Month: December 2020

These so-called “liabilities” have stacked up even more in the fourth quarter with lower-than-expected viewership for major sports, college football games being canceled and networks’ traditional fall programming pipelines being disrupted by the coronavirus crisis. “Ratings are down significantly and probably to a greater degree than anyone had modeled,” said a second agency executive.

In addition to wanting to show they can deliver on advertisers’ audience goals, networks stand to sacrifice revenue the longer that they carry a debt. “In some cases, they have liability from two years ago. That stuff is at 10% to 15% cheaper CPMs than the new inventory. So just getting it off their books is beneficial because they’re giving it away at the discounted 10% to 15% rate,” said a third agency executive.

One way that some networks are looking to settle their debts is by simply offering to give advertisers their money back rather than set aside inventory to make up for the missed guarantees, according to agency executives. To be clear, such cashback offers are not entirely new; the first agency executive said that for years they have been able to negotiate for clients’ money back if networks didn’t deliver on their upfront guarantees. However, other agency executives said broadcast and cable TV networks have become more willing to make these offers. 

Historically, networks would be able to find additional pockets of ad inventory to offer to advertisers, such as linear slots they set aside to sell in the scatter market or impressions from their streaming services and digital properties. But with pent-up advertiser demand squeezing the scatter and streaming ad markets, “now they’re running out of other areas,” said the third agency executive.

Advertisers are not all that interested in the cash back offers, though. While some clients are willing to take the money and spend it elsewhere if they are under a time constraint — like a retailer in the holiday shopping season— others expect to receive what they are paid for and are willing to wait. “They can’t say, ‘We can’t deliver; here’s your money back’ and push us into the scatter environment,” said the second agency executive.

However, advertisers may not be willing to wait for all that long. Although some are still owed for ad buys placed one to two years ago, ad buyers are becoming less tolerant of adding to their tallies. And while the networks’ streaming inventory would seem to offer a release valve make up for the linear misses, not all advertisers see that as an equal trade because of the concurrent reach of linear TV. “We want like for like. For the most part, we want linear impressions [for make-good inventory],” said a fourth agency executive.

As a result, advertisers may soon reach a point where they are no longer willing to spend new money until their old debts are settled. “I’ve had conversations with all of the top sales executives at the media partners [to tell them] ‘Hey, we’re watching this closely and we will prioritize future deals and also look at exercising [cancelation] options where we have to if you can’t hit the guarantees our clients need,’” said the second agency executive.

This year, the media industry shed even more jobs than it did in 2008, when a financial crisis plunged the global economy into a recession that lasted several years. Through November, digital, print and broadcast news companies shed over 16,000 jobs, compared to 14,000 jobs in 2008, according to the outsourcing firm Challenger, Gray and Christmas.

While the furloughs and layoffs were largely driven by the sudden shock of the coronavirus crisis in March and April — over 11,000 of those layoffs came in the first half of the year — the reality is that media companies endured staff cuts all year.

And while ad sales and other revenue opportunities began improving shortly after the nadir of April, few hit the targets they’d laid out for the year and only about half even matched the revenue they generated in 2019; 43% of respondents said that revenues went down year over year in 2020, and a full third said their revenue declined by double digits.

Those tough results contrast with the largely upbeat outlook most of the survey’s respondents have, not just about the year ahead, but the year concluding. Even though much of American life will remain under a kind of lockdown through the first few months of 2021, and the American economy remains in a precarious position, most respondents are expecting a bounce back in 2021, and many even say that the company they work for did well in 2020.

This week, Digiday caught up with Kenny Mac, diverse audience marketing lead, vp and strategy director at Giant Spoon to hear about the new division as well as ways brands and agencies should be continuing to push forward to improve diversity and inclusion in their companies. Mac just joined the company in August. Previously, he was the founder and lead strategist of Creative Contraband as well as the founder and creative director of Behind the Hustle.

This conversation has been edited and condensed for clarity.

This past summer, diversity and inclusion became a bigger focus point at agencies. Did that inspire this new division?

[Giant Spoon Co-founders] Marc [Simons], Jon [Haber] and I have been talking about working together forever. [This past spring], we went after a client together and in the midst of us going after the [first] client — we were 95% closed — unfortunate occurrences of George Floyd and Breonna Taylor hit the news. We started to talk about what our working relationship was going to be and that led to me coming in as vp and really helping to shepherd more business.

It also was a direct ask for Marc, like, ‘We need Black leadership and I know that you have these leadership qualities and we need that here.’ Of course, that’s my responsibility as a Black man in this industry — to nurture, mentor and support the next generations coming up. But by no means, was it like, ‘Oh, the world’s like burning, we gotta go create this [division].’ There was already need for it. And all this summer did was amplify that need.

So with this new division you’re talking to brands about issues they’re having with diversity and inclusion. What are those conversations like?

There’s no one fix. It’s really us sitting with them and understanding where they are as a company and what they’re trying to do as a company as well as what they’re already doing. And then we’re looking at the audiences they’re trying to connect with and saying, ‘Well, this is where this audience is. How do we organically connect with them?’ A lot of this is touching passion points and looking [beyond] the typical analytical data. It’s looking at both of them.

Can you give us an example of how you’re working with brands to improve diversity and inclusion?

We’re having focus groups, we’re having work sessions [with clients] and they’re talking about the people that they want to hire and how to get those people that they want to hire. One of my big things that I’ve been telling them is, ‘I looked at your numbers, 11% of your workforce is Black and you want to hire more Black people. Instead of looking outside first, let’s start to look inside, let’s check in with that 11% and find out what it’s like to work for your company from that community. Let’s find out what their trials and tribulations are internally, and then ask them  what type of leadership they would want to see, or if they know people like to tap into their network?’ So it might be that you’ve got a small percentage [of diverse employees] but tap into that percentage in a meaningful way. Figure out how to make this space a better space before bringing in new people because that’s part of the problem.

Part of the problem is that the focus is on hiring rather than retention. Is that what you’re saying? 

If there’s some toxicity in the space already and you’re bringing in more people, you’re just putting more people in a toxic environment. This is not an overnight issue that can be fixed with one solution. There have been companies that made big plans over the summer, big commitments like, ‘We’re going to hire X amount of Black employees’ whilst their current Black employees are outside with picket signs. Fix that first. That’s part of the process.

Aside from focusing on fixing internal culture, what advice do you have for brands and agencies looking to be better when it comes to diversity and inclusion?

The whole concept of the good ole boy network is based on comfort. Sometimes it’s based on bigotry, but a lot of it is based on comfort. [If agencies and brands use the same vendors], the same people over and over and it’s comfort and it becomes lazy. One of the things that we’ve been doing and challenging some of our clients to do too, is look at your vendor list. If you’re going to go out with a bid, make sure that vendors have ownership in different diverse groups. [Let’s say you’re working with five vendors] and three of them are going to be new vendors that you’ve never used before that come from different backgrounds. Those are ways where you can start to get that inclusion starting to happen. It should be ingrained [in] everything you do. Again, it’s not a charitable thing. It’s just what you should do. It’s 2020. And you need to be thinking to the future.