Month: April 2020

“The whole campaign was based on context,” De Groose told me. “When people are watching film they’re in a different mindset.” 

Over two decades later, context is still top of mind for De Groose. She is the chief executive of U.K. newspaper trade group Newsworks, which last month launched its “Back Don’t Block” campaign, urging marketers to remove trusted news brands from their sweeping brand safety block lists. Newsworks estimates that U.K. news publishers could inadvertently lose £50 million ($62 million) in revenue to blunt coronavirus-related ad blocking if the pandemic lasts until the end of June. “The system is very broken,” De Groose said.

Coronavirus keyword blocking is a symptom of a much larger issue. In the shift toward audience-based digital ad buying and a procurement-forced incentive to grab as many impressions for as low CPMs as possible, context has been relegated down the list of priorities on the media plan. For many advertisers, all “reach” is treated equally. If they can’t get that high-earning New York Times subscriber on the Times’ homepage because it’s full to the brim with coronavirus stories, they can simply buy ads to reach that user on Google and Facebook instead (where apparently the adjacency issue doesn’t seem to apply.) Context becomes a nice-to-have when specific audiences can be found anywhere.

“Media planning is [about] who, what, when and where. The ‘where’ appeared to drop off the brief somehow.” Iain Jacob, former chief executive of Publicis Media EMEA told me. “I’m not blaming advertisers, but they may have inadvertently abdicated a responsibility which was initially a foundation of media planning.”

The notion of “ad misplacement” was alive and kicking long before the dawn of digital media. No airline would want their print ad next to a newspaper story about an airplane crash. But the 2017 Times of London “Big Brands Fund Terror” splash about YouTube ignited renewed concerns — and, of course, very public marketer hand-wringing. Brand safety became a lightning rod issue for the industry as news story after news story uncovered major advertiser ads next to questionable content all over the web. There was undeniably a “gambling in Casablanca” aspect to the outrage that on the internet ads could end up in all sorts of tawdry places. Advertisers reacted by building up content block lists of terms or categories to avoid — some of which run into the thousands — in fear that journalist screenshots of their ads could reach the boardroom. Few seriously rethought their overall ad strategies that prized “efficiency” (read: cheap) over quality.

Ironically, the news industry that worked to shine a light on this issue is now the one being knee-capped by it the most. It’s no surprise that exasperated publishers say the pendulum has swung too far in the direction of precaution when there’s little strong evidence that most news stories have a detrimental effect on the advertisers that appear alongside them.

GroupM is encouraging its clients not to block coronavirus keywords and advising that being careful about where advertising is scheduled on a news site can actually open up an enormous amount of additional inventory. On Apr. 20, GroupM surveyed 80 of its major advertiser clients and found that 92% were either using “refined semantic avoidance” — to only block negative, grim news such as deaths — or not blocking news at all. 28 of those advertisers had changed their avoidance strategies after receiving the agency’s advice, said GroupM evp of global brand safety John Montgomery.

“The value of quality is ultimately worth paying more,” said Montgomery.

With CFOs placing marketing budgets under the microscope as the coronavirus crisis grinds on, marketers are under more pressure than ever to reduce cost and drive immediate results. Meanwhile, resources at agencies too are more cash-strapped than the bygone era when they received 15% commissions for media. Montgomery recalled being given six weeks to put together a media plan for the Unilever account in South Africa back at the start of his career in media planning — a process that included interviewing newspaper editors about their editorial vision to see whether it chimed with any of the agency’s clients.

With the rise of digital, that process has become manifestly more complex, with faster turnaround times, driven by technology. Publishers also abdicated control of their own monetization in pursuit of ad dollars on the open marketplace. When technology is used as a blunt instrument, the only thing that can be expected is blunt results.

Growing a web publishing business from a small starter loan and your own profits “toughens you” in ways that are different than venture-backed media according to Digital Trends CEO Ian Bell.

The bootstrapped tech publication has grown the old-fashioned way — that is taking in more money than you spend — since 2006. This year, Digital Trends expects $50 million in revenue. It has not laid off or furloughed any workers despite feeling the pain of the downturn. Digital Trends also will be profitable again this year, Bell said.

