Month: August 2020

Such has been the erratic shopping behavior characterizing the last five months for so many publishers, who have had to swiftly adapt to people’s buying whims, weather commission rates dropping to zero and contend with merchants dropping out of programs for stock and supply-chain issues.  

Despite this, e-commerce has been one of the bright spots for publishers’ stretched and strained ad revenue lines. Hearst saw e-commerce revenue grow 322% during the second quarter compared with the same period the year before. While the company wouldn’t say how much revenue that equals or what base the growth was from, that lift had to take some of the sting out of cratering ad sales figures. Still, with forecasting largely out of the window, predicting how long the ride will last is anyone’s guess.

Now into the third quarter, Hearst UK is seeing normality return to some e-commerce categories: Health and fitness is stabilizing, home and garden categories are still high as people settle into the reality of spending more time at home.   

“The biggest drop in sales are for things like face masks,” said Betsy Fast, chief content development officer at Hearst UK. “So many of our sites were winning on face masks since it’s something everyone needs. Now that’s leveling off and we’re finding other ways to provide recommendations, whether it’s specialized light-weight masks or exercise-ready masks.”

According to Skimlinks, the trend for face-mask content is booming. Variations include face masks for kids, for bridal parties, or face mask cases and skincare to combat bad skin from wearing face masks.  

Hearst UK began diversifying into affiliate and e-commerce revenue lines in 2017. All titles dabble in some form of affiliate. The magazine group, for example, works with networks like Skimlinks and Amazon and titles leaning more heavily into e-commerce include Cosmopolitan, Good Housekeeping, Digital Spy and Runner’s World. The shoppable ad units it offers as part of client campaigns have been getting more sophisticated by driving product sampling through social links. By 2018, the magazine group had hired four vertical shopping editors across tech, beauty and fashion, home and fitness.   

“Hearst UK is the largest publisher we work with in the U.K.,” said Dunia Silan, vp revenue for Europe, the Middle East and Africa at Skimlinks. “The revenue they generate, the commission they earn and the amount they have grown year-on-year has surpassed any other growth for U.K. publishers.” Partly that’s thanks to the Hearst’s laser focussed internal editorial-driven team that keep on top of the trending products and pivoting when stocks run short, she said.

Since December, Hearst has been offering product sampling as part of e-commerce-led ad campaigns which have become more popular with beauty brands while stores have been closed.

“When you have a shop front where people can’t purchase, consumers become even more reliant on trusted sources. You don’t have the same face-to-face interactions with people behind the counter,” said Wolfson. “More beauty clients are coming to us for help.” In October, Hearst is running a campaign with a client, which it wouldn’t name, that uses augmented reality for people to trial lipstick color.  

As more brands choose to go direct-to-consumer through e-commerce via publishers or big tech platforms, that can mean ceding the relationship with the customer and their purchasing data. “Think about retargeting abandoned baskets,” said Ryan Storrar, svp head of media activation at agency Essence. “If that basket is on Facebook, you just don’t see it. There is a tension there.”

During the months of lockdown, e-commerce exploded as advertisers shifted budgets from upper funnel media spend quickly into e-commerce, where a decade’s worth of retail sales across the industry was made on U.S. digital channels in eight weeks, according to stats from New York University Professor Scott Galloway, via WARC. Now, the bottom-funnel activity is starting to level out as brands that made initial adjustments have started more brand-based marketing, said Storrar. “Time will tell whether that revenue is incremental or at the expense of something else.”

For Hearst, the fourth quarter — typically a busy time for publishers — looks primed for more growth. Compared with this time last year, more advertiser-led briefs are coming in with commerce as a component within health, fitness and fashion. The company said it’s partly, but not exclusively, driven by the holidays.

“Hearst’s purpose is to get more out of life,” said Fast. “From mid-March that really became our MO: Helping readers find what they need and couldn’t get before, help them pass the time, help them with life spent at home.” E-commerce, at least for now, has helped the company deliver on that proposition.

“These are editorial launches in nature … but this is not a simple adjacency strategy,” said chief revenue officer Geoff Schiller, who calls brand deals like this a “layer cake” strategy.

