needs an off-the-shelf platform that includes an event landing page, a content management system, live-streaming capabilities for multiple speakers in different locations, ability to have multiple concurrent conference streams, separate “closed-door” roundtable or breakout digital rooms that are invitation-only, as well as chat features, networking and meeting planner.

“We need to balance full capabilities and speed to market,” said Francescone. “We can always augment in further iterations. These features can be bought separately and stitched together on my current FT live event website but I don’t have time for that.”

Getting people to pay for online events has had a tough track record: Like with a lot of online content, the expectation is that it should be free. Not even the FT, which has had a paywall since 2002 and champions that content should be paid for, can shake that expectation. Instead, it’s exploring a tiered system where delegates access for free while accessing additional business development features come at a price. 

Business-to-business events have always been more healthy than consumer events partly because of how they contribute to corporate professional development hours for a lot of professions like law, finance and accounting.  

“Professionals at home have got to keep their studies up,” said media analyst and senior adviser at Trillium Partners Alex DeGroote, adding that the FT has the brand to pull in strong speakers and delegates. DeGroote estimated the publisher would lose out on a third of its revenue by not holding in-person events.

“The reality is [virtual events] are high margin,” said Francescone. “You’re not hiring a venue, you are leaving delegate revenue on the table and relying on sponsorship. The cost base is smaller, it’s a different economic business model, you can make money in a number of different ways. The marginal cost of adding another day online is close to zero.”

The FT has moved 60 events into September, aside from the conferences that it’s already hosting over that time, ranging in size and location. It postponed the events around five weeks ago to get a head start on fixing in dates during what’s sure to be a busy time for a lot of conferences (if the restrictions around social distancing in Europe and the U.S. slacken by then). The vast majority of sponsors have deferred their package to the postponed events, as have the thousands of delegates who had already registered with the event, said Francescone.

“Live events will come back, they will still be the backbone of our business for the future, but some of these tech solutions will endure after the crisis,” he added. “When this is over the need for business development is going to be strong.”

Richard Robinson, managing director of marketing consultancy Xeim Advise, told me he’s been asked by marketing directors over the past few weeks, “What can I do if I can’t produce any ads?”

“The fight for the survival of the client brand: That’s the client brief at the moment,” Robinson added.

A global recession already began in March, according to Bloomberg Economics’ new global GDP tracker. “The March reading is unlikely to be the worst of the downturn,” said Bloomberg’s economists, pointing to the fact that countrywide lockdowns the world around are set to continue throughout April. 

Some advertising and media executives I’ve been speaking with are optimistic that the economy will begin spring back a “v-shaped recovery” towards the end of this year. MDC Partners CEO Mark Penn told me he’s trying to be “optimistic without being Pollyanna-ish.”

“”We are not going to see a full economic recovery in 90 days. We are going to go from a shutdown, to a partial opening, to a greater opening,” Penn said. “I think Easter may have been optimistic, but July 4 is not…everyone thinks they see these openings somewhere between May 15 and July 4.”

But with U.S. unemployment already surging to a record high and more businesses running out of runway and set to go bust as the weeks roll on, far more of the executives I’ve been speaking to are finding it hard to retain a glass half-full outlook. That’s before even mentioning the human toll of this cruel virus. 

“I don’t agree with those saying we’ll see a Q4 economic rebound and I think 2021 is going to be a tough year too,” You & Mr Jones CEO David Jones told me. “I would suggest that the messaging that a lot of the world’s big companies are giving externally is much more optimistic than how they are feeling in their board rooms/meetings.”

Coca-Cola is essentially a marketing company. Its core business is convincing consumers its brown fizzy, water is delicious and makes you happy. So when Coca-Cola says it is putting all of its commercial advertising on hold from April until further notice, it’s clear that advertising isn’t what clients want of their agencies right now. Coca-Cola, its bottling partners and the Coca-Cola Foundation are donating $120 million to support coronavirus relief efforts, the company said. (Globally, Coca-Cola spent $4.2 billion on advertising expenses in 2019.) 