“Running the old fashioned way, off of profits, creates a grittier leader,” Bell said on the Digiday Podcast. “You get forced to have those tough conversations with the bank, with your team. You have to meet covenants. You have to make sure that you survive at all costs. In a lot of ways it toughens you.”

“We’ll be profitable again this year,” Bell said on the Digiday Podcast. “The momentum’s there.”

Widespread lockdowns have led people to lean more than ever on their electronics, whether to connect with loved ones or stay busy and entertained. Bell sees that as an opportunity.

“You’re going to find that people got that technology dopamine drip, and they’re going to continue to rely on it more than they did prior,” Bell said. . We’re uniquely poised to be right there for them.”

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

People won’t stop leaning on technology after the pandemic

“More so than ever, people are probably realizing the positive impact that technology can have on their lives. For us, not only are we uniquely poised to help people navigate through this, but once things sort of get back to normal after all of this, I think you’re going to find that people got that technology dopamine drip, and they’re going to continue to rely on it more than they did prior. We’re uniquely poised to be right there for them.”

Not your classic tech news site

“If you’re going to be a tech news site, you should be a subsection of a bigger company — a New York Times or a CNN. You cannot last and survive on your own as purely a tech news site. The demand’s not there. You can get it anywhere, right? For us, news is important, but it’s not our core. Our core really is around enthusiasts and, I’d say, that mainstream user that really does care about products and services. And we’re okay living there. That’s where we want to be. It helps us build a big moat. It allows us to monetize that user four or five different ways as opposed to one or two.”

On Amazon slashing its affiliate marketing program

“A lot of brands are getting affected by that. And it’s not going to come back to 15%. Diversify as much as possible. We do have partnership with Wayfair and Walmart and Best Buy. Lower your dependency on any one of those. You don’t want to be solely dependent on an Amazon. They’re going to put you out of business no different than the video business being dependent on Facebook or anyone else. Diversify as much as you can.”

This Friday, at noon ET, we are airing our next episode of The New Normal, a weekly interactive show focused on how publishers are adapting their businesses. This week, Action Network CEO Patrick Keane will talk with Digiday editor-in-chief Brian Morrissey about how a sports media company focused on sports betting adapts in an age where sports around the world are canceled. Register here.

“If an advertiser is on 45 days they’re trying to get 60-day terms, and if they’re on 60 days then they’re trying to get to 90,” said Nany Hill, founder of The Agency Sherpa and former 4A’s president. “It’s not right, but I understand why. Everyone is trying to retain their cash. There’s not even one I can point to because it’s literally everybody.”

That can be particularly galling, however, when the companies doing this sit in far better financial positions.

Pfizer has told agencies that it could take up to 120 days to get paid, according to two separate sources with knowledge of the plan. Usually, the pharmaceutical giant pays agencies within 60 days. Pfizer’s market capitalization is $212.7 billion.

But the bigger the client, the more it can get away with, it seems. After all, few agencies want to end on the wrong side of Pfizer, which spent $2.6 billion on ads in 2019, according to Statista.

“Agencies are going to want to work with Pfizer regardless of those terms because they represent stability as a business that’s either not going to be impacted by the coronavirus, and even it if it is then will be in a positive way,” said an agency source.

The decision won’t be as straightforward for other agencies. For those agencies, the pharmaceutical company has given them a termination right, which means they can walk away from the account if they can’t swallow the stretched terms, said the second exec.

Pfizer did not respond to two requests for comment.

It’s no surprise that the industries hit hardest by the pandemic like travel and retail have been among the first to delay payment terms to agencies. TK Maxx in the U.K.  has delayed payment terms with all its suppliers, including agencies, from 30 days to 120 days. German retailer Bijenkorf has added 60 days on top of its existing 90-day payment terms to suppliers. But the frequency in which these requests are happening is nevertheless worrying for agency execs, particularly for those who can’t bankroll the cost of some of the more protracted delays. Neither TK Maxx or Bijenkorf responded to a request for comment. 