For example, the launch of NowThis Kids stemmed from the whitespace that the edit team saw for a “co-viewing” platform for parents and children that helped to answer some of the more complicated questions kids have around current events.

With the idea for the vertical set, the edit team was then able to share the idea with sales, Schiller said, who could then find a partner that was looking to promote a similar message. The sales team was also responsible for selling the advertiser, in this case Cheerios, on the add-ons they could have in the vertical.

Stretching into 2021, the exclusive partnership with Cheerios will allow it to run branded episode segments, newsletter contributions and more along the editorial content that’s released every Monday, Wednesday and Friday in the form of videos, podcasts and newsletters.

Schiller priced these brand deals in the seven-figure range and a buyer who spoke on the condition of anonymity said that these partnerships would start clocking in on the lower end of the $1 million range. But the more elements that are layered in, the more the overall deal increases.

These deals require a significant upfront investment and commitment from brands, especially since cancellation clauses do not usually kick in for several months, according to Patrick Kelly, svp and group director digital investments at Havas Media.

But the upfront costs tend to be on par with the advertising budgets that national brands have for channels like social media and digital media anyway. What’s more, Group Nine’s titles already have a strong presence on social media with relatively brand safe messaging and narratives, said Kelly, making them a safer and more succinct way to spend those social budgets.

“You’re getting in front of the people that you want in a brand safe way and you’re not changing the investment much from what you were thinking of spending on that platform in the first place,” Kelly said. 

According to Group Nine, NowThis had a total of 2.6 billion monthly views in June across its site and Facebook, YouTube, Snapchat, Instagram, TikTok and Twitter channels. The Dodo has an even higher view count of 4.6 billion views in June.

“We’re seeing continued and, in some cases, quick-turn success when we’re giving them ways to add on to the already planned editorial product,” said Schiller. That’s because these digital titles have the existing audiences from their other verticals that the new vertical can appeal to off the bat.

But “there is some risk with new vertical or site launches in terms of what level of traffic it will garner and response the audience will have to the content, said Danielle Sporkin, U.S. head of integrated planning at OMD. “And buyers need to assess if the cost of the partnership is worth the value being provided by the publisher.”

In the past year, Group Nine has closed five of these longterm partnerships: launched NowThis Kids with Cheerios, DodoWell with Petco and Dodo Kids with Paramount Pictures’ “Dora the Explorer” movie, and relaunched PopSugar Fitness with Under Armour and PopSugar Family with H&M. 

Each of brands paid to be the exclusive advertiser for six to 12 months following the verticals’ launch or relaunch.

Schiller said that while this branded vertical strategy has been put into practice on a couple occasions the past at Group Nine, it was after the acquisition of PopSugar at the end of 2019 and the subsequent merging of the sales teams, that a concerted effort was put into selling these longer term deals. 

There were “some organizational changes that the sellers were transitioning to, one of them being category specialists versus agency specialists,” he said. Now sellers can focus on how best to sell the editorial products that are already in the pipeline, as well as the built-if-sold products the company has, by “connecting the dots” to the best fit for the brand. 

“Anything that we do from an editorial perspective that we build this layer cake strategy around, we’re super confident in the success of it because it’s been backed up with insights” about what the audience wants and is willing to consume, Schiller said.

While many popular podcast players, including Apple’s and Google’s, typically surface the popular, original shows first in their search results, the Anchor-hosted copycats appear too, in many cases with nearly identical metadata and cover art. The fake shows appear designed to trick listeners into listening to them, so they can be monetized through ads injected automatically using Anchor technology.

On Anchor’s own app, the problem is even worse, with the namesake show rarely appearing at the top of results. A user hunting for the podcast “Serial,” for example, would have to scroll past nearly a dozen fake shows before finding the show that brought podcasting into the mainstream.

The problem inside Anchor’s app is far down the list of creators’ concerns; Anchor’s app is responsible for a negligible amount of podcast consumption, said Dave Zohrob, the founder of the podcast analytics and ad attribution service Chartable.

But the confusion this has caused has incensed several creators, who say the phony shows have the potential to create confusion among potential listeners, degrade the listening experience on different apps, and possibly cost them money: A copycat podcaster can create a show on Anchor, upload it to Spotify, then use Spotify’s automatic ad injection to monetize a confused listener.

