Month: May 2020

Now that states like Texas and Georgia are lifting the stay at home order, the company is starting to spend more on advertising in those areas. In the regions already opening up, PepsiCo’s increase in advertising will focus on digital media and other lower funnel advertising.

“It’s really important not to be dark at this time,” said Lyons. “We believe we’ll have a stronger ROI in the parts of the country that open up sooner. So we’re going to take a more regional approach as every state is in a different place.” 

One example of this approach is a recent regional campaign that PepsiCo debuted earlier in May focused on the Southeast in the U.S., “Stronger Together,” which aimed to support healthcare workers. The company asked locals of the region to send in stories of local heroes that would be part of a 30-second spot.

Lyons declined to say how much PepsiCo has increased its advertising budget in those regions or say when PepsiCo advertising will return to normal. In 2019, PepsiCo spent $880.5 million on media, according to Kantar, which doesn’t track social spending. “The goal is to get back to normal spending levels as soon as it makes sense for us,” said Lyons. “The plan is that when the country opens back up again our spending will be more robust.” 

As marketers across the globe look for ways to stabilize advertising efforts and return to some sense of normal, they have looked to countries that are further along in the recovery from the coronavirus pandemic to get a sense of what’s to come. A similar approach may take place in the U.S. as different states are also in different stages of the recovery which makes a regional approach to marketing more attractive, according to agency executives.

“When budgets are less than what they typically are, marketers become more surgical and deliberate in their targeting,” said Matt Hofherr, chief strategy officer and co-founder at ad agency Muhtayzik Hoffer, of the regional approach to advertising that some marketers may take in the coming months. 

Going into coronavirus lockdowns, there was consensus across the U.S. but coming out looks “so different,” said Gavin Jones, co-head of strategy at ad agency Venables Bell & Partners. The agency is exploring regional advertising strategies for its clients that it will likely employ later this summer. The approach will change not only the media mix but also the messaging for those brands. “We are trying to explore how you lean into different environments but it’s still so unknown.” 

Aside from a regional approach to advertising, PepsiCo is also emphasizing ecommerce with the introduction of PantryShop.com and Snacks.com to navigate this crisis. Doing so has already changed the marketing mix. “We have shifted some of our marketing mix quickly to lower funnel [advertising for] ecommerce as we saw that channel accelerate quickly through this,” said Lyons.

While the inventory unification was expected after the merger, ViacomCBS is using the move to seize on advertisers’ desire to strike a balance between accessing enough inventory to reach a lot of streaming viewers and maintaining control over and insight into their streaming campaigns. To that end, the company is connecting the ad technology underpinning its streaming properties so that it will be able to control how many times someone is served an advertiser’s campaigns across those properties.

“We can offer unified buying and frequency control across all of those distribution endpoints, which will be different as the buyers have seen us because they are used to transacting against two or three or four different inventory silos,” said Halley. Each month 150 million people tune into ViacomCBS’s digital properties, including 50 million viewers who stream its TV shows, he said.

Frequency management has been a major headache for streaming advertisers, especially for ads running on connected TVs. Advertisers can buy connected TV inventory from media companies as well as connected TV platforms and ad tech firms that aggregate inventory across various streaming apps. That increases the likelihood that individuals will be overly exposed to an advertiser’s campaign, leading to wasted ad dollars and annoyed audiences.

Some advertisers, particularly TV advertisers, have dealt with the frequency issue by primarily buying streaming inventory directly from the media companies. That enables an advertiser to manage frequency within each media company’s footprint. But for an advertiser to reach a large number of people, the advertiser still needs to buy ads across multiple media companies, and the more media companies included in a campaign, the more likely someone may be overexposed to an ad across the different media companies.

As a result, TV advertisers are prioritizing the media companies that are able to provide them with the most reach among streaming viewers. That can limit how many companies advertisers feel they need to buy from, especially as conglomerates like ViacomCBS, The Walt Disney Company and NBCUniversal build up their streaming footprints.

“If we can at least frequency manage within each corporation’s offerings, it’s a step in the right direction,” said one agency executive. However, advertisers ultimately want to be able to manage frequency across different media companies, this person said.

Last week, I praised boring media models. A related concept I hear is maturity. That starts with business models. Not to pile on the big money-losing digital publishers making cuts right now, but how long were they going to tout big top-line growth while they elided the part about losing money? It calls to mind John Houseman’s classic Smith Barney ad: “They make money the old-fashioned way, they earn it.” Said one publishing exec at a top digital publisher: “Our eye is less on revenue, more on margins and profitability.” Better late than never, I suppose.

