Month: February 2023

YML joins a group of agencies that all operate independently from each other but share best practices, expertise and access to clients. Those agencies include the namesake Code and Theory, which is a digital-first creative shop, along with Kettle (content production and creative), Rhythm (CRM specialists), Truelogic (near-shore capabilities, which means offshore talent in the same time zone) and Mediacurrent (experts in Drupal). 

“The complexity to reach consumers from a technological lift standpoint is way greater,” said Dan Gardner, Code and Theory’s co-founder and executive chairman of the network, talking about brands’ evolving tech needs. “You have to have technical capabilities, super deep benches across multiple technologies — both back end and front end — to actually deliver on the creative visions they have. And YML being part of the expanding Code and Theory network really allows that to happen.”

“Twenty years ago, there used to be the CMO and CIO, right? Now, if you look at like how the teams are changing on their side, there’s the chief digital officer,” said Ashish Toshinwal, co-founder and CEO of YML, who noted his shop brings its mobile-centric tech skills to bear while adding offshore access to talent. “It’s kind of a combination of a little bit of power from the CIO a little bit of power from the CMO but they’re leading the product experience or the customer experience for that brand. That position is gaining lots of steam, and this network is targeting that position in a very, very big way.”

The move very much fits Stagwell’s long-term goals of matching concentric circles of expertise together to expand talent capabilities and broaden organic growth among its clients. And it comes at a time when CMOs are thinking more about technology’s impact on marketing than ever before — certainly with the rise of artificial intelligence, as well as other ad-tech innovations that require as much of an engineering degree as marketing acumen.

While neither Gardner nor Toshinwal would provide actual revenue numbers individually or combined, they explained that the Code and Theory network has generated just under 25% revenue growth each of the last three years, while YML has seen closer to 30% growth. The expectation is the expanded network, which encompasses some 2,000 staffers, will continue to hit close to 20% growth in 2023.  

“It follows the Stagwell playbook to create cooperative practice groups,” noted Jay Pattisall, vp and senior agency analyst at Forrester. “This type of coordination among the holding companies’ operating agencies is becoming more common because the engineering resources (both talent and budgets) are precious commodities.”

Pattisall cited GroupM’s bundling of multiple units into Nexus as a shared tech and engineering resource for the WPP media agencies, as well as Publicis Groupe’s Epsilon acquisition combined with Sapient’s offshore engineering work, as examples elsewhere.

“The benefit of this is cost efficiency,” Pattisall added. “Clients get access to resources otherwise found in larger system integrators and digital consultancies. Stagwell does not bear the cost of building and rebuilding the same technology and engineering backbone across multiple companies. At the end of the day, a shared tech and engineering resource is not true integration. Code and Theory and YML are still separate brands, leaders and P&Ls.”

It’s been just over one year since Akoto Ofori-Atta and Lauren Williams co-founded Capital B, a non-profit news organization focused on reporting the stories of Black communities both on a national and local scale. But despite facing a harsh economic climate for most of that time, Capital B is in a period of growth and expansion, according to the newly appointed CRO Gillian White.

Capital B generated an audience of about 600,000 people in its first year and is projected to hit closer to 1 million unique viewers in year two, said White. It has also raised over $12 million to date from a mix of foundations, corporations and donors, according to the Capital B website, and has more than 1,000 paying members who contribute donations on a monthly or annual basis in exchange for exclusive additional content, in addition to advertising on the site and at events.

White joined Capital B in September 2021 as the svp of revenue and programming from The Atlantic to help establish the business-side and would not disclose exact revenue figures, but said funders are backing an expansion into another local newsroom in Gary, Indiana after creating its first local outpost in Atlanta in January 2022.

The new outpost, launched in conjunction with the American Journalism Project (AJP) and as a part of the Indiana Local News Initiative, is expected to add three to five more employees to the Capital B team, adding to the 24 existing staffers on both the business and editorial sides. Capital B received an undisclosed portion of the $10 million raised for the Indiana Local News Initiative to build its newsroom and pay new staff salaries.

“The plan was always for [grants and funding] to be the bulk of our operating income and [cover] our operating expenses. And then over time, that pie [will] get more diverse, just as it would be for any other organization,” said White. By its fifth year, the goal is to make all revenue streams — grants, advertising, memberships, merchandise and events — equal contributors, she added. 

