Month: May 2020

Guaranteeing ads can increase sales or store visits relies on historical data to serve as a benchmark for any boosts. With so many businesses closed or limited for the past two months, benchmarks set against current sales or store visits would set a low bar, and the question of how advertisers’ businesses and TV viewership will fare over the next year similarly muddles the models used to set the guarantees. “Everything gets thrown out the window right now,” said a second agency executive.

A&E Networks, NBCUniversal and WarnerMedia are among the network groups that have publicly offered business outcome guarantees, though other networks have done so privately. Advanced TV advertising firm Simulmedia began offering these deals in 2015, and they account for roughly 25% of the company’s business, said Simulmedia CEO Dave Morgan.

One TV network has had to put some of these deals on hold since the coronavirus crisis began, according to an executive at the network. “In the bigger picture, I believe [guaranteeing business outcomes] will be the No. 1 initiative we have on a go-forward basis. But for this upfront, I see it being a lesser part of the equation,” said the executive.

However, while some agency executives said they may need to forego business outcome-based deals in the next round of upfront deals, others are not yet willing to give them up and instead see the current market as providing an opportunity to push for more of these deals. 

“All of the things we wanted to do three months ago are highlighted as good ways to approach this. How do we move more towards business outcomes? How do we move more towards connected TV? If you ask the question of is this all going to slow down innovation or speed it up, it needs to be on the speed up side. But there’s mixed opinions about that in the marketplace,” said a third agency executive.

If business outcome guarantees are taken off the table in this year’s upfront marketplace, that could lead advertisers to turn to the scatter market, where networks sell the inventory left over by upfront advertisers. Traditional TV advertisers have historically kept their money in the upfront because they can get lower rates than what they would pay in the scatter market. However, with advertisers seeking more flexibility as they deal with the crisis, some have moved money to the scatter market because it doesn’t require long-term commitments. 

The near-term nature of the scatter market can be better suited to offering business outcome guarantees despite the questions around past and future performance. Simulmedia has been working with advertisers, especially food delivery services, financial services companies and direct-to-consumer marketers, to adjust the models used for correlating business outcomes with ad exposures.

“The models have to be brand new, based only on data from the last weeks not the last year. For most of the TV industry, everything is a year-over-year look,” said Morgan.

Hosts Adam Lefkoe, Matt Miller and Connor Rogers provided live commentary and analysis from their homes. In total, the live-streams generated 12 million video plays in the app, which is four times more video views than its video coverage of the draft in 2019, according to Mittman. 

While there were always plans to live-stream more content into the app, Bleacher Report hadn’t planned to do it so soon. In fact, it had not long finished 1,500-sq.-ft. studio space in its Manhattan office dedicated to the football sector. The closure of the office during New York’s lockdown, however, rendered the studio useless and forced Bleacher Report to fast track those live-streaming plans it had been quietly developing.

The switch squeezed the production from two studios staff staffed by more than 70 people into one that was entirely remote and run from video director of technical operation Steve Pellegrino’s apartment in Queens, New York where he orchestrated the production to more than 20 behind-the-scenes crew members. 

“In 2020, there’s no shortage of places to watch live video but what we’re doing provides a companion experience for a broader and sometimes complementary experience to what modern sports fans need from a live broadcast,” said Mittman. “When live sports return it’s going to help not hurt the momentum we’ve built in recent months because we’re the only sports media company that has the rights with major leagues like the NFL and the NBA but we also have content that allows us to be relevant to fans without match highlights.” 

The live-stream represents one of two separate strands of content Bleacher Report wants to build its live-stream strategy around: the first is content around tentpole events in sports like the  NFL Draft: the second is original content that riffs on more lifestyle and entertainment cornerstones of sports and athletes such as its ‘Run It Back’ show where NBA players watch a series of games.

The latest test ran over the weekend ahead of a charity golf match featuring Tiger Woods, Phil Mickelson, Tom Brady and Peyton Manning. The hour-long pre-show to the event was hosted by Bleacher Report presenters Adam Lefkoe and Kelly Stewart, who asked fans to share their predictions for the match and participate in talent challenges for a series of $1,000 giveaways.

The show also featured betting information provided by DraftKings in the build-up to the match as Bleacher Report continues its push into sports gambling that has already seen it agree to develop studio shows from Caesars Casinos in Las Vegas. Betting drives people to the Bleacher Report app. Its users spent 13% longer in betting streams from the last quarter of 2019 to the first quarter of 2020 than they did over the same period a year earlier, per Bleacher Report. 

“In the absence of people being able to go to physical casinos and to bet on sports what can you do to monetize that if you’re the financial guys at Turner Broadcasting or Time Warner? It’s going to be through the app,” said Brad Rees, CEO of sports research company Mediacells. “Part of the reason for these live-streams is driven subscription-based financial models that marry online betting with video on demand.”

The tests come as Bleacher Report plans to fold its over-the-top B/R Live platform, which live-streamed sports matches, into its main app. While the B/R Live service still exists separately, its owner has said it plans to use it to bolster the direct-to-consumer offering from Blecher Report’s main app.

For readers who subscribed in March, the first-month churn for monthly auto-renewing subscriptions dropped by 17% compared with the average churn in January and February, according to data across subscription platform Piano’s 300 global media companies. This is driven by Europe, where the first-month churn was down 34% overall. In the U.S., churn was flat in March versus the January and February average across all monthly subscriptions. Further, in the U.S., churn was down slightly for subscriptions with a one month or shorter trial and up slightly for subscriptions without a trial.