“Cash flow is king right now so we’re getting clients that are asking us to either to extend payment terms or change them,” said Oliver Bishop CEO of TIPi Group, which has clients in the retail, restaurant and DTC industries. 

Those discussions create ripple effects as one company’s spending is another company’s income. And the longer an advertiser holds on to cash the more likely it is that agencies will either have to find funds from elsewhere or squeeze other firms along the supply chain, said Bishop.  

“How do you respond when a client says ‘I need to put my people first and so haven’t got the cash to pay you?’,” said Luke Judge, CEO of media agency Incubeta in the U.K. and the U.S. “Where we can we’ll accept extended payment terms and if we’re able to then we’ll put plans in place to trickle money through for payments that are due. Being empathetic is the trick of the trade now.”

There are times, however, when advertisers need to take more drastic measures to keep their costs down. Take the travel sector, for example. Revenues are dwindling for airlines as travel restrictions grow, leaving some short of the funds needed to pay agencies.

KLM has halted all its spend with its media agency until further notice, said an ad exec who works with the airline. The decision comes as the airline tries to shore up its balance sheet in order to outlast any drag revenue from the travel lockdown and economic slowdown. 

“KLM has laid off 40% of their staff and all they’ve told all external service providers like contractors and their media agency that they don’t have the cash to pay them,” said the exec. 

KLM did not respond to a request for comment.

While agencies often feel intimidated into accepting unfavorable payment terms, some have found ways to cope. In exchange for a percentage of an agency’s annual fees, credit insurance firms can cover the costs should any of its clients be unable to pay fees on time. 

“If clients don’t fall within our credit insurance bracket then there’s a difficult conversation to be had, said Bishop. “As much as I want to help those businesses there’s no way I can offer those extensions when I’m not insured for it.”

There is a fear, however, that delayed payments could push agencies to breaking point. Prior to the current crisis, payments for a wide range of services — such as programmatic, production, agency fees and social media — were already stretched by businesses that wanted that money for other projects. Payment terms for ad agencies lengthened by more than a quarter (27%) to 58 days on average last year from 46 days in 2013, according to the Association of National Advertisers study of 109 client-side marketers. 

“We have clients asking for extended payment terms or reduced fees,” said an agency exec on condition of anonymity. “I just want them to know that we’re going to have let people go because of this. We’re all in a shitty boat and I want to help but it’s not like they’re passing this onto us without repercussions. It’s not a guilt thing, it’s a reality thing.”

Rajamannar spoke to Digiday about how Mastercard is putting actions over words, and when it will get back to spending more money on advertising. The answers have been condensed and lightly edited for clarity.

What role do you see advertising playing now

We have a series of products that can help people at this time so we’ve started pivoting our communications and marketing campaigns toward those. For example, in some countries people do not trust shopping online [as much as they do in the U.S.] so we’re running campaigns to inform people how they can safely shop online to help with a pain point. [To help the community,] we’ve said we will do something for the healthcare workers. As one example, we started running campaigns in Europe with UberEats where we’ve contributed 140,000 meals to healthcare workers. We’re trying to do things like that. 

Much of the marketing for Mastercard has been around experiences. How have you adapted?

Our core has been around “Priceless” and bringing “Priceless” to life [with] once in a lifetime experiences. Most of these experiences were in person. We’ve had to move to digital and reimagine what they would look like at home. So now you can have a cooking lesson at home from a celebrity chef or have a video chat with a celebrity athlete. We’ve had to quickly pivot and become relevant in this way. 

Are you spending less on ads?

We’re going to be managing our expenses tightly as a company and that includes marketing and advertising. We won’t share publicly how much we have reduced [our advertising] but yes, we have tightened our belts. At the same time, we’re making sure we don’t go dark. Globally, there’s a change in the messaging, strategy and tactics. All those changes require money. So we do have our marketing budget but in terms of advertising, yes, we have pulled back on advertising to some extent. 

Where have you pulled back?

