Month: May 2020

The point isn’t simply to get people to watch the Instagram Live but to continue to purchase Patron to celebrate Cinco de Mayo as they normally would. Alcohol delivery and at-home booze sales are up — according to Cowen research, tequila sales grew 64% in the four weeks that ended on April 18th — but that increase doesn’t account for the losses from bar and restaurant sales. 

Having to pivot to an at-home strategy isn’t unique to Patron. Brands have had to figure out new ways to reach people as most stay home as the typical ways people buy their products have been shuttered. When it comes to alcohol brands, much of the new messaging from brands has been about supporting bartenders in need and doing so by fostering a sense of community online. For the Instagram Live, which will begin at 5 p.m. Eastern Standard Time, Patron is paying each of the 20 bartenders $1,000 for participating.

Overall, Patron has reduced its advertising spend for the time being. (The company declined to say by how much.)  “Our goal is to take a much more conservative approach,” said Parker, adding that the company is taking a quarter-by-quarter approach when it comes to increasing spending back to where it had been before the coronavirus hit. “We’re spending less on paid media.” 

To do that, Patron has cut its television, out-of-home and print advertising as well as canceled in-person activations or events it had planned. Instead, the company is focused on social, online video and some television spots. Per Kantar, Patron spent $15.8 million on media in 2019.

Instead of creating all new assets, the company has repurposed some that were used for National Margarita Day on Feb. 22. “From a messaging perspective, it’s much more about making a margarita at home,” said Parker. “[We’re trying to show people] how to get the ingredients to make a margarita versus a message that might’ve been getting them to a bar or restaurant.” 

“Bartenders drive lots of usage and trial, it’s the primary way spirits are grown,” said Allen Adamson, brand consultant and co-founder of Metaforce, adding that at-home consumption has not made up the gap. “That’s an in-person experience that you need to find a way to replicate. It’s a smart move to create an event online.” 

The company is also looking to use some of its advertising budget to help service industry workers affected by coronavirus. As part of the reduction in advertising spending, Patron took $1 million that would’ve gone to that budget and donated it to bartenders and restaurant workers. “It’s less about rightsizing our spend and more about supporting the men and women who have supported our brand for 20 years by using our marketing to donate to families, children and restaurants,” said Parker.

Last month, Facebook and Google parent Alphabet did warn of “significant” slow downs to their ads businesses from March as governments around the world began to issue shutdown orders. But both companies also said on their first-quarter earnings calls last month that they had seen signs of stability (though not growth) in ad spend in the first few weeks of April. 

In any other quarter, that kind of muted outlook would seriously rattle investors. But FB and GOOG shares rallied after their earnings announcements. “2QTD sigh of relief,” wrote J.P.Morgan analyst Doug Anmuth in a research note, referring to Alphabet’s earnings. “FB is weathering the 2020 storm better than peers,” wrote Barclay’s Ross Sandler in his Facebook earnings note.

Alphabet’s first-quarter revenue stood at $41.2 billion, up 13% on the year-ago period (that figure also includes Google Cloud Revenue and its “Other Bets” segment.) The company said Google ended March with a mid-teens percentage decline in revenue, compared with last year; YouTube’s March revenue “decelerated to a year-on-year growth rate in the high single digits,” according to CFO Ruth Porat; Google Network revenue in March declined “in the low double digits,” Porat said. Facebook booked $17.4 billion in ad revenue in the first quarter, up 17% year-over-year. The company said ad revenue was “approximately flat” in the first three weeks of April.

Data from ad tech company Kenshoo’s ad buying platform shows that after an initial decline, total spending in both the paid search and paid social channels leveled off and began growing into the middle of April,

Analysts had feared that as small-to-medium-sized businesses — understood to make up a large proportion of Facebook and Google’s client list — felt the financial impact of the crisis, Google and Facebook’s ad businesses would get whacked. That may still happen as the full extent of the crisis plays out.

But in the short-term, the rapid rise of social commerce was largely overlooked — especially among companies who had never before sold a single product online. My local east London pub has, of course, shut its doors to customers. But it’s pivoted from pulling pints to launching a home-delivery vegetable box service — a service I wouldn’t have known about had I not seen an ad on Instagram about it. (The sweet potatoes were delicious, thank you for asking.)