“Even flat churn is impressive, given the big increase in new subscriptions during March,” said Michael Silberman, senior vice president of strategy at subscription platform Piano. “It demonstrates the value readers place on quality journalism during the pandemic and their willingness to pay for it.”

The discrepancies between the U.S. and Europe are in line with the higher subscription peaks felt in Europe as most publishers held their paywalls. In the U.S., a lot of publishers made their virus content freely available as a public service. 

Turning off the auto-renew function is usually a precursor that a reader will cancel a subscription. The number of people turning off auto-renew in March was down 23% compared with the January and February average, declining 18% in the U.S. and 34% in Europe, per Piano.

One driver for improving retention is an increasing share of paid-monthly trials: In April, 73% of new monthly subscriptions were paid-for trials, 11% of new subscriptions were for free trials, according to Piano. In January, 61% of new subscribers were paid-for trials and 18% were free. Readers accustomed to getting content for free tend to churn out when they are hit with a bill.

Publishers have been concerned that readers converting on coronavirus content are either flyby traffic, less valuable and more skittish and likely to churn once the news of the virus spreading starts depleting. Some fear acquisitions could drop below pre-coronavirus levels since many people accelerated their purchase decision. The global impact of the virus is still dominating news headlines driving prolonged reader interest, despite reports from Reuters Institute that people are starting to avoiding the news. The reality is that subscription increases are still not enough to mitigate the losses in ad revenue.  

Churn has been a concern for mature subscription publishers for years, but as the popularity in reader-revenue models has grown over the last six months, so has the urgency to develop data-based retention strategies.  

“Everybody is thinking about [retention],” said Silberman, “and we’ve been advising on some tactics to track users who have subscribed in March and April so that they can be emailed and messaged on-site to drive engagement. The same principles apply now as they always have: Find ways to deliver value, develop habits and remind subscribers about the value of the product.”

Offering customers the option to suspend subscriptions can help businesses save one out of every six churning customers, according to data from subscription platform Zuora. Pausing subscriptions, rather than canceling, is not widespread, with 20% of businesses offering this option, including Nordic publisher Schibsted and Bonnier-owned Swedish group Mittmedia. But there has been a 40% increase in the number of businesses offering the suspend option since the beginning of 2020.

Consultancy Ths Sterling Woods Group is helping clients run net promoter score surveys to understand what it will take to retain this new cohort. It’s also doing more to build habits by showing them content they want and exposing them to related content and media.

“There may be a bit of a ‘pull-forward effect,’” said CEO Rob Ristagno. “New acquisitions spiked dramatically in March and April and in some cases May. Publishers are assuming new business will come back down to earth soon. We need to look at both [acquisition and retention].”

The rules of thumb go out the window if your company is in survival mode. The insistence that brands should keep advertising during a recession won’t pass muster with the CFO when your sales have shrunk to zero and there’s no clear indication of when they will return.

The current conditions set up a fascinating future case study into which of the foundations of marketing remained solid during a crisis, and which cracked under pressure.

Take the principle of brand building. The received wisdom is that brands are largely built on traditional channels — primarily TV — while digital is more of a direct-response accompaniment. 

Rishad Tobaccowala, Publicis Groupe adviser Rishad Tobaccowala, anticipates we’ll learn two things after the crisis, which could challenge the advertising industry’s prior assumptions.

The first, is “the impact of digital versus analog media, since most folks have retained digital or even increased as they look for outcomes and focus,” he said.

The second revolves around the importance of content, he said. He noted the current blur of “these uncertain times” and “we’re here for you” advertising messages that are so samey they became the subject of a parody compilation video that’s been viewed more than 1.5 million times.

“Few [advertisers are] standing out to solve real issues with great authenticity,” Tobaccowala said. 

Another big question: Will people remember those advertisers that did? and what, if any, impact it had on those companies’ bottom line.

Speaking of bottom lines, the beginning of the crisis saw CFOs forensically scrutinize their company’s outgoings and ask marketers to rip up their annual budgeting plans. Could zero-based budgeting become the norm versus the annual “spend it, or lose it next year” media plans in the long-run?

“It has to,” said Ryan Kangisser, managing partner for strategy at marketing advisory firm MediaSense. “Brands forecasting for 2021 say it’s going to take two to three years to get back to the level they were.”

Zero-based budgeting is a good mindset to retain, Kangisser said, who added that directionally more marketers and agencies were moving to being incentivized on client business performance, versus being bonused on metrics like brand health or on how cheap they can provide media.

“It will force more questions around impact, efficacy, channel allocation and KPIs,” Kangisser said.

Like so many other coronavirus-forced shifts in consumer and business behavior, the question now is which of these disruptive marketing trends will linger and which will dissipate once the adrenalin rush fades and the virtual war room is packed away.

Finally and most fundamentally, what will the role of the CMO look like in the new normal? Was their position within the c-suite strengthened or weakened during the crisis?

“Organizations have had to become more consumer centric through lockdown and if they persist with that strategy they’re likely to lean towards success,” said Martin Lawson, an independent marketing science consultant.

“It’s incumbent on marketers to be the voices for the consumer [within an organization]. At a time when they’re being squeezed by the CFO and CTO, they’re not always guaranteed a top seat at that table. This is perhaps giving them renewed impetus and vigor and a rightful claim … to guaranteeing a seat.”