Month: February 2022

Per Gannett’s earnings report for Q2 2021, the company already had a total of about 1.4 million digital-only subscribers before the company introduced USA Today’s paywall and vertical products. By the end of 2021, Gannett was sitting on about 1.6 million total digital-only subscribers, and the bulk of those are people paying for Gannett’s 200-plus local publications, not USA Today.

Digital-only subscription revenue, which hit $100 million by the end of 2021, was only 8% of Gannett’s total subscription revenue and 3% of total overall revenue last year. That’s compared to the company’s print subscription revenue (includes print and digital bundles) that reached more than $1.1 billion and accounted for the remaining 92% of subscription revenue and 36% of the company’s total overall revenue for the year.

Gannett’s subscriber growth does not appear set to accelerate all that meaningfully this year. In its latest earnings report, the company projected it will add 100,000 subscribers in the first quarter of 2022 and then another 300,000 to 500,000 subscribers over the following three quarters to end the year with between 2 million and 2.2 million subscribers. That would leave at least 3.8 million subscribers to add by the end of 2025. In other words, Gannett’s subscriber growth rate will need to more than double from 2022’s 600,000-subscriber trajectory to average more than 1.26 million new subscribers per year for 2023, 2024 and 2025.

Point being: there is a steep hill to climb in 2022 to get a lot of that growth under its belt. Additionally, looking at some of the news publishers in its competitive set, Gannett is lagging behind a full two-and-a-half decades after The Wall Street Journal (its paywall went up in 1996) and a decade after The New York Times (its current iteration of the paywall went live in 2011). Then again, Gannett seems to also be looking at its competitive set and counting on pulling some pages from their playbooks to reach its projected subscriber count.

In 2021, the Times ended the year achieving its goal of reaching 10 million subscriptions by 2025, four years ahead of target, with the vast majority of subscriptions (about 92%) being digital-only subscriptions to its core news product, cooking, gaming and Wirecutter verticals, and to the newly acquired sports product,The Athletic. From digital-only alone, it earned about $774 million in revenue. The Wall Street Journal reported in its most recent SEC filings for the second quarter ending on Dec. 31 that it had 2.9 million digital-only subscribers, which represented 81% of its total subscriptions. News Corp, WSJ’s parent company, doesn’t break out the publication’s individual subscription revenue. 

Beyond simply being late to the paywall party, Gannett faces the challenge of being a largely local publisher. While USA Today is a national publication, it does take a localized approach to coverage with its USA Today Network that delivers both regional and national news, which can impact the propensity of getting readers to subscribe.

The digital subscriber penetration — or the ratio of total unique visitors to paid subscribers — of national publishers and metro or regional publishers tends to be very different, according to Justin Eisenband, managing director of corporate finance in the telecom, media & technology division at FTI Consulting. While national publishers like The New York Times and The Wall Street Journal toggle between 6-8%, a metro publisher like The Boston Globe sits at upwards of a 4-5% penetration rate, though most are between a 1-3%, indicating that regional papers have a smaller pool of readers that they can get to pay for a subscription, he said. 

Not only that, but the post-Trump slump has led to a slow down in traffic to national news content – a decrease of about 25% in the last six months on average, Eisenband said. Meanwhile, local news is down slightly less at 20%, and both decreases are subject to impact digital subscription businesses, especially when compared to 2020 and there were bumps of 50-60% across the industry in subscriptions to news sites, he said.

This is seen within The Times’ latest earnings report for the full 2021 year. Digital-only subscriptions revenue increased by 29.4% year over year. However, subscriptions to the non-news, digital-only products (like gaming, cooking and The Wirecutter) increased by 46% year over year while the main news product comparatively saw a 27.7% growth rate.

“More of the growth is coming from those vertical products from The New York Times than it is from their core news. So [while] core news is still growing, there’s definitely been a slowdown in news across the board,” Eisenband said.

Gannett’s strategy is emblematic of the Times’. The company has also taken a vertical-focused approach to subscriptions with its USA Today Sports+ membership and its crossword membership. And in 2022, CMO Mayur Gupta is planning on investing in creating topic-specific, paywalled products that repackage evergreen content and sit apart from USA Today’s hard news reporting, which largely remains free to readers. 

As for this being the primary strategy to increasing digital subscriptions this year, Eisenband said it’ll all come down to the execution of the strategy. “A lot of metro papers made the approach of trying to siphon off verticals and it hasn’t worked so well for [those] papers, but it’s obviously worked really well for The New York Times. So it’s about execution, [because] you don’t want to cannibalize your main product,” he said.

