Month: December 2020

See Control v. Exposed. The agency is working more like a management consulting firm with Nokia than a de facto media player. Indeed, the media lead for marketing Nokia phones is actually a Control v. Exposed exec who is temporarily based at the smartphone phone manufacturer to shepherd the day-to-day development of its media strategy.

“Nokia wants to get down to the nuts and bolts of what is generating business and where they should put their bets,” said Paul Frampton, president of Control v. Exposed. 

Since Control v. Exposed’s appointment over the summer, Nokia handset marketers have been moving toward a hybrid agency model whereby work is split between its own marketers and Control v. Exposed. This way the marketers get the best of both worlds: control aspects of media buying they deem most valuable such as the contacts with technology vendors like demand-side platforms and the subsequent data they generate — while retaining media specialists they can call on as a variable cost.

In a nutshell, Nokia wants a media strategy that not only works its media dollars harder, but also optimizes its data, especially given its plans to sell handsets directly to consumers. 

Unlike its rivals, Nokia can’t dominate TV schedules and online auctions with reams of cash. It’s a far cry from the halcyon days of the Nokia brand when big budget PR stunts and product placements in Hollywood blockbusters were par for the course. Nokia’s brand doesn’t have that cache anymore so its marketers have to react and adapt faster to opportunities as they arise. 

One area of particular focus is data. Nokia-branded handsets are not only a source of anonymized customer data, or first-party data, for targeting and measurement, they’re also a source of telemetry data on how the phone is being used. Eventually, this data would be combined with third-party data, albeit through different tech stack, said Frampton. While third-party data is becoming less valuable in online advertising, it still has its uses, which primarily revolve around reaching new audiences. That’s crucial to a business like Nokia that’s trying to carve out space for itself in an already congested mobile phone market. 

Alongside markets like Germany, the U.S., and the U.K., where the Nokia brand has a strong legacy, HMD Global has its sights set on Indonesia, India, and South Africa where smartphones aren’t as ubiquitous. Rather than compete directly with the likes of Apple and Samsung, Nokia is targeting those markets where they aren’t as dominant.

“There’s an opportunity for the Nokia brand in markets where people are switching from their feature phone to their first smartphone,” explained Frampton.

It’s not the first time Nokia’s marketers have taken on more of the work usually consigned to agencies. In 2014, they created the ads for a brand campaign shortly after the business was acquired by Microsoft. Despite these moves, HMD Global continued to work with agencies to promote Nokia-branded handsets. Indeed, Both Essence and Mindshare, which were appointed in 2017, will continue working with HMD Global.  

“What the last 12 months have taught any marketer is the importance of e-commerce, data and the need to find operational efficiencies, all of which lend themselves to an in-house or hybrid model,” said Ryan Kangisser, managing partner for strategy at advisory firm MediaSense. “The work marketers don’t want to do is the ad ops and the optimization part of media management — but owning that first-party data and their relationship with ad tech vendors are high-value areas.”

In the latest edition of our Confessions series, in which we trade anonymity for candor, we hear from a media buyer about the stress he’s been dealing with, how his job has gotten more difficult due to demands from procurement and why he’s considering leaving the agency business. This conversation has been lightly edited and condensed for clarity.

Have you been able to take time off? We’ve heard that it’s been more difficult this year for agency employees to do so. 

It’s been backlogged, effectively. I was too busy earlier in the year, I had too much to do and didn’t have a team. I think a lot of people feel that way. You can’t take time off when there’s work to do and you don’t have people to hand stuff off to. If the work needs to be done it doesn’t really matter, someone has to do it. 

Why don’t you have a team?

We had won lots of new business [before the pandemic] and hadn’t staffed up adequately. Everything is about price and procurement, about margin and profit, about what’s captured on the spreadsheet. That’s how the business works. It’s no secret that procurement is the one [thing] driving this because they get bonuses and KPI’d on saving money. It’s very easy to do that with the agency relationship. But what the spreadsheet does not capture is the toll it takes on a staff member. It’s that simple. 

So clients’ procurement teams are making it harder to staff up?

It’s all about cost versus revenue. Say you get $100,000 in and it costs you $50,000 to staff up a team 100%. [Then procurement might say they] need to show more profit than normal and can force fewer people to do all of the work instead of a full team so then there’s more margin being shown. What that doesn’t capture is that instead of five people doing the work now you have two people or three people. The work is still getting done, but those three people are carrying five people’s worth of work. In some cases, it can be one person doing the work of five people. It’s all in the name of profit. 