A survey of media buyers conducted by Digiday last month found that three-quarters (75%) of media buyers say their clients are reducing their marketing spend due to the coronavirus. A similar percentage of buyers (73%) said clients were pausing their marketing expenditure on various channels almost entirely.

That’s not to say marketers and their agencies are redundant (figuratively or literally) during this crisis, but they’d be making a mistake to apply pre-coronavirus thinking to this new reality: business as unusual.

Wherever there’s a crisis, there’s usually a consultant. The unfolding pandemic will certainly test the strength of advertising agencies’ recently launched consulting arms.

WPP’s Grey Consulting has created a framework called AIM (Adapt, Innovate, Mitigate) that acts as a 48-hour turnaround decision-making tool to help guide its clients through the crisis. A retail bank has used AIM to enable it to make customers realize they won’t be left out of pocket as the pandemic grinds on and assess what the actions it makes today might mean for the company in three months and six-to-12 months time.

“Clients are asking for a cool, clear head — someone who can help them step back from the incessant stream of emails, messages and video calls and take a look at the bigger picture,” Grey Consulting’s CEO Leo Rayman told me.

Advertising can still play a role, but that’s not where the conversation should start. Independent creative agency Uncommon has been quick out of the gate with client work responding to the crisis. It came up with the idea for Scottish brewer BrewDog to use its distillery to make hand sanitizer to give away to charities and the National Health Service. The agency also worked on the relaunch of ITV’s mental health campaign “Britain Get Talking,” which featured homemade videos of the U.K. broadcaster’s biggest stars encouraging viewers to keep connected with loved ones throughout the quarantine period.

“You can’t find peace by avoiding life,” Uncommon co-founder Nils Leonard told me. “It isn’t a choice between doing the right thing for the world and keeping the brand alive. Doing the right thing for the world is how you keep the brand alive.”

Testing a contributions model vs. memberships

Skift is in the unique position of being a bootstrapped business-to-business publisher that makes 40% of its revenue from events, while at the same time its primary readership — the travel and restaurant industries is feeling the most immediate pain.  

As of January 1, Rafat Ali, CEO of Skift, had several growth plans mapped out that were predicated on its events business, subscriptions and an acquisition. Following the coronavirus pandemic, Ali anticipates a 25% drop this year in revenue from its 2019 revenues.

The company is scheduled to have eight or nine physical events, but they have been delayed to later in the year, though the likelihood of cancelation is still probable, he said. Virtual events are an attractive option to make up lost revenue there, but as for comparing to the revenue driven from physical events, he said a “good case scenario” is that they will bring in 25% to 30% of the revenue as an in-person event.

Last year, the company’s revenue breakdown was 40% from branded content, 40% from events and 20% from subscriptions. Campaigns have been paused or pulled and subscriptions are more important than ever, Ali said.

Getting its readership to pay for a high-priced membership can be tricky, however, due to the strains on those industries, even though the information is needed — as demonstrated by traffic increasing by three times to Skift in March, according to Ali.

Skift Research, its $2,100 annual subscriptions, was restructured to include a $295 monthly option as well as having the ability to purchase single reports. Skift was also set to launch its metered paywall, which the company spent over six months building the tech stack for, but that was put on hold. 

“It didn’t make sense to launch [a paywall] when our industry needed us most,” said Ali.

Rather, the company moved to promoting a contributions option that utilized some of the same tech. The response so far has been good, Ali said, bringing in incremental dollars, however it won’t be enough to save the company. 

Additionally, rather than charging for access to its new webinar series, viewers are given the option to pay what they want. One webinar last month on business travel had over 3,000 viewers and while not every attendee paid, the average amount contributed from viewers was $37 per person. 

In early February, Skift put a hiring freeze in place and later in March, the company furloughed half of its 40-person staff. The freelancer budget has also been cut and Ali said that the company’s office lease is done on July 31 and he is heavily considering not renewing, but making the company almost entirely remote.