The absence of a metered paywall on USA Today is likely to also impact the speed at which new subscribers are acquired. But given the fact that the publisher’s digital advertising and digital marketing services bring in a collective 25% of the company’s total revenue, cutting off the flow of traffic and number of eyeballs on the national and local media sites with the meter could have a negative impact as well.

“That plays a role in how aggressively you want to drive subscriptions because if you’re still monetizing non-subscribers really well, you may not push as hard,” said Eisenband. 

“From a media strategy standpoint, we wanted to make sure we showed up in places that were part of San Franciscans’ daily existence and that we showed up in places we hadn’t been in,” said Bowman. “If we prove success[ful] in the Bay Area, you can easily see [this campaign] expanding and showing up in more places.”

The current ad campaign, which stars TV personality Tan France and highlights care as a main differentiation for the airline, was created by Mekanism and designed to work as a national ad campaign. Throughout 2022, Alaska Airlines plans to continue to advertise heavily in the San Francisco Bay Area and then expand to other parts of California. After that, the airline’s marketing team plans to make the case to expand the same campaign to more markets.

It’s unclear how much Alaska Airlines is spending on its increased advertising in California as Bowman declined to share exact figures. That said Bowman did share that it’s the “highest media spend we’ve had in the marketplace in over 10 years” and that “we significantly invested in this campaign in ways we haven’t before.” 

Alaska Airlines spent $12.9 million on advertising during the first nine months of 2021, up from $6.2 million spent during the same time period in 2020, according to Kantar. Those figures exclude spending on social media advertising as Kantar does not track those figures.

Using one region as a test case to eventually increase ad budgets elsewhere isn’t an unusual approach. Tourism boards will often take a similar approach with OOH and print work in one region and eventually expand elsewhere, according to Duane Brown, founder of performance marketing shop Take Some Risk.

Allen Adamson, brand consultant and co-founder of Metaforce echoed that sentiment: “If it doesn’t work with your most important market and your most important target then it doesn’t make sense to throw more gasoline on the fire. If it can move the needle where it matters most it will move the needle in the rest of the country.”

That’s not to say that Alaska Airlines is solely focused on California. The airline is taking what Bowman calls a dual approach to its media with the regional focus on San Francisco as well as the national ad approach digitally on platforms like TikTok. Previously, the airline ran a hashtag challenge, Alaska Air Karaoke, on TikTok which generated over 5 billion impressions, per Bowman. Using both TikTok and more traditional ad placements like OOH in San Francisco helps to “create a broader, more national layer of awareness while we’re going deeper with the care-focused storytelling in the Bay Area,” said Bowman.

“Alaska Airlines’ regional travel campaign approach allows their marketers to better understand local market dynamics, by channel,” said Mack McKelvey, founder and CEO of SalientMG. “We know that 78% of the workforce will be commuting at least part-time in the first half of 2022, especially in rural (88%) and large urban (80%) areas, according to OAAA’s recent Harris Poll. That means, OOH cannot and should not be overlooked, as it offers huge relevance for brands. Alaska Airlines is cleverly integrating a TikTok tie-in to bridge traditional and digital.”

As the social media landscape becomes more competitive, it also becomes more nuanced, according to advertisers. Competition for user attention and media dollars has led platforms to roll out more individualized product features for users and advertisers. And in the digital age, people are increasingly weary of being advertised to, meaning advertisers have to fit their creative into each platform more seamlessly to reach their desired audience. 

“It’s making them focus on the platforms where [customers are] experiencing the advertising instead of just the brands and what the brand has to say,” Piper said.  

As Brandon Biancalani, head of paid media at social agency Modifly, put it, the ad experience has to become endemic to the platform. Meaning, users are looking for ads to be an unintrusive part of their social media experience, and advertisers will need to be more mindful of how they appear on each platform. 

“That’s kind of been an ode since the beginning of internet marketing; people don’t want things shoved down their throat,” Biancalani said. “Instead, we have seen success with user-generated content snippets, entertaining product value videos, and use of relevant trends.”

For a large swath of advertisers, social media is the go-to platform to authentically get in front of a generation of shoppers who increasingly do not want to be advertised to. Historically, brands have had a set-it-and-forget-it approach, setting up social media business managers and running ads across platforms, per Biancalani. But as people’s social media habits change, advertisers will need to take a more granular approach. It’s part of the reason influencer marketing is booming right now, he added.

“There’s a lot of business integrations now on these platforms that I feel like a lot of brands aren’t fully taking advantage of,” he said. “Specifically, they just want to set up their business manager and start running ads — and there’s a lot of integrations now for businesses to be literally seen even organically in these platforms.” 