In a conversation with Digiday, White discusses how she is approaching Capital B’s continued growth, and how her new role will allow her to contribute more to fundraising conversations — the revenue stream that remains the most significant for the news organization as it enters its second year. 

The conversation has been lightly edited and condensed for clarity. 

Why Gary, Indiana to expand your local newsroom strategy?  

AJP is a funder and massive supporter of Capital B, so we were able to get an early inside track on the work they were doing in Indiana, and started talking to them about how we might fit into the puzzle. Gary is a nearly 80% Black city, and is one that has faced tons of economic headwinds, a declining population — a lot of the issues that we see Black people facing around the country. Gary also is a place that doesn’t have the local news presence specifically focused on them that we would like to see for a Black community of that size. It’s 40 minutes outside of Chicago so it can get wrapped into Chicago, but becomes secondary. It just made sense as a mission-driven location for us to go there and try to serve that community with local news.

How are you establishing a presence in Gary? 

We are using our funding right now to start our job search process to find our Gary, Indiana editor. [We’re] looking [for] three to five [editorial staffers] to kick it off. We have a central Capital B business and revenue team that serves both our national operation and all of our local newsrooms.

Part of the Capital B mandate is that people who work in local newsrooms have to live in the city where their local newsroom is located. So our Atlanta reporters and editors live in Atlanta. Our Gary reporters and editors will need to live in Gary. Even if they end up working remotely from their homes. 

You’ve just recently stepped into the role of chief revenue officer. How have your responsibilities changed now that you’re overseeing the whole revenue mix for a non-profit media organization? 

When I initially came on, I was mostly focusing on standing up an events business and [the] earned revenue [business] — so selling newsletters, getting sponsorships for our various projects and events — and I would occasionally help out on the fundraising side because that was something that I used to also do at The Atlantic. And through the course of that first year, [I was] having [more] conversations with Lauren [Williams] and thinking about ways that we could make sure that we shored up our financial footing, I think it became clear to both of us that it might make sense to take on a little bit more and that all of these things really were deeply linked.

Our ability to fundraise effectively influences what we want to do on our earned revenue- and sponsorship-side, influences how we think about our membership goals — all of these things are tied together. So in my new role, it’s basically just an expansion of the svp role that I took on, [but] now instead of just focusing on earned revenue and events, I focus on pretty much anything that we use to derive revenue for Capital B. Fundraising and grants, the financial side of memberships and membership goal setting, merchandise — which we will start building out soon — as well as earned revenue and anything that falls into the corporate sponsorship realm. So it’s just more of a holistic picture of all of those things.

Given that for-profit media companies are having a harder time in this economy to raise investment funds, how has the economy impacted Capital B’s ability to fundraise?

We’re super aware and we’re going to continue to be hyper aware of what’s going on in the economy, or even just what people think might happen in the economy. Having an ear to the ground on that is a huge part of my job [and] a huge part of [Williams’] job, so this is something that we started talking about six-plus months ago, what that could potentially look like. But even before we launched, the conversation that [Williams] and I had – [and] part of the reason that I came on on the business side, as opposed to the journalism side – was thinking about how we maintain our financial stability and how we create that for our journalist and for our readers, in an industry that’s not that stable a lot of the time.

So far, honestly, we’ve still been getting meetings, we’ve still been having really positive conversations with funders — both folks who are existing funders and folks who might be new funders. And we just always have in the back of our heads what their concerns might be and what limitations they might have, and try to factor that into our planning process.

Now that you’re beyond the initial launch period, how have pitches to donors changed?

I’m showing people more of what we can do and we had so much amazing work that we can point to, both with existing funders and with new ones to say, “If you want to know what Capital B is about, just take a look at the site. Just take a look at [our] YouTube and see the events. Take a look at the newsletter, see the impact we’ve had. See the people’s voices that we’ve been able to bring to the public.” So I think having that proof of concept is really, really useful. 

A year ago, we didn’t have anything to show them, and now we can [point to reporting from national health reporter] Margo Snipe, who is going around in Fort Myers after a hurricane, asking residents whether or not they’ve gotten assistance. And [then] reporting out that no one has been by to talk to them, which then garners a response from FEMA. That is what we are doing. That is why we are here. So having that type of proof of concept and the ability to point to that I think is really amazing.

