Month: April 2020

“One key issue for publishers is how to maintain the surge in engagement and new readers as a result of Covid-19. Most publishers I’ve spoken to saw a massive spike at the start of the outbreak,” said Tara Lajumoke, managing director of FT Strategies. “The concern is, as that peak flattens, will engagement and interest go back to pre-crisis levels? Or can publishers engage and retain the kind of audiences who will become loyal readers for the long term?”

This is the dilemma for subscription publishers trying to map known patterns to unknown situations. The hypothesis is, understand more about people and what they care about so that when coronavirus news wanes, they have enough of a reason to return. 

The FT is also trying to figure this out for themselves, said Lajumoke, but it has increased reader research to develop propensity models. This would calculate the reader’s propensity to subscribe if a reader accesses the site through its coronavirus tracker via Facebook, then reads three articles on small and medium businesses for a certain amount of time, for instance.

Announced in October as a way to make use of its capabilities in growing subscription businesses, FT Strategies has run consulting projects for clients like Penguin Random House and Bonnier. Non-media entities are also on the books, like automakers, as more companies search for ways to increase their grasp of data and grow direct-to-consumer businesses.

Lajumoke, a former McKinsey & Company consultant, has built a team with consulting experience, with several more due for the coming months. FT Strategies also draws on the in-house data and business-to-business capabilities from within the publisher.

The squeeze on programmatic ad revenues and restrictions on in-person events businesses has led to more companies valuing recurring reader revenue. Inbound leads to FT Strategies have increased over the last two months, she said.

Initially, 70% of the GNI Subscription Lab program was meant to be delivered in person before it pivoted to a combination of one-to-one calls, group sessions every two weeks, mini breakout groups and interviews.

Like all event organizers are finding, there are certain freedoms with virtual executions that in-person events don’t have. The FT hosted a virtual talk about the FT’s digital strategy for the eight publishers. Roughly 10 staffers from each company attended, including editors, data officers and marketers. 

There are, of course, other areas that can’t be replicated online. The FT suggests that the whole company should focus on a north-star metric, a proxy for engagement, that makes the biggest difference to the business. In the FT’s case, that’s a combination of reader frequency, volume and recency of visit. Lajumoke’s team would be better placed observing how possible this is by visiting companies in-person to see whether multi-disciplinary teams sit together or whether staffers have easy access to visual dashboards. Instead, the cultural elements of how a company at all levels can rally around a single mission has to be judged through interviews.  

“Our fundamental belief at the FT, is that organizations must start with a single mission that everyone across the newsroom, data, tech product, marketing, and the rest of the organization is committed to,” said Lajumoke.

This would put TikTok on the same path of other platforms, which have largely followed the same playbook in having both branding and direct-response ad products.

Still in an early testing stage, the creator call-to-action ads are only available to select advertisers and agencies. The exact revenue-share split has not been determined, although the company has been discussing a 20/80 split in TikTok’s favor, said people familiar with the program, whose tests have yet to go live. This model allows TikTok to tap into revenue that may have previously been shared only directly between the advertiser and influencer.

“We are constantly experimenting with ideas and features to improve the app experience for our users,” said a TikTok spokeswoman. “TikTok is a platform for creative expression and a big part of that is showing and sharing the things you love with others. We’re in the early stages of testing a way users can add links to products to their videos and will share more updates when we have them.”

TikTok’s Creator Marketplace launched late last year and allows advertisers to browse the platform’s top creators and filter them using metrics such as audience demographics, follower count and the topics they tend to create content about.

With its focus on creators, TikTok appears to be “pivoting more toward a YouTube creator shared revenue model than an Instagram model, which is smart,” said Amy Luca, chief executive at influencer marketing company TheAmplify. “One of the things that Instagram struggles with is retrofitting some of their programs to pull out money from the gray market ecosystem that is being earned by influencers and paid by brands on their platform.”

Earlier this month, Levi’s shared details about how it had partnered with TikTok influencers Everett Williams, Cosette Rinab, Gabby Morrison and Callen Schaub to promote its “Future Finish” customizable denim technology on the platform. The influencers’ in-feed ads included TikTok’s relatively new “Shop Now” buttons. Levi’s didn’t share specific numbers but said the push, which ended on Apr. 19, generated a watchtime that was twice as long as the average on TikTok and that product views to its “Future Finish” page “more than doubled” for the products that featured in the TikTok campaign.