It’s something that Biancalani said Pinterest and TikTok have done well. TikTok users are more likely to resonate with ad creative that is real and native to the platform. Meanwhile a hard sale, product conversion video may better resonate with Facebook audiences, he added.

“It’s not a peanut butter spread approach,” said Sennai Atsbeha, vp of brand marketing at Gymshark apparel company. “We can’t approach every community with the same strategy.”

As the nine-year-old brand looks to scale and reach new audiences, Atsbeha said the social-first company ensures an authentic partnership with each influencer it works with based on that influencer’s platform of choice. 

“That content is very different from some of these other platforms,” he said. “So it’s important that we understand what makes the content different, what makes that athlete or that individual special within that space.”

It’s a similar story at State bag company, where CMO Meghan Holzhauer said the brand works with a lot of content creators and influencers to keep the ad creative feeling native to the platform.

“This UGC style creator content has consistently been some of our best performing creative so we’re doubling down on the strategy,” Holzhauer said in an email. 

With each passing generation, shoppers are getting smarter and more particular about how and where they interact with brands, according to Courtney Berry, managing director at Barbarian, a creative digital agency. Going forward, the changes are going to push advertisers to think about social media advertising in the context of a full-funnel marketing strategy — one with multiple parts, she said.

“Thinking through all of that complexity and that nuance at the beginning of the campaign is very crucial,” she added. 

I spoke with Kinsa’s cmo Andy Yost as well as vp of data science John Zicker about their work with brands, agencies and retailers.

The following has been edited for clarity and condensed for space.

What makes Kinsa’s data different?

Andy Yost: What’s unique about us is our predictive real-time illness insights allow us to work with consumer packaged goods brands to fuel smarter business decisions around media planning, but also around supply-chain management decisions. It allows them to get ahead of where illness is striking and take action quickly. An early strategic advantage for us over others is our ability to collect three key data sets: where illness starts — people who are using our product before going to the doctor; how fast illness is spreading; and understanding illness severity. Those three unique inputs have really helped us create a very interesting and compelling offering for enterprises, like the packaged goods industry.

With whom do you share that data, and what’s the process for sharing it? 

Yost: There’s a range of ways that we’re working with consumer packaged goods companies. We identify the brands that this is most relevant to cold and flu [remedy] manufacturers, talking to CMOS and brand managers of those companies. We also work with their agencies, particularly around media spend and media optimization. And we’re having conversations with retailers, which are working with these brands to make sure that products are on the shelves where illness is spiking. It’s also led us to interesting partnerships with players like The Trade Desk, where we’re able to help our brands and our agency partners make more effective decisions around their media spend.

How do you gather the data and make it ready for prime time for brands and agencies? 

John Zicker: We’re collecting information in the household at the time of need, which all marketers really care about. Somebody feels feverish, they grab the thermometer, and then it opens up a conversation where we collect other symptoms — cough, headaches, chills, body aches, those types of things. Using that, we then can combine it and match that up with whatever [brand or marketer] we’re working with. The other thing is, unlike publicly available data about illness, we aggregate that into DMAs, which [is] how marketers think — as opposed to the whole state or the whole nation. So it’s better targeting.

What brands have you specifically helped? And how did your data impact their media? 

Yost: [Reckitt Benckiser’s ]Mucinex is a good example in terms of our ability to partner with a brand and subsequently their media planning aspects of what they were doing for the business. It played out in a couple of different ways. One, there was incremental sales lift [81 percent, according to a Kinsa case study] that we saw for people who are new to the brand after running digital ads in the areas that we were seeing illness rise. There was also incremental sales lift that we were seeing in test-and-control groups with our audience versus audiences in general. So overall, we were able to prove the effectiveness of the hyperlocal aspect of this. We are able to help brands make decisions faster about the investments they need to make, which ultimately leads to either improved sales performance and/or savings in terms of their investment in media.

What is the revenue play here? 

Yost: Our overall mission is around helping curb the spread of infectious illness through early detection and early response. We’ve built this system within the past 10 years that does have the thermometer aspect to it, but it also has this important insights business. There are monetization opportunities, both on the consumer and the enterprise side related to that.

Color by numbers

A study of 3,021 women commissioned by Omnicom Media Group and Dotdash Meredith and conducted by The Harris Poll identified what it dubs “The Future Majority” — a cohort composed primarily of Black, Latina, Asian American Pacific Islander (AAPI) and LGBTQIA women under 40. This growing group has strong opinions brands and agencies might want to pay attention to, including: 

• 75% of survey respondents agreed with the statement: “I can’t name more than 5 brands that I have a deep or intimate relationship with (i.e., a brand that ‘gets me’)”;
• Another 34% of respondents have already walked away from brands that do not align with their values;
• Some 64% say, “I’d rather pay a little more to buy from a company that aligns with my values, than pay less to buy from a company that doesn’t”;
• Even scarier, 81% report experiencing direct or indirect discrimination in the last 18 months.

Takeoff & landing

• Omnicom, Comscore, VideoAmp and Discovery Networks are banding together to create new currencies for TV measurement in advance of this year’s upfront marketplace. Separately, VideoAmp said it will use viewership data from Comcast’s cable footprint (at last count some 18.5 million) to its cross-platform measurement service. 
• Stagwell had a busy week: Not only did the holding company enter into affiliate partnerships with three African agencies (digital shop Incubeta, media shop SBI Media, and PR firm Orient Planet Group), it officially rebranded the merged Assembly/PMX Forward media unit under the Assembly name and rolled out a new logo. 
• Personnel moves: Erica Hoholick was promoted from president/COO to CEO of independent agency 22Squared.

Direct quote

“If you look at all of linear TV, that’s now moving across to streaming apps and platforms, but currently, there’s only limited amounts of that that you can buy programmatically. There’s a few reasons for that, as a lot of publishers are worried about their [advertising] yield, they’ve held back their best inventory [from programmatic trading] because they’ve been concerned around being paid fairly for that … They’re concerned their inventory will fall to the bottom of an auction, and they won’t get paid well by the inventory landing on an auction that’s outside of their control. At the same time, you also have clients that don’t spend as much as they should programmatically, as they’re concerned about what they pay and where their money lands.”

— GroupM’s global head of investment, Andrew Meaden, explaining the rationale for creating a new programmatic marketplace, which the media network announced last week.

Speed reading

• I broke a little news about Omnicom’s Annalect platform partnering with Affinity Solutions to get exclusive access to a trove of credit- and debit-card data solutions to feed into its Omni operating system. 
• Digiday’s senior marketing reporter Kimeko McCoy looks at how one DTC advertiser is broadening its media mix in the face of rising CPMs and weakened targeting.  
• Digiday marketing editor Kristina Monllos digs into how yet another marketer, Abercrombie & Fitch, used Tik Tok in an innovative way to refresh its brand. 

For the first time since that office launched in 2020, those execs feel like they’ve got a firmer handle on what Reddit is: a virtual town hall where people go to learn from one another about specific topics, from anime to stock market tips. 

Like they do elsewhere, advertisers can reach Reddit users through a mix of in-feed placements takeovers, promoted videos, app install options and other tried and tested formats. What makes it all that much more interesting, according to the agency execs, is the platform’s ability to contextualize advertising. 

This is to say it’s an environment geared toward passions and fandoms where marketers can call on the platform’s niche interest targeting to place ads in the relevant sub-Reddit group in the right context so people there might be more willing to click on an ad. It’s a proposition made all the more intriguing by the fact that increasingly those people are more upstream along the conversion funnel. 

“What we do well beyond having de-duplicated reach and our interest graph, is that at that moment when someone is researching a product they’re thinking about purchasing, they’re increasingly coming to Reddit,” said chief operating officer Jen Wong. 

It’s a key part of Wong’s strategy: pointing to the fact that a high percentage of people searching for things on Google are then going to Reddit to find out about their search. Unsurprisingly, this SEO point has piqued the interest of marketers.

“The feedback we’re getting from the market here in the U.K. is that our attempts to grow the advertising business are working so far,” said Wong. 

The results back this up: invoiced ad revenue for the U.K. and EMEA increased by more than 250% year-on-year in 2021, while the number of advertisers it worked with in the region has jumped 55% over the same period. Granted, these growth rates are skewed somewhat because they’re from a small base. Nevertheless, they show there’s an appetite for those ads — a vindication of sorts that the company’s decision to open the international office at the height of the pandemic was ultimately the right thing to do, said Wong.

Since it opened, the London office has grown to employ over 150 people. And the recruitment drive is showing no signs of slowing down. Currently, there are 16 roles open at the office — the majority of which are connected to supporting Reddit’s ads business.

Initially, those execs talked agency representatives through what ads on Reddit could do for their clients. Increasingly, those meetings are about deals that give those clients discounts, early access to products and exclusive links to talent in exchange for a commitment to spending a certain amount. 

