Month: March 2023

“A collaborative nature is a must,” said Skinner, who has worked with brands like Visible, Target and Mac, among others, to create content that will appeal to his audience of 1.4 million Instagram followers. “I want to be thoughtful about [brand partnerships] so that people can enjoy it. I still want it to feel like me.”

Skinners’ recent collaborative work with Visible is likely part of a burgeoning trend with influencers working in a more advisory capacity. Rather than working with dozens of influencers to post the same brand-approved copy, marketers and agency execs say that the relationship with influencers is evolving and maturing to work with them on more than just a media placement.

For some, that’s more collaborative creative work with brands like Gymshark and Pretty Little Things using influencers like David Laid and Molly Mae as creative directors. (Brands like Wild Turkey have been using celebrity creative directors to stand out for years; Diet Coke turned to model Kate Moss while LVMH recently tapped Pharell.) For others, it’s using the insight influencers have about their audience almost like that of market research.

“The era of creators as creative directors is here, and it will only continue,” said Sadie Schabdach, Dentsu Creative evp of influencer marketing. “This trend is an evolution of the product marketing collaboration model, which positions creators as innovators on behalf of brands. This model will not eliminate the modes of influencer marketing that preceded it. This is a ‘yes, and’ extension of how brands and influencers are working together today.” 

Marketers are looking to influencers for “creative ideation and thoughtful strategic direction” to make content that is “durable, lasting and impactful,” explained Zach Blume co-founder of the creative shop Portal A, who added it’s a move away from a more transactional model to one of a “deeper level of collaboration.”

“It’s because authenticity wins,” said Kay Tenerovich, director of social strategy for Carmichael Lynch. “These influencers know what resonates with their audience better than we do. They should be the ones leading the creative process, not following strict orders from brands and agencies.” Tenerovich added that the creative shop is also looking to hire a creator as a “social content designer.”

While brands may want content that is more authentic to them now, the move to be more collaborative with influencers comes as influencers are recognizing the opportunity in building their own brands to monetize their own audience, agency execs said. With that being the case, marketers need to offer influencers more incentives to work with them.

“Brands and marketers are having to approach more creators as true partners or collaborators,” said Brendan Gahan, chief social officer and partner at Mekanism. “The reason? The power dynamics between brands and creators have evolved. It used to be creators were reliant upon brands to make a living. But, that’s all changed.” 

Gahan continued: “Creators are seeing their peers launch their own brands, products, and communities and make more money than ever. There’s a playbook. Creators find content marketcontent marketing? fit. Then they build an audience. Then they launch companies. So, creators understand they’ve got options. As a result, brands have to make their incentives more compelling.”

Jago Sherman, head of strategy at the influencer shop Goat Agency echoed that sentiment: “this reverses the relationship, from brands telling influencers what they want, to asking them what they need.”

It’s unclear how much more influencers make for a more collaborative or longer-term relationship with a brand. The nature of the deal would change, per agency execs, but will be dependant on the influencer, the brand and the nature of the relationship. 

“Paying for someone’s knowledge and expertise is obviously very different from paying for their media value,” said Vickie Segar, founder of influencer marketing shop Village Marketing. “We are creating custom offers for this work and deciding together what the value is per creator. That said, their time is very valuable given what they are able to make with branded posts.”

Marketers and agency execs say they expect this evolution to continue as the changing nature of advertising today — where the landscape is more fragmented and harder to break through — makes influencers more and more appealing.

“The current reality is that the landscape has really changed — creators now define and influence culture via an ongoing connection with their unique audiences,” said Kerry Doyle, evp and head of content at Carat U.S. “Creators have that one-to-one emotional bond and influence that is ultimately driving the cross-funnel bottom line for our business, from awareness to purchase.”

Before the cannabis ad ban was lifted on Twitter, brands were already running organic marketing campaigns on social platforms including Instagram, TikTok and Facebook to build awareness among adult audiences. But it has been difficult for brands looking to advertise cannabis products. For example, brands can advertise hemp products on Meta-owned platforms, but there are restrictions on geographical targeting and content and they can’t advertise hemp products containing THC or CBD. And despite the fact that New York State legalized cannabis use for adults, TikTok restricts public service announcements regarding drugs.

