Month: August 2020

The pandemic clauses are meant to put in writing how TV networks and advertisers should handle deals in the event of a crisis like the coronavirus outbreak. “We don’t know when it will be officially over. So we need to make sure we have as much protection as possible,” said a second agency executive.

When the current crisis accelerated into a lockdown and the economy faltered in March, many advertisers asked to be let out of their commitments. However, since their existing upfront deals did not provide pandemic-related escape clauses and the advertisers were at the mercy of the networks to excuse them. For the most part, networks complied with those requests. But if the current pandemic worsens and leads to new shelter-at-home orders and restrictions on businesses, advertisers and agencies don’t want to be forced to count on networks being so compliant again. 

“I can’t go through what we went through in March and April. I need to know now that [a TV network will] let me out of XYZ for however long,” said a third agency executive.

In some cases, an advertiser would be able to cancel the full amount of their remaining upfront commitments. In others, the advertiser would be able to cancel a higher percentage of their commitment than upfront deals traditionally permit. Or the cancelations would occur in phases: An advertiser able to cancel their commitment for a given month or quarter, and then the advertiser and network would see if the conditions triggering the clause persist before the advertiser is allowed to cancel the following month or quarter.

“There are different levels of what a pandemic clause could be, from greater flexibility to full cancelation to varied or staggered orders dates versus the traditional market deadlines,” said a fourth agency executive.

There are also differences in what would trigger a given advertiser’s pandemic clause. The clearest trigger would appear to be the World Health Organization declaring another pandemic, but “the WHO definition doesn’t work for everyone,” said the fourth agency executive. Instead, ad buyers are largely trying to tailor the trigger to individual advertisers’ businesses.

For a retailer or auto manufacturer, the trigger would be if a certain percentage of stores or dealerships are closed. For a movie studio, the trigger would be based on whether its films are able to premiere in theaters or the share of theaters that would open to a show a film. However, the problem with making the triggers specific to individual advertisers’ businesses is whether the TV networks would be able to verify whether a trigger has been met.

Agreeing to what would trigger a pandemic clause “is its own kind of negotiation, in and of itself,” said a fifth agency executive.

Paywalls and digital subscriptions may be on the rise at digital media companies around the U.S., but South Africa presents a different case.

“Our competitors went behind paywalls, and they didn’t have a good experience,” said Branko Brkic, founder of the South African online news site Daily Maverick, which covers politics and business from their newsroom in Johannesburg.

“You can’t debate the issue that you need income from your readers to be part of your stream of income. But we really do not believe that the paywall is a way to go,” Brkic said on the Digiday Podcast.

The site instead relies on a model akin to the Guardian’s — make the content free, but ask your readers for support at every turn.

“What we say with Maverick Insider is ‘help us actually make this possible for people who cannot pay. Be part of something bigger, be part of something really beautiful,’” he said. “It’s an emotional decision.”

And in Brkic’s telling, it’s worked. Over last two years, the company has gained 13,000 paying members, each paying at least 75 South African Rand (or about $4.50) per month.

The site drew 4,500,000 this past May, its highest monthly figure.

Brkic founded the Daily Maverick in 2009, the year after the financial crisis decimated the digital advertising market and taking his previous publication — a magazine simply named Maverick —out of commission in December 2008.

The day it was announced that they were going out of business, Brkic said he began designing Daily Maverick. Employees of the defunct Maverick joined the enterprise.

The magazine’s online successor delivers shoe leather reporting in a country with insular news organizations and reporters who failed to go beyond stenography. “What South African media for many, many years got used to is basically going to press conferences,” Brkic said. Brkic’s bolder take on journalism included an award-winning investigation into the police killing of 34 striking miners in 2012.

“South African people need to know the truth,” Brkic said. “And as matter of principle, I really don’t think we should let only people that have a checkbook be able to know what the truth is.”

Here are highlights from the conversation, which have been lightly edited for clarity.

On Daily Maverick’s predecessor (Maverick, the magazine)

“We were very outrageous. It was a combination of Vanity Fair, Fortune magazine and the spice of Top Gear — which your guys [in the US] would better know as Grand Tour, on Amazon Prime. It was supposed to be irreverent, high quality, quite funny. And we succeeded — but not in making money. And the South African market is controlled by the SABC [South African Broadcasting Corporation] and a couple big multinational companies. So it’s very difficult to break through. They control printing, distribution and sales. And for some reason they didn’t like me for saying that they’re rubbish. By 2008, the crisis hit and advertising went down. We ran out of money, so in December 2008 the whole company went [under]. And I knew by then the only thing that I could do from now on is to go online. For the first time in my life I actually looked at publishing from the position of the online publisher, editor and reader. And especially in South Africa, I found out that online was mostly seen as a dumping space for everything rather than the space for quality journalism. So the day it was announced that Maverick magazine was closing down, I designed the first iteration of Daily Maverick. It took me quite a few months to convince somebody to put some money into it.”