Have you introduced programmatic advertising yet, given how substantial that revenue stream has been for publishers over the past several months?

One of the things that I love about being nonprofit is that we do not have to say yes to every earned revenue strategy, particularly if it doesn’t make sense for us, or if it’s going to cause a lift or issues that we’re not prepared to handle yet. So for us, programmatic is not part of the strategy yet, for a couple of reasons. One, the volume that we would need to be doing consistently and be able to promise, we just didn’t know what we would have in year one. It didn’t make sense for us to put ourselves in that position for what might have been a marginal gain for us. 

And two, we want to know who is advertising with us. We are a mission-driven organization and a values-driven organization, and for us, it is much more important — especially during these early years — to be focused on partnering with businesses and corporations that we know align with those values and can articulate to us why they’re interested in us too. And that they have those shared goals, so that it makes sense for our audience. 

What’s your process for finding and ultimately working with advertisers who align with Capital B on your mission and values?

We do our due diligence in advance to try and understand what commitments [advertisers have] made to the Black community and why we might be an appealing investment for them. We already know when we solicit a meeting what they are about when it comes to the things that we cover and the community that we cover. So for us, it’s really a conversation with them about what their goals are this year? And what commitments are they making this year to this community? And seeing if there’s a way to move forward on that. Having those conversations has actually been really energizing.

We can reasonably make advertising and corporate sponsorships a part of our revenue puzzle without being too dependent on them. We have our foundations and we have our grants, so it’s not like if ad sales take a dive this year that we don’t know where our operating budget is coming from. At this point, it’s really additive.

What we’ve heard

“The dirty secret with YouTube [has always] been that 75% of the platform’s users [are] outside of the U.S. and so when people talk about their view numbers, not only is it bots, but it’s a lot of international audiences.”

– A media executive

Salon is straight shooting on Safari

For programmatic-dependent publishers, it matters where a reader enters their ecosystem.

“As of today, Safari earns $1 for every $3 that I earn on Chrome, with the same exact footprint and the same exact demand stack,” said Justin Wohl, CRO of Salon, who has been watching this ratio become more and more dramatic since May 2020 when Apple updated its internet browser (Safari) with full third-party cookie blocking.

Given half of Salon’s readership comes from Safari, Wohl said that the problem has become unsustainable, especially at a time when open programmatic marketplace RPMs are the lowest they’ve been in three years. 

“The ‘no silver bullet’ sentiment is still felt really strongly here,” said Wohl, given that a lot of proposed solutions require a universally accepted way of authenticating, validating or identifying audiences, but none have been dubbed the “winning solution.”

In the meantime, Wohl’s team is working on a makeshift solution that will address Salon’s audience on Safari with the problem at hand. Rolling out over the next six weeks, unfilled ad inventory will feature messages from Salon, loosely stating: “Our independent journalism is supported primarily by advertising, and if you are willing to volunteer your email address to us, you’ll be passively supporting us in that we will be able to yield more valuable ad results when you visit us.”

At that point, Safari users will also be prompted to either authenticate themselves by registering with their email address, signing up for a newsletter, becoming a paid subscriber or changing their browser. Alternately — they can just stay on Safari and go unpunished.

At the very least, “I still do better if I can move someone from Safari to Chrome, where I’ll get 3X the CPM on them [that I’m] currently [getting],” he said. 

Numbers to know

$388 Million: The amount Penn Entertainment paid to buy the remaining stake of Barstool Sports, which the gambling operator now fully owns. In total, Penn Entertainment spent $551 million on the digital media company.

10%: The percentage of NPR’s 1,100 staffers that will be impacted by layoffs.

$11.99: The starting price for Meta’s new monthly subscription business, which takes a page from Twitter, and gives paying users a verification badge and tools to monitor their identity. According to a Bank of America research note, the subscription business could earn $1.7 billion in 2024, CNBC reported.

