Month: May 2022

Following two years of drought-like conditions movie theaters experienced over the course of the pandemic, Dr. Strange’s performance is being heralded as a harbinger of the return of a blockbuster summer again. 

The forecast for in-cinema advertising was looking up even before movies started to draw significant crowds again. IPG’s Magna unit is predicting cinema advertising in the U.S. will grow 168 percent in 2022 to hit $444 million in total. (Statista states North American in-cinema advertising will grow to about $700 million, well shy of the $1 billion-plus it had reached in 2019.)

“Cinema has always played a prominent role in our holistic video buying strategy,” said Dave Sederbaum, executive vp, head of video investment, dentsu Media U.S. “We do feel that there is some positive momentum and confidence in cinema as the box office continues to show positive signs of recovery.”

“There are many reasons cinema could play an important role in a client’s media mix,” said Tracy Chavez, executive vp, director of investment operations at Publicis Media Exchange (PMX). “The use of large screen sight, sound and motion is always an engaging way to drive awareness of a message and a complement to a holistic video campaign. Proximity to location is a strong driver for many of our brick and mortar clients as well.”

John Partilla, CEO of Screenvision, acknowledged the company won’t yet return to pre-pandemic ad revenue levels in 2022, even though it will more than double the 2021 number. “It’ll take us another year to get back to where we were in 2019,” he said.

Ross Benes, analyst with Insider Intelligence, doesn’t believe there’s much to get excited about, though. “There is growth in this industry and there is opportunity, but it’s never going to be like traditional television advertising,” said Benes. “It’s a nice niche to have if you’re a brand marketer who can spend a bunch of money since it is a large screen, you can’t skip it, and it has prestige to it. But there’s really a limitation on how much exposure you’re going to get.”

Both cinema ad companies are trying to change that perception by rolling out new products and services to better compete for video or mobile ad dollars. Screenvision will introduce through its private PMP what it’s dubbed an “advertainment” app, called Trailer Pack that will launch on CTV platform Roku, showcasing movie trailers but with an AI twist in that it tries to learn the user’s film preferences, creates customized trailer reels that brands can sponsor.

Screenvision is also introducing a new DMP called Cinelytics, that blends first-party data from Trailer Pack and other properties with second-party loyalty data and third-party location, and behavioral targeting, Martino explained. Working with data from Catalina run through its Liveramp attribution platform, Screenvision tested a CPG client she declined to identify, that saw a 4.5 percent sales lift. “If we can actually show that cinema dollar works harder on your media plan, it’s okay that we might be a little more expensive,” said Christine Martino, Screenvision’s chief revenue officer.

For its part, NCM in March announced its data intelligence platform NCMx to boost its linking of first-, second- and third-party data to offer a more comprehensive view of the moviegoer before, during and after going to a theater.

But it hasn’t been easy for either Screenvision or NCM, which had to rely on stimulus money from the federal government to make it through the dark days of the last two years. Staffers were let go, and the companies had to limp along with minimal revenue coming in. 

Barry Frey, CEO of industry association Digital Place-based Advertising Association (DPAA), credited both companies for partnering with other DPAA members that needed sales boosts, which kept the in-cinema sales teams occupied and employed. “These were good partnerships and many of them continue today,” said Frey.

He also cited the cinema companies’ moves to ramp up programmatic selling opportunities, enabling cinema to be considered alongside mobile and video budgets. “The business strategists and the engineers had the chance to really connect the programmatic ecosystem [during the pandemic], that now they’re seeing the benefits of.” 

Benes countered that programmatic remains a small part of the overall digital out-of-home business being transacted. 

Still, cinema ad firms have time on their side, as audiences have gotten used to the pre-movie experience offering a blend of ads, trailers and content. Consumer insights platform asked a  panel of 168 respondents through its Feedback Loop unit about in-cinema ads. Of the 73% have that been to a movie in a theater in the past six months, 84 percent noticed advertisements before, during or after the movie. Among them, 62 percent of people said they like advertising in cinemas, 20 percent said they had no opinion and 18 percent said they didn’t like them.

A recession in the near term is possible, but not probable

Everything is cyclical, and nothing more so than advertising and media. It’s an old adage but advertising is a bellwether for the economy, and with many of the large media companies catching a cold in the opening months of the year, you can almost guarantee that a recession is looming. 

