Less BS, More Facts, Some Opinions
Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. Advertising Amazon Amazon is a top-10 global ad business, and it’s been able to achieve that status without doing all the things that platforms typically do to butter up the guys with the budget (feting advertisers with open bars and hosting glitzy, star-studded events).… Continue reading »
The post Amazon Is On Its First Madison Ave Charm Offensive; Giving Agencies Their Due appeared first on AdExchanger.
Holidays have long been an economic engine for brands to take part in cultural moments as a means to boost brand awareness. But increasingly, shoppers are becoming wearier of these moments being commercialized. Especially when those moments are meant for and created by marginalized groups.
“Those are real, authentic moments that have real feelings behind them,” said David Tann, founder and CEO of Atlanta-based creative consultancy and brand agency. “When you try to turn those things into capital moments, where you’re trying to make a buck off of it, you’re gonna get pushed back every single time.”
Last week, mega retailer Walmart faced significant backlash after rolling out an ice cream product meant to pay tribute to Juneteenth. The brand has since publicly apologized in a statement made to several news outlets. The holiday, which commemorates the emancipation of enslaved people in the US, became a federal holiday last year under President Biden’s administration.
Old Navy misstepped, suspending its 2021 Juneteenth campaign after influencers critiqued the retailer’s low pay rates.
“A common brand faux pas is the tendency to prioritize the brand over the audience. It reduces the value of the moment to just another selling opportunity,” Shalanna Clark, head of marketing at digital marketing agency Code3, said in an email. “Consumers are very sensitive to that.”
Two years ago, calls for diversity and social justice reached a fever pitch and brands were quick to renew commitments to these causes (or at least have their comms teams release statements saying they were). Seemingly, the movement has since lulled and companies have gone back to business as usual, ultimately falling back into the same mistakes.
According to Tann, it goes back to the importance of having diversity in the room where decisions are being made. “The onus is really on the company to have some sensitivity and have voices at the table that can speak to things in a different way,” he said.
That’s not to say there’s no place for brands and advertisers in moments that matter to niche communities, Clark told Digiday. But there must be an alignment between brand purpose and campaigns to avoid the pitfalls of performative marketing.
“The old-school notion of changing the packaging theme without giving anything back no longer works,” Clark said in an email. “In fact, it adds gasoline to the rage of consumers who are already marginalized at a time when our causes and plights should be in the spotlight.”
Per experts, it’s a concept that goes beyond Juneteenth, applying to moments like Pride Month, Mental Health Month, Women’s History, Asian American and Pacific Islander Heritage Month, Native American Indian Heritage Month and the list goes on.
At Dagger ad agency, director of strategy Abby Hill told Digiday that she asks brands to instead look inward as opposed to outward when looking to participate in those moments.
“If your organization is co-opting a moment for capitalism, maybe consider driving funds to nonprofits or even a small business,” she said.
It’s about building on the idea of brand purpose, Hill told Digiday.
“Brands should say something or get involved,” she said. “But always making sure that it is in line with your efforts and true to the brand in every way.”
What customer-facing marketing strategies is Canva employing to scale the business?
Our best marketing is ultimately our product, which is why we focus so heavily on our product experience. At Canva, we believe that integrating marketing with our product and engagement teams is critical to creating a memorable and consistent product experience for our community, at scale. Building hyperlocal products, experiences, and communities is also central to how we scale Canva.
What internal marketing strategies are Canva employing to scale the business?
There are a lot of different internal marketing strategies we’re using to maintain our unique team and culture while scaling Canva, from announcing and rolling out our approach to the future of work to help retain teams by giving them the flexibility to determine the work-life balance that best suits them, to promoting learning and development opportunities to help our teams grow from within and tackle bigger goals and challenges, to engaging our teams through our #canvalife Slack channel, where our global team posts videos and photos of what’s happening all around Canva.
What has been the result so far? What makes these strategies work for your team?
