Month: April 2023

• One publisher said RFP turnaround times have decreased from an average of six days to four days in the first quarter. 
• Another publisher said cancellation rates are higher than ever. 
• Publishers are trying to determine how to not only sign deals but keep their thumbs on advertisers so ad campaigns start on their initially agreed upon day.

Advertising revenue was down in the first quarter but that doesn’t mean that the advertisers who are spending have been any less demanding when it comes to how fast a sales cycle can be completed — a timeline that’s been compressed even further by advertisers since the third and fourth quarters of 2020.

It’s not just the creation and execution of campaigns that advertisers are demanding publishers complete in half-time, however. One publisher who spoke on the condition of anonymity said that the turnaround times for in-bound requests for proposal [RFPs] have also shrunk, adding that RFP volume is up while win rates are down — resulting in more work for less compensation.

“I’ve never seen a sales cycle like this,” said Orlando Reece, head of global sales at Insider. Starting in the third quarter last year, “it has shortened so much where before, you were talking two months, three months, four months before a quarter, you were doing deals and getting the deals ready. [That] shrunk to like, within a month, and sometimes within two to three weeks.”

Q1 advertising revenue ended “down a little bit” compared to Reece’s forecast heading into the quarter. He declined to disclose exactly how much ad revenue was off target, but did say his team was able to offset some of the deficit from existing clients and advertising categories by starting to sell within new ad categories. The only issue is that even some of the new deals were too slippery to keep in the quarter. 

“[It was] really good and lucky for us that we did that pivot,” Reece added, declining to disclose which advertising categories his team began selling.

Now, publishers across the board are grappling with how to win over advertisers who have little money to spend and then keep them happy and locked in long enough for their campaigns to see the light of day — and for publishers to get their paychecks.

RFP frenzy

During the first quarter this year, the average turnaround time for an RFP was four days compared to six days in Q1 2022, said the anonymous publisher, but it was even more extreme with smaller-sized revenue deals valued at $250,000 or less.

“We saw an average turnaround time of two-and-a-half days versus five days in the previous year [for <$250,000 deals], so you’re basically talking about a 50% reduction in turnaround time. And then you couple all of that with the fact that RFP volume is actually up, it’s creating a pretty significant tax on our resources,” said the publisher.

Overall RFP volume so far for 2023 was up by 185 deals compared to this time the year, according to the publisher, but the win rate was down year over year, and fewer prospective clients are willing to share why they didn’t accept a proposal. They declined to share what the win rate was for proposals this year versus 2022, but they did say that the average dollar opportunity has remained equal between Q1 2022 and 2023. This year, however, the majority of RFPs are for sub-$250,000 deals or are $1 million-plus deals. 

“All these things in concert — high volume, quick turn, low win rate and lack of information — means that we have less visibility and are operating in a much more challenged environment than we were in Q1 a year ago,” the publisher said.

Slipping through the cracks

A second publisher who spoke on the condition of anonymity said that starting mid-2022, campaign planning was “thrown into a tizzy” and knowing how many deals would be booked in a quarter became a privilege, not a guarantee. Deals that were once considered “surefire” — meaning campaigns that were 75-90% planned — started getting pulled out from under their sales team. 

“We don’t know what’s real because they’re shifting so frequently. And [advertisers are] more than willing to take those cancellation fees. It just really puts publishers in a hard position right now, because there’s no stage where budgets feel real 100%,” the second publisher said. “It’s very hard to forecast.” 

Based on the IAB’s Standard Terms and Conditions for Internet Advertising for Media Buys One Year or Less, campaign cancellations and terminations that happen 14-days or less from the campaign launch date require the advertisers to pay a fee, which varies by contract, but is equivalent to the first six days worth of deliverables from the campaign. The advertisers are also responsible for covering the costs for any custom materials made by the publisher.

The second publisher said that their company also has its own terms that are paired with IAB’s terms, but at that point of the planning stage, they were really counting on the full deal’s worth of money. 

“It goes to prove that we don’t really have an understanding of the market,” the second publisher said, but ultimately their team is forced to grin and bear it and hope that the situation will get better eventually as the economy rebounds.

Insider, on the other hand, has not experienced an increase in cancellations, but Reece did say that slippages are happening more frequently, meaning deals that were meant to close in the first quarter are moving later and later into the year. 

“I saw a lot of slippage out of the quarter,” said Reece. “It would just move from February to March, then from March to April.”

While part of that was due to clients’ CMOs and CEOs taking a long time to approve advertising budgets for the quarter or the year, some of it was due to a lot of back and forth between the advertiser’s, agency’s and Insider’s respective legal teams. 

The first publisher also said that there hasn’t been a big uptick in cancellations, but not hearing back on RFPs leaves the team in some degree of limbo. 

