Month: May 2020

Publishers are bracing for a worse second-quarter: 80% have lowered forecasts.

Back in March, Digiday Research found that 88% of the publishing executives surveyed expected to miss business goals for the entire year. About 85% of them expected to see a decline in ad revenue, 79% in event revenue and 68% in commerce revenue.

It’s been an especially tough time for news publishers: 59% of them said they missed their forecasts in the first quarter, and 19% of them exceeded it.

As for the second quarter, only 1% have raised their forecast, while a whopping 70% have lowered it.

Advertisers continue to be reluctant to spend any money on ads alongside coronavirus content. A prior Digiday survey found that 40% of brands are not advertising next to coronavirus-related news online, up slightly from the same survey conducted a month ago, when 37% said they will not buy ads alongside coronavirus-related content.

As for the negotiations themselves, the leverage is certainly not in the networks’ favor. May 1 through May 15 marked the deadlines for when TV advertisers could cancel a percentage of their annual upfront commitments for the third quarter. Many chose to exercise that option. Big advertisers including General Motors, General Mills and PepsiCo have reined in their commitments this year, according to The Wall Street Journal. Advertisers expect to spend 20% less in the U.S. upfront marketplace this year, according to an IAB survey of 390 buyers, planners and advertisers.

The upfronts have worked in pretty much the same way ever since the 1960s. The model — in which networks created a short window for advertisers to lock in a restricted supply of inventory inventory around the most attractive programming in the fall — has been replicated in TV markets around the globe. A good upfront negotiation helps advertisers mitigate the amount of money they need to spend in the scatter marketplace, where ads are bought nearer to the time they air, usually at a premium. Legacy upfront advertisers are working off a lower base price that was set years, if not decades, ago, meaning new advertisers enter the upfront marketplace at a disadvantage.

But this year, with little visibility about the future economy, more ad dollars have shifted to scatter, connected-TV and other online platforms. For the TV networks, flexibility — not usually a core characteristic of the upfronts — has been key this time around, particularly around cancelation options for advertisers whose businesses have been severely impacted by the crisis. 

Around half of the U.S. TV ad market’s volume has moved from the upfront to scatter, Dave Morgan, CEO of Simulmedia said, citing conversations with clients and big agency buyers.

“The large network groups will get pretty good deals done, but likely will have to be generous with options,” said Morgan. “Buyers will sign up for volume — and pretty good pricing — as long as they have a lot of outs.”

It all begs the question why, in the 21st century, the majority of the TV advertising marketplace should continue operating around a model that was invented in 1962

“I question it and the longer things operate a particular way, the less likely they are to return to old ways, which had ton of shortcomings given underperformance on ratings,” said Pivotal Research senior internet and media analyst Michael Levine. (He also feels the same way about business travel.)

Some veteran media and ad industry veterans are still keen for the upfronts to remain in some form. In the earlier throes of the outbreak in March, Michael Kassan, CEO of MediaLink — also owned by Cannes Lions organizers Ascential — raised the possibility of hosting this year’s upfront negotiations at Cannes in June. You can imagine who would have been on hand to set up all the meetings. “It was blocked on everyone’s calendar anyway,” said MediaLink CEO Michael Kassan. Cannes Lions 2020 was pushed back to October and eventually cancelled altogether in early April. 

Kassan still thinks there’s a possibility of a calendar-year upfront negotiating period that would take place in the fall, for all of 2021’s inventory, rather than the artificial broadcast year. 

“What the marketers are struggling with is they want the flexibility they think comes with the calendar year, but they want the orderly marketplace that comes with the upfront — there’s a bit of push-pull going on,” said Kassan. 

On May 11, NBCUniversal held a virtual “one industry” virtual event — the same date it had been due to hold its annual upfront at Radio City Hall in New York City. With the upcoming schedule uncertain, execs talked remote attendees through its “One Platform” ad buying tech. Mark Marshall, NBCU president of advertising sales and partnerships said he’s keen to return to an in-person upfront marketplace. 

“We think this is a chance to make a significant change in the way we’ve transacted in the business,” said Marshall. “In addition to the 90-minute show, it’s a great forcing mechanism to get us all in the same room to figure out what works, what are the needs of marketers — but I don’t know if it will look the exact same,” Marshall told me.