What we’ve covered

ChatGPT’s arrival accelerates lifestyle publishers’ move away from SEO-driven content: 

• The arrival of generative AI chatbots brings with it a unique threat to publishers that produce online content to answer the simple questions readers enter into search engines. 
• As a result, lifestyle publishers like Bustle Digital Group and Leaf Group are moving resources away from SEO-driven content and into original stories and personal takes.

Learn more about how lifestyle publishers are shifting their SEO strategies here.

What do creators really want from TikTok?

• As central as creators have been to the short-form video’s app’s success over the last two years, they don’t necessarily feel like they’ve been compensated for it. 
• They’re no longer seeing the platform through the rose tinted glasses they once did.

Read more about what creators desire from TikTok here. 

How Reset Digital’s new programmatic marketplace aims to help Black-owned newspapers sustainably grow:

• At the beginning of February, advertising agency Reset Digital launched a new programmatic marketplace for the National Newspaper Publishers Association (NNPA).
• On the latest episode of the Digiday Podcast, Reset Digital’s CEO Charles Cantu said that this collaboration with the NNPA went beyond the creation of a marketplace, to provide these news publications with the tech stacks necessary to run ads, as well as teach them how to sustainably build their online audiences.

Listen to the interview with Cantu here. 

How will ChatGPT change freelancing? 5 publishers weigh in:

• Given how easy it is to access and use ChatGPT, what’s stopping a writer from putting an assignment brief into the chatbot, waiting for a story to generate and then submitting that to an editor?
• When that question was posed to heads of editorial teams at five different publishers, the simple answer was nothing. At Least not yet. 

Learn more about how publishers are updating their freelance contracts here.

What we’re reading

Some NYT journalists disagree with staff union’s approach to the paper’s latest controversy:

Dozens of reporters from The New York Times signed a letter to the NewsGuild of New York, objecting to how the union responded to the paper’s leadership, arguing that it was the journalists’ right to criticize the paper to address workplace conditions, according to Vanity Fair. This stemmed from a dispute over the Times’ coverage of transgender issues.

Artificial intelligence and chatbots might not change journalism:

Because AI systems like ChatGBT are language models, they’re not built to perform tasks that require fact finding, verification or math, ultimately making them terrible at performing basic journalism skills, according to Semafor.

Overtime launches a boxing franchise:

After identifying its audience’s strong interest in boxing, sports media and league operator Overtime created a new boxing league and franchise that will give male and female boxers the opportunity to compete in summertime matches, according to Adweek. Coverage from the franchise will then be distributed across Overtime’s platforms, creating advertising opportunities.

Future plc taps Jon Steinberg as its new CEO: 

This April, U.K.-based publisher Future will appoint Jon Steinberg as its new CEO, replacing  Zillah Byng-Thorne who held the role since 2014, according to the PressGazette. Steinberg previously served as CEO of Mail Online in North America, and before that as BuzzFeed’s president and COO.

For QR codes to be part of an effective strategy, marketers need to consider their purpose and make sure they work well. Experts also recommend ensuring QR codes are practical for long-term use.

Usage and risks grow in tandem

Retail brand Instacart is partnering with Michelob Ultra to run shoppable television ads during the month of February that allow viewers to purchase snacks and drinks by scanning a QR code displayed in the ads. Customers can also add other products to their shopping carts from the Michelob Ultra page on Instacart. Instacart CMO Laura Jones said that the risks associated with QR codes were not of concern to the brand simply because it’s been nearly a decade since QR codes were relatively new and were in more of an experimental phase. 

“Because of the ubiquity now of QR codes and through the pandemic, advertisers are starting to embrace them more broadly and if it were maybe two years ago, people might say, ‘Oh, I’m not going to scan that,’” said Jones. “But I think now it’s almost become second nature.” Jones added that Instacart has been interested in the idea of real-time delivery for a long time, but wanted to make sure the brand was able to provide a really seamless customer experience. So Instacart is turning to QR codes to build connections with its customers while also aiming to drive traffic to its platform.

The use of QR codes has been standard now, compared to years prior, since 2020, when restaurants began using them to offer digital menus and provide consumers with a touchless experience. Now it is more common to see them at physical locations or online, and brands are being more strategic about how to use them in advertising and beyond, according to marketing executives.