“If we survive, I’ll take it as a win,” Ali said. “If anyone comes in flat, it’ll be a huge win.”

Investing in new digital platforms

Fifteen-year-old, London-based LGBT media publisher PinkNews faces the likely prospect of scrapping its largest event, the PinkNews Awards, scheduled to take place in October, according to CEO Benjamin Cohen.

The company earns 15% of its revenue from events — last year PinkNews brought in $2.3 million in revenue and made $450,000 in profit — but the sponsorship sales made from selling the awards at the start of the year provides important cash flow for the second and third quarters, he said. This year, however, not a single sponsor has come on board and typically typically the company would have received all of its sponsors by now.

January and February were already down in revenue, Cohen said. While he is not putting a hiring freeze in place — the company has three active senior executive roles it is looking to fill — recently vacant positions will not be replaced and many roles will have to become combined. The company currently has 27 full-time employees.

Many of the company’s other events and projects have either been canceled or paused indefinitely because of this, including its Pride campaigns and events. To adjust for this, Cohen said it is moving up the launch of its virtual Pride march, Pride For All, from next year to this coming June, which it is trying to sell sponsorships for. In addition to this, the publisher moved up the prioritization of its app, which, he said, has had interest from venture capitalists. 

The company was planning to launch an LGBT travel website in partnership with a hotel company, however, the partner had to pause its participation in that deal due to the crisis.

“Our profitability would’ve been higher if we had not invested in these projects for the past six months, which are now paused and basically thrown away,” he said.  “We don’t want to take our foot off the pedal because of this.”

Developing direct-to-consumer products

Augustus, a 5-year-old, Dubai-based digital media company, was forecasting $4 million in revenue this year — a 40% increase from the $2.8 million it generated in 2019. Now, CEO Rich Fitzgerald said the company will not have growth and the new goal is to remain flat in revenue while breaking even on profit and retaining as many staffers as possible. 

Already, the company, which owns three digital publications and one branded content studio, was down 70% in revenue in March, falling from $311,000 earned in February to $90,000 in last month, with net losses of $80,000, Fitzgerald said. He is now budgeting for $20,000 to $30,000 in losses each month for the next several months going forward. 

Because of this, Augustus laid off four of its 25 employees and did 15% pay cuts for the remaining 21 staffers on March 12. 

In February, Augustus’ revenue breakdown was 94% from branded content and 6% from display advertising. In March, however, Fitzgerald said the split became 80-20 as only 24% of forecasted sales targets were hit and deliverability was down from 90% in February to 18% due to canceled or paused campaigns. This includes a $100,000 deal with a cinema chain that ended up getting pulled due to move theaters being closed, he said. 

Direct-to-consumer products are now a major focus. This includes a membership program for its lifestyle websites (Lovin Dubai and Lovin Saudi), and an Arabic-language streaming service called Smashi TV.

“There is a lot of ground work we can put into place that doesn’t need more investment in staff and is not dependent on a profitable year,” said Fitzgerald. 

How was the pandemic changed your role? 

Procurement-led financial constraints are part of working with media so we have had to be responsible for cash flow. The coronavirus has created working conditions I’ve never experienced before. We can’t calculate either top-line or complete volume growth so we’re having to work closely with the finance team to make sure we’re using what data we have. 

The finance directors are the keepers on what is and isn’t the proper amount for us to spend. I tell them what’s on a media plan that’s either muscle or fat. In other words, I have to tell those execs what’s going to work for the business now. In a world where we have to drastically change our plans, I have to tell the finance team what deals are the most necessary versus unnecessary. That’s what my role is now. 

Marketers aren’t known for having a finance mindset. 

It’s harder working under these conditions because you’re not in the room with the key stakeholders in the business and there’s a tremendous amount of uncertainty with regards to the impact this will have on what we do. The decisions that I made two days are having to be revised based on either new information or shifting corporate priorities. 