The bulk of the change happened with sponsorship. Without [live events or sports] happening, that sponsorship opportunity has been canceled and that money is there. In 2013, we pivoted Mastercard to mostly [use] experiential marketing approach we moved a lot [of our budget] from traditional advertising into experiential marketing in a big way. As part of that shift, we went into sponsorships pretty significantly. So when some of these events get canceled obviously that money doesn’t get spent so we do have those. However, there are some events still going on like esports. Last weekend, we had the League of Legends live broadcast [and we still sponsored that]. 

Where does that money go? 

We look at opportunities to constantly be visible in a more appropriate and relevant way that can be sensitive to the current situation. So we’ve been doing a boatload of “Priceless” causes. We do that as well as digital experiences and supporting small business communities with promotions to go shop those businesses. 

When do you think advertising spending will return or go back up?

As the economy starts to open up, you cannot be a silent brand. We need to see what’s going on in each region and based on the moment the market starts to open up, Marketers will quickly start to spend their marketing dollars again. So marketing spending will probably start coming back in the third quarter but how fast or how much will come back depends a lot on to what extent we’ve been able to contain coronavirus and the recession. 

Have you put coronavirus or bad news about the economy on a block list? 

We have not blocked anything of that sort [but context matters]. If we are doing something for the health care workers’ benefit, like our UberEats program, we’re not advertising to sell something, just inform. If you as a reader are looking at something coronavirus-related and along with that news you see the ad from Mastercard about what we’re doing for healthcare workers with UberEats in Europe, that’s not necessarily a conflict in what they are seeing. Obviously, what’s happening with coronavirus is not good but it should not be put in the same bucket as [mentions of] terrorism or pornography.

Libby said that revenue from memberships — the second largest revenue stream for the Daily Beast — has increased “commensurate with subscriber growth.” She would not disclose exact revenue figures. Noteworthy, however, are the $1 one-month trials and 30% off annual membership discounts that are currently running on the site.

Some of the growth has been driven by making more of its opinion and analysis coronavirus coverage beyond the paywall — news related to public health and safety is in front of the paywall — but the biggest shift has been in its marketing, Mary Cullen, the Daily Beast’s head of membership said. 

Prior to coronavirus, the messaging strategy focused on the benefits of membership. Now, it is exclusively in the vein of “support us,” a strategy the Beast has tested in the past around its Jeffrey Epstein coverage. Today, site visitors are greeted by a bottom banner with messages such as, “Essential reporting. Gloves optional. Join for $1,” or “Unprecedented times calls for unprecedented reporting. Join for $1.”

Visitors who click on a member-exclusive story can read a message explaining why it is not free to read. 

The Beast changed its pricing strategy too. Normally, the Beast uses a decoy offer strategy, which places the monthly, annual and two-year membership options against each other with the goal of illustrating that the annual option is the best deal, Cullen said.

Right now, the third option is being used to market a “I want to give more” option, which offers a year’s membership, with the rest directly contributing to the site, for $100.

The “Give More” option still acts as part of the decoy, but Libby said that since launching it, average order value has increased 35%.

According to Libby, coronavirus content earns approximately only 77 cents on the dollar that non-coronavirus content delivers in terms of advertising revenue.

With 75% of the Daily Beast’s content classified as coronavirus-adjacent, naturally the publisher is going to see a decrease in programmatic advertising revenue. Overall, private and open-marketplace programmatic advertising is down close to 40% year over year, she said.

“By quarter three or quarter four, it will start to normalize,” she predicted.

With publishers seeing an increase in traffic pretty much across the board, Peter Figueredo, NYC head of strategy at House of Kaizen, said that right now, his client’s readers have anywhere from one to three times more propensity to subscribe, based on the number of readers who are making the conversion.

“If they are just looking at this bump for today, they’re not going to make up for lost ad dollars,” Figueredo said. Therefore, getting rid of messaging around the benefits of what members get with their money might have a negative effect in the long term where readers feel more inclined to cancel their subscriptions after the constant feed of coronavirus coverage is over.