The publishers who lacked the maturity to skip the buzzy newfangled programs from platforms — no, this time the revenue will come — are paying the price. Those that made sure to identify a there, there — in the form of making money — are better off. “What we haven’t done that is frustrating in good times but thank God in bad times is you don’t see us hiring 25 people to take a flier at Snapchat three months after Discover was announced,” said the CRO. But of course, platforms were just the dealers. The real drug was the big numbers. “The whole industry chased scale instead of depth and intimacy,” said a top exec. “You need to reorient your business to depth.”

That’s because the nature of the media business is undergoing an accelerated shift. The constant refrain I hear can be summed up this way: Ads way down, subs way up, commerce doing well (in many areas). The immature businesses over-indexed in a single way to make money, most disastrously in advertising. How could anyone not know at this point that when the economy gets shitty, advertising is the first to cut? No CFO is reading the case study about Cadbury gaining share thanks to a TV ad featuring a gorilla playing the drums. The optimistic CRO counted eight different business lines, some hit hard (like direct-sold advertising) but others doing very well. 

Even within advertising, those who matured beyond railing against programmatic are better positioned. This publisher has seen programmatic revenue go up, despite overall yield going down, thanks to traffic surges. But those gains aren’t possible without setting up the infrastructure needed. If you haven’t done the grown-up work of getting in place a solid preferred marketplace, there’s no efficient alternative to provide to a key direct advertiser in need to cut costs.

“I do wonder if direct will ever come back as strongly as it did before,” said a top product executive. “A lot of advertisers are playing around with programmatic. Will it ever go back to what it was, or has that time past?”

One major media company publishing executive sees a need for publishers to think harder about what value they’re providing. Publishers have to talk in abstractions around brand and context and inevitably “premium,” but the economic function of advertising is, ultimately, to drive sales. The weight of what a publisher does has to be oriented to driving sales, and those closer to transactions will undeniably fare better. “There’s no brand advertising anymore in any category,” said a leading business-side executive at a large digital publisher.

“The nature of the ad side is changing a lot,” said the product exec. “The ad side was about representing the value of the media brand and [audience]. What we’re seeing is all marketers become direct sellers. We have to be adept at matching buyers and sellers. We’d outsourced that to retargeting companies.”

Here’s the catch: To do that, companies need a mature data infrastructure. This isn’t the pizzazz many media execs love. This is the grind. It’s like how politicians love to go to the grand opening a fancy new subway station, but they often neglect doing upgrades to the signaling that is causing horrible delays. Ultimately, neglecting the basics catches up with you.

“One of the things hanging over my head is there are a lot of publishers not thinking of their data strategy,” said the CRO. “If enough publishers don’t do that, there might not be a reason for advertisers to consider publishers as data partners.”

That’s a hit now, but it will be more a hit coming out of this crisis. The other side is somewhere out there, and what I keep hearing is how those cut first from plans (and often, companies) are the low performers. The high-performing publishers also feel the pinch, but they’re not dropped. As the economy begins fitfully to reopen, advertising is beginning to return. Whether it will return to anything close to a normal level by the second half is the big question — “How are advertisers thinking about budgets in the back half of the year?” the CRO asked me — but what is clear is that when that point is reached the low performers will likely remain dropped. The high performers will gain disproportionate share when the economy’s on/off switch is finally flipped.

“I’ve learned the hard way when you come out of a downturn the team that’s intact and perform at a higher level, you can really gain share on the other side,” the CRO said.

“For us, advertising remains a crucial part of the overall communications strategy and so we’ll be looking at the back end of the year for when we get back those originally planned levels,” said Jack Hinchliffe, marketing director at KFC UK and Ireland. 

Despite this stance, Hinchliffe isn’t committing to any long-term media plans just yet. Indeed, 90 days is the new long term for many advertisers. Half of them have cut their planning horizons in half, and are only committing to media less than three months out, according to an Advertiser Perceptions study of 151 marketers.

The decision to focus on delivery was a “big shift” in messaging for KFC, said Hinchliffe. 

Restaurants across the globe have pivoted to a delivery model as nationwide lockdowns have kept diners at home. Those orders have softened the impact of the lockdowns for KFC in the U.K.and Ireland where sales have accelerated in recent weeks, said Hinchliffe. Sales at stores open for more than a year fell 8% at KFC in the first quarter ended 31. March. 

“We’ve seen for some time that delivery has been growing for us as our customers look for more convenient and easier ways to access food and it’s been a key growth channel for us over the last year, said Hinchliffe.”

KFC’s ad is emblematic of two big challenges advertisers are trying to nail as lockdowns ease: the first is messaging and how they show empathy in a way that can’t be construed as profiteering during a crisis: the second challenge comes down to producing ads at a time when people still need to enforce social distancing. 

“Even when total lifting happens, behaviors and attitudes may be changed for good,” said  Leila Fataar is the founder of consultancy Platform 13. “Life inside the new guidelines means evolving spaces for brands to be both useful and enjoyable — all need to be taken into consideration in the coming months.

