Month: February 2023

Publishers are finding that not only are advertisers willing to sign campaign deals this quarter, but they’re also willing to commit to events as far as nine months out. With these promising indicators, some publishers are anticipating doubling their event revenue this year.

“Experiential [is] something that we’re still really committed to being a big platform for ’23, despite the potential economic challenges for brands,” said a digital publishing executive, who spoke on the condition of anonymity. And early indicators show that brands are willing to spend on event partnerships if they can achieve the ever-desirable, full-funnel reach.

Publishers’ event strategies have been ramping up over time. In the summer, a Digiday+ Research survey found that 78% of publishers said they planned to focus at least a small amount on building their events business in the next six months, with 40% saying building up their events would be a large focus.

But not all publishers agree that experiential will be the saving grace for 2023, especially because quick-turn campaigns are still being prioritized by clients and many publishers don’t have a permanent event space at their disposal.

Another publisher who spoke on the condition of anonymity said they will be prioritizing “a lot more private marketplace and programmatic guaranteed deals.”

“I don’t think you’ll see from anyone in this space, some ginormous, meaty, experiential [campaigns] that would be too top-of-the-funnel [focused], given the uncertainty [of the economy this year],” the publisher added.

Guaranteeing more results

A significant appeal of events is they can offer a more holistic set of data post-campaign that advertisers are not always able to get from digital campaigns or social media branded content, according to the publisher. For example, being directly in front of audiences can guarantee people interact with the brand, and social amplification around events can provide more impressions even beyond the people in attendance. In some cases, adding commerce components can also provide a full-funnel effect, from brand awareness to point of purchase.

“From a client’s perspective, they want to spend their money where their money is gonna work the hardest and they’re going to get the most return from every dollar spent,” said Jon Lefferts, evp of integrated investment at UM.

Apartment Therapy was one publisher that pushed back the timeframe for its tentpole event Small/Cool to the fall of 2023 after it took place in spring during the year prior. About nine to 10 months out from the event, the company signed two sponsors that together represent a quarter of the anticipated revenue for Small/Cool, according to Apartment Therapy president Riva Syrop.

Overall, interest in events (both standalone custom events and sponsorships on editorial events) has “significantly increased” year over year, Syrop added. She declined to share exact growth figures, but said that this increase in interest from advertisers is largely attributed to brands wanting to be a part of “proven franchises” that will deliver on the objectives, or key performance indicators, they need to justify their marketing budgets in 2023.

“They want a proven franchise or format that they’re confident will perform against their KPIs in terms of consumer turnout, press coverage and online reach,” Syrop wrote in an email to Digiday. She did not say whether AT is offering any guarantees on specific KPIs.

Another experiential format that’s picking up interest from Apartment Therapy’s clients is in-store activations, including creating curated displays in retail spaces that have the AT stamp of approval, Syrop said. These activations are very centered around commerce, which has been a desirable way for events to achieve the bottom-of-funnel quality that’s largely desired by advertisers during an economic downturn.

For BDG, which has had a “surprisingly difficult” start to 2023, per an internal email from CEO Bryan Goldberg (the company has laid off 8% of its total staff and shuttered Gawker 2.0), its events business is on an upward trajectory, counter to the industry trends reported around advertising revenue.

So far, BDG’s Nylon House and ZOEasis event franchises have sold five sponsorships for their Coachella iterations this year, according to BDG president and CRO Jason Wagenheim, who declined to share hard revenue figures. This is halfway to the number of sponsors attached to the company’s Coachella events in 2022, said a spokesperson.

The Nylon House franchise will also launch at Formula One in Miami in May and is already attracting sponsor interest, though Wagenheim wouldn’t say whether sponsorships have already been sold against that event, and the house will return to Art Basel again after a profitable run in 2022. More events from that franchise will be built if they’re sold to advertisers, he added. 

Last year, BDG invested heavily in revamping its events business. That revenue stream doubled in 2022 over 2021, growing to represent “nearly” $10 million in revenue, Wagenheim said.