Emphasis on the almost. That is to say, a recession isn’t necessarily around the corner. Consumer spending, investment and job growth remain healthy — for now at least. Still, marketers are feeling jittery. They know things are going to get worse before they get better. That’s an unavoidable truth of rampant inflation. More people are more price sensitive. But they’re not that price sensitive. Otherwise, some of the largest advertisers wouldn’t be so confident in their ability to pass price hikes on to retail customers directly and consumers indirectly. They said as much on recent earnings calls. 

Time and again CPG CEOs were questioned on whether the fact that the overall cost of gas, food and other everyday items is increasing at its fastest rate in more than 40 years would stunt their ability to grow, and each time they downplayed it. The view being that people are still prepared to pay those high prices even if they don’t like it.

No wonder marketers aren’t panicking just yet. Advertising budgets continue to be managed at relatively fixed percentage levels of newly increased revenues, leading to higher advertising budgets. Indeed, IPG’s Magna unit, one of the three principal advertising prognosticators among the agency holding companies, revised its growth estimate of total 2022 U.S. ad spend to be a slightly more sobering 11.5 percent compared to last year. That estimate would still put spending at $320 billion — marking the first time U.S. ad spend is expected to break $300 billion, but one percentage point less than the 12.6 percent it had forecast before Russia’s invasion of Ukraine. 

“There is doom and gloom but it’s not totally warranted,” said Brian Wieser, GroupM’s global president of business intelligence. “Last year was an unprecedented year of growth, and this year we’re likely to see what will almost be an unprecedented year of growth. The problem is a relative one because if the market decelerates from 25% in the U.S., or in the case of the U.K. from 40%, to something like 10% then that might feel bad but its way stronger than any other normal year.”

The question is how long can those price hikes continue to defy gravity? The income squeeze is getting tighter and there are fewer people by the day who are able to afford the level of borrowing they either want or need. Simply put, it’s the uncertainty that makes inflation hard to grapple with, not the actual thing itself.

A tough job just got tougher

Big profits are becoming even scarcer for the largest media businesses. How scarce? Enough to show that the bloom is off the rose for streaming. For all the excitement around the business model, it has not created any real free cash flow for its main stakeholders. On the contrary, it has incinerated billions of dollars with no end in sight. And yet investors were happy with this cash burn for years as long as it drove subscribers. So Netflix pumped billions of dollars into programming, playing it by the numbers, while its rivals tried to figure out a transition to the new era of consumption that would not break legacy media’s spine. Whether it can be done remains to be seen. But the signs don’t look good. That much was clear when media CEOs recently reflected on their struggles so far this year. Some fared worse than others, of course, but they’re all grappling with the same problem: the cost of content continues to soar as it becomes harder to hold on to subscribers. Or to put it another way, the momentum gained by streaming services during the pandemic is proving hard to sustain. 

The glass-half takeaway from these updates: these services should at least still continue to grow — just not as fast as they have done. A bleaker conclusion is that the business of streaming — and more broadly media — is becoming even less profitable. No wonder advertising is no longer as dirty a word as it has been in these circles. Netflix and Disney are both pursuing advertising models for their own respective services as a way to kickstart momentum.

“Our research indicates advertising will continue to provide improved consumer access and choice in where and how they consume media content and will remain an important part of the media and entertainment value chain,” said CJ Bangah, a partner at PricewaterhouseCoopers. “Advertising, and broader industry business models, will evolve in the coming years given the current environment. We forecast enhanced attention on ad relevance, performance, measurement and consumer centricity in the coming years that will transform the role advertising plays in the broader entertainment and media ecosystem.”

A window of opportunity

Downturns aren’t bad for everyone — especially in an economy as volatile as it is. Remember, this slowdown has been brought on by a glut of money that supported the world economies during the pandemic and the uncertainty that is now hitting markets due to political events, said Paul Coggins, CEO of mobile advertising firm Adludio. The current incumbent media leaders tend to capitalize on ad revenues and subscriptions for their investors, rather than investing huge amounts into innovation, he added. 

“So what we are likely to see from the upcoming recession is the next media challenger brands coming to the fore, which is ultimately good for competition, good for consumers and good for the advertising and media ecosystem,” said Coggins. “Web 3.0, for example, is the new frontier, yet there is no one business owning the hardware or delivering a solid consumer user case.”