It’s an opportune time for advertisers like KFC to increase their spending. The cost of advertising has dropped across media, from TV to digital where there are fewer advertisers to drive up competition. TV ad costs have plummeted by as much as 50% in the U.K., according to the Advertising Association’s Warc Expenditure Report.

Last year, the trade show had nearly 40,000 attendees, approximately 40% were international visitors. Most expect a far different event this year, as Germany emerges from lockdown but other countries slowly reopen their economies. The general expectation is that travel to large trade shows will be one of the last economic activities to return, based on human psychology alone.

“No way no how. That’s how I would summarize my and other industry executives’ response to an in-person conference that requires air travel,” said Luma founder and Dmexco vet Terry Kawaja. “They need to take Cannes’ lead and skip 2020 as no one will show up.”

A rosier picture is emerging in Germany as it cautiously eases restrictions. Shops, restaurants and schools began opening up in the last two weeks, companies are figuring out how to return to work, hesitatingly. There is a local appetite for the trade show to mark the opening of an economy after the summer months.

More than 2,000 global exhibitions have now been postponed or canceled as a result of the virus outbreak, according to independent consultant Alex DeGroote and media analyst Colin Morrison. Germany, with 12% of postponements and 16% of cancelations, has been worst hit with a total of 340 shows so far impacted. Germany is the third-largest conference and exhibition market, behind China and the U.S. While these are mostly domestic attendees, Germany’s shows have a higher rate of international visitors. Translating physical serendipitous meetings online is often left lacking. Simply going ahead provides the sector with a real boost, said DeGroote. “Perhaps it will run at 30% capacity, however, I’m not sure how profitable it will be.”

As it stands, video exchange Teads will not be exhibiting in Cologne this year. Usually, it has a booth that is about 200 square meters and 60 reps from Europe and the U.S. on site. During these two days, over 200 meetings take place at its booth, of which a large part is new business. Ad tech company PubMatic canceled its sponsorship of the live event and hasn’t bought a booth this year. It will figure out closer to the time if it should send anyone. Ad tech platform Index Exchange is watching developments. Dmexco event organizers did not respond before press time to answer how many attendees it expects.

Attendees have questioned the value of tent poles events like Dmexco long before the coronavirus. Measuring the value is wonky. While the number of meetings will be tracked, rarely is the loop closed and the potential revenue generated calculated. One of Germany’s largest ad agencies Ströer and German publisher Bauer stopped buying booths before 2018, partly because it’s such a hefty outlay. Modest booths costs around $50,000. During a tightened-belt global recession, those costs are hard to justify without clear returns. Because of coronavirus, the value of international conferences is being even more tested. 

“Would we suffer for not going this year? I don’t think so,” said Arne Brekenfeld, chief strategy officer at Publicis Groupe, Germany, Austria and Switzerland. “It’s good to sell the agency group, it’s good for networking, clients expect us to, and it works to incentivize and to show [employees] they are valued. I’m not saying we shouldn’t have [shows] at all, but not so many.”

As a group, Publicis made the decision early on to not go to industry events this year. Dmexco is not a deal-making event for the agency, which sent around 70 people from its German offices last year. Worldwide the group would usually send hundreds of staffers, mostly from Europe.

Over the last eight years, the conference has grown its international clout, which drives profits for the organizers and adds value for the attendees.

“More than 50% of our revenue comes from abroad. If Dmexco sees fewer international exhibitors then our ROI will decrease,” said Tom Laband, CEO of Berlin-based ad tech company Adsquare. “It’s never been about deal-making for us, it’s the value in meeting international partners.” The company will decide by June whether or not to attend.

Hosting the event is a pretty courageous act: The signal of a local economy getting back on track, even if the event is a different shape. Being part of that is an opportunity for those who attend at a time when there’s little competition. Those who refrain can reassess what value attending physical events mean to their business while demonstrating care for their employees’ health. Whether in or out, people want clear guidelines.

“We can easily replace the physical event content, but what happens with relationships and well-being?” said Brekenfeld. “We haven’t thought enough about that, we will definitely need to come back to a good ratio with physical and virtual event formats in the future to simply make people happy.”

Business-focussed international conferences have debated for years whether exhibitions will be disrupted by digital media. What Dmexco 2020 will look like will be different, the challenge is finding the right way of making it valuable online for attendees. Right now, coming up with creative solutions is trickier.

“There is an emptiness and void, the exchange of ideas is cut off at the moment because people don’t interact that much,” said Joerg Vogelsang, regional managing director, Germany, Austria and Switzerland and Central and Eastern Europe at Index Exchange. “What should an event about online advertising look like, does it need to be a trade show? It’s a change of mindset, it would be wrong to duplicate it online.”