“The model is working for us. I’m expecting this to be another year where we double the experiential business,” said Wagenheim.

Making events cheaper and more turnkey

Another reason publishers are bullish on events this year is that some, including Forbes, have gone to great lengths to decrease the overhead costs that typically fall back on sponsors to foot the bill, like investing in permanent or semi-permanent event spaces.

The first publisher who spoke to Digiday for this story said that their event space enables their team to avoid signing new rental agreements for each event and building up a new space each time. They declined to share how much upfront cost savings amount to as a result of the strategy.

“One-off custom events are really cost prohibitive for brands and then also very production-heavy because you’re constantly rebuilding a space. [We have] an always-on, programmable space, that allows us to not have to pass a massive investment off to a brand,” the first publisher said.

Forbes’ permanent events space is called Forbes on Fifth and is located in Manhattan. And Sherry Phillips, CRO of Forbes, said having the space available for both tentpole editorial events and custom events for sponsors has made experiential campaigns much faster to execute — though she declined to share exact timelines. This is something many advertisers and media buyers look for when advertising budgets get approved last minute and in-quarter ad buys are still top of mind. Phillips did not share how much the space costs to lease or own.

“[Clients] don’t want to put down dollars that [they] can’t recoup. You don’t know what’s going to happen in two months, and you’re [being asked to] put money down for six months in advance. I think publishers, networks, whoever it might be, need to be more flexible and need to condense their timelines” when it comes to these large media buys, Lefferts said.

Wagenheim added that event execution is getting faster in general, as brands seek shorter turnaround times and in-quarter executions. 

“Ideally, it’s about four to five months out that we’re able to lock them up, but realistically speaking, it’s typically more in that two to three months range,” said Wagenheim.

Indeed, GroupM recently estimated that 90% of digital ad campaigns will be influenced by AI by 2027, per an analyst note from New Street Research’s Dan Salmon. 

Given AI is already being widely used at media agencies to do a multitude of tasks from dynamic creative optimization through to brand safety guarantees, its application over the next five years will be predicated on depth as well as breadth. 

Take Havas, for example. It has historically used AI and machine learning technologies for lower funnel performance optimization tasks. Now, its trying to embed the technology throughout more phases of the campaign process. 

“At HMG, we want to move to a place in the next 2-3 years where we are applying AI in our agency to optimize all media buys, to create custom algorithms within a bidder, to identify the right training modules for a planner, make manual tasks like filling out our timesheets far more automated, and much more,” said Mike Bregman, chief data officer at Havas Media Group. 

To be clear, this doesn’t mean that AI is necessarily going to rapidly take away sector jobs. Nor does it mean that media agencies are going to be upended by machines. Rather, all signs seem to suggest that AI is simply taking over the mundane aspects of media selection and trading — as most machines do. 

Horizon Media is a case in point. The media agency launched an AI-based predictive analytics tool last month it said was designed to boost e-commerce sales by 20% for clients. 

Omnicom is also investing in AI. Last week, DDB announced a new hybrid creative platform called RAND focused on developing and implementing new AI technologies for creative processes. RAND will also be a formal center based in Sweden, and DDB is hiring creative technologists and people with machine learning experience to help build new creative augmentation tools.

Although past tech explosions sometimes felt foreign to the agency’s DNA as a creative agency, DDB EMEA Chief Strategy Officer George Strakhov said AI is worth investing in because it is the “fundamentally next step in the creative process.” As media buying becomes more optimized and personalized, Strakhov said it’ll become even more important for generative AI to help creative producers develop enough content to meet that demand. However, he said it’s important to also think about a key question: What are marketers optimizing for?

“Naturally, you optimize for what you can measure, and right now it’s mostly attribution,” Strakhov said. “But if you only optimize for the immediate action, the immediate click-through, you run a danger of TikTokifying everything, which is everything is just going to be whatever makes you watch. And I don’t think that’s where we want to go.”

Agencies that don’t have their own proprietary models will likely want to work with various AI vendors, noted Nicole Greene, senior director analyst in Gartner’s marketing practice. She added that research around choice architecture and the role it plays in nudging people toward various actions is both “exciting and scary at the same time.”