Expect that to change sooner, not later, given the amount of money pouring into defining the metaverse. And whilst the likes of Facebook are already investing funds into this, the winner is actually likely to be an unknown startup, said Coggins.

The demise of third-party cookies is also an occurrence that (theoretically) means publishers are in a good position and brands in an even better one; it’s the third-party ad tech intermediaries that are on notice.

But in their candid moments, executives at such entities across the board say they’re concerned over the scarcity of first-party data within their ranks and are trying to bulk up their relationships to prolong effective customer communications long after third-party cookies have crumbled.

Marketing departments at CPGs — a business vertical that has historically been disintermediated through their reliance on retail partners for consumer access — have been making significant strides in this regard since the sunsetting of traditional identifiers became clear in 2020.

Speaking recently at Digiday’s Programmatic Marketing Summit hosted in Palm Springs, California, Marykate Byrnes, director of media and growth at La Colombe Coffee Roasters, shared the insights from her efforts to future-proof the company’s marketing strategy.

In conversation with Tim Peterson, senior media editor, Digiday, Byrnes shared that brands are prepared to pay higher CPMs, as long as they can measure results consistently, that her team was building a “customized approach” to avoid seeming creepy to consumers, and it’s best to be open with partners to better vet data sources.

“Our overall strategy has shifted to focus on channels that are going to be able to provide consistent reporting across all of our metrics from top to the bottom of the funnel,” said Bynes, adding that she expects to see a rise in the cost of ad inventory this year.

She further detailed this involves ensuring retail partners pass back sales data on a timely basis, plus ensuring that “CRM lists are getting scrubbed” in a matter whereby her team can demonstrate how the brand’s ad spend is contributing to “bottom-line business goals.”

She went on to explain, “We are working to unify our point-of-sale systems, in cafes and on the online platform that’s gonna open up a lot more. We’re just starting data on trends that are really gonna apply across campaigns which is fantastic as it’ll also help inform our promotion strategies and products.”

La Colombe’s media team also intends to invest in customer acquisition efforts on email and SMS as those channels have a higher propensity to generate conversions, plus customers that do regularly demonstrate higher purchase orders, noted Byrnes.

She explained how her team intends to construct a cohesive plan using a single framework and assess how it is delivering against its earlier projections on a monthly basis for the remainder of 2022. “We want to make sure we’re giving everything enough time to gather data to make sure it’s useful,” added Byrnes.

This involves working with its agency BIG to develop “custom cohorts” of audiences using its CRM data in a manner where they can “follow users in a way that is less creepy” to ensure their ad campaigns are delivering on “ a real bottom line, and not just media metrics,” according to Byrnes.

The return to travel has come back in nearly full force and for a media brand like Condé Nast Traveler, that’s music to its editors’ ears.

Like any travel publication in March 2020, CNT needed to pivot its editorial output to include more news about travel restrictions and less about where in the world its readers should jet off to. Since then, however, the brand has been able to pivot back to a degree, only now it has two years’ worth of organizational changes and international collaboration to add to its content. 

As one of the brands under Condé Nast International that has reorganized to link all of its seven global editions under one editorial director, CNT has created a number of editorial packages and initiatives that include contributions from the writers and editors in the United States, the United Kingdom, Italy, Spain, the Middle East, China and India. 

But the international collaboration has also changed how global editorial director Divia Thani, who is based in London, and deputy global editorial director Jesse Ashlock, who is based in New York City, run their teams and lead editorial direction across several time zones. 

In the latest episode of the Digiday Podcast, Thani and Ashlock discuss how they’ve been tracking the return of travel and how they’ve expanded their editorial strategy to pull from the whole Condé Nast Traveler ecosystem after their international reorg. 

Highlights from the conversation have been lightly edited and condensed for clarity. 

Travel is back and perhaps bigger than ever

Ashlock: There was a kind of incremental return [last summer] and then it was like a dam that burst and I think that the dam is going to be completely washed away come Memorial Day. There’s a lot of traveling to make up for lost time and people are reevaluating their approach to travel. [They’re] thinking about trips that they didn’t take before the pandemic because those trips were available to them whenever they wanted them and then a couple years went by when they couldn’t take that trip, so they’re like, “Oh, better take that long haul, bucket list, dream trip, and not the domestic weekend trip.”