“It’s growing Anchor’s business at our expense,” said Barstool Sports CEO Erika Nardini, who catalogued several different examples of the fakes on Twitter. Nardini said Barstool’s attempts to contact Anchor to resolve the problem were met with radio silence.

Reached for comment, a Spotify spokesperson said that the offending shows were taken down, and sent a statement.

 “We take intellectual property infringement activity extremely seriously,” the statement read. “Spotify has multiple detection measures in place monitoring fraud on the service to detect, investigate and deal with such activity. We are continuing to invest heavily in refining those processes and improving methods of detection and removal, and reducing the impact of this unacceptable activity on legitimate creators, rights holders and our users.”

As of Aug. 20, some of the shows are still available on competitors’ apps, such as Google Podcasts, though a lag in when those apps update their RSS feeds may be responsible for the disparity.

Anchor provides a lot of the scale and raw material that helped turn Spotify into one of the largest podcasting platforms. Founded in 2015 by Michael Mignano and Nir Zicherman, the service was hosting 15 billion hours’ worth of content at the end of 2018, according to a note Spotify CEO Daniel Ek published last year.

It has caused other problems for Spotify in the past. Last summer, Podnews reported that Anchor users were using the platform to illegally distribute music, a striking black eye for a company that positioned itself as a bulwark against recorded music piracy almost a decade ago.

The news that Spotify had taken down the fake shows did not mollify many of the sources contacted for this story, who say that Spotify has given podcasters no indication that they have resources or technology in place to keep this from becoming a game of whack-a-mole.

“It strikes me as something Spotify is not prepared for,” a source inside Stitcher said. “A platform like YouTube is good at finger-printing content. If your copyright is infringed, you actually have a lot of options.

“I don’t think they are very well-equipped to handle this.”

“The customer is always right, but if the customer is right and they are also creating a circumstance that’s unsafe, then no they can’t be right anymore,” said Amber Cabral, founder of Cabral Consulting and formerly a diversity strategist for Walmart.

These shortfalls were exemplified this week by a group of former Glossier retail employees, calling themselves Outta the Gloss, publishing an open letter to Glossier leadership, asking the company to make changes to the way they treat and train retail employees, referred to internally as “editors.” Glossier laid off all of its retail employees on August 7, as it plans to close its stores for the rest of the year due to the coronavirus pandemic (the company said it eventually plans to re-open stores) In response. In response to a request for comment, Glossier pointed Modern Retail to the statement the company had previously issued on social media, stating in part that “we’re so sorry we didn’t create a workplace in which our retail employees felt supported in the most critical ways,” and outlined steps it would take in the future “to ensure that the values we uphold in our brand and the service we provide to our customers are universally extended to our employees.”

Specifically, the former Glossier employees say that they felt their managers inadequately handled instances of customers being racist in stores. A customer who disparaged Latinx workers as “illegals,” was allowed multiple times to enter the store, the former employees alleged. Similarly, a group of white teens who came into the store and “applied some of our darkest complexion products in gleeful blackface,” were not asked to leave, the former employees said. In response to Outta the Gloss’ list of demands, Glossier said it would be making some changes, including requiring all employees to complete recurring anti-racism training, displaying a “code of conduct” for customers in stores, and having a dedicated, on-site Human Resources staff.

Rebekah Kondrat, founder of consultancy Kondrat Retail said that in her experience, while all retailers have some form of de-escalation training, DTC startups opening stores for the first time often don’t have robust enough de-escalation training.

“What I mean by that is, the [training] is like, ‘if a customer is upset, try seeing things from a different angle or try to discover what they are upset about,” said Kondrat, who has previously managed stores for Starbucks, Apple and Warby Parker. “What they don’t go into is — if you still can’t appease them, what other courses of action do you have?” Kondrat said Glossier’s decision to create a code of conduct for customers is also a move that other retail startups should consider emulating.

Cabral said that in order for de-escalation training to be most effective, it needs to be done on a recurring basis. This way, the message can sink in for existing employees and new employees don’t go many months into the job without it. What’s more, she went on, companies should reinforce the messages passed down in de-escalation training during in-person meetings or online communication with staff.