Going after guarantees 

Industry Dive’s CEO and co-founder Sean Griffey said that he’s also not seeing much of an increase in cancellations, but the legal process is also really slowing things down for his sales team. What has been working to solidify more deals this year is talking up the products in Industry Dive’s media kit that guarantee results for advertisers and are priced based on the number of leads guaranteed, such as webinars.

“[Guarantees] are in much more demand than in the past,” Griffey said. 

The first publisher said that given the influx of work and resulting bandwidth issues, their team has started thinking more about templating solutions and creating off-the-shelf packages to respond to RFPs so that they can get back to clients faster. 

The second publisher said that they’ve been trying to drive more programmatic dollars directly through their sales team via programmatic guarantees and incentivizing clients to do so by unlocking added products like custom content or creator-led videos if they spend a certain amount. The idea is that budgets earmarked for programmatic are less likely to be pulled last minute and therefore the add-ons will also not be canceled. 

What we’ve heard

“It was frozen in [January]. It was bad. Nothing was happening. Then you felt the defrosting happen, but we are still fighting for every dollar we can.”

— Orlando Reece, head of global sales at Insider

Publishers are marketing with AI

Publishers are experimenting with different ways to use generative AI technology, from research and analytics to producing evergreen posts, but some are now finding success with using AI for marketing and sales communications.

At the Digiday Publishing Summit in Vail, Colorado last week, a few publishers said they were using generative AI to produce marketing copy. One publishing executive — who spoke anonymously under Chatham House rules — said their company’s marketing team tested human-written copy against copy generated by AI technology. The AI copy would “usually” result in more conversions, they said.

Generative AI allows marketing and sales teams to quickly tailor language to specific audiences, several executives who spoke to Digiday for this story said. The first publishing exec added that their team considers “the persona” and the “tone” when generating marketing copy, and can tweak the text for different target audiences.

Companies like Ingenio, Team Whistle and BridgeTower Media are also using AI to generate text for marketing purposes. Executives at those publishers said the AI tools make it easier and faster to do this work. 

Team Whistle has experimented with generative AI for sponsored social video and advertising to produce video captions and scripts. “You can do any kind of tonality that you want,” said evp of content Noah Weissman. “It will spit out five different versions of social copy.” Weissman said some of Team Whistle’s recent “viral videos” contain AI-created scripts and text.

BridgeTower Media is using generative AI to “seed” marketing messaging in text and emails promoting its events and paid products, as well as to create “talking points” for the company’s sales team, said David Saabye, svp of digital product management at the B2B media company. AI technology was also used to generate custom images for BridgeTower Media’s corporate website, which relaunched a few weeks ago. 

Another publishing executive at the Digiday Publishing Summit said a recent reorganization of their team tasked them with writing marketing copy. They used OpenAI and Jasper to write promotional text for their magazine subscription. “I didn’t have time to delegate [to a freelancer]. And it’s been like having an intern,” they said. “But I would love a real intern too.”  – Sara Guaglione

Numbers to know

13%: The amount of people in the U.K. who say they trust the press, compared to 30% of people in the U.S., according to research by King’s College London for the World Values Survey.

5.7 billion: The number of “bad ads” removed by Google from its ads network in 2022, up from 3.4 billion in 2021. 

85%: The number of publisher pros who said they get at least a very small portion of their revenue from programmatic ads as of Q1 2023, up from 78% six months prior, according to a new Digiday+ Research deep dive.

What we’ve covered

Publishers’ Q1 ad revenue was better than forecasts, but not by much:

• For most of January, many publishers shared the very bleak experience of being behind 10-25% in their ad forecasts for the quarter. 
• Now that March is over, publishers are surveying their wounds and finding that while ad revenue was indeed down, the numbers aren’t as bad as once predicted.

Read more about how publishers rounded out the first quarter here. 

As AI attention builds, so does the tension with how to handle it:

• After months of tech companies racing to roll out various artificial intelligence tools, the sector now finds itself coming under increased scrutiny. 
• But that doesn’t seem to be stopping anyone from building it — or slowing down many from buying it.

Read more about the state of regulation around AI technology here. 

Paramount slows down its podcast production launch pace as market comes ‘back to Earth’:

• Paramount will launch fewer podcast shows this year than in years past and will be more selective about which shows get developed going forward.
• “What we’re now feeling is a market correction. It’s a ‘come back to Earth.’ Podcasting is going to be governed by actual economics,” said Steve Raizes, Paramount’s evp of podcasting and audio. 

Learn more about how Paramount is approaching its podcast business in 2023 here. 

How Forbes and The Daily Beast are consolidating diverse revenue streams to create the highest value audience:

• Publishers have been trying to break out of the business-side silos for years, but not all have been able to effectively execute a reorganization strategy that’s led to meaningful change.
• Forbes and The Daily Beast shared an inside look into how they reorganized their revenue teams to make money more efficiently.