What does that uncertainty mean for the media dollars you control?

Originally, there were budget cut exercises or plans to ring-fence certain media dollars, but they’ve since gotten stricter and come back more aggressively from the finance team. I’ve had to revise plans once again both in terms of long-term changes to the budgets for the year but also for certain campaigns because we’ve had spend tied to certain music festivals and sporting events that have shut down. There’s a triage of things impacting our investments. In response, we’ve had to change immediately for the next three months in terms of what we communicate and what inventory we buy. 

What happens to the money for the canceled media investments? 

In the case of our sponsorship investments, that money is coming back to the business because those events aren’t happening. In other areas, we’re trying to get as much money out of commitments as possible. We have agreements with Facebook and YouTube to spend, but they’re more flexible than firm, which is important as those are the two biggest line items on our digital media plans. Search is another investment that’s flexible as is outdoor, where in many cases we’re able to cancel 30 days before campaigns begin. Radio is also pretty flexible. The real issue here is TV, though there is some flexibility given so many of the sports are on hold now. 

It sounds like you’re going to be moving a lot of money around in the second quarter? 

Between 50% and 80% of the money we’re going to spend this quarter is going to be on flexible investments that can be changed if needed. At the same time, we’re either trying to see where we can cut our media dollars drastically for the third quarter or we’re trying to shift out some money from the second quarter into the next. 

As the business moves into the second quarter, is there more or less certainty around your media investments? 

Last month, there were lots of investments being paused and revised, whereas now more of it is being canceled. We didn’t know how bad the pandemic was going to be, whereas now we’re getting a better sense of how acute its impact will be on our sales. In the early days of the coronavirus, our sales weren’t that bad compared to other industries and even some of our rivals. Now, however, we’re seeing a dip in demand. Our grocery sales were way above expectations initially, for example, but even they’ve slowed down. 

With cash flow paramount to the business and increase your role, are you delaying payments to agencies?

We’ve not extended the payment terms with our agencies yet. We pay our agencies within three months. We don’t have procurement people here pushing for 120 days payment terms. I don’t know why businesses need that long to pay suppliers even if it is being done for cash flow purposes.

Quibi had originally planned to roll out connected TV apps, but its strategy shifted last year to being a mobile-only service, Digiday previously reported. Coinciding with that strategy shift, Quibi developed a technology called “Turnstyle” for people to switch between watching a show horizontally or vertically. That feature seems to be a primary reason why Quibi has eschewed the TV.

“It’s not designed for TV,” said Katzenberg in an interview with Deadline published on March 27. “It’s unique on the phone. Our technology that has been created and patented for this makes watching it on the phone beautiful. It’s special. I can’t stand my TV on its side.”

Katzenberg may not be able to turn his TV on its side. But why would he need to in order to fully appreciate Quibi’s programming?

Based on the initial sampling, Turnstyle does not yet appear to be all that important to the viewing experience. Eventually there may be shows that ask people to rotate their phones to see otherwise out-of-view aspects of certain scenes or that reward repeat viewing from the opposite perspective. But for now, the feature seems to offer little more than to provide people the option to view Quibi’s shows however they prefer to hold their phone.

The debut slate of shows seem to primarily use Turnstyle to provide audiences a wider perspective when viewed horizontally and to zoom in when viewed vertically. That gives the sense that these programs were produced primarily with horizontal viewing in mind. Many of the vertically framed scenes feel like higher resolution versions of the cropped clips that initially comprised TV networks’ Snapchat Discover channels. As a result, at this point Quibi’s Turnstyle feature does not feel all that different from the dynamic video player YouTube announced in 2017 that automatically adapts a video’s size based on the screen’s orientation.

To be fair, Quibi plans to release more than 175 original shows this year, and some of them may make fuller use of Turnstyle. And since Quibi is offering 90-day free trials for its service, people may continue to try out the app until those movie-quality shows truly designed for the phone premiere. Additionally, the seemingly minimal exploitation of Turnstyle does not appear to have had much impact on the app’s initial reception.