“You can make sure that when you are talking about de-escalation, you are brave enough to discuss the circumstances where it doesn’t go in a way that feels incredibly neat, where it feels incredibly easy to deal with,” said Cabral.

But, there’s only so much training that can help store employees when dealing with an unruly customer in the moment. For starters, Kondrat said that store employees are often incentivized to just appease belligerent customers in store because of retailers’ obsession with online ratings, and it can be hard to break leadership of that habit. For every viral video that makes it clear a customer was out of line for berating store employees, there’s a customer who may lie in a Yelp review and say they were treated unfairly by store employees.

And, it can be scary for employees to confront customers. As recent instances of customers responding violently to employees who have asked them to wear a mask have shown, employees have good reason to fear unruly customers.

“There is no training, education or organizational structure that will completely remove the burden off of the person that is on the front line,” said Cabral. “There is a certain amount of onus that does rest on employees to be able to say, ‘this is the right response here,’…and what the organization can do is say, ‘here are the ways we support you.’”

How agencies have addressed the call to action in the months since then varies. Some have focused on adding chief diversity officers. Shops like DDB, MiQ and Barkley are all currently seeking diversity and inclusion execs, per LinkedIn job postings. And this week, BBDO appointed its first chief diversity, equity and inclusion officer. Others have created new internal councils focused on diversity and inclusion. For example, Havas announced its appointments for its new diversity, equity and inclusion committee this wee. And others have tapped consultants to help improve the hiring process as well as overall company culture. 

“Agencies recognize that there’s an urgent need to envision themselves as a group that values diversity but they’re not there yet,” said Nandi Welch, co-founder and head of business strategy for the brand consultancy Rupture. In the last two months, the brand consultancy has seen a significant uptick in inquiries, nearly “a year’s worth,” per Welch, to help brands and agencies with strategic work as well as diversity and inclusion initiatives.

Rupture isn’t alone in the uptick in interest from agencies, holding companies and brands in need of help improving diversity and inclusion. Keni Thacker, founder of 100 Roses from Concrete, a network for men of color in advertising, has not only heard from agencies seeking to fill open or newly created diversity and inclusion roles but had requests to help train or coach employees who have been newly appointed in those roles. Some agencies, in a need to fill a diversity and inclusion focused role, have opted to elevate employees who have shown passion for diversity and inclusion into new roles within the agency, said Thacker. Still, training and deploying those staffers to be truly effective will take time.

“Being passionate about [diversity and inclusion] it is one thing but being able to talk to the CEO, to senior leadership and to be able to make the case for diversity, equity and inclusion is a whole other skill set,” said Thacker. “You heard the battle cry of needing more Black and Brown leaders but are you setting them up to win?” 

Some agency employees and execs say the focus on adding diversity and inclusion executives to fix systemic issues with diversity and inclusion at agencies can be problematic. By zeroing in on one role to fix a problem with the entire agency, agency employees and execs say that can make it one person’s responsibility rather than the whole agency which can make it difficult for that executive to succeed. Others say that diversity and inclusion execs have been at agencies for years and haven’t been given the power to make true change. 

“It takes the entire agency to do this, not just one person,” said Barb Rozman, chief talent officer at Campbell Ewald. 

That’s why some agencies, like Campbell Ewald, Innocean and Muhtayzik / Hoffer are leaning more on internal committees to create new policies to better the agencies’ diversity and inclusion rather than adding a diversity and inclusion officer. 

Improving diversity and inclusion at agencies has to be a “groundswell movement,” to keep the change going, said Kirk Guthrie, svp and executive director of HR at Innocean, adding that the shop has not only added a new council to help drive new initiatives but committed to regular town halls on diversity and inclusion as well as a pay analysis and to look into its recruiting practices. “It’s very easy for these conversations to be a hot topic for a quarter and then the gravitational pull of client needs slows it down.” 

Agency execs and employees say that they worry the push for change and true diversity and inclusion could slow down but are hopeful that agency employees will continue to speak up if it does. 

“Agencies are focused on quick fixes sadly,” said Thacker. “Or better yet a more aggressive band-aid solution will put them at the cool kids / woke table. It’s going to literally take years to see the effects of this time on the industry. It needs to be intentional.”