“AI is in everything and I don’t think marketers and agencies really fully understand how much AI permeates our lives,” said Greene. “How quickly ChatGPT has advanced has really brought this to the forefront.”

Of course, online platforms are also increasingly touting the AI capabilities of their various ad products — something that the CEOs for Google, Meta, Snapchat and Microsoft all made sure to brightly underscore in their most recent calls to analysts. They were so keen to talk about AI that it was mentioned 105 times in total across those sessions. Some of these mentions were more focused on tools that are closer to machine learning than true AI, but it’s clear what the end goal is. 

Nicola Mendelsohn, vp of the global business group at Meta summed it up when she told Digiday: “I think more and more advertisers are starting to say to us, ’Now we get what you’ve been saying about how AI is going to play a really crucial role in the future of content creation and also consumption for users, creators and businesses’.”

This sort of pitch from platforms gets lapped up by marketers. Indeed, Meta’s Advantage+ Suite, which is a set of machine-learning-based technologies that help marketers automate all steps of a campaign, is one of its fastest growing products. The same goes for Google’s Performance Max tool that uses machine learning to automate targeting, creative decisions and placement of marketers’ ad dollars across all of Google’s ecosystem. The company’s chief business officer Philipp Schindler talked up its importance on its earnings call last week. 

Still it’s not all upside. There are caveats to this story. Namely, the black box nature that underlines a lot of these technologies. Take the solutions proposed by Google and Meta. Sure, the performance of these products speaks for themselves, but therein lies the problem. Whether its Advantage+ or Performance Max, marketers have to cede control over their advertising to them and trust the AI without being able to verify its outcomes are correct.

Here’s what the independent media and marketing agency presidents and CEOs I spoke with agreed on: 

A return to normal

So far, the hope among agencies is that 2023 is the first year that feels “normal” — as in, no more trying to compare to pre-pandemic times and numbers. As Kern Schireson, CEO and chairman of Known put it, “I’ll take some normal. I’m happy to go plug away, put our best foot forward, do what we do best, and go win new business and improve current business in normalcy. Yes please.”

Dooley Tombras, president of Tombras agency, also noted this is the first year that feels truly post-pandemic, both from the fact that stimulus money isn’t creating a false sense of wealth or affluence but also from the disappearance of lockdowns and the habit changes they produced. 

“There was an unbelievable amount of noise in sales data, your media mix, model data in 2020, and 2021, and that bled into last year,” said Tombras. “We weren’t totally back to ‘normal.’ Now, the noise has been removed [and] the excuses are sort of off the table. Now, CMOs and their agencies are responsible for driving growth, and there’s repercussions if you can’t do that. There’s going to be winners and losers, and everything counts again.”

Client budgets leaning toward conservative

After clients took longer than ever to determine their 2023 budgets, the consensus among the agencies is that clients will spend them conservatively, with some experimentation thrown into the mix.

“With the exception of a few clients, I don’t remember plans being approved this late in the process, and I attribute that partly to the economy,” explained Matt Powell, CEO of digital marketing agency Moroch. “But I also attribute it to this [being] the first year people are finally saying the goal is not to get back to 2019 for the first time in three years. The world has changed.

“Clients realize they cannot go dark” as they did in 2020, said John Harris, CEO of Worldwide Partners Inc., a reverse holding company of independent agencies where they share practices but not top-down ownership. “They’re saying, ‘OK, we may need to shift the priority of spending to emphasize customer service and customer experience in our web channel and reallocate some dollars from some above the line media.’ But they’re not saying ‘Whoa, put on the brakes.’”

More pitches against holding companies

Indies are running up against holding company agencies in more pitches than in recent years, a sign the indies are trying to punch above their weight, and that holding companies are extending their reach into mid-size and smaller clients.

“I think you’re seeing holding companies go downstream for budget, and I think you’re gonna see independents go upstream, which is exciting,” said Kamran Asghar, CEO and co-founder of Crossmedia. “I think the consultants are going to have a good year. I hope that they I hope they do themselves a service by going outside of the Big Six.”