The nature of TV ad buying has transformed dramatically since the swinging sixties, when the upfront market was created largely to cater to automakers who released new models in the fall. Upfronts presentations now focus as much on “addressable” ad targeting and measurement products as they do on upcoming comedy dramas and reality shows. Meanwhile, as AdExchanger reported last week, prominent veteran TV buyers like GroupM’s Lyle Schwartz and Omnicom Media Group’s Chris Geraci have recently left those agencies.

In 2020, TV is tech and there are plenty of newcomers waiting in the aisles to take advantage.. The disruption to the upfronts this year had been “liberating” for some advertisers, said The Trade Desk CEO Jeff Green on his company’s first-quarter earnings call this month, adding: “I hear it from brands and agencies every day. For them, the upfronts are a bit of a burden.”

Still, inertia is an incredibly hard habit to break, advertising veteran Bryan Wiener, now CEO of ecommerce analytics platform Profitero, told me. Advertisers always had and still will care about the NFL and the Grammys, where supply is constrained, but for years the upfront had been about bundling in less desirable shows with those tentpole events.

The coronavirus crisis “is an event that will break the upfront and it will never return to the way it used to be,” Wiener said.

Get ready for the great unbundling.

How have layoffs at your agency affected your workload?

I work at a small agency that has always run very lean. The problem with small agencies is that you’re already operating at max capacity. When the furloughs happened, we weren’t in a scenario that had less work. A lot of our business pre-[coronavirus] relied on experiences, so we were scrambling and pivoting on projects we’d already won and had forecast for. 

Would you say you are working more now? If so, how much more? 

I’m working until around midnight, four nights a week. And that’s working working. No walks to the coffee shop with a colleague, no chit chatting in the conference room because someone is 15 minutes late, no discussing weekend plans across our desks. Without the social distractions, it’s max output, max hours, all the time.

How is that affecting your mental health?

When the furloughs first happened and the nights started to get longer, I was afraid of burnout. I’ve always struggled a bit with insomnia, but now every single night I’m awake from 2-5 a.m. thinking about anything from what’s on my to-do list the next day. 

Do you think the agency is now understaffed? 

Absolutely. Not only because of furloughs but because somehow, we’ve gotten more work. It’s impossible to see into the future right now, and forecasting is a nightmare, so we’re trying to work with the teams we have on projects. 

Do you feel like you have to be productive all the time to manage the workload? 

I definitely need to be productive and on-the-ball to manage my current workload, which I sometimes feel has come at the expense of getting to have regular one-on-ones with people who report to me. I’ve had to move so many of these meetings in order to keep up with client work, and that really bothers me. We are in this perfect storm of understaffing, adjusting to changes in environment both personally and professionally, and tapping into creative territories we likely would have never explored if it weren’t for this insane scenario we’re in.

As an account director, you have to anticipate client needs to keep them happy. How have you done so now?

Anticipating my clients’ needs, asks, wants, concerns and proactively addressing them is what I consider to be my most important task. Continuing that through [coronavirus] has not been easy. How can I predict what my clients need when I don’t even know what I need? How can I answer a question when the response in a “normal” time, in a “normal” world’s foundation has been completely ripped out from under all of us?

Is there anything you wish you knew from your bosses?

The main thing I’d ask from leadership now, is some sort of idea around timing regarding when we expect to return to the office. I don’t expect them to know an exact date because I think that’s impossible to guess, but it’d be helpful [to have notice]. 

McClatchy CEO Craig Forman describes the local news company as more relevant than ever.

“The coronavirus crisis has been a reminder to all of us in our communities of just how important it is that our communities be strong and vital,” Forman said on the Digiday Podcast. “We’ve never seen digital traffic or even demand of the scale that we’ve seen for McClatchy.”

McClatchy — home to local papers like the Miami Herald, The Kansas City Star and The Sacramento Bee — has seen digital traffic increase by nearly two-thirds to reach 100 million users in March, according to Forman.

“If you talk to our local customers, they’ll say that their need for local news is not met by any of the national news publications,” Forman said. “The kind of coverage that you get in Kansas City — the award-winning investigations into secrecy in the Kansas state government that force political change there, or even the national series that results in Pulitzers — we have 54 of them over the years — that’s not provided by the national media, and that is the core to local essentialness, and that’s where the strength is for local brands.”