For cannabis companies to advertise on Twitter, they must be pre-authorized by the platform and meet other requirements, including being licensed by the appropriate authorities and targeting audiences only in jurisdictions where they are licensed to promote their products or services online. Twitter also prohibits advertisers from making efficacy or health claims about cannabis products or depicting its use in their ads.

For edible brand Kiva, director of e-commerce Aaron Rivadeneyra said the brand has had a strong organic presence on all social media platforms that allow cannabis, with Instagram being its most engaging social media platform. Rivadeneyra added that Kiva has stayed away from direct product sales marketing.

Ashley Fields, svp of marketing and communications at alcohol brand Cann, said that prior to the lift of the ban, the brand was leveraging TikTok with short-form video content and Instagram to attract adults of drinking age. However, she said she observed a shift in 2021 regarding a demographic looking for an alternative to alcohol: people over 21 seeking an alcohol-like buzz or experience without alcohol’s negative side effects.

“We’ve seen a massive shift, especially among Gen Z, but really across the range of I would say, age, sex, household income, etc., all of those key indicators of people shifting their behavior away from alcohol and looking for alcohol alternatives,” said Fields. 

In response, Cann has tapped celebrities including actors Gwyneth Paltrow, Kate Hudson and Adam DeVine and basketball player Baron Davis to broaden the brand’s reach to new and curious audiences on a state-by-state basis.

How much are cannabis brands ready to spend?

As MJBizDaily reported, Twitter is offering an advertising incentive for cannabis brands through March 31, and will match new advertising spend up to $250,000 on a one-to-one basis over the course of six weeks. According to Fields, Cann is going to spend about $25,000 on advertising to an audience in one city to test and learn the scale of the platform. 

“What we’ve been told [by Twitter] so far as it’s very much going to be an educational platform and so for a brand like us where we’re hyper-focused on mid- to bottom-of-the-funnel tactics and high ROAS (return of ad spend), that might not necessarily be something that we’re ready to invest a lot of money in,” said Fields, adding that the brand is trying to educate and acquire customers who wouldn’t traditionally say that they are cannabis users.

Although Rivadeneyra and Kate Lynch, evp of marketing at Curaleaf, declined to share details on how much their advertising budgets will be for Twitter, Rivadeneyra shared that Kiva increased its digital budget by four times and that the brand plans to spend 30% of its advertising budget on the platform. Lynch said Curaleaf opted to spend “a larger amount than they typically would” in order to get familiar with the platform.

“2022 was a year of digital test-and-learn for Kiva and while we definitely found a few tactics that didn’t have acceptable paybacks, we found many that did,” said Rivadernerya. “We look forward to putting a portion of that against some aggressive test-and-learn initiatives with Twitter.”

According to Chase Terwilliger, CEO of Balanced Health Botanicals, the brand is currently spending $12,500 per month on Twitter and will ramp up efforts on the platform significantly if they see a positive return on investment in the space.

Keeping up with regulations

The laws and regulations of the cannabis industry are constantly changing from state to state, so brands must also adjust their marketing strategies to meet the needs of their customers and normalize and destigmatize cannabis over time as regulations continue to change.

According to Fields, the wording used in advertisements for cannabis products must vary depending on the state where the ad is distributed.

“So for example, in Massachusetts, whenever you’re doing an ad, let’s say on a billboard, you’ve got basically a paragraph of text that you have to write in terms of TNC (The Nature Conservancy) where you don’t necessarily have that in California so for us, depending on the type of ad unit and then the state itself, it’s going to definitely be interesting to navigate,” she said.

Lynch said that from a marketing and advertising perspective, Curaleaf is not locked into the way things have been done in the past, and the brand is able to define modern marketing for itself at every turn.

“With this industry comes the need for adaptability and while it’s hard to say what the future of cannabis advertising holds, we’re committed to acting quickly as regulations change, as we have with the latest Twitter news,” said Lynch.