Talent is stabilizing

Staffing issues, which have plagued all agencies, indie or holdco, since the pandemic began, are leveling off as staffers seek out stability and realize that perhaps the green grass of ad-tech might be artificially colored.

“We’re starting to see the Great Return,” said WPI’s Harris. “The frantic hunt for talent isn’t as frantic as it used to be, and talent is a foundation of any agency. There’s a recognition of the importance of the people and the leadership that you work for, and the opportunities that you gain. There’s a return to employee loyalty and not just chasing money.”

Where there is lack of accord is on the bottom line. As one might expect, there’s a divergence among independents about how they will fare with revenue growth in 2023. While Known’s Schireson said he is forecasting his agency to hit between 20-30% topline revenue growth this year after 2022 was “like running up a down escalator,” Crossmedia’s Asghar foresees low double-digit growth this year after his agency had its best year ever in 2022 at 30% growth over ’21. “Everyone’s going to be battling for dollars this year,” said Asghar.

Similar to Crossmedia, Moroch’s Powell said after growing revenue about 10% in 2022, he’s hoping to hit the same increase this year. And Dooley Tombras said “finding any growth would be good” in 2023 after securing 15% revenue gains in 2022.

Color by numbers

Cloud platform Filestage this month surveyed more than 300 agencies and brands in a new State of Creative Collaboration 2023 report to understand how the hybrid workplace is changing. It turns out a lot of marketers are still stuck in too many meetings, and waiting for feedback and approvals are the biggest bottlenecks at work. — Antoinette Siu

Some stats:

• Some 23% of agencies are fully remote now, with 62% maintaining a hybrid workplace and 23% in the office. Around 28% of respondents are digital nomads.
• 75% of creative collaborations happen remotely, with 25% face-to-face.
• Marketers spend 20 minutes reviewing each piece of work, totaling 8 hours per month. The average process to get work approved is 7 days at agencies and 10 days for brands.
• Respondents said waiting for feedback is the No.1 problem slowing them down. 

Takeoff & landing

• Publicis’s 2022 financial results impressed analysts, showing 20% net revenue growth for the holding company, and 10% organic growth. Chairman Arthur Sadoun noted that one-third of the holding company’s revenue now derives from data and technology services. 
• Independent agency Known hired Kasha Cacy as its first chief media officer, bringing her over from Big Village Group (formerly Engine) where she had been global CEO. Kacy also was U.S. CEO of IPG’s UM before that.
• Demand-side platform Adform partnered with supply-chain emissions firm Scope3 to offer carbon-reduction calculations in the programmatic world. Advertisers will be able to plan, audit, optimize, and monitor brand’s campaigns’ carbon footprint directly through the Adform DSP using Scope3 data.

Direct quote

“Let’s be honest. Our industry is far from perfect. Many of the problems that the IAB cited were because of an imbalanced industry that we all created and supported with our advertising investments. Did we ever utter the issues of “brand safety” or “digital ad fraud” ten years ago? Of course not. But it is time for our industry to clean up its messes and present a far more responsible approach to address the issues that are prevalent in our industry.”

— ANA CEO Bob Liodice and 4A’s CEO Marla Kaplowitz in a joint statement in response to IAB CEO David Cohen’s attack on those forces in the digital industry and in Washington who “have made it their mission to cripple the advertising industry and eliminate it from the American economy and culture.”

Speed reading

• Digiday senior reporter of marketing and technology Marty Swant continued his run of solid analysis of the ways marketers and agencies are embracing generative AI.
• Digiday media agency reporter Antoinette Siu examined some of the challenges behind the red-hot marketplace of retail media networks. 
• Digiday’s senior news editor Seb Joseph looked into some of the ways in which media agencies are again wresting some control they lost to the programmatic marketplace. 

Privacy regulators in California, for example, have said companies need to honor GPC to comply with the state’s privacy law. And the Interactive Advertising Bureau’s privacy compliance framework — the Multi-State Privacy Agreement — includes support of GPC, while publishers including The New York Times and WordPress owner Automattic similarly support the opt-out request facilitator.

