Month: July 2022

The following conversation has been edited for space and clarity. 

After doubling your revenue in 2021, Court Avenue hopes to achieve 25-30 percent growth in 2022, even in a recessionary environment. How do you plan to get there? 

We’re brought in first and foremost as a strategy consultant for digital transformation, and that down funnel lends itself to a lot of execution work. But it all starts with the C-suite and working on what the roadmap looks like for digital transformation. And it’s not just a marketing task. It’s an executive interface task … Software as a disruptive force isn’t slowing down because of the recession. In fact, it accelerates because companies look for ways to use technologies to reduce cost. That does trickle down into: What does consumer engagement look like? What does customer relationship management and consumer loyalty look like? The biggest brands and businesses in the world now are thinking about direct to consumer and how they provide services. These are things that we are brought in on. And those are, I believe, going to be high growth areas, even through the recession. I think companies will invest and lean in on that.

How do you plan to be expansive or acquisitive in the next year or two? 

We’ve intentionally not raised capital at this stage, but we do want to be an entrepreneurial company. We want to incubate businesses where we think there’s a vertical competency and capability that’s best served by having a CEO and a founder that lead it, but it’s connected to what’s happening. So we talk about ourselves as a not a holding company, but more of an operating network. We intentionally own and control everything we incubate, so we have no P&L conflicts of interest. And these capabilities are enhancements to what we do, but not competitive to the core services.

We just launched a company called Red Line, which is a software engineering business that will work on digital product development and back-end software engineering, led by a CEO who used to be a part of Rockfish, my prior company. He’s the CEO and co founder, but it’s a part of Court Avenue. We also launched Court Avenue LatAm, and are opening our first Mexico City office with its own CEO. We’ll expand to other international markets, probably in 2023. 

And then later this year, we’re launching a company called Turn Two that’s in the Adobe Professional Services space. Many of our clients are on the Adobe tech stack and they want services for that product. Rather than just making it a division of Court Avenue, we felt like it would be better served to hire a CEO. So we found a great CEO and founder that’s going to run that business for us.

Who do you compete with when going after business? 

We compete with the biggest agencies like AKQA and VMLY&R, and we compete with Accenture. And with Kia, Dell, UnitedHealthcare, Epson and the U.S. Air Force, our clients make a pretty nice list. These are the kinds of companies that spend hundreds of millions of dollars in partnerships. We could do this through organic growth. Even without onboarding another logo, there is room to 10x the size of this business, in my opinion. 

Now, that’s clearly not the way we’re going [to get] to 10x. We’re going to do that through adding new clients as well. But at the same time, the organic growth you get by being a good partner, hiring good talent, being fair, in terms of cost, etc., that’s the way we’ll organically grow. Our ambition is to be that type of partner for all the brands that I’ve already mentioned and others that we’re working with [including Mastercard], so that every year our relationship with them is getting bigger.

How are you handling talent retention at a tough time? 

Our industry is highly recruited, and we’re actively hiring. So we will increase headcount [currently around 70 FTEs, and 30 contractors] by another third before the end of the year based on where we’re at right now. So far, while they’re watching the economy, our customers aren’t expressing any kind of hold backs in terms of their projects. We’re being realistic, and paying attention as well. But as of this moment, with the work that we have committed to the end of the year, we need to grow our team by 25-30 people minimum. So we’ll probably finish the year at around 100 employees full time as well as a number of contractors.

Color by numbers

Media analysts Borrell Associates recently polled 1,881 local media buyers as part of its Spring 2022 Survey, and captured the media they plan to increase and decrease in the foreseeable future. A few highlights: 

The media receiving the largest percent of buyers who said they plan to increase or start to spend, include: 

• Social media +27 percent (with only 5 percent saying they plan to reduce spend there) 
• Search engine marketing +25 percent (with only 3 percent reducing)
• Event marketing +18 percent (-5 percent) 
• (Shockingly) Banner ads +16 percent (-4 percent)
• Streaming video/OTT +15 percent (-3 percent).

The media losing the most ground: 

• Newspapers -14 percent (with only 7 percent saying they’ll increase)
• Radio -11 percent (but +12 percent saying they’ll increase). 

Takeoff & landing

• Horizon Media bought live digital experiential marketing platform First Tube, which works with clients in CPG, DTC, financial services, media, retail and technology categories, among others. First Tube will operate as a standalone company under Andrew Beranbom, its CEO and co-founder.
• Media and consulting agency Audience Precision launched a new tech platform and tool called Precise360, which offers agencies a behavorial-data-driven media strategy designed to help them more efficiently plan. 
• Attention metrics firm Adelaide will use Disqo’s Brand Lift and Outcomes Lift ad measurement products to enhance its AU metric.
• In personnel moves: Dentsu International promoted Deva Bronson to executive vp, global lead of brand assurance, expanding her U.S. role and her responsibilities: she will incorporate brand responsibility, brand safety and brand suitability to safeguard clients against digital threats and ensure they make the most responsible decisions … Kepler Group named Joshua Lerman its global CEO, replacing Rick Greenberg, who becomes executive chairman … Stephanie Feldman is new CMO for Power Digital full service agency…Firework hired Meg Siegel from TikTok, where she was vp of brand strategy for B2B, to be its new vp of brand marketing…Full-service agency DCMN named David Figueroa head of U.S. operations, coming over from C5 Growth Marketing Consulting, where he was a managing director. 

Direct quote

“I expect Prime Day ad spend to be up at least 10 percent versus last year. Even with brands facing profitability concerns with inflation and rising costs, many brands have expressed to us that sales on Amazon as well as in stores are lagging behind initial forecasts and that they are looking for a boost to show double-digit, year-over-year growth on Amazon. We have seen [cost-per-clicks] rise 10-20 percent versus last year, so I believe most brands will be pressured to increase their spend a similar amount to chase much-needed top-line growth as we start Q3. I don’t believe Amazon has peaked and is losing e-commerce share as much as they are facing customers who are starting to shop back in stores near pre-pandemic levels. With rising customer acquisition costs on Facebook and increased costs of fulfillment for DTC brands, I expect Amazon’s share of e-comm sales to increase meaningfully in 2022 while the comps ease in Q3 and Q4 due to the shift back into stores that started in second-half 2021.” 

— Fahim Naim, head of Amazon at Advantage Unified Commerce, an e-commerce consultancy, on the eve of Amazon Prime Day on July 12-13.

Speed reading

• With the Supreme Court overturning Roe v. Wade, Digiday has covered much of the reaction from marketers and agencies. Senior marketing editor Kristina Monllos tracked how some marketers are reevaluating their social media spend. Senior marketing reporter Marty Swant looked specifically at how OKCupid is using its platform to fight for pro-choice rights. And on WorkLife, regular contributor Tony Case cataloged the efforts of many companies to support employees to still have choices. 
• TikTok may be the hottest platform for marketers, but it’s in the cross-hairs of at least one FCC commissioner. This CNN story spells out why commissioner Brendan Carr called for the tech giants Google and Apple to drop TikTok from their app offerings.  
• Nevertheless, TikTok took over VidCon last week, and Digiday’s senior media editor Tim Peterson was there to cover it, in story and video form in his latest Future of TV Briefing.

Cue a scramble from investors to cash out cryptocurrencies at a time when there isn’t necessarily a bunch of buyers. Therein is the kicker: the more spooked crypto investors get, the more they pump those currencies into the market, leaving a surplus of supply with limited demand. Bad news for any company primed to stoke the belief among investors that cryptocurrencies would make them richer. This belief has been undoubtedly shaken and with it the view of crypto bosses. 

The rapid growth, short-term mindset that guided many of them over the last two years, has contorted into a more conservative, survivalist one. Companies are cutting costs in a market that’s lost as much value as crypto. As ever, ad dollars are among the first to go.

“I can tell you the amount those companies spend has dropped on average around 70% in the last few months,” said Zachary Greene, founder and CEO of crypto-investing and finance website GreeneryFinancial.com. “Due to the loss in ad revenue and other revenue due to the downturn we’ve had to stop all of our ongoing marketing ourselves as well as temporarily lay off some team members and reduce hours of others in the last month.”

Life comes at crypto companies fast. It was only earlier this year they were forking out millions of dollars for ads during the Super Bowl. Now, they’re barely advertising at all. Digital ad spending for the 10 cryptocurrency advertisers is around 90% down since November, per data tracked by digital ad intelligence platform Pathmatics. Worse still, no one knows when those dollars will recover. Emphasis on the when — not if.

Of course, there are the true believers, the ideologue who believe these virtual currencies are here to stay. But they’re not the ones crypto advertisers ever really targeted. Instead, they were looking for new investors, drawn to the sector thanks to FOMO. That fear is a lot scarcer now than it’s ever been. And in its place is regret in getting involved as much as they did. The last thing crypto advertisers are thinking about is chasing new investors who are more conservative than ever.

“From what I have seen, sponsorships that are already live will be honored, but I am having a hard time seeing anything else come through, at least while the crypto winter lasts,” said Dion Guillaume, global head of PR and communication at cryptocurrency exchange Gate.io. “As with any sector, some difficult decisions must be made during difficult times.”

Pull advertising or push it. Shift messaging or dial it down. Stop acquiring new customers or focus on leaner acquisition models; marketers are trying to make sense of all this and more as they move to match the ebb and flow of the market. 

Take the advertising outlay of the largest crypto advertisers for example. It’s in a state of flux, according to MediaRadar’s analysis of 200 crypto trading platforms and currencies advertising across national TV, magazines, newspapers as well as online channels including websites, podcasts, Facebook, and YouTube.

Coinbase’s ad spending dropped 98% between February and March. A further 68% was shaved off this outlay a month later in April. Then spending started to recover in May, with it 17 times what was spent the previous month. It’s a similar story at Crypto.com. Spending slumped 71% in March compared to the previous month. In April, a further 68% was shaved off its spending. Like Coinbase, Crypto.com increased advertising in May, which was up 70% on the month prior.

Granted, not all of this volatility in ad spending is down to cost cuts. It’s more complicated than that. For starters, the lack of big-ticket sporting events like the NFL season and the Winter Olympics may have played a factor in the drop of advertising. Likewise, advertising in this market tends to be dictated by the price of crypto and how well it’s doing in the market. Let alone, the animosity people have toward these companies currently.

“Crypto advertising has taken a hit recently,” said Harrison Jordan, a Canada-based NFT lawyer. “Brands are more hesitant to be associated with crypto as the markets crash.”

Like so many things, this pullback happened gradually. After the Super Bowl, crypto advertisers began to pull back advertising after spending so much money over a concentrated period of time It quickly became more acute as the market crash deepened.

Ad spending for linear TV impressions across the five largest crypto advertisers in the U.S. fell sharply in April 2022, after building steadily from October 2021 through February 2022 when multiple crypto brands ran Super Bowl ads, according to television insights and analytics firm Samba TV. Between February 2022 and May 2022, there was a 64% decline in total linear ad impressions across these crypto advertisers.

“Crypto advertisers were quick to reign in ad spending as the bottom fell out of the crypto market, clearly showing a correlation between valuation and willingness to lean into advertising,” said Dallas Lawrence, svp of television insights and analytics firm Samba TV.

These are sharp drops, no doubt. But they’re not a complete break from advertising. Few cryptocurrency companies can afford to do that. Not when customer acquisition is so important — especially to the exchanges like Coinbase and FTX. They have to continue to spend, albeit in a more measured and meaningful way — or at least the ones that can afford to must. The reality is some of these companies weren’t smart enough to have a robust war chest for stormy times. For those who did, ad dollars are moving away from media deals, toward more purpose-based advertising strategies, as well as a larger focus on improving the underlying product.

“Depending on your product’s role in it all, brands may need to lean in on messaging to support their users in different ways,” said Pat Larsen, CEO and co-founder of crypto tax software ZenLedger. “By finding ways to provide value and help users succeed through a bear market, a brand can affirm their role in consumer lives.”

Bottom line: crypto companies are using this time to fortify their strategies for the long run. After all, volatility is par for the course in this market, and while this tumultuous period is more acute thanks to a turbulent economy, there’s a certainty among industry observers that it will eventually bounce back — just as it has done several times before. Whenever this moment does happen, Investors and commercial brands will be quick to jump back in. Crypto marketers will want to be in position to leverage that hype to amplify their own brands.

“In the short term, advertising executives are having to re-think their media plans, but it allows for new conversations and strategies across the board,” said Michael Gaizutis, the founder and chief experience officer at RNO1, an experience design agency in tech, e-commerce, and Web3. “Digital currencies and digital ecosystems are here to stay: from crypto to digital assets — to future metaverses. Those who embrace this now will be rewarded greatly in the not-so-distant future..”

The in-house team is composed of 13 creatives including project managers, operations, producer, production leads, an in-house photographer, copywriters, designers, art directors, as well as five people handling communications for the company. Harry’s, founded in 2012, has had an in-house creative team since its inception. While the team handles everything from physical packaging to organic social media to partnerships to digital marketing content the company will tap agency partners and freelancers as needed. 

Bolstering the in-house team’s capabilities with an in-house studio is a “sea change” for the brand that will allow it to be more nimble, explained Cashdan, adding that there’s been packaging updates and various other innovations lately. The studio now allows them to “iterate on art direction,” said Cashdan, as well as “tailor [content] more for our dot com, social, we don’t want to just drop a product image in every touchstone that’s the same but telegraph for each channel, audience.”

That tailored content has helped Harry’s in its effort, over the last year-and-a-half, to shift its social presence and lean into more organic social content that feels native to the platform that it is on. “The reality is that so many consumers now will go to Instagram first,” said Cashdan of the company’s need to lean into organic content across various social platforms now. “Different from the website, it brings out the personality, values of the brand.” 

It’s unclear how much Harry’s has invested in its in-house agency or its content studio as the company declined to share those figures. The company also declined to share how much it is spending on organic content or its media budget. That said, Cashdan did share that Harry’s is “investing much more in organic social but also investing in paid channels” and that it isn’t “moving [dollars] from paid to organic.” 

During the first two quarters of 2022, Harry’s invested $30.6 million in advertising placements, per Kantar’s data, which also found that Harry’s invested $46.9 million throughout 2021. Those figures exclude spending on social media channels as Kantar doesn’t track social spending. 

As for strategy, Harry’s in-house team maintains a pre-planned social content calendar to engage its audience but doesn’t dictate a set cadence of posts each week. The team focuses content around major brand initiatives, launches, cultural moments as well as lighthearted content that reflects the brand’s personality. 

“For example, most recently we leveraged our Instagram to provide a behind-the-scenes sneak peek of our Pride campaign a few days before it officially debuted,” said Cashdan in an email. “We continue to engage with our community via posts and comments as they interact with that content.” 

Building out a studio in-house and focusing on organic social content makes sense to Eunice Shin, partner and global head of direct to consumer at Prophet, a growth strategy consulting firm, as thriving DTC brands focus on “content, community and commerce.” 

“Today’s DTC world has shifted to a little more of an on-demand approach,” said Shin. “Brands have to have creatives, writers, photographers, all filling the content engine. They need to be giving customers a reason to come back with new imagery, content, etc. It can’t feel static and the same all the time. It has to feel fresh and new on an ongoing basis. Bringing that capability in-house makes it easier for those driving performance marketing, have a consistent voice and brand story.” 

That said, Shin cautioned that the approach only works if the in-house team is capable of telling the right brand story for that brand and that brand’s community. “If your team doesn’t do the right job, not effectively telling a story [that can be a problem],” said Shin. “But if there’s a team that understands north star then it’s great.”