Our marketing team, which has doubled to more than 300 Canvanauts around the world, has played a critical role in building Canva’s community, taking it from zero nine years ago, to now more than 80 million users in more than 190 countries around the world — with 35 million new users joining the Canva community in the last year alone. Our growing international brand awareness and talent brand campaigns also created a surge of more than 240,000 applications to join the team last year — more than triple the previous year.
Influencer marketing is increasingly becoming a top priority for brands looking to stand out in today’s crowded digital advertising marketplace. While planning and activating in the influencer marketing space has gotten better, previous Digiday reporting shows the industry still has a ways to go in terms of measurement. As influencer marketing continues to boom, a new report from Nielsen reveals key findings. See them below:
“Every business right now needs to communicate their purpose and vision in a different way.”
– Duncan Chater, managing direcor of Bloomberg Media in Europe, on Bloomberg Media’s regional expansion plan into an economically uncertain U.K.
The post Marketing Briefing: As Juneteenth nears, some brands’ lack of diversity shows in their performative marketing appeared first on Digiday.
The problem with valuations of esports organizations is that more often than not, they don’t add up. Sky-high valuations on non-profitable businesses are par for the course in the sector. That’s not a great thing to have going into an economic downturn when investors and marketers alike want to know what their investments actually deliver. The concern is that the only return they get from esports investments is uncertainty.
To determine why esports valuations are so opaque, Digiday contacted five experts across the industry, from league managers to organization heads to journalists — including the author of Forbes’ annual valuation report, the closest thing to a definitive valuation in the space.
Growth versus product
Valuation is a tricky proposition for any business, but it is particularly challenging in the media and entertainment industries, where companies’ production costs and profit margins can be less straightforward to ascertain.
Still, most traditional media and entertainment businesses have agreed-upon core products: sports teams, for example, are united by their shared revenue streams of ticket sales, merchandise and media rights.
Esports organizations, on the other hand, simply haven’t figured out what their core product is quite yet. Media rights, a major revenue source for traditional sports teams, are not a factor in an industry whose audiences are accustomed to watching esports broadcasts free of charge on platforms like Twitch, while live events remain a relatively untested (but promising) revenue source. Merchandise is a proven revenue stream for organizations such as 100 Thieves, but the lower margins of these commercial models are less enticing to potential investors.
“It’s really hard to value pre-product companies — and a lot of esports teams are still ideas, they’re not yet to that sort of product stage,” said esports journalist and longtime industry watchdog Jacob Wolf. “But the hype and FOMO around the industry over the past few years was so high that even though the companies necessarily were in that early stage, they started being valued like they were middle-stage companies.” (This Digiday reporter is a friend and former colleague of Wolf).
Reality eventually caught up. And now that it has, those esports companies are under more pressure to make money. They can’t drop tens of millions on a creator house and say they’re growing with millions of fans worldwide. A culture of spending and asking for permission later no longer sits well with esports’ bankrollers.
Building the funnel
Esports organizations often speak about their business successes in terms of growth: more acquisitions, more fans, more advertising inventory and so on. But the industry is now decades old, and investors are starting to tap their fingers. These days, outside observers are beginning to care much more about revenue streams and actual profits — and Forbes, a publication that serves many of those observers, has taken note. The methodology of its first annual ranking of esports valuations, in 2018, was largely cribbed from Forbes’ longstanding annual valuation of traditional sports teams. These days, it’s become clear that esports valuations are an entirely different beast.
“In some ways, it’s not that different. But what does feel different is that, in those traditional sports organizations, the sports team itself is still the crown jewel; it’s still at the heart of that business,” said Brett Knight, the editor at Forbes who produced the publication’s most recent list of esports valuations. “In esports, the teams themselves are becoming smaller and smaller pieces of these companies. As they diversify, the esports team is seen both internally and externally as less and less important. It’s just one piece of this organization — and in many cases, it’s treated almost as marketing, as promotion for these other businesses. It’s a customer acquisition funnel.”