While each newsroom’s union contract differs, here are some of the ways unions represented by guilds in New York are addressing layoffs.

Pushing back

Fundamentally, newsroom unions can push back against layoffs announced by company management. 

“One of the toughest aspects of doing union work is to confront layoffs,” said Lowell Peterson, executive director of the WGA-East, which is currently fighting layoffs at BuzzFeed, Vox and MSNBC.

If someone is laid off, rather than wondering why they got fired and if their severance package is fair in comparison to others, unions can collectively request information from management to find out why the company is enacting a layoff and to see if there is room for negotiation on the number of people being let go and if they can apply to other positions at the company, Peterson said.

“We spend hours and hours sitting across the bargaining table to save as many jobs as we can,” he said.

Vox Media’s union, for example, tweeted on Wednesday a list of questions they collected from members on the impact of recent layoffs, after over 20 members were let go. The questions range, asking what the company has done to prevent layoffs, if executives have taken pay cuts, what measures are being taken to prevent further layoffs and details on future hiring plans.

For formed unions that have not yet reached an agreed-upon contract (such as NBC News), a layoff is considered a “condition of employment” and would need to be negotiated before enacted, said Todd Vachon, director of the Labor Education Action Research Network (LEARN) at Rutgers University. Unions will often discuss with management the financials of the company to determine how many people need to be let go and if an option like furloughs is viable.

“Union jobs are more secure because they are able to negotiate these creative ways to save jobs,” Vachon said.

The Washington Post, for example, did not allow employees who were laid off to apply for another job at the company for over a year, said a person familiar with the details. The newsroom union fought back, and now employees can apply for jobs immediately, they said. The Washington Post did not immediately return a request for comment.

Extended severance

Unions often negotiate with management to get extended severance and benefits packages for members, Peterson said.

This was a “big issue” in negotiations with Vox Media’s union and management, which ratified its second contract with WGA-East last June, Peterson said. Vox Media union’s new contract guarantees a minimum of 12 weeks’ severance, even for members who have worked there for less than a year, a WGA-East spokesperson said.

The Post’s Guild, for example, is negotiating over a “separation incentive program,” according to a document shared with Digiday, which would give eligible members from the newsroom who were let go on Jan. 24 additional severance based on how long they had worked at The Post.

A number of contracts at unions affiliated with the NewsGuild of New York also require companies to pay extra severance if they lay off employees out of seniority order (where junior employees get laid off first), a NewsGuild spokesperson said. Notice provisions are also in a number of NewsGuild union contracts, which are a required period of time that employees are given before their layoff goes into effect.

“It gives the union time to come up with a strategy to fight against the layoffs,” Vachon said.

Support and communication

Unions also serve as a support system for employees that have been let go.

“The guild gives us a chance to air our grievances” against management, said a recently-laid off journalist, who asked to remain anonymous. They called a recent meeting between their newsroom union and executives “cathartic.”

Nate Wilcox, an editorial manager at Vox Media who was let go on Jan. 20, said he was “grateful” for the editorial union. The “mutual support during the day of the layoffs was immensely helpful… It seems pretty invaluable to have the union support and solidarity through this experience,” he said.

Unions have also been actively sharing details — and their grievances — regarding recent layoffs with the public via social media. Peterson said this is a move to drive “public pressure.”

Unions “organize collectively — like a social movement — and go online and start to create a narrative of injustice and great public support for the workers and opposition to the company,” Vachon said.

BDG’s union tweeted on Thursday that it “vehemently condemns” the company’s firing of nearly 40 members and the shuttering of the Gawker site. The union claimed it’s the third round of layoffs in the past five months, effectively reducing the number of its members by half to around 100 workers.

After 20 employees were laid off, The Washington Post’s Guild tweeted on January 24: “We’ll continue to hold the company accountable and fight these seemingly arbitrary terminations in every way we can — including helping our colleagues find other jobs within the newsroom and securing the severance packages they deserve.”