QR codes generated by users accumulated more than 6.8 million scans worldwide in 2022, a 433% increase over the previous year, according to a report from analytical platform QR Tiger. Brands typically pay for the QR codes that come with real-time analytics, and often apply them across their physical and digital ecosystems, according to Flowcode founder and CEO Tim Armstrong, who partnered with Avocados from Mexico and Planters to run QR codes during the Super Bowl.

Meanwhile, a third of restaurant owners said they’ve used QR codes to enhance their business since 2020, according to the Restaurant Readiness Index. And a Sharethrough study found that 76% of people said they would scan a QR code if it was relevant to them while watching TV.

The case for testing

As QR codes become part of everyday use for brands in advertising and elsewhere, marketers and agency execs say that making sure to test codes prior to them going public is key.

Armstrong said that testing of QR codes should happen months in advance before debuting on a big scale, such as during the Super Bowl. Last year, for example, Coinbase’s website crashed after running an ad featuring a QR code during the Super Bowl.

“That is the challenge we have set out to solve, treat QR like the most intimate space between your brand and the consumer,” said Armstrong. “You have to trust the tools that you’re going to use as a consumer and a brand to directly connect with each other.”

Ron Surfield, associate partner at growth strategy consulting firm Prophet, said that QR code protocols are an ISO standard, which means there aren’t many ways they might go wrong. This is because the input string has to be right before the code can be generated.

“This is the equivalent of us mis-typing our own email address or website url. So yes, if the marketer fat-fingers the url of their campaign site that they send to the QR code generator, it’ll send people off to a broken or non-existent url,” said Surfield.

Because anyone with a smartphone can scan a QR code at any time, their use now spans across a multitude of marketing campaigns and a variety of purposes. And QR codes’ functionality has grown over the years as well.

“So people got very comfortable with QR codes, but you want to make sure as a marketer that you’re clear about the promises of where you’re going to land,” said Kevin Krim, CEO of television advertising company EDO, adding that brands should utilize the technology more to develop long-term relationships with their customers. “It’s this really sort of empowering effect where you can pack all this information into this little square.”

But as QR code use grows, the risks continue to grow, too. For instance, the FBI warned in January 2022 that QR codes could be tampered with to redirect consumers to malicious sites.

According to Krim and Mat Zucker, senior partner and co-lead of marketing and sales at Prophet, experimenters win and experience matters, especially since brands need to consider security risks and data privacy in addition to fixing clunky connections that can come with QR codes. “QR-enabled data collection and storage helps inform marketers on who their customers are, thereby understanding them better to connect in more targeted ways,” said Zucker.

Some markets are really taking off. Livestream shopping, or live shopping, reached an estimated $497 billion in China 2022, according to Coresight Research. In the U.S., the livestreaming e-commerce market totaled a far more humble $20 billion in 2022, which is expected to grow to $68 billion by 2026. While live shopping is already growing steadily in China and other parts of Asia, agencies are beginning to test these commerce features in the U.S. with growing interest from clients, said Allysun Lundy, vp head of retail media strategy at Publicis Commerce.

There is particular client interest in showcasing “products [like technology or] something that really does need more explanation, such as makeup, where you want to give a tutorial around that,” Lundy told Digiday. “Maybe there’s limited-time offers that are associated with it or they know something might sell out.”

There are also certain product types that tend to work well for a livestream. The most popular product in live commerce is apparel and fashion, accounting for 35.6% of the share of categories, while beauty products and food each account for more than 7%, per McKinsey. Tommy Hilfiger’s fashion livestream in China reportedly generated an audience of 14 million and sales of 1,300 hoodies in two minutes. The fashion brand then extended the livestream to Europe and North America. Results of which have not been made public. Exact revenue figures were also not made available.

Influencer marketing and authenticity

Influencer marketing on social media may be a key area in expanding live shopping — these creators are often the hosts introducing products. Additionally, Gen Z and millennial consumers are likely to make purchases on social platforms, given trends like TikTok’s #mademebuyit. In a study comparing live shopping purchases across audiences, The Influencer Marketing Factory found 47% of consumers that made a livestream purchase in the U.S. and the U.K. were Gen Z shoppers.