Early-stage mindset in a maturing industry
Part of the problem is that esports organizations haven’t diversified their business models fast enough. And that can make them seem younger than they actually are.
“Esports teams don’t always look like early-stage startups at first glance — some of them are 10 or even 20 years old, and some are already generating real revenue,” Knight said. “But teams and investors believe that they’re still in the very early innings here. That’s why the multiples with these valuations are higher than you would see on our lists for more traditional sports; there’s an expectation that those businesses are still growing.”
In other words, those expectations create a self-fulfilling prophecy of sorts that esports organizations are more valuable than they actually are. The Forbes valuations can inadvertently fuel this perception. Even so, most industry experts agree the Forbes articles are fundamentally sound and well-reported. They’re just better used as a bellwether of how the biggest esports organizations stack up against each other, rather than a definitive ranking.
Envy/OpTic Gaming, whose portfolio includes a live events business, is among the esports organizations that say they are still in the process of laying the groundwork for more significant revenue generation.
“It’s a very difficult thing to say, ‘well, all the work you’re doing in the background isn’t going to be valued’, because it’s not necessarily revenue-generating at the moment, even though it has asset value,” said Envy Gaming CEO Adam Rymer, who was critical of Forbes’ esports valuation process in a LinkedIn post last year. “My concern is if there’s no consistency in how the methodology has been calculated from year to year, and it can result in big increases or big decreases, then it makes it hard for us to do our job the way we should be doing it, which is just focusing on building the business.”
What makes an esports org an esports org?
The more esports organizations diversify their holdings, the more they’re increasingly finding themselves in direct competition with other operators in the space, from game developers — 100 Thieves recently announced its own plans to get into development — to esports leagues such as ESL. As a result, it is difficult to produce accurate valuations for companies across the space, not just the so-called esports orgs.
“The idea of a single value for the entire esports industry is difficult because it’s always shifting. You can’t get an accurate picture because the movement of sponsors, investments, acquisitions and talent mean it’s always in a state of flux,” said ESL Pro League commissioner Alex Inglot.
The ESL Pro League, for example, has had $20 million of investment from new partner teams over the past year, much of which came via the teams’ external investors. In other words, the value of the teams, to some extent, rests on the continued success and value of the ESL Pro League itself. This is far from ideal for esports organizations, given the cutthroat nature of the industry: if the Overwatch League goes up in smoke, so too do the hopes and dreams of the teams that dropped tens of millions on franchise spots.
This is yet another reason why it is becoming more difficult to accurately value esports orgs. Organizations often point to league franchise spots as tangible, valuable assets: the operating logic is that they spent millions of dollars on them, and so owning them should naturally add millions to the value of the orgs. But with Overwatch viewership declining and Activision Blizzard allowing teams to defer the payment of franchise fees, it is becoming increasingly unclear whether observers such as Forbes to take the financial worth of these franchises at face value.
The Forbes valuations are a much-anticipated annual event in the esports industry — but in future years, it might not necessarily make sense to compare the diverse spread of companies now known as “esports organizations” against each other. Already, Forbes decided to exclude Luminosity Gaming parent company Enthusiast Gaming from its latest valuation report, as the company’s public filings indicated that only three percent of its revenue came from esports in 2021.
Right now, many esports organizations are more brand hype than tangible value. And while the holding company model might help esports organizations figure out how to turn a profit, it doesn’t make it any easier to determine their true worth.
“I think the word ‘esports’ probably doesn’t fit as well as it did once upon a time, in terms of what we are because it seems to be a one-size-fits-all word for what these companies are,” Rymer said. “And when you get into it, esports is part of what we do — but we’re really about building brands and communities around gaming.”
The post As esports organizations widen their revenue streams, valuation continues to be a challenge appeared first on Digiday.
Subscribe: Apple Podcasts • Stitcher • Spotify
Born out of a college class project in 2017, Front Office Sports is entering its fifth year with an eye on growth.