The “Shop Now” button is now available to all advertisers to drive traffic to their websites — but is separate from the creator call-to-action beta test, a TikTok spokeswoman confirmed. Separately, TikTok has been allowing some of its top users to add ecommerce links to their videos and bios since November. In a similar call-to-action vein, this week TikTok also launched a product called “Donation Stickers,” made available for all users to embed within their videos and live streams to raise money for good causes. htt

TikTok, which had already been growing quickly over the past year, has been on a tear since the lockdown took hold. Data company Apptopia estimates the TikTok app was downloaded 100 million times worldwide between Mar. 20 through Apr. 28. Apptopia estimates 11 million of those downloads were in the U.S. TikTok was the second top free app in both the iOS and Google Play stores in the U.S. on Apr. 28, behind Zoom, according to Apptopia, which estimates TikTok has 328 million monthly active users.

“TikTok is still very much a brand [advertising] platform — it’s still nascent,” said Andrew Jude Rajanathan, a global director at media agency Zenith. 

“With TikTok, the starting point is the virality of video and the creativity of the video. Over time they’ll start to add in [more] performance, direct-response [ads], the CTA buttons will get better,” Rajanathan said.

“This will call into question how many people you need on a full-time basis,” the CEO said. “You can trust an older person to work from home more than a younger person. You’re going to see companies keep fewer people who can do both strategy and execution — and have expertise. Experience and professionalism and dedication are going to be recalibrated to a degree we haven’t seen.”

The scale era of digital media was premised on sending hordes of inexperienced people into the content mines. With Google and Facebook taking most of the ad market, and Amazon chomping on a lot of what’s left, few publishers patiently groomed young people. Instead, they were tasked with churning out listicles, embedding outrage tweets and reheating Kardashian news to feed digital media’s insatiable appetite for the empty calories of cheap clicks and fleeting pageview highs.

The cover story explaining why these newsrooms that were disproportionately filled with people in their 20s and 30s was that younger staffers “got digital” more than their doddering elders, apparently forever fumbling with their feature phones, the mysteries of embedding an Instagram post and understanding how a wireless mouse works. Those over 35 were thought to be dinosaurs as up-and-coming millennial news publishers burned through venture capital, never turned a profit and often barely left a dent. Some went under, some have limped on. BuzzFeed’s 2019 diversity report takes pride in “more than half” of the company being over 30. 

What’s more, the management ranks at publishers soon swelled with the same young people. Good times cover up a lot of weaknesses; bad times ruthlessly expose any shortcomings. The front of the parade is always a good party, but these are times when, in the words of another top media exec, “the adults in the room” are needed to make hard calls and get teams through the fire. As Andy Jassy, CEO of AWS, said, “There is no compression algorithm for experience.”

Media companies are learning this the hard way.

“We have a lot of people who knew what to do when what to do was obvious,” said the media CEO. “Now that it isn’t obvious there isn’t a lot of thought process. People are baffled and confused, and if you haven’t been through it before you don’t know how to understand what are the important things and how to prioritize them and ignore the rest. A lot of the kids get overwhelmed by the volume of everything.”

The type of severe economic downturn that we are facing now leaves few media companies as “winners.” After all, the global economy is, for the most part, shut, with cascading effects in overall demand, even availability, of goods and services. That is acutely felt in the advertising market that is still the lifeblood of most publishers. The dislocation is also affecting their commerce businesses. And don’t even ask about live events, which are gone and likely not coming back anytime soon.

But publisher after publisher has sung the praises of their subscription businesses. Many are ringing up big gains in subscriber numbers with promotional offers and buying up cheap Facebook ads. But they are harvesting a demand to pay for news content that, paradoxically to most other goods, is clearly on the rise. The catch: Content worth paying for often comes from a deep bench of experienced journalists. This runs contrary to the industry’s long fetish with stuffing their ranks with the young. 