Gen Z’s shopping on social media will play a big role in the growth of live shopping, said Daria Belov, brand marketer and PR director at influencer agency HypeFactory. “Gen Z now uses social media not only to consume content but also to search for and read reviews, and subsequently make purchases,” Belov said. “Secondly, social media algorithms have become more sophisticated and are now able to identify user preferences and provide personalized recommendations.”

At creative and influencer agency Real Hype Creative, CEO and founder Erica Yang works with around 30 creators, helping them experiment with livestream content on TikTok. The firm provides training and support on logistics and videos. One of its partners on TikTok Shop is Segway in a collaboration with the upcoming movie “Transformers: Rise of the Beasts.”

“We are interested in shopping, so we’ve worked with a lot of creators, a lot of key customers and then we can post videos on TikTok and showcase the functionality side and [a lifestyle],” Yang said. “We are ultimately working through the data and the algorithm to push to the right targeted audience.”

While leveraging influencers can be effective for live commerce, Publicis’ Lundy cautions that content needs to be believable whether it features celebrities or micro influencers using those products.

“I think what’s most difficult is just the authenticity of it,” Lundy said. “When you compare Rihanna, for example, doing a live stream with her makeup — that’s something that consumers are going to tune in for because they’re excited about it… Even when they bring in a celebrity, I think it still needs to be that balance, where it feels believable versus super sales-y.”

Live platforms and the future of video commerce

For Amie Owen, U.S. head of commerce at IPG’s UM Worldwide, the evolution of social commerce “makes sense,” because everyone is now on social media. Owen mentioned the topic of live shopping coming up frequently at the agency over the last year. Ultimately, she added, seeing retail media and shoppable “all coming together in one component” represents a sizable part of the future of commerce media.

“[Live shopping] is drawing attention during the engagement, and it’s also allowing that shoppable piece,” Owen said. “There’s pros and cons to leaning into different areas, but sometimes you have to test the waters. From our standpoint, when we do test the waters and take risks, we’re doing it based on data.”

This month, video commerce platform Firework launched a partnership with The Fresh Market to use the first shoppable live commerce retail media network (RMN) in the U.S. The Fresh Market will allow brands to run sponsored video ads across its livestream series, featuring content like holiday meal prep tutorials or chefs’ recipes. The majority of RMNs are static and display, while Firework uses a video-driven RMN. As Owen explained, this means it can be used across TV, website and other digital ads to make anything shoppable and live.

Jason Holland, president and chief business officer of Firework, said video commerce lets marketers develop and measure these omnichannel touchpoints from in-store to digital. “[Video] resonates with today’s consumers in a way that no other channel really can,” Holland said. “When the video assets of retailers and brands combine… the KPIs are more than 10x any other medium being deployed, and far beyond traditional search and display ads.”

He said The Fresh Market video commerce is generating a 133% increase in conversion rates, 115% increase in average session length and 23% increase in click-through rates. “It’s no surprise that they’d want to open these kinds of opportunities up to their suppliers,” Holland explained, without providing exact figures.

For creators, live shopping’s interpretation of e-commerce will have different appeals on each platform. Real Hype Creative’s Yang said there is a distinction between interest and needs-driven shopping. TikTok has been a popular platform for commerce because people use it for entertainment. The app knows users’ preferences and interests very well, she said, and the algorithm will get more fine-tuned as it studies them. (One former agency executive says TikTok’s algorithm is said to know all about users within two minutes of using the platform.)

“You watch videos so much and they’re so addicting,” Yang said.

But Owen believes all the social platforms can be positioned for commerce — “It’s just a matter of who they’re partnering with,” she added. For example, TikTok livestreaming is easy “from a consumption standpoint,” whereas Instagram makes checkout easy and accessible.

“So if they’re there mindlessly scrolling through, it just makes it that much easier to buy,” Owen said.

Lundy agrees that there is a different content strategy from Pinterest to Instagram or TikTok to TV for retail. But ultimately this creates more work for agencies — which is good. “People used to talk about how there has to be different content from TV to banner ads. And now it’s like there has to be different content from [every social platform],” Lundy said.

But there are potential challenges as brands move into live shopping. Lundy noted that live content is more difficult to moderate, so agencies need to ensure that products used in a livestream are “complementary of the same values on the same app. And same thing even [for] the person who’s doing the livestream — are they going to say anything that’s against what your values are, or what your consumers may not agree with?”