Earlier this year in February, FOS got a round of funding from Crain Communications, which bought a 20% stake in the company on a $25 million valuation. Founder and CEO Adam White said that the company is on a path to profitability this year between the investment and the success it’s seen in revenue streams like its year-old learning business. In total, FOS is projected to earn eight-figures of revenue this year.
On the latest episode of the Digiday Podcast, White talked about using the influx of revenue and investment to grow the FOS team, which is now at 40 full-time employees, including the recent hire of Lisa Granatstein as its chief content officer from Adweek where she served in the same role. Earning 99% of its revenue from advertising still, Granatstein will be responsible for finding more sponsorship opportunities on editorial projects, as well as growing the Pro subscription product that’s still in its beta phase.
Below are highlights from the conversation that have been lightly edited and condensed for clarity.
This is really about operationalizing and connecting the dots between editorial, sales, the subscription business, everything, right? So the newsletter drives the business right now and is the biggest area that we’ve invested in. The site product is continuing to be really high quality, we’ve seen a lot of really good success there. We’re doing a million-plus pageviews a month [on the website]. On the newsletter, we’re doing 25 million opens per month, and on social we’re doing over 200 million impressions.
Now, it’s really about how do we operationalize and package everything. Bringing Lisa on, you start to look at her background, and she was at Adweek for about 10 years and a few other places before then, and so her real remit is, how do we take the newsletter to the next level? How do we take the site to the next level? How do we bring our content to life through events – that’s an area that we tested, and saw early success, pre-pandemic, [but] haven’t gotten back to that. So how can we find more success and start to build out and bring our editorial product to life through events. You look at the pro business, you look at some of the other opportunities from a podcast standpoint that we can look into.
And then having her be able to operationalize and work with a cross functional team that is saying, how can we find ways to work with the sales team to package things around key tentpole moments, like Title Nine is a big opportunity that we’re working on right now that we’re focused on. How do we package a Title Nine opportunity for brands across social, newsletters, events, etc.
Our approach was, can we create something where we can provide truly a professional education opportunity that’s online, that’s go at your own pace, and that we can bring brands into? Pepsi took the first stab at it with us and we had over 10,000 people enroll in that class, which was absolutely insane. The average time spent was two hours. I always now go to brands and I say, “When was the last time you know, for a fact, that someone spent two hours engaged with your content? It’s almost impossible.” There’s no other type of partnership really in the market, in my opinion, where a person is spending two hours with a brand.
And obviously, it’s not just branded content, there’s a whole educational aspect. There’s a quiz aspect, it really feels like an online education certificate because it’s meaningful. And then at the end, all of the people who take the course get online certification digital badges to go on Linkedin.
The Pepsi one was a smash hit. Facebook then signed on for one. We have Ticketmaster running one right now. Coinbase is launching here shortly. Facebook saw so much success in the first one, they’re coming back for another one. I expect us to probably do probably six to eight more potentially with some of the conversations that we have ongoing right now.
It’s one of those other key trends that we identified as all of these brands want to provide education. And so you can mix that with the opportunity [of] people sharing [the certification online after] and it’s a true thought leadership opportunity. Brands are bringing in other partners – Pepsi brought in their agency partners into this. And realistically, if we do our job, I would expect us to have probably north of 100,000 people enrolled across all of our courses by the end of this year.
They are people who understand media, they understand the opportunity that we have presented, and so we’re just now figuring out the cross functional stuff, right? That investment happened in February, so it’s only been a couple of months. We’ve been talking with their other brands about opportunities to do cross promotional events, [such as] showing up at tentpole events, with potentially Ad Age at the Superbowl, for example, right? We’re starting to talk about cross promotion from a content standpoint. How can they pull in our content to their various publications, things like that.
I’ve talked to every single one of their brands about our course product and how they can potentially implement it. I’ve talked to every single one of their brands about our newsletter technology and how they can potentially implement it.
The post How Front Office Sports is leveling up its branded content business through educational courses appeared first on Digiday.