Terwilliger also chimed in, noting that Twitter is going to be extremely vigilant and will not approve ads to run that go against the platform’s policies. Twitter has clear guidelines within its policy around what can and cannot be said and shown in ads, so if someone does not abide, their ad simply will not be approved to run, Terwilliger added.

Why Twitter’s cannabis decision matters

According to Jay Milliken, senior partner at Prophet, a growth strategy consulting firm, Twitter is suffering from a loss of advertising revenue given the recent changes at the company after Elon Musk’s takeover. And loosening their cannabis advertising rules opens up a new potential source of revenue for the platform. Even so, the move will not likely replace the revenue generated by the advertisers who have left Twitter, given the smaller and fragmented scale of cannabis companies.

“From a marketing perspective the more channels available to cannabis companies to build their brands and market their products the better,” said Milliken. “Twitter is a unique platform where all companies, including cannabis companies, can authentically interact at a personal level with their customers and prospects.”

To some brands, Twitter’s cannabis advertising move is indicative of the growing acceptance of cannabis, and they are hopeful other social media platforms will follow Twitter’s lead.

“We hope to continue to lead the industry by doing things the right way,” said Terwilliger.

“We’re eating digital Wheaties,” joked Mark Penn, Stagwell’s chairman and CEO. “Take a look at the top three layers of our four layer pyramid, and those have been growing 28%. Because we’re overweighted in higher-growth areas, we continue to put up numbers that look substantially better than the bigger holding companies.”

For the more traditional holding companies, 2022 revenue flat at Omnicom, up 7% at WPP while Publicis saw revenue rise 20% — meanwhile, organic growth ranged between 4-10% among them. 

Stagwell forecasting for 2023 was similarly more bullish than the other holding companies, calling for 7-10% organic revenue growth (and between 10-14% when excluding Stagwell’s political businesses). “In 2023, we have to work against the lack of a political cycle, but we still see research continues to be strong [as well as], digital transformation. And our brand experience group is getting a lot of pitches — that area is continuing to come to the fore when we put together the creative and the media.”

Independent analyst Brian Wieser noted that Stagwell has a bit of an advantage by virtue of its size (it’s not quite as large as the other holding companies — yet), and can therefore afford to be more bullish in predicting 2023 growth.

“Many smaller agency groups out there… appear to be well positioned for faster growth than traditional agency holding companies because of where their businesses have focused,” said Wieser, who noted he doesn’t track Stagwell as closely as the established holding companies.

“The underlying economy in the U.S. and most major markets should still be positive in 2023, with inflation providing a tailwind to growth in marketers’ budgets,” added Wieser. “At the same time, most public companies are reluctant to provide numbers they don’t think they can beat as guidance, so to the extent that the larger holding companies’ guidance is essentially for a 3-4% organic growth rate in 2023, one should interpret that as the number they collectively expect to beat.”

Stagwell’s results for 2022 also showed a surge in growth Internationally — while North American revenue growth hit 14%, international hit 26%. “We grew twice as fast outside the U.S. as we grew [domestically],” said Penn. “And we’re continuing to focus on getting our European business in shape — bringing together our companies there so they can pitch at scale. We’re doing the same thing in Asia, and we’re looking on an M&A basis to fill out Latin America — we have a strong [base] in Brazil, but I want to be strong throughout the region.”

Debt targets for Stagwell are reduced to $2 billion from $2.5 billion, said Penn, who added that devoting cash to reduce the firm’s debt load doesn’t take away from acquisitive growth targets. “We’re using a third for new growth, a third to pay for old stuff, and a third to pay for shareholder stock buybacks,” he said.

“This effort in Indiana came about because there were some local philanthropists there who were concerned about the decline of local news in their communities,” said Sarabeth Berman, CEO of the AJP. And just like how community theaters, school fundraisers, museums and libraries have been supported by local philanthropies and individuals for years, Berman and her team believe that local journalism is now being viewed as a civic institution in that same capacity. 