Read more about how these two publishers are shifting their internal operational strategies here.

What we’re reading

Publishers worry traffic will falter because of search engine’s AI chatbots: 

Google’s and Microsoft’s AI chatbots provide answers to users’ search queries in full paragraphs rather than sharing links to sources and because of that, publishers are concerned that readers won’t end up on their sites like they typically would when looking for information, The New York Times reported. 

Russia detains a Wall Street Journal correspondent:  

The WSJ’s Evan Gershkovich was accused of espionage by Russia’s Federal Security Bureau last week, marking the first spy case brought against an overseas reporter by Russia since the Cold War, WSJ reported. 

Twitter labels NPR as ‘state-affiliated media’: 

In one of the latest updates to Twitter’s user verification protocol, nonprofit news organization NPR was labeled as “state-affiliated media” earlier this week, the Washington Post reported. This label has not been applied to media organizations that are in fact funded by their respective governments, including The Voice of America, the BBC and the U.S. military newspaper Stars and Stripes. 

Podcast listenership remains, but the ‘dumb money’ is gone: 

After eight seasons, NPR’s “Invisibilia” podcast was canceled along with three other podcast shows due to cost cutting to try and fill in the $30 million budget gap within the nonprofit news organization, Vanity Fair reported. This decision was made despite the fact that “Invisibilia” garnered more than 40 million downloads within three-and-a-half months of its January debut. 

For instance, machine learning tools are currently being used to catch anomalous budget inputs within social campaigns to flag them for second-level approval.

So if a campaign is extended by a month, but the extra budget has been erroneously applied to the final two days of the current month, the tool can flag this error and prevent a month’s worth of budget being spent over a two-day period. 

“It’s sort of biddable operations,” said Mike Bregman, chief data officer at Havas Media Group. “We constantly have to think about the billions of dollars that we have in our treasury at any one time so the idea of using AI to help with that bookkeeping is key. We’re able to use AI to help keep track of all of that at a real scale.”

Elsewhere, machine learning is also being used to recommend how much to spend on a given day based on a week or month level budget, as well as the seasonality and past spend patterns for that specific brand. 

Both examples speak to the biggest benefit the agency has reaped from AI to date: speed and time savings — hours of human work reduced to minutes or seconds. 

Take the aforementioned case of catching anomalous spending decisions, for example. Not only did it generate upwards of one million dollars a year in savings, according to Havas Media Group, it also freed up hours — time execs at the agency could spend working with clients or with one another.  

“The agency model has to be futureproofed and in order to do that there are some fundamental changes to the way organizations are designed, the way they operate and the technology that helps them do that, which need to be addressed,” said Bregman. “AI has the ability to unlock all of that.”

Creative — or rather the way it is optmized — is another process AI has permeated through at Havas Media Group. Nowadays, any dynamic creative optimization-driven campaign deployed in and around the purchase funnel by the agency has AI in the background. 

“These AI platforms can come up with different combinations of messages in a few seconds when it would take a copywriter a few days,” said Bregman.

Copywriters should breathe easy. Havas Media Group isn’t planning to replace them outright. Rather, it’s using AI to handle certain tasks. 

As Bregman explained: “it’s still smart to have a human that’s reading all the iterations, because some of them might just be ridiculous or outside the norms.”

This is just the start. 

Over the next two to three years, Havas Media Group wants AI more deeply embedded into the fabric of the agency. So not just using AI to optimize all media buys but also to create custom algorithms within a programmatic bidder or using the technology to identify the right training modules for a planner as well as making manual tasks like filling out timesheets.

Some of these efforts are already well underway, like for lower funnel performance optimization. Havas Media Group’s execs are using AI to power custom algorithms in the demand-side platforms — or ad tech used to place programmatic bids — to get 25%+ improvements in the cost per acquisition charged when the ads it buys lead to a conversion.

The application of AI is expanding to broader metrics like attention, where it’s used to model consumer interactions with ads — which is important as the industry moves toward attention-based planning. 

Even from this limited vantage point it’s easy to see where this nets out in the short-to-medium term: campaigns planned and bought by AI. The tools are there already, it’s just whether marketers are willing to trust the technology with their money. The optimization, on the other hand — the bit that comes after the ad has been bought and the client wants to sweat those dollars harder — remains a work in progress. 

Bregman expanded on the point: “The idea of funding the fluidity [of campaign optimization] that comes as a result of AI is something that not a lot of advertisers are comfortable with.”

Eventually, however, this stance will change — whether marketers are comfortable with it or not. The emergence of AI solutions from Google (Performance Max) and Facebook (Advantage+) make that all too clear. Both solutions can be whittled down to this: advertