Month: January 2023

After all, the price for an Axios Pro subscription, which allows readers to “go deeper” on topics ranging from media deals to health care policy, is not cheap. An annual subscription to one Pro newsletter runs $599 while an all-access subscription to every Pro product costs $2,499 per year. Axios did not provide an average price for what its subscribers were paying.

As a premium subscription model, subscribers are typically business professionals who are likely to expense the cost with their companies. Or in other cases, corporate subscriptions are sold to companies directly who have multiple employees reading the content at a lower rate per user. Because of this subscriber base, Axios runs the risk of its Pro product being ruled an extraneous expenses and getting cut from the budget as a result of companies trying to stay afloat.

The advantage of B2B and premium business subscriptions is that the retention rates tend to be higher on average, according to Justin Eisenband, managing director of the Telecom, Media & Technology industry group at FTI Consulting, when compared to news, politics or lifestyle subscriptions. However, “with corporate cut downs and expenses being looked at, there has been an uplift in churn there as well. [Business publications] are not immune to it.”

Axios publisher Nick Johnston said he’s not seeing a direct impact on retention from clients cutting down expenses due to the economic downturn, but the reality of the current economy means that the products his team is selling have to be great. “If you have great reporters delivering great information and awesome scoops, those are things that people have to read, especially in the subscription areas that we started in,” he said.

Co-founder and president Roy Schwartz said on an episode of the Digiday Podcast from 2021 that his ultimate outline for the company is to have the Pro business represent 50% of Axios’ total revenue. In 2022, Axios’ total revenue was in the $50 to $60 million range, according to Johnston, putting Axios Pro’s contribution at 3% to 4% (a company spokesperson declined to provide an exact revenue total for the year). Given that, increasing the subscriber base in 2023 is a necessary step for Pro to close the gap and achieve that 50-50 split with the rest of the business.

For Johnston, adding more newsletter products, hosting subscriber-only events and happy hours and doing as many subscriber surveys as possible will enable the business to grow in 2023.

“When you go into a subscription product, especially a high-dollar one like ours, you can get a lot of very useful feedback from these readers because they are very discerning. To get them to swipe a credit card and give you $500 or $1,000, they’re really going to pay attention to that content and they’re really going to have thoughts about it,” said Johnston, who added that most of his time as publisher is spent taking phone calls with subscribers, potential subscribers and with the Pro sales team to gather as much feedback and options as possible.

When asked if Pro is profitable, a spokesperson said that the business is still considered to be an investment for the company as it builds out new verticals and teams (editor’s note: translation — no). In February, Pro is planning to launch two new Policy newsletters covering tech and engineering, both of which Johnston said were built using insights from prospective subscribers. 

“People started to reach out and express interest before the product even existed. I would be on the phone with potential [subscribers, asking them to] tell me your pain points,” he said. 

According to Eisenband, incentivizing annual or two-year-long subscriptions improves retention and combats churn, so offering a multi-year subscription option at a slightly discounted rate at the time of renewal is one way to ensure the subscription business doesn’t get impacted by potential cost cutting this year. 

What’s more, “community building can be a great way of driving engagement amongst readers. That’s really the retention tool that works the best, but also very hard to execute,” added Eisenband. 

According to Rebecca Graf, WeWork’s head of ancillary revenue for the U.S. and Canada, using Recess helps connect with brands that want to reach people who use co-working spaces. It also gives WeWork members a new way to learn about new products. Some brands like PepsiCo and Sierra Nevada might be recognizable while others — such as Health-Ade and Milk Bar, might be newer. So far, more than 40 brands have used Recess to work with one or more WeWork on short and long-term partnerships.

Rather than pouring over workout schedules, music festivals and farmers markets, Recess CEO and co-founder Jack Shannon said the platform is meant to cut out the busy work without going door-to-door in every market. Describing it as an “ad network for experiential,” he said the platform also gives media buyers ways to reach audiences beyond social media and other digital marketing platforms.

“A lot of these experiential agencies are still just having team members do that work manually internally,” Shannon said. “They’re Googling farmers markets in Albuquerque and randomly reaching out and trying to get in touch to figure out how much it costs, when can they be there and what’s the availability.”

WeWork has partnered with hundreds of brands beyond its work with Recess. For example, it has Numi as an exclusive tea partner, provides coffee through a deal with Lavazza and recently announced Doordash as WeWork’s exclusive delivery partner. Although WeWork wouldn’t disclose how much money it’s making through Recess, Graf said the goal is not “just to generate revenue.” Rather than just working with brands, WeWork has also had meetings with agency partners — something that is also part of Recess’s business model.

“The authenticity of the experience of the people that we work with in this space has to align,” Graf said. “We have no interest in becoming like a Times Square or anything like that. That’s why we’re choosing very specific categories to be broader category partners.”

Avoiding becoming the Times Square of co-working doesn’t mean WeWork isn’t open to showing more ads at various locations. Just this week, it announced a new partnership with Captivate to bring digital out-of-home ads to nearly 200 WeWork locations.

Despite years of doom and gloom about the “retail apocalypse,” discovering products in person is still an effective marketing tactic, notes Claire Tassin, a retail and e-commerce analyst at Morning Consult. (A 2022 survey conducted by Morning Consult found that many people still prefer to shop in person for categories like groceries and household goods, apparel and personal care products.) The current economic environment also makes some shoppers less likely to try new brands if they haven’t had a chance to see them in person yet.

“The magic happens in identifying that overlapping customer base, but also a need that makes sense in the moment,” she said. “Whether it’s a snack brand or a skincare element — something that has that like complementary value for the same target demographic…That’s when it works. Otherwise, it’s just kind of like spray and pray, which is boring.”

Some marketers see some of the benefits of a platform like Recess, which removes a lot of the leg work while avoiding the rising costs of buying ads on social networks. In some cases, already established brands might be more likely to land deals with major events even though smaller brands benefit from offline awareness.

Although smaller brands might get sticker shock when it comes to breaking into event sponsorships through traditional routes, marketing consultant Kevin Simonson said Recess could be an appealing alternative. Although he hadn’t used Recess yet, Simonson — who was previously co-founder and former CEO of Metric Digital — sees ways it could be useful. For example, if a pet brand wants to use it for finding animal shelters to sponsor.

“People like in-real-life,” Simonson said. “They still like to touch products and they like to drink the products and taste the products when applicable. It’s just really difficult to do, especially at scale. Because it requires relationships, and real relationships are hard to scale.”

Beefing up its in-house capabilities has been a multi-year process for P&G, which previously moved media planning and buying for some of its brands that were handled by Dentsu Carat to in-house teams. Per Schulten’s remarks during Thursday’s call, it’s likely P&G will continue to ramp up its in-house capabilities this year. P&G declined to answer follow up questions from Digiday.

“There are many categories in the U.S. that are still building their own approach to drive these synergies and there’s the whole world outside of the U.S., which is still building on the capabilities that we are developing,” said Schulten. “So we see this as an area of continued investment in terms of our own capabilities with a great ability to drive productivity for years to come.”

Procter & Gamble raised its full-year sales forecast and warned that high commodity prices are putting pressure on profits despite a drop in sales volume. Even so, the company did not say it would cut back on its advertising budgets, instead noting that P&G would continue to “fully support” its brands.

It’s unclear what exactly P&G means by continuing to “fully support” its brands, as the company did not provide ad spending figures. With that said, Schulten did note that “in the most recent quarter, for example, we’ve increased quarter over quarter our total ad spend by $140 million.” Where that increase went or how it was spent was unclear, as Schulten did not share additional details.

“A more mechanical interaction is taking place between consumers and brands and there is less importance to traditional media than to digital media in the media industry,” Allen Adamson, co-founder of Metaforce, a marketing collective and brand consultancy, said of P&G’s in-house moves. “As more companies do not need to go to an outsourcing agency to buy media and strategy, outsourcing agencies are no longer necessary.”

A report from P&G’s earnings call on Thursday showed the company’s first-quarter sales declined 6%, marking the company’s biggest drop in years, likely due to inflation pricing. Each of P&G’s five major business units also saw declines in the quarter. However, P&G’s prices increased by 10% during the period, driving a 5% increase in organic sales, which excludes the impact of currency swings and the impact of acquisitions.

As Tide detergent and other staples became more expensive in 2022, consumers cut back on purchases, lowering the company’s quarterly profits and sales volume. Schulten noted P&G’s success with its Downy Rinse and Refresh and Dawn Powerwash product lines, adding that despite the higher price point for Powerwash consumers are still intrigued by the product innovation.

“The brand has grown at 50% since that introduction and Dawn has driven 90% of category growth,” said P&G CEO Jon Moeller. “Dawn Powerwash, again, a premium priced item that was introduced largely during difficult economic times as a standalone brand would be the third largest brand of the category. So I just used that as an example for the continued positive responsiveness of U.S. consumers to innovation, and we’ve got a lot of innovation coming.”

“Games is the largest segment within entertainment by far,” said Michael Metzger, an esports industry expert and partner at investment banking firm Drake Star. “There’s a good amount of new players coming into Netflix; Amazon might make a big move this year.”

Despite these encouraging signals, however, early signs seem to indicate that the gaming industry might not be as recession-proof as experts believed in the past. In its earnings report last week, Ubisoft reported a total loss of over €500 million for the past fiscal year; Riot Games laid off 46 staffers earlier this week; and Google finally shut down its cloud gaming service, Stadia, among other discouraging news. 

The esports industry — which currently serves mostly as a marketing offshoot for the broader gaming industry — is also feeling the heat. Brands like BMW have pulled out of the space, heightening fears that an “esports winter” is coming. In a bid to keep the sponsorship money flowing, leading esports orgs such as OpTic have beefed up their partnership departments and increased their focus on recession-resistant brand partners.

“While I think esports is probably not recession-proof, from my seat being the person over sponsorships, I’ve spent more of my time thinking about the brands that are recession-proof, or that need to stay top-of-mind to our audience,” said OpTic svp of sales and partnerships Erin Schendle.

Schendle declined to specify individual prospective recession-proof sponsors, but listed sectors such as food, beverages and financial services as examples. “People are going to eat, and they’re going to drink, and those types of things,” she said. “There’s financial services; people still need a bank. They still need credit, you know, maybe even more so.” (OpTic’s current partners include Jack Links, Mountain Dew and Jack in the Box.)

The gaming industry has transformed over the past decade, and the strengths that carried it through the 2008 crisis are simply no longer as present. Lucrative retail sales have fallen off in favor of free-to-play or live service games, and the rise of gaming livestreamers has given players new options to consume their favorite games without having to actually purchase them. At the same time, the prices of both consoles and premium titles have skyrocketed.

In 2008, the list price of the Nintendo Wii was $249.99; these days, the base model of the Nintendo Switch sells for almost $300. Sony’s PlayStation 3 went for $399 in 2008; in 2023, the PlayStation 5 has a $499.99 sticker price.

“The Wii was actually quite successful during the 2008-2009 recession, because people were sacrificing out-of-home entertainment, and it seemed like a more cost-effective form of entertainment,” said Chris Beer, a data journalist at GWI. “But given that consoles are expensive now, and gaming has changed a lot, I’m not entirely sure that’d be the case.”

The gaming industry’s transformation has had some potential upsides, too, as a potential recession approaches. In-game purchases, for example, were a niche revenue stream in 2008, but a source of billions of gamer dollars in 2023. Gamers are certainly more down to spend their money on virtual items these days than they were back then. But the operative word is “uncertainty”, and it’s far from a sure thing that the gaming industry will be as recession-proof this time around as it was in 2008. 

“The market hasn’t really existed in past recessions,” Beer said. “So it’s not like we have much in the way of historic data to find out which people were buying skins, emotes, hats, whatever it is that they’re going to use to represent themselves in these online spaces.”

Just don’t call it a pivot to video — this is one with much lower stakes. Yes, publishers are producing more video for a platform they don’t control. No, they’re not doing so in search of ad dollars. Instead, they’re doing it in search of new audiences.

What little stakes there are around these investments revolve around experimentation and marketing. 

That’s clear in the wide-ranging content strategies employed by the news publishers on TikTok.

Take CNN for example. Since September 2021, the news publisher released 846 videos — or an average of 14 videos per week. So far, those videos helped CNN rack up 1.3 million followers and 11.3 million likes.

Then there’s The Daily Wire. Similarly to CNN, it has produced a total of 812 videos since October 2021. However, its presence on TikTok has already far exceeded CNN despite having started on the app a month later. So far the American news site has accumulated 2.8 million followers and 63 million likes.

Focusing on TikTok content

The difference between the two: the type of content published and length of each post. 

While CNN focuses on snippets of actual daily news stories as they unfold using videos that are anywhere up to almost 10 minutes long, The Daily Wire concentrates on entertaining news and uses TikTok trends and filters in posts that only last about a minute.

Being a prolific on TikTok will only get a publisher so far. It’s the actual content of the video themselves that will set apart the ones with real staying power.

But figuring this out will take time. Not least because news isn’t necessarily something that’s intuitive to the platform. Entertaining content is. This puts more emphasis on users liking or engaging (i.e commenting or sharing) with each video post, which subsequently influences what’s on their For You page.

“Publishers must be prepared to lose editorial control on TikTok, even more than on other platforms,” commented Jamie MacEwan, senior media analyst at Enders. “You can’t guarantee your video will be widely shared on the day it’s uploaded.”

The Washington Post’s foray

It’s why those behind The Washington Post’s videos on TikTok are always talking about meeting people where they are and creating content for the platform.

The publication posts a mix of long and short form TikToks, mixing original series, comedy posts, and more serious ones. For example, The Post has joined in on a trend dubbed Misinformation Mondays — as a way to combat inaccurate stories.

The news publisher, which started its account back in May 2019, was indeed one of the first to invest in TikTok, as noted by the 15-second staged sketch comedy featuring Senator Cory Booker and The Post’s own Dave Jorgenson (senior video reporter), which went viral and was subsequently picked up by The Atlantic. Since then, Jorgenson and his team posted 1,918 videos (which works out at about 11 videos each week) and accumulated around 1.5 million followers and 69.9 million likes.

Jorgenson explained that his team at The Washington Post tend to upload two TikToks per day, generally between 12 p.m. and 6 p.m. ET, in a bid to catch the early risers from the West coast, those throughout the day on the East coast, as well as people winding down in the evenings in the U.K. — its second biggest market. 

“You’ll notice that we very rarely even take other footage, horizontal footage that even The Post has shot and repurposed for TikTok because we want to make it look like it was shot on an iPhone for TikTok,” said Jorgenson.

Comments like this are to be expected. This isn’t the first rodeo for a lot of these publishers. So it stands to reason that the execs at these companies are going to wheel out the usual platitudes that get dished out whenever a new platform emerges. Even so, TikTok is anything but par for the course. Unlike other platforms, TikTok has a content driven algorithm which means each video has to resonate with its viewers for the algorithm to actually pick it up as something worth promoting to the masses.

LADbible, a British publisher, posts around five to 10 times a day using a mix of user-generated and original content on TikTok. “It’s critical to get the tone right so we often test global creative on TikTok with our LADnation research panel, to ensure the messages are as effective as possible with our audience,” said Rebecca Tyrell, TikTok lead at LADbible Group.

The team is always refining what works through constant testing, learning and iterating to ensure the development of its work is de-risked and will be a success with LADbible’s global audience, she added.

“However it isn’t enough to republish creator content, our audiences want to discover more about what’s viral, uncover new stories, and be part of the conversation,” she continued.

What works on TikTok

Investing in the concept of native, authentic content is key to creating content that pops on TikTok, as is staying true to the publisher’s brand. No mean feat for even the most seasoned of publishing execs. That said, they’re clearly seeing some early signs of success, as evidenced by the BBC’s plans.

Big, important news stories, context and explanation around those works well as TikToks for the news organization, for instance. That’s according to Naja Nielsen, digital director for BBC News.

She pointed to the funeral of Her Majesty Queen Elizabeth II on Sept. 9 as proof. 

While the main event unfolded on linear TV, the BBC took to TikTok to record everything that took place in and around the U.K. in the lead up to the day. “We’ve had a big uptick in followers around those more raw live streams,” said Nielsen.

Similar to the majority of publishers, the BBC still considers itself to be in learning mode on the platform as the digital team is currently in the midst of deciding the details of its TikTok strategy. Chances are it won’t stay this way for long. The BBC posted job advertisements last week for four journalists, to create a TikTok team within the corporation’s social news unit.

“We are expanding our team because we want to take some of the first lessons from our first year on the platform and put them into our business as usual,” added Nielsen.

In fact, it’s a thought not lost on other publishers. LADbible already has around 30 execs, spanning original products and branded content produces, making content for TikTok.

The Washington Post also launched what they deem to be a cross-company task force called Next Generation, back in 2021, which feeds into its overall TikTok strategy. Certain reporters intentionally create content to live on TikTok first — then it’s a matter of working out which of those pieces will make it into the paper.