To date, over $130 million of funds for local journalism have been raised by local funders and national philanthropies combined through the AJP, but community-based giving from local funders is an important area of focus for the new initiatives that the organization is working on, according to the AJP. It’s not just the initial investment into the community that is appealing, however. The AJP’s leadership also believes that local philanthropy could potentially be a more sustainable revenue stream for local media. 

The Houston Local News Initiative, which was also established by the AJP in January 2022, raised $20 million from three local Houston, Texas-based philanthropies to create the nonprofit news organization Houston Landing, which is expected to go live later this year. 

Lumina, a private foundation based in Indianapolis that was initially created to support higher education opportunities for high school students in the state, is one of the local funders that got involved with the Indiana Local News Initiative. Over the past couple of years, the foundation has expanded its support to include news outlets, including the launch of Capital B, with the hope that supporting journalism will provide more coverage of community issues, like higher education, according to Lumina’s strategy director for communications Kevin Corcoran.

“Lumina has never committed to anything of this scale and scope before with other local funders. … Our hope is other local funders will continue to join. It’s big, bold and exciting, but it’s also an unproven startup, so it’s scary,” Corcoran said. 

Unlike large national funds that seed the initial startup or provide investment over a definite period of two to three years, local philanthropies and funders — because they are based in the same communities as the publications they support — are more likely to develop long-term relationships, as they fall within the target readership that these news outlets seek to reach.

Take AJP’s grant. Any funds coming from the organization is restricted to hiring business and operations teams, “because we think it’s really important that from day one, you are hiring and building the capacity to bring in other revenue streams,” according to Berman. Therefore, journalism jobs and editorial initiatives are not covered by the AJP.

“That’s not the sexy part” of philanthropy, Berman added. “Most philanthropists are in this because they want to support journalism.” And many of the other funders included in the Indiana Local News Initiative are allocating their grants to go toward journalism jobs and editorial initiatives.

The hope is that local philanthropies will stick around well beyond the initial investment period and continue to finance the non-revenue driving journalism jobs, keeping philanthropy a smaller, but stable, part of the revenue pie for these local news outlets — the way they’ve financed other civic institutions for decades.

Tracie Powell, founder of The Pivot Fund, is a prime example of how local philanthropies are advocating further for local media within their communities. Born and raised in Atlanta, Powell said she recognized about a decade ago that local journalism needed the support of philanthropic dollars, particularly publications that were founded by and made for marginalized communities. While it’s not limited to Georgia-based publications, The Pivot Fund is currently supporting seven news organizations in the state in a variety of ways.

“The organizations that we currently fund I had no idea existed until we did our landscape analysis,” said Powell. But after witnessing the polarization and inaccuracies that came from national news outlets trying to fill the role that local news outlets would play in her communities but didn’t have the financial support to maintain, she said, “There’s a [growing] recognition among funders that it’s up to us. It’s up to the communities to tell their own stories. And the way that we do that is by investing in credible news and information that’s coming from the community.”

Word in Black, a non-profit media collaborative formed in 2020 by the Fund for Black Journalism, the Google News Initiative and 10 local, Black-owned media outlets, earns about 45% of its total revenue from philanthropy — the majority of which is allocated to producing its journalism. 

“We meet with funders who have an interest in a topic to understand the inequities that exist in Black America, who want to see more journalism [and they] fund the beat. They want to make sure that the stories are getting out there,” said Nancy Lane, CEO of Local Media Association, which helped establish the Fund for Black Journalism.

To date, nine Word in Black reporters have been hired and supported by individual funders and philanthropic organizations. But while those reporters focus on the national level, Word in Black’s network of 10 local newsrooms also receive financial support to cover those topics on the ground in local communities, said Larry Lee, president and publisher of the Sacramento Observer, one of the 10 publications included in the Word in Black network.

Even at the national level, The Guardian’s philanthropic arm — theguardian.org — brings in anywhere between 5% and 9% of the annual revenue per year on the North American side of the business, and lately, a notable portion of donors have been individual contributors. During the publisher’s financial year, which ends on March 31, about $300,000 in revenue came from individual donors who contributed upwards of $5,000 to $10,000, according to Rachel White, president of theguardian.org and evp of philanthropic and strategic partnerships at The Guardian. This represents between 7% and 13% of the total philanthropic revenue earned this year in North America.