What’s the toll been on you?

I’m burnt out. It impacts your mental health in one way or another. It’s just the nature of the beast, unfortunately, it’s become that way. 

Procurement has been in control for a while now. Do you think that’s even more so now because of the coronavirus? 

100%. At the end of the day businesses all have profit and loss to maintain. The easiest way to do that is to control staff. It’s one of the biggest line items on a spreadsheet. Most people are quite disappointed this year because there’s no pay raises, no promotions. That’s across lots of businesses, but in the agency world it takes more of a toll because everything is so procurement driven. 

Is your agency giving out bonuses or raises to make up for people taking less time off this year? 

Not really. There’s some stuff for very junior talent. It’s cheap. Giving someone who’s on $100,000 a raise versus giving someone who’s on $20,000 a raise is going to be cheaper. That’s it. 

How has the lack of time off affected your job performance? 

The quality of the work has completely slipped. We’re in delivery mode now. Everyone in an agency feels like that. We’re effectively flipping burgers — get it out the door and that’s it. If you need five people to do a job and only one person is doing it no matter how good that person is, the work is going to slip eventually. 

What do you wish you could tell procurement about the effect they’re having on your job?

There’s nothing to say. They’re getting a bonus at the end of the year and I’m not. You can’t get between someone and their paycheck. There’s a lot of stuff that the spreadsheet doesn’t capture that they don’t take into account but, quite frankly, I don’t think they care. If you haven’t done the job [of a media buyer] you have no empathy for it. You might have some sympathy, but not really. You’re probably more thankful that you’re not in that position. It’s nasty. That’s how those people think. 

Let’s say they did care, what would you tell them?

You can’t expect great performance at a low rate forever. It doesn’t work. There’s a reason things cost what they do and are valued the way they are valued. If people don’t want [to pay for the valuable media placement] it becomes a price discussion and a race to the bottom and that’s what the agency will deliver. [When it’s all about price] the qualitative stuff —someone’s mental health, someone’s bonus, someone’s career trajectory — that all goes out the window. It doesn’t actually matter. There’s lip service paid, but it doesn’t really matter [to clients]. 

If it doesn’t get better are you thinking of leaving the agency business?

There’s a big exodus [at agencies] to go to media owners or clients because other places will offer you a better deal — better compensation, fewer hours, lower stress. That is a symptom and an outcome of procurement [putting pressure on agencies]. You hear people in the C-suite at agencies talking about how we’re a talent business, but if that’s really the case then why do so many people leave agencies every day? 

And is that something you’re considering? 

Perhaps. [Agencies] need a better business model. The business model is fundamentally commoditized and eating itself. It’s getting worse and worse every year. The quality of the people in specialist roles at agencies is getting worse and worse. The people who are good quickly figure out they can go elsewhere and get paid better. It’s about the incentives and trade offs. I like working in an agency — the variety of the work is good, it’s not boring, it’s not monotonous, always something new and it’s very tech driven now — but at a certain point it becomes untenable. 

Why haven’t you left?

I’m still here because there aren’t that many opportunities on the market due to Covid. During times of financial stress, CFOs at every company get constipated. They don’t want to spend any money. They can’t predict revenues, margin, they can’t do anything in a predictable way. The only thing they can predict is that they can control their costs — and that’s a very easy lever to pull. 

Under Levene’s leadership as chief digital officer, digital revenues now account for 38% of the national media group’s total. And while core brands such as People and Allrecipes accounted for lots of that growth, Meredith also launched numerous new products and properties this year, including two media brands and a data studio, which allows brands to tap into Meredith readers to inform ad spending decisions for a fee. (Meredith also launched a pair of quarterly magazines, including Millie, a personal finance brand aimed at women, and Sweet July, a magazine created in partnership with Ayesha Curry that focuses on topics including home decor and food.

Digiday grabbed Levene for a brief chat after the announcement of her elevation. The conversation has been edited and condensed.

As you step into the president’s role, what do you see as Meredith’s strongest point of differentiation for the national brands?
I think it’s powerful, trusted brands. The knowledge of our consumers, and what they want and need. We get that through our first party data. We reach 95% of U.S. women. We understand and can predict what’s important to them. It’s taking that data and insights, and we get it from first party data, to expand our content, our products and services, and to help our advertisers.