“Whilst Reddit’s pitch is focused across the entire client portfolio, they are happy to build bespoke terms/opportunities for clients that could offer Reddit growth year-on-year,” Emma Morris, managing partner and head of investment at Starcom. “They’ve been keen to understand the individual nature of our clients’ business challenges and create a partnership that helps address the needs of their businesses.”

Some of those partnerships are further along than others. In fact, negotiations for an advertising deal with WPP are reportedly in the works with WPP, per the Financial Times. Expect more of those deals to be brokered from its London office. 

“We’ve invested in an agency team there [London] that’s allowed us to educate the market at scale,” said Wong. 

That said, there’s something for advertisers of all sizes, she continued. 

There’s the aforementioned agency team for larger advertisers that need additional support, a research and insights division to support those medium-sized advertisers that tend to work with Reddit directly as well as an automated ad marketplace for advertisers, particularly smaller ones to bid on inventory.  

“There are a lot more advertisers that could be on Reddit, many of which will come from the SMB and mid-market segments — all these segments will be important to how we grow the ads business moving forward,” said Wong.

It’s clear where the popular — but controversial — online discussion forum’s priorities are. 

After all, there are few better ways than advertising for platforms like Reddit to generate consistent healthy returns. Even more so for an unprofitable company poised to become publicly listed. 

But the path to profitability is paved with challenges for Reddit. 

Yes, the platform can influence culture as it showed last year when it was at the heart of a meme stock frenzy. In fact, it helped push quarterly revenue past $100 million for the first time. But the veracity of the event also highlighted Reddit’s biggest issue in securing media dollars: those message boards at the heart of the event were raucous places for even the most liberal of advertisers as Reddit’s outspoken users got caught up in the cut and thrust of a stock rally that saw some make life-changing sums of money and others lose life savings.

Still, Reddit’s Wong believes instances like this are exceptions, not the norm. The platform has put the necessary checks — three different flavors of brand safety controls depending — and balances — content moderators and a list of preapproved places ads can appear on the platform where — in place. Nevertheless, opinions can be hard to shake once formed.

“Brand safety is definitely a key factor in the hesitance to consider Reddit on a media plan,” said a senior agency exec who asked to remain anonymous due to ongoing conversations with Reddit. “However, the team is acutely aware of this and it’s clear from the work they’ve done with Oracle that they’ve dedicated a lot of time to addressing this challenge.” 

So far those efforts appear to be working — at least to a point. Advertisers like Octopus Energy, Bitstamp, Huel, Capcom, Ooni, Dell, Intel and Adobe are among a raft of advertisers — both local and global — buying ads in the U.K. 

“We welcome new entrants to the advertising market,” said Steven Ballinger, president of Dentsu’s media investment and innovation arm Amplifi in the U.K. “They often provide new audiences and innovation in connecting consumers to brands.”

Agency execs are impressed with what they feel has been a more considered approach from Reddit to getting the narrative right for the U.K. market. Not to mention Reddit’s audience growth. Between 2019 and 2020, daily active user growth grew 48% year-on-year, according to figures Reddit has shared with agency execs who have subsequently shown Digiday.

Impressive as this growth is, it’s still not enough to convince many advertisers to go big on the platform. Not when there are many advertisers still working out how Reddit fits within the media mix (paid and organic). And therein lies the platform’s problem. It needs more advertisers on board to show others what good advertising on the platform looks like, but advertisers don’t want to come on board until they know what good likes like. 

“The main reason advertisers are still trying to figure out what to do with Reddit is because of a lack of understanding,” said Lore Oxford, global head of cultural insights at We Are Social. “There’s also a perception of Reddit having a very U.S. centric, male-dominated audience, which is reinforced by the fact that some of its most popular categories are crypto, gaming and sports. The reality, however, is different given weddings as well as beauty and fashion are some of the other widely discussed topics on the platform.”

Still, execs at Reddit are loath to let a crisis go to waste. With so many ad dollars being moved around for a multitude of reasons, from price inflation to blunt targeting and measurement. There’s a chance, regardless of its size, to position Reddit as a safe haven of sorts for advertisers. 

“Reddit is emerging so doesn’t necessarily have as sophisticated a measurement platform as some of its contemporaries,” said Obele Brown-West, chief solutions officer at Tinuiti — the company’s first independent agency partner. “And yet we’ve done case studies with clients in partnership with the measurement team at Reddi that reveal the impact of investing dollars there. It’s growing and Reddit is bullish on getting measurement to a level that matches what’s on offer at more established platforms. If anything, the team at Reddit wants to go even further.”