Thani: There have been a few stops and starts and pauses this past year — and that might continue to be the case — but what’s happening now is that people are just ready to get back out there. One big difference we’ve seen in the past few months is that whenever anything changes in the world, they’re no longer canceling trips. Travelers really are just changing the location if for some reason, you’re [going to] a place that is closing borders, or cases are rising or anything like that. They’re switching over to a different destination, but they’re no longer canceling their trips.

And they’re very optimistic. They’re booking far ahead. It’s kind of impossible, already, to get a villa in Greece already for the summer.

International collaboration first came from necessity 

Ashlock: We had to tear up some issues completely in 2020 —  a lot of people did — and the truth is that actually the first time that I really became aware of who Divia was and how great she is, is when she proposed a global collaboration called “Under One Sky.” [It] was the first time that all of our editions came together before this whole global thing happened at Condé Nast and we did it as an expression of solidarity with the global travel community.

Thani: It’s something that happened completely organically. All seven editors from across the world came together and all of us had to rethink what we were going to do because no one in the world at that time was traveling. It was a chance for a Traveler to really take a stand and really think about who we want to be in that kind of environment. For us, it became really clear that we were all united for the first time, and it really showed us that we want it to be where to stand with our partners in the travel industry in their most difficult time. 

It [also] showed us that we could all work together in a really amazing way and still take one theme and be able to express it differently across all of our regions for our audiences. And I think that that continues to be so important to Traveler, even now. 

The logistics of becoming an international team

Thani: The time difference really can kill you. It’s very, very draining to be working with so many different markets when there’s such a difference in the time zones. However, I think that a lot of that is growing pains and when you start working together for the first time, it doesn’t matter if it’s in the same room or in the same team. Obviously, it is complicated by the fact that there was a pandemic, and we couldn’t meet each other [but] I think that we learned you really can build incredible relationships, even through Zoom.

Condé Nast has been incredibly supportive in really helping the editorial teams come together in different ways. And I think that they’ve been very instrumental and very understanding of the fact that they gave us an enormous task. And there was this attitude throughout the company, that it’s going to be hard, but we’re going to do it together and we’re going to figure it out as we go along. And that was the point where I think those words were starting to grate on us. But I think that they’re true. 

Benefits of being international

Thani: It was a very hard year for all of us, [but] in this new year, I think all of us have seen some of the benefits of what this organizational change has meant. And I think you really need to see the benefits before you can truly believe in it. We’re at that stage now, where we’re starting to see the positive effects of all of the changes, [like] being able to work with all of these people from all of these teams around the world. [We’re able to get] their local expertise and knowledge, [as well as] ideas and stories from across the world that you otherwise would never have access to. [And] we are able to call anyone from any of these places and say, “I have a question about this particular hotel or this region.”

“So much of TikTok’s success is tied to its creators,” said Swap Patel, executive director of media at McKinney. “Larger, more established players like Google/YouTube have, for years, not only helped creators make a name for themselves but also incentivized them with a cut of the revenue amassed via the YouTube Partner Program. So it’s only natural that TikTok now offers this as well.” 

With the announcement of the Pulse ad product, agency execs believe this is part of a larger shift for TikTok to more fully embrace the fact that users turn to the platform for entertainment more than social media. “This change will reinforce TikTok’s position as an entertainment platform, closer to YouTube and further from Instagram,” said Danielle Kim, associate director of strategy at Stink Studios. 

Agency execs noted that while TikTok had been garnering roughly 10% of the social media ad budget in previous years, they expect that percentage to increase to between 10-20% of the spend. At the same time, some agency execs wondered if the shift to be more of an entertainment platform could have brands move ad dollars from other entertainment sources like linear TV rather than simply getting more of the social media budget. 

Given that TikTok’s entertainment comes from creators, courting them to continue to build on the platform with an ad revenue share makes sense to agency execs. “This is one big step on a path of much more needed steps,” said Alexis Madison, associate director of digital strategy at Deutsch NY. “Creators give TikTok their power.” 