“The small business element turned out to be substantially in Facebook’s favor, to a surprising degree — that’s been a huge point of differentiation for them,” Brian Wieser, GroupM’s global president of business intelligence told me. “It’s probably true that Google experienced something similar” in terms of SMBs increasingly turning to its products.

That’s certainly been the case in Italy, according to We Are Social Italy CEO Ottavio Nava, who told me small businesses are mainly using Facebook, Instagram, WhatsApp, Messenger and Google — at least those that know how to use Google’s ads platform — to power their efforts.

“In the couple of months before, Facebook was in a bit of an innovator’s dilemma on social: What can we do to connect more? I think this situation showed them the way,” said Nava. 

(Nobody’s making fun of Facebook’s Portal video call camera now, are they?)

For larger advertisers, sticking with Facebook and Google isn’t just about muscle memory. CFOs are in cash preservation mode and entire businesses have been realigned to focus on short-term. There isn’t an “experimental” portion of the ad budget right now. And if marketers are forced to make substantial cuts to their media spend, broadcast media that doesn’t help build direct relationships with customers and that isn’t easily tied to immediate sales are likely to be the first in line for the chop, Barry Lowenthal, CEO of The Media Kitchen, said.

“Any channel that can’t demonstrate a clear and direct return is probably going to get cut,” Lowenthal said. “Google, Facebook and Amazon are all very attributable media partners so they are going to be the last to get cut.”

Cash-rich Google and Facebook have recognized they are in a less precarious financial position than others and have offered support to media businesses. Facebook has pledged $25 million in grants and $75 million in “additional marketing spend” to help ailing news businesses. Google launched a “Journalism Emergency Relief Fund” and said it would wave Google Ad Manager ad serving fees for five months.

But Google and Facecbook are often in a “damned if we do, damned if we don’t” dilemma when it comes to their philanthropic efforts. Predictably, some competitors see these types of gestures as another display of the duopoly’s dominance. 

“Ad serving represents no more than 3% of [Google’s] total ‘ad tech tax’,” said Arnaud Créput, CEO of Smart AdServer in an emailed statement last week. “So the waiving of these fees will have little to no impact on Google. None of its competitors are in a position to offer such a measure.”

Some industries have seen the winners and losers completely switch places owing to the coronavirus crisis — and in some sectors, everyone’s a loser. But in online advertising, it’s the same as it ever was. Let’s see how the second quarter shakes out, but signs suggest that In this David and Goliath story, Goliath not only wins but will probably emerge out of the battle stronger.

YouTube has been talking with publishers about the subscription sales tool since 2019. The tool’s development is part of YouTube’s involvement in the Google News Initiative, a program that YouTube’s parent company formed in March 2018 to support the news industry. However, some details still need to be sorted out, such as YouTube’s cut of each subscription sold and what subscriber information will be shared with publishers, according to the publishers.

YouTube’s subscription sales tool for publishers would resemble the channel memberships tool it introduced in June 2018 for channels to offer perks, such exclusive access to live broadcasts, to people who pay a monthly fee. In lieu of on-platform perks, people would pay for a subscription to access content that otherwise sits behind the paywall on a given publisher’s site or apps.

News publishers have been looking for platforms like YouTube to step up their efforts to help publishers make money. Publishers receive a share of revenue from the ads sold against their YouTube videos — typically 55% goes to the publisher — but news publishers, in particular, have a harder time attracting ad dollars because advertisers remain wary of their ads appearing next to controversial topics. The situation has become more acute since March as publishers have seen their YouTube CPMs fall by more than 20% despite an increase in viewership.

At the top of publishers’ YouTube monetization wish lists is for the platform to pay publishers to license their videos, as Facebook began doing for articles last year. Short of that, publishers would like a higher percentage of ad revenue. By comparison, publishers consider the subscription sales tool to be potentially beneficial but unlikely to offset their ad-related monetization issues.