But despite this boost, Forman acknowledges “a real paradox.” McClatchy doesn’t see that “essentialness” translating as much (yet) on the advertising side. That is why Forman is making a case that advertisers must again re-focus on the context in which their advertising appears.

“What often you can’t find in the world of digital advertising is the adjacency and the renown brand construct that makes your advertising important in context,” he said. “And at this time where local is the success story of the emergence, McClatchy and others are doing everything we can to partner with local brands to show them that the trusted environment of local news is where they need to be.”

Join us on Friday, May 29 at 12 p.m. ET on The New Normal, a weekly interactive show focused on how publishers are adapting their businesses. Josh Raab, Director of Instagram at National Geographic, will talk with Digiday editor-in-chief Brian Morrissey about adapting National Geographic’s Instagram feed in a world where travel (and travel photography) have gotten a lot more complicated. Register here.

Those vertical-specific products, along with 29 other local coronavirus newsletters launched by individual papers in the USA Today Network, were built after USA Today’s first coronavirus newsletter became the fastest-growing newsletter in the news publisher’s history, according to a spokesperson. The company wouldn’t say how many subscribers the email has.

That newsletter packages reporting from different USA Today Network titles with original reported top stories, follows a similar template it built to cover Hurricane Irma in 2018. It boasts an open rate of 40%, and at one time had click through rates of 20%, according to the company.

Gannett is not the only news publisher that’s attracted a big audience to its coronavirus newsletter. The Washington Post’s coronavirus newsletter, also launched two months ago, has already built a subscriber base twice as big as the Post’s second most popular newsletter. Time Magazine’s coronavirus newsletter gathered up 70,000 subscribers in under a week, with an open rate of more than 70%, Time Magazine chief revenue officer Viktoria Degter said. The Philadelphia Inquirer’s coronavirus newsletter, which publishes seven days a week, has over 30,000 subscribers and became the second-biggest newsletter the Inquirer publishes in less than two months (The Inquirer’s food and drink newsletter reclaimed that spot after it pivoted its coverage to focus on coronavirus).

Even a non-news publisher like Dotdash, the search-focused publisher that operates brands including The Spruce and Verywell, has seen its email newsletter subscriptions “surge,” a source familiar with the matter said.

Newsletter ad revenue has leapt up during this period, though not in direct proportion to the growth of consumption, said Kerel Cooper, svp of marketing for the email monetization platform LiveIntent. Over the past two months, email newsletter ad revenue for local news publishers is up 32% compared to the previous period, LiveIntent data shows.

Though some publishers have had success in finding direct sponsors for their newsletters, doing so has gotten harder, said Kayvan Salmanpour, the chief revenue officer of Globe Media, which owns titles including the Boston Globe and Stat.

While the effects of the virus are likely to linger for several months longer, these publishers eventually will have to figure out how to hang on to the audiences they’ve gathered with these newsletters.

“We’re actively trying to get people back to our main stable of newsletters,” said Derrick Ho, senior product manager of messaging at Gannett, who has managed the newsletter effort with Lindsay Deutsch, its loyalty editor. “I think we’re still working out the plans. You just don’t know how the story is going to pivot.”

Some plan to move their coronavirus coverage over to another established product and encourage readers to migrate. BuzzFeed News, for example, which has gathered 35,000 subscribers to its daily coronavirus newsletter, will move people over to its flagship morning newsletter, Incoming, when life gets back to normal, a spokesperson said.

Others are hoping to use the audiences  to launch newsletters on related topics. The Philadelphia Inquirer, for example, sees an opportunity to use the coronavirus newsletter audience as a foundation for a health and science newsletter, said Kim Fox, a product director at the Inquirer.

“What we’ve seen here is a deep interest in science and health,” Fox said. “We always suspected that was there.”

While that transition will have to be managed and communicated very clearly, Fox said, she said she and her team have learned from this that they have an opportunity to build more like this in the future.

“We’ve proven to ourselves that we can be far more agile with this product line,” Fox said. “This event lesson has helped us.”