However some questioned the platform’s cap of 100,000 followers for the program, noting the power of smaller creators. “[Marketers shouldn’t] just stop at creators with 100k followers,” said Chelsea Smith, associate director of influencer marketing at Campbell Ewald. “Micro influencers have a wealth of knowledge and influence that enable brands to go beyond mass reach to engage with more specific audiences.” 

Others question TikTok Pulse’s focus on the top 4% of content and whether or not that would differ from where brand content is already showing up. “All advertisers want more control of placement, adjacency, etc., so this is certainly a benefit,” said Jason Dille, evp, media at Chemistry. “However, with the top 4% of videos already taking a large portion of user’s consumption, many brands were probably already there.”

3 Questions with Cariuma’s chief digital officer Felipe Araujo

Shoemaker Cariuma doesn’t have a so-called marketing playbook. Why is that?

It’s more about the process than the playbook on what we should do. It’s more about putting that customer first, understanding where she is, what she’s looking for and building the ecosystem around her versus the other way around.

What does that look like in practice when it comes to building a media mix? 

It changes throughout the year. There’s seasonality of the platforms as well and we’re learning that. That’s why it’s so important for you to have a diversified channel mix. At different times of the quarter or the year, you’re seeing this channel is working really well.

Last year, we saw a lot of success on channels like ​​LiveIntent and channels like Google, outside of text ads, going more into shopping, smart shopping, discovery units, YouTube, etc. We saw that display grew its share in terms of efficiency. We still have success on Facebook and Instagram, it’s just that the mix has changed in terms of how reliant you are on [them] and what [they] represents in your media mix.

What has been the result of the flexible media mix approach?

We have created this culture of iterating, learning, testing and not being scared of failing. Not every test needs to be successful. The failures are as important as successes. — Kimeko McCoy

By the Numbers

After two years of the pandemic, the ways in which marketers are getting in front of shoppers has changed over the last two years. Budgets that were once tight have since recovered and new marketing channels have emerged. This year, marketing budgets across the globe have gotten a major bump, according to a new report from social listening company, Mention. Find details from the report below:

• 59% of marketing managers who responded to the survey say their budget increased in 2022.
• 72.5% of survey respondents said brand awareness is the key goal of social media marketing efforts.
• 41% of respondents reported that the main difference in their marketing strategy post-pandemic was investing in new marketing channels.  — Kimeko McCoy

Quote of the Week

“The office just needs to have a different purpose. Coming together face-to-face is nice. I don’t think it’s critical for building relationships.”

— Emma Sexton, founder and CEO of Hands Down Agency on remote work and the future of the office.

What We’ve Covered

• How Omnicom Media Group is making sense of clean room complexities
• Marketers are adapting to new ways of working with creators
• Overheard at the Digiday Programmatic Media Summit

That’s when a process called “dunning” comes into play.

WTF is dunning? 

Dunning is a 17th century term that means “to make persistent demands upon for payment,” according to the Merriam-Webster Dictionary.

In a modern media context, it is the process of reminding a paying subscriber whose payment has already lapsed to update their account with new payment information to keep their subscription active. The dunning process kicks off the moment the first payment fails and you try the card again. 

Canceling subscriptions due to lapsed payments — or basically any sort of cancelation that occurs without the customer intentionally reaching out to stop their subscription on their own accord — is also known as passive churn or inactive churn, according to Justin Eisenband, a managing director in FTI Consulting’s telecom, media & technology industry group.

Why is dunning important? 

On average, passive churn accounts for anywhere from 20-60% of a publisher’s total churn base in any given period, Eisenband said, but it’s also significantly easier for a publisher to recover this cohort of drop-off.

“In terms of the share of churn, it’s really one of the most controllable levers you have as a publisher” unlike combatting active churn, where someone is purposefully trying to leave your ecosystem, Eisenband said. With passive churn, odds are that the subscriber either doesn’t realize their card is going to expire or remember that this specific payment to the publisher will lapse as a result of getting a new card or reaching their credit card limit.

And it’s also an incredibly important area for publishers to focus on “because getting your [passive] churn down from 50 to 20% often results in a 20 to 30% improvement in your [overall] churn rate,” he added.

Can a publisher prevent this from happening to begin with? 

Yes. According to Eisenband, there is a “pre-dunning” process that can be done by publishers’ third-party billing service providers and credit card payment platforms like Stripe and Braintree.