Meredith just wrapped up its fiscal year. What do you think will define the coming fiscal year for Meredith’s brands?
We’re seeing really strong growth on the digital side of the business. We’re also seeing strong growth on the consumer print side of the business. I see this notion of consumer engagement with our brands continuing to be strong and expanding. That means the touch of the magazine, and all that that provides, all the way to new platforms we’re working on digitally. We expect to be doing more content across platforms.

What’s something you learned in 2020 that’s going to be applicable in 2021?
I think I’m gonna go with our employees, and just how incredibly dedicated and steadfast and talented they are, and how quickly we were able to pivot and work from home. I think we’ve had to step up even more in communication. Communication across teams, within teams. I think our communication is better than ever, both internally and externally, because we’ve been forced to be [better]. I’m a firm believer in person-to-person communication, and that when this is all over we will go back to an office. It’s likely to be more flexible. But there’s something we learned about being consistently communicative and transparent with our employees.

What are your top priority for the brands?
I’ll give you three: Continued consumer engagement across platforms, continued strength in advertising and diversification of revenue streams; third would be continued strength in data and insights. Those are my three areas of focus, because they touch every part of our business. And scale is really important, particularly the ability to understand consumers and segments of consumers at scale. We can really understand women down to very specific needs — and how we can help them, at scale.

What is an area of the business that needs the most shoring up?
One thing I want to drive through the rest of the organization is continued innovation. Our company is incredibly innovative and I don’t know that the rest of the world knows just how innovative we’ve been, with the development of our new platform and data and product development. I want to drive that through the rest of the organization. I think you’ll see us do more of those things as I take the reins. I don’t think people know just how big our digital business is.

• Discovery+ will debut on Jan. 4 and roll out in 25 global markets in 2021, including the U.S., U.K., and Brazil.
• The streamer will offer two subscription tiers: The ad-supported tier will cost $5 per month, and the ad-free tier will cost $7 per month.
• The streamer’s programming library will include original TV shows, current and past shows and shows licensed from A+E Networks.
• Discovery has not yet signed deals with Amazon or Roku to make Discovery+ available on their respective CTV platforms.

The subscriber pitch

Discovery is not trying to steal subscribers away from Netflix. The company’s CEO David Zaslav has previously described Discovery’s forthcoming streamer as supplementary to other services like Netflix, Disney+ and Amazon Prime Video. Similar to how Disney+ caters to families and AMC Networks’ Shudder caters to horror fans, Discovery+ is aimed at people who are into reality TV (albeit the PG-rated variety) and documentaries and are not able to get enough programming about people fixing houses, cooking food or communing with wildlife.

Overall, Discovery is trying to regain the subscribers it has lost as people have canceled their pay-TV subscriptions and win over audiences who may never have paid for traditional TV. “This is for cord cutters,” said one agency executive of Discovery+ in an interview earlier this year.

The programming library

Discovery+’s programming library will primarily consist of shows that have aired on Discovery’s TV networks. At launch in the U.S., it will feature more than 55,000 episodes from more than 2,500 current and past TV shows. The company will also license shows, such as “Ice Road Truckers,” “Dance Moms” and “Pawn Stars,” from A+E Networks. That should help Discovery avoid the Quibi trap of not offering enough programming to keep people entertained.  

However, a library of TV shows alone would likely not be enough to attract subscribers. People who receive Discovery’s linear networks as part of their pay-TV subscriptions would have little reason to pay an additional $5 or $7 a month for Discovery+ if they would only be accessing the same shows available within Discovery’s streaming apps available to pay-TV subscribers. Meanwhile, the cord cutters that Discovery is trying to attract may be unlikely to sign up for a service strictly offering shows that were not compelling enough for them to pay to watch on traditional TV.

Discovery+ will also carry original programming that will only be available on the service. The streamer will debut with more than 50 exclusive original shows and will premiere new original programming each week of the year (which may simply mean new episodes), Zaslav said during a virtual presentation on Dec. 2 announcing Discovery+. That original programming will include shows featuring Discovery talent, such as “Bobby and Giada in Italy” starring Food Network hosts Bobby Flay and Giada De Laurentiis; spin-offs of TV franchises, like “90 Day Fiancé Diaries;” and series starring outside celebrities, including Kevin Hart who will appear in the Will Packer-produced road trip series “Route 66.” 