Quibi ranked fourth among the free iPhone apps that received the most downloads on April 6, as of midday ET, according to mobile app store analytics firm Sensor Tower. Another app analytics firm, App Annie, also said that Quibi was the fourth-most popular free iPhone app in the U.S. by downloads through 2 p.m. ET on April 6.

The app was designed to be people’s streaming service of choice for when they are away from home, but that positioning has been nullified with so many people quarantined at home. For the time being, Quibi is competing not only with mobile-only entertainment like Instagram, TikTok and Snapchat but also with the likes of Netflix, Disney+ and YouTube. 

Instead of carving out a niche for itself at the outset by offering audiences a viewing experience they may have not encountered before, Quibi’s initial programming slate seems to sit somewhere in the middle: shows that can compete on quality with much of what’s available for people to watch but that are only available for them to watch on their phones.

Mel Magazine, a men’s interest publication born from Dollar Shave Club, wants to be more than a case study in brand content.

“The way we went around building the publication, it drew from a lot of the same DNA. But it’s never been there just to push razors,” founding editor Josh Schollmeyer said on the Digiday Podcast. “It’s been there to be a thought leader on modern masculinity.”

As Mel Magazine launched in 2015, Schollmeyer recalled, “the core edict was ‘go out there and try to do great work, and we’ll figure out how this can work back toward the brand.’”

Schollmeyer talked about the myth that was the archetypical men’s magazine reader, providing counter-programming to all the coronavirus coverage and why his peers thought he was crazy to take this job.

Here are a few highlights from the conversation, which have been lightly edited for clarity.

Why the DSC ownership model works

“One, there was real white space in the men’s lifestyle content market. That was an area that really needed reinvention and to be blown up, in the same way that Jezebel and the Cut and the women’s side of things had been doing things right for a while. Nobody had been doing anything [the equivalent for men] — outside of maybe Deadspin or Grantland, but both of those were more pop culture, sports-based than any kind of true men’s lifestyle publication. So there was real opportunity there. And with Dollar Shave Club, Mike [Dubin, CEO] was really interested in this kind of content-commerce model, but doing it differently, which would be more brand-backed publishing. And again, there was a real opportunity to fill a need with a certain kind of male consumer and reader. The way we went around building the publication, it drew from a lot of the same DNA, but it’s never been there just to push razors. It’s been there to be a thought leader on modern masculinity.”

A separation of razor and pen

“My KPI in the early days was ‘ hire the best people you can and do the best possible work you can.’ Five years in, I think we’ve built a pretty impressive editorial platform and brand. On the flip side, I have a small segment of my team that works on much more traditional branded content stuff for the Dollar Shave Club universe that you would never necessarily know the Mel team was behind. So we do give value back to the business in that regard. And there are ways, potentially in the future, that this will be brought together in a way that’s a little bit more forward facing. But there may not be. Journalistically, we’ve never wanted to hide [Mel’s belonging to Dollar Shave Club]. We wanted to earn our way into that market.”

What happened to the archetypical men’s magazine reader?

“I actually believe that that guy never really existed. It was just that [publishers] could get style advertisers, they could get auto advertisers, they could get liquor advertisers, they could get studios. That guy existed to sell against.”

The innovation — it’s coming from outside the house

“The idea of me going to a brand, everybody thought I was nuts and crazy and that I was basically pissing away my career. I was very frustrated with legacy consumer media. I felt they weren’t going to get it. They were holding onto every last penny they were going to bring in in the ways that they knew. Especially on the print side — any print legacy publication, I think that’s still true mostly today, outside of New York Magazine and the Atlantic — they weren’t really that interested in figuring out digital. They didn’t really go at it the correct way, and I was super frustrated. I was kind of like ‘if anybody’s gong to get this, it’s not going to be somebody from this industry.’ Mike and I talked early on, for about six months, and he kept saying ‘I would like to start an Esquire meets Vice.’”