“We haven’t actively been driving that, but because of the success of our lower dollar reader contribution program [which drove over half of The Guardian U.S.’s revenue this year] we’d be remiss if we didn’t look into whether [high-value individual donations] held potential for us in a more expansive way,” this coming year, White said.

Currently, this position exists largely at companies that already working in AI or tech. Retail brand Levi’s is the exception, announcing a CAIO in 2019. Overall, the number of companies with this role is still so small that Indeed told WorkLife they weren’t able to gather enough data to see exactly how much it’s growing. But as the adoption of AI becomes more widespread across other industries, it’s likely this role will gain traction in other industries also, experts believe, echoing the early rise of the chief mobile officer circa 2011.

“Businesses that have seed opportunities in AI should probably have this role,” said Joshua Meier, chief AI officer at generative AI drug creation company Absci, formerly of OpenAI who worked on an earlier version of ChatGPT. 

We spoke to a number of chief AI officers to see what this role entails its future place within organizations.

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Although OpenAI’s API is just now becoming more broadly available, noteworthy companies such as Snap, Instacart and Shopify are among the first to use it. Now, marketers and technologists say opening the API to third-party apps could further open the floodgate of developers building on top of it.

The portability of large language models helps developers more easily use APIs and explore new uses, said Gartner Marketing senior analyst Nicole Denman Greene. Although OpenAI’s new integration of ChatGPT and Whisper will likely be just one of many integrations to come, she also mentioned that AI’s ability to understand language nuances is a tricky part of generative content — and something that will continue to be both challenging and also risky.

“In this case, speech-to-text has practical applications for marketers looking to use transcription capabilities to improve their content and experiences,” Denman Greene said. “However, marketers should remain cautious, as they need to ensure human oversight to check for the inherent biases that will now be embedded in the training data. This will be compounded by ChatGPT and Whisper making connections to understand and generate new content.”

Another way companies might benefit from OpenAI’s API is by analyzing the sentiment of customer feedback. Stephen Curial, chief technology officer at the e-commerce search and analytics platform Jungle Scout, mentioned an example of a seller that used ChatGPT to analyze dog reviews and then adjust sizes to meet buyers’ expectations.

“It saves you the time,” Curial said of APIs. “You don’t have to go spend time and figure out the details, [or] figuring out the algorithm and fine-tuning it to be able to really implement it. You can get a version that’s already tuned without being an expert in it.”

To attract more developers, OpenAI is also lowering costs. Developers will pay $0.002 for 1,000 tokens — which amounts to about 750 words — making it 10 times cheaper. In some ways, the strategy could be similar to what Uber did with its early prices to undercut taxi fares and what Amazon did with book prices to attract readers way from local bookstores.

May Habib, founder and CEO of generative content startup Writer — which has its own LLMs used by thousands of customers — said it’s no surprise that generative models would quickly become near-free or free. And while it’s a “good thing for society,” she said there’s a lot of work that still needs to happen.

“Though a near-free ChatGPT is a great ‘wet-your-beak’ offering,” Habib said, “there’s still a lot that needs to happen before generative AI can be used to massively improve efficiencies at scale.”

The ways companies are already using ChatGPT vary greatly. In the case of Instacart, shoppers can ask about food to generate ideas for recipes based on product data from the grocery platform’s more than 75,000 retail partners. And on Shopify’s app, people can use ChatGPT to find products and brands with a new shopping assistant to help them find what they’re looking for or discover new products.

Since OpenAI has already put some guardrails in place and fine-tuned ChatGPT, it could help marketers feel safer about using the API, according to Ryan Cottrell, director of marketing technology at Publicis North America.

“There was always the possibility to train your custom models, but having something out of the box that ensures safe content for all users is appealing on a larger scale,” Cottrell said. “Not only will it produce safer content, but it will also speed up production time when going to market.”