Finding a revenue model that works

“It took us ten years. When we launched, Facebook and Google still didn’t take 60 or 70% of the market. And the South African market was already small to start with. Even then, the print market was dwarfing the online market. we quickly realized that we had no chance. If we do an advertising model, we’re just going to close down. So we basically begged and borrowed, got close family friends [to invest], and as we were going bigger and our stories got more influential and changed the agenda of the country, people started realizing that we need to be around. Even if we struggle to pay salaries, we need to be around. For a long time we were actually quite cheap to run. And we started attracting the attention of foundations, [which] helped us breach those terrible periods. There were times where ‘salary day is tomorrow and we have nothing in our account. Literally nothing.’ But we somehow managed to survive it. We’ve never been late with salaries. We realized that we must develop multiple channels of income.”

Maverick Insider, a growing membership model

“Our competitors went behind paywalls, and they didn’t have a good experience. You can’t debate the issue that you need income from your readers to be part of your stream of income. But we really do not believe that the paywall is a way to go. What we’ve done is design something called Maverick Insider, which is a membership model. When you have a paywall, what do you say to your reader? You are my customer, this is the product. It costs you this much. The customer on the other side says ‘can I afford it? Do I want it? Do I have time to use it?’ It’s a very rational decision, a left-brain decision. What we say with Maverick Insider is ‘help us actually make this possible for people who cannot pay. Be part of something bigger, be part of something really beautiful. It’s an emotional decision.’ And it works out really well for us. Over the last two years we gained 13,000 members. And our numbers are now actually speeding up. Every month we set a new record. And we give them benefits. They get to comment on our stories, the have preferred seating at our events, they get a newsletter.”

Last week, Ocean Spray debuted the incubator’s latest effort, Tally-Ho, a line of functional water enhancers for dogs available in some Boston-area stores (Ocean Spray has its headquarters in nearby Plymouth, Mass.) as well as Indiegogo, according to the brand’s website. The Lighthouse Innovation Incubator, which Ocean Spray introduced last October with the goal of producing and testing out potential new brands, currently has four new test brands on the market. 

The incubator has rolled out a line of herbal tonics, Atoka; a CBD sparkling water line, CarryOn; an edible gummy supplement to help protect skin from the sun, Dabbly; and now Tally-Ho. From concept to market test takes roughly five months, according to Santi Proano, head of the Lighthouse Innovation Incubator, who said that the cooperative doesn’t expect all of these brands to be winners, but that it’s looking to see which could be viable long-term brands to help Ocean Spray grow.

“This group is an internal way to build innovation for new brands that aren’t Ocean Spray to reach new consumers in new categories,” she said “It’s really about stretching beyond what Ocean Spray can do as a brand and the sorts of consumers and categories it can reach.” 

Ocean Spray isn’t the only legacy brand looking to build out new brands within its walls. Big brand holding companies have created venture arms like Anheuser-Busch’s ZX Ventures, Siemen’s Next47 and Procter & Gamble’s P&G Ventures. 

“Most of the big traditional brands in the consumer space are built for the times when big was beautiful and when agility had not yet entered the lexicon of business,” wrote Dipanjan Chatterjee, vp and principal analyst at Forrester, in an email. “All of that has changed, especially with the all-pervasive infusion of digital. Rather than make a lumbering pivot to agility, incubation is a low-cost, low-risk way to play fast and loose to see if something sticks.” 

That’s exactly what Ocean Spray is doing with the incubator which has just five employees dedicated full-time to it. With each new brand idea, the incubator is running market tests, analyzing the success of those tests and then deciding whether or not to proceed with the brand. Should the test prove successful, the brand will be given the resources to grow by Ocean Spray and be a priority. Otherwise, the brand will either be deprioritized or killed off completely. 

“We really embrace the idea that if we’re going to test we have to be open to failure,” said Proano. “A lot of innovation fails. [We’re trying to do it] quickly and cheaply so that we can learn something from it, iterate and move forward with either killing a project or making it bigger.” 