These billing services often have credit card updating capabilities where they use their relationships with banks and financial institutions to preemptively update new expiration information after identifying an expired credit card but before actually charging the old card.

This can solve a good chunk of passive churn right out of the gate, Eisenband said, and it’s also the best user experience because “you don’t want to bother your subscribers to say a credit card isn’t working before you try to charge them. If you could avoid bothering them, avoid bothering about payments.”

How many times should a publisher try to charge someone during the dunning process?

Eisenband said that the typical number of attempts is five to six in a month, but timing those attempts to certain days will often have higher success rates.

The first of the month, Fridays and the 15th all tend to be strong days to try, as those are often correlated with when people receive their paychecks, pay their credit card bills or activate a new card.  

When should a publisher bother subscribers about lapsed payment and what should publishers say to get them to update their payment information?

If after five or six attempts payment still hasn’t been completed, that’s when contact with the subscriber should begin.

For Gannett, publisher of USA Today and over 200 regional publications, passive churn accounts for approximately 40% to 50% of Gannett’s total churn in any given period on average, according to the publisher’s svp of growth, Nikhil Hunshikatti. To reduce that percentage, after payment has not been completed, there is a 58-day “grace” window to try and recover lost subscriber revenue, he added.

The first email goes out four days after the final attempt to charge the payment method has failed. From there, eight subsequent emails are sent, interspersed with two or three robocalls and another two or three calls from a live person, he said. 

“It basically starts with just a reminder that your payment method has declined. Then it’s a softer reminder following after a week or two. Then, we have a headline [toward the end of the grace period]. We’re trying different ways to grab the users’ attention along the journey,” said Hunshikatti.

On average, Gannett’s first email is the most impactful in recovering this lost revenue, followed by the second and the final emails, compared to the rest of the communications, he added. The first email has a success rate of 95% in getting people to update their payment. After that, all other combined outreach adds another 2.5% to the recovery rate.

How effective are phone calls? 

The first few calls make the most difference, according to Hunshikatti. 

If a connection is made to the correct person, the first robocall can have a 56% success rate in getting the subscriber to update payment information. An outbound call from a live person has a success rate of between 13 to 15% if a connection is made, he said.

If the first communications are the most successful, why does a publisher need to send upwards of nine emails? 

The amount of outreach should be tested and honed by each individual publisher, according to Gwen Vargo, vp of communications and operations at the American Press Institute, who previously served as the director of reader revenue and studied publishers’ subscription businesses. 

But the idea of regular outreach and communications falls back on the idea of a multi-channel marketing strategy, she said. 

“We know as marketers that the more different types of touchpoints, and the more it’s repetitive, the more likely that message is going to stick and they’re going to be able to take action,” said Vargo.

What about bribery?

Sure, a publisher can try. 

After Gannett has identified that a subscriber’s credit card is going to expire, the publisher offers that person an incentive to update their payment information before the payment lapses to begin with, as part of Hunshikatti’s team’s proactive dunning strategy. 

A $10 Amazon gift card has been the most effective incentive for this strategy, he said, but Gannett has also tried Starbucks gift cards and other credits. 

“Our objective there was to proactively get them to update their card so they don’t lapse,” Hunshikatti said. “They never intended to leave us [and] now that we’ve seen the results of that test with almost a 14% to 17% lift, [it] makes sense for us to figure out how we can introduce some of this incentive testing as part of our reactive measures” for subscribers whose payment has already lapsed. 

The incentives are not immediately awarded, however. Hunshikatti said that, after subscribers update their payment, three months later they are awarded the gift card. 

Should a publisher try to upsell them? 

No. Not according to Eisenband, anyway. 

“The challenge is that subscribers are not in the mindset of wanting to pay more. You’re there to save them from churning. Emails are transactional in nature and not engagement based in nature,” he said. 

Other tips and tricks 

• Always send dunning emails from the publisher’s domain versus from the billing vendor to instill credibility and security when asking for a subscriber’s new credit card information, Eisenband said. Also, put a lot of branding on the payment update page that they’re prompted to go to after clicking the link in the email.
• Make the process of updating payment mobile-friendly, Eisenband said, adding that about 75% of dunning emails are opened on a phone versus on a desktop. Also, don’t force a subscriber to have to log into their account after clicking the link in an email, he said. There should be as little friction as possible to avoid spill off.