The ad-supported tier

Discovery executives repeatedly described Discovery+ as ad-free during the Dec. 2 presentation, but that’s not entirely true. Discovery+ will operate an ad-supported tier, and the company has signed launch sponsorship deals with several advertisers, including Kraft Heinz, Lowe’s, Pepsi and Toyota. The company did not describe what those sponsorship deals entail beyond mentioning “interactive experiences” and “curated content collections” in a virtual investor presentation on Dec. 2. As Digiday previously reported, Discovery+ will carry a maximum of five minutes of ads per hour of programming. In the investor presentation, Discovery said that it expects to generate $4 in average monthly ad revenue for each person who subscribes to the ad-supported tier and that Discovery+’s individually targeted ads will command CPMs that are at least three times higher than its linear TV CPMs.

The distribution strategy

Distribution is the biggest question mark around Discovery+ at the moment. The company has a deal with Verizon to offer free year-long subscriptions to some of the telecom giant’s wireless customers. The arrangement seems similar to one that Disney struck with Verizon for Disney+, which likely helped that service to surpass 73 million subscribers in its first year. 

However, Discovery may have a harder time winning over non-Verizon customers. For starters, the company does not seem able to count on its existing pay-TV subscribers providing a built-in subscriber base for Discovery+. Aside from deals with Sky in the U.K. and Telecom Italia in Italy, Discovery has not yet announced any deals to make Discovery+ available through people’s existing pay-TV subscriptions, which is an arrangement that WarnerMedia had made with U.S. pay-TV providers for HBO Max.

Additionally, the company has not yet signed deals to make Discovery+ available on Amazon’s and Roku’s connected TV platforms. NBCUniversal and WarnerMedia ran into the same distribution setbacks with their respective streamers, and Peacock’s and HBO Max’s absences on two of the dominant CTV platforms have likely curtailed their subscriber numbers. 

The big picture

Like seemingly every other TV network owner, Discovery has not only read the writing on the wall, but is finally following it: the traditional TV business is not growing, but the streaming market is. As a result, TV network groups like Discovery have to finally dive into streaming by offering programming to people without pay-TV subscriptions.

However, Discovery faces the same dilemma in shifting to streaming as other TV networks: Linear TV pads its profits. Because of that, Discovery has to build up its streaming business in a way that won’t cannibalize its linear cash cow. That would help to explain why Discovery+ seems aimed almost exclusively at people who don’t already pay for Discovery’s pay-TV networks. 

The exclusivity of Discovery+’s original programming and the availability of Discovery’s linear programming on Discovery+ could complicate matters, though. Discovery may hope that pay-TV subscribers would pay an addition $5 or $7 for Discovery+ to watch “Route 66” and other original series, but more likely, people will content themselves with their pay-TV subscriptions, which could limit the reach and resulting revenue for Discovery+’s original shows. Or if Discovery was a primary reason someone had yet to cancel their pay-TV subscription, they may opt to cancel their pay-TV subscriptions if they feel they are being shortchanged by not being able to access Discovery+’s original shows. 

Discovery could find a compromise by eventually airing Discovery+’s original shows on its linear TV networks. In fact, it probably will. During the investor presentation, Discovery CFO Gunnar Wiedenfels said, “I would expect that some of the content is going to end up on linear.” But that could introduce complications if it upsets the pay-TV providers who would likely then look to lower the affiliate fees they pay to carry Discovery’s networks by arguing the second-run content discounts the networks’ value. 

That is the crux of the issue: In trying to build up a streaming business while preserving its linear business, Discovery is in a catch-22. The company needs Discovery+ to help it catch cord cutters, but without catching the ire of the pay-TV providers that could hobble its linear TV by cutting its affiliate fees.

Seemingly in recognition of this dilemma, Discovery has priced Discovery+’s ad-free tier at $7, equivalent to the average monthly revenue it generates per pay-TV subscriber, and expects the streamer’s ad-supported tier to generate a $9 ARPU in the U.S., according to the virtual investor presentation. 

In other words, Discovery wants to make sure that it is not losing money if Discovery+’s growth comes at a cost to its linear TV business. “I’m very confident that, with our Discovery+ product, we’re going to be able to achieve at least that same [linear TV] ARPU, if not more,” said Wiedenfels.