Publishers are unsure whether a significant portion of their YouTube audiences would pay to subscribe to their digital properties. At the least, they see the subscription sales tool as having some promotional value. “It’s a new marketing opportunity for us,” said one publishing executive.

Publishers have been told that YouTube and Google have been working to tie the video platforms’ subscription sales tool to Subscribe With Google, a tool that Google rolled out in April 2018 for people to subscribe to publishers’ sites using their Google accounts. YouTube is also working on a way for publishers’ existing subscribers to connect their subscriptions to the publishers’ YouTube channels so that a publisher could distribute videos on the channel that are only available to its paying subscribers, regardless of whether a person subscribed directly from the publisher or through YouTube.

Publishers expect that YouTube will share subscriber information, such as subscribers’ names and email addresses, with the publishers. Google provides that information to publishers using Subscribe With Google. Receiving subscribers’ email addresses would enable publishers to establish direct relationships with the subscribers they receive from the platform. 

The team found some opportunities. Since March 9, the Times has produced more than 30 digital events that have attracted more than 100,000 attendees from over 90 countries, Flood said. Additionally, over 80% of attendees in April were new attendees to the publisher’s events. The company is also heading towards hosting one event per day, including the weekend.

The Times had to abandon some of its live events plans. For example, The New York Times Food Festival was postponed fully until next year because it was too tactile to take place in a virtual setting.

For now it’s also forgoing ticket revenue. In the latter half in the year, if the business-to-business space has a “significant moment” of drawing a lot of attendees, Flood said her team might consider charging for consumer revenue from that crowd.

The Times has been able to monetize some of the events through sponsorships, however. Accenture, previously a sponsor for the Times’ Dealbook Conference, is now sponsoring four virtual Dealbook events. Additionally, MassMutual was supposed to sponsor a three-part, in-person series called Unfinished Work this month, which has now been transitioned to a fully digital program that will still be presented by MassMutual.

The task force has learned a lot of techniques — from creating live virtual versions of top-performing articles to incorporating pre-recorded videos into events — that should serve the events business down the line. It has also restructured the Production team into three-person pods responsible for executing one event series or type of event in order to be more nimble.

Additionally, the group created a playbook that houses all best practices, sample workflows for each platform and a digital events checklist designed to create consistency across the pods.

“We’re looking for more opportunities for interactivity to make the events more dynamic,” said Weinstein.

A digital events task force was created in mid-March to help pinpoint the transferable elements of the other vertical’s event franchises. The team, made up of six staffers from various areas of the company, including research and development, marketing, brand, events and newsroom, has met once per week since forming, Flood said.

One model that the task force explored involved transforming top-performing Times content into virtual events, to bring more life to the stories as well as offer a chance for more interactivity on the topic, said Weinstein.

For example, one of its top performing digital events so far was a conversation led by NYT Well’s founding editor Tara Parker-Pope, who spoke about the anxiety that teens are experiencing during the pandemic, which had 7,000 total viewers. Comparatively, only 250 people were able to attend the Times’ last in-person live event, a discussion tied to The 1619 Project held on March 6.

A lot of the events that the publisher has put on so far have functioned like conference calls. The Times is looking to branch out beyond this with one of its bigger upcoming projects — a virtual recreation of Broadway shows’ opening nights. That program will incorporate pre-recorded videos that “feel live” in order to make sure the visuals and audio are of high enough quality, Flood said.

The big challenge for many publishers is dealing with falling sticker prices and being able to sell advertisers on the new ROIs that these digital events offer. 

Ben Hindman, CEO of events marketing platform Splash, said prices for virtual event sponsorships average one-quarter of live sponsorship prices, while Tessa Barron, vp of marketing at digital events platform company ON24, said rates are about half of what she’s previously experienced in live events. 

“Ultimately, I don’t see the actual sponsorship being a one to one swap,” Barron said, between live and virtual events. Virtual offers publishers the ability to capture data about attendees in a way that live events could not, however, especially with understanding attendees’ intentions.

In a physical environment, Barron said there is only one way to engage with people, which is trying to capture their attention from a booth. In a virtual environment, attendees are able to have someone the opportunity to choose and opt into different levels of engagement with the sponsors.