Take Stat News, which is having a moment now. Stat, part of the company that owns the Boston Globe, has long fascinated me for the self-interested reason that its model closely resembles Digiday’s, only focused on health. Stat has seen a surge of interest as the story of our times is squarely in its wheelhouse. Traffic to the site has soared. A year ago, Stat was happy to get 1.5 million visitors in a month. In March, it got 24 million. Stat’s subscription business has grown significantly as well, with net new subscriptions so far this year pacing 60% above the rate for all of 2019. (That’s not to say Stat hasn’t suffered: The publisher was planning a 450-person event in the fall, which is doubtful.)

Poke around Stat for a while and visit the profile pages of its 15 reporters. There are people like Helen Branswell, a journalist with 20 years of experience, who has reported on — I’m not making this up — the bird flu, H1N1, Ebola, Zika and SARS. This is not Branswell’s first infectious disease rodeo. She was onto what would be named coronavirus while most “content creators” were preparing for New Years Eve parties.

There’s also Matt Herper, who I went to J-school with at Columbia two decades ago. Herper reported on science and medicine at Forbes for nearly 20 years before joining Stat. There is Wall Street Journal vet Ed Silverstein who spent two decades covering the pharmaceutical industry, and biotech writer Adam Feurstein with 25 years experience.

“When we were outlining the market assessment, one of the guiding principles was it was going to be high-quality journalism and a subscriptions model,” said Angus Macaulay, Stat’s chief revenue officer. “You need people who have seen these stories play out over 10 to 20 years.”

This is a group that would be euphemistically termed “seasoned.” They’re also likely expensive since middle-aged people have middle-aged headaches like mortgages, child care and tuition. Economics are what’s at work here. The complete commoditization of the ad market has caused a race to the bottom on operating costs, and the top cost for publishers is people.

That doesn’t work in a subscriptions-driven world. Why are The New York Times, The Financial Times, The Wall Street Journal and Bloomberg lapping the field in piling up not just big subscriber numbers but also big subscriber revenue? The subscriptions business of digital upstarts are either far behind or non-existent. The flight of talent to the Times — Ben Smith from BuzzFeed, Kevin Delaney from Quartz and Kara Swisher from Vox — is driven by economics. The big subscriptions businesses of the old guard beats the programmatic ad and content studio businesses of digital media. In a reader revenue world, quality and experience win.

In private conversations, publishers at small media companies are livid that money intended for small businesses seems to be going to companies that either have access to other sources of funding, or are planning to use the revenue in ways that seem contrary to the PPP’s purpose.

“Morally, I can’t justify it,” said the CEO of one mid-sized digital publisher with fewer than 500 staffers but decided not to apply. “Who are we to ask for PPP? It doesn’t make any sense.”

Bustle Digital Group, which laid off 24 people at the beginning of April, said in a statement this week that it would use the $7.5 million it got from the PPP to expand the hours it was giving to freelancers, while also reducing pay cuts it had instituted recently. BDG would not make an executive available for this story.

Axios CEO Jim VandeHei wrote on Tuesday that forgoing the PPP loan, which was revealed just a week earlier in an Axios piece, was done because of the issue becoming polarized and an unnamed “alternative source” of capital materialized. Axios would not comment on the record or detail the source of capital.

While many media companies were ineligible for the funds – including an estimated two thirds of U.S. newspapers – a number of small companies were able to get their applications approved.

But many of the smaller publishers that have gotten funds so far have done so almost in spite of their banks, rather than because of them. Two smaller publishers that received PPP funding said they got their applications started by obsessively reloading their banks’ websites on the day their application portals were supposed to launch, rather than wait for the banks to announce they were working. The cofounder of one of those publishers said their application had been processed two hours before their bank sent out an announcement that the bank was now accepting applications.

On some level, things have played out this way because of how funds were distributed during the first round of the PPP. Only large banks were able to distribute funds because they already had access to E-Tran, the portal that the SBA uses to process applications.

And aside from rules about the size of the businesses they were to lend to, “the banks had no other guidelines and no other rules,” said Greg Ott, the CEO of Nav, a gateway to loans for small businesses. “So, in some respects, they did what you’d expect them to do: They served their largest and their VIP customers first.”