Creating brands outside of the Ocean Spray banner to grow makes sense to Allen Adamson, brand analyst and co-founder of the brand consultancy Metaforce, But, he noted, there are challenges. “Ocean Spray is so iconic, so big and so linked to cranberries that no matter how much innovation they’ve done it just feels like the same old Ocean Spray,” said Adamson. “To some extent, if they are going to grow new brands they have to get away from the Ocean Spray brand and system.” 

That said, Ocean Spray isn’t solely leaning on the incubator for innovation as the cooperative has other groups working to modernize the Ocean Spray brand and find new ways to expand it. Still, the cooperative recognizes that to venture into new and emerging categories like pet wellness or CBD it will need new brands that can speak to those consumers.

“There’s a deep recognition of the need for transformation,” said Proano. “We do really, really well within our existing categories but we really want to make sure we assure the future.”

While ad spending has rallied in several key categories over the past five months, many brands, particularly those in the retail category, worry about going dark for extended periods of time as fall begins and winter looms. Because of the concern, many advertisers seem content to work more closely with publishers they already have relationships with, typically on smaller, cheaper campaigns that can be executed quickly.

“They’re gonna go with what they know,” said Rich Routman, the president of Minute Media, a sports-focused startup that owns titles including The Players Tribune and 90min.

Perhaps the biggest driver of this dynamic is a lack of time, as brands, worried that consumer sentiment or the health of the economy might take a sudden turn, are planning their ad spending over much shorter windows of time, to avoid paying for ads that might seem out of touch with a fraught moment. An executive at Vox Media said they’d seen lifecycle of many advertising client campaigns — from RFP to IO — shrink to half, or even a third, of its typical length over the past five months.

The chief revenue officer of another publisher, who asked not to be identified, said that many of his largest clients are still working on 30-day planning cycles, making big branded content deals or ambitious creative campaigns all but impossible. “Our business has gotten a lot more transactional and turnkey,” that CRO said.

For publishers that have numerous direct relationships with brands, that squeeze hasn’t been all bad. Though much of the work advertisers feel comfortable investing in right now is less expensive than the campaigns publishers typically pushed, the work is more frequent; sources at three different publications said that brands want to work on smaller branded content projects lately and at brisker than usual cadence.

But those same conditions make it a lot harder to win business from advertisers they haven’t worked with before. Though the number of RFPs circulating has begun to tick up after falling precipitously earlier this year, there is no guarantee that hike will continue: MediaRadar’s RFP predictor tool cannot predict how many RFPs brands might issue in the fourth quarter of the year.

Minute Media has managed to win some clients over the past few months, Routman said, including the charcoal brand Kingsford and the lawn care company Scotts. That’s partly thanks to a forced shift in their content strategy: Many of Minute Media’s titles had to overhaul their content strategy in the spring, after most professional sports leagues halted their seasons. Minute responded by focusing on what it called “athlete-generated content,” much of it personal, often lifestyle-driven fare made by professional athletes cooped up at home.

But Minute Media also benefitted from all the work it’s done
in the past with professional athletes around topics including racial and
social justice.

“Brands want to align with someone that has a purpose,”
Routman said. “We’re not someone who’s taking advantage of something going on
in the market. These are stories that have been part of The Players Tribune’s
fabric for a while.”

Media companies that do not have a deep track record in covering racial justice or public health have had to rely instead on other ways to start conversations with advertisers. Many have invested more heavily in custom audience and consumer research.

Publishers including Leaf Group, for example, have significantly increased the cadence of consumer research they are doing, hoping that the insights and predictions they now share weekly can start conversations with brands that lead to business.

“It’s one thing to say, ‘This is what’s happened and why,’” said Jay Ku, Leaf Group’s svp of advertising and brand partnerships. “It’s another thing to then add to that, ‘And based on that, we predict that these changes (or no changes) will happen to your industry in the next 30 to 60 days.’”

Others have tried to pique advertiser interest by partnering with A-list talent on built-if-sold projects that advertisers can get involved in more deeply. Vox Media is among several publishers that have been working with talent agencies such as CAA on projects like these, the Vox executive said. In early August, Vox Creative hosted a Zoom panel discussion, featuring the actress and director Olivia Wilde, on the subject of democratizing opportunity for artists.

But by and large, sources said that there is a measure of resignation that any new business they’re able to drum up is likely to be small.

“The bigger stuff is just not gonna happen [with a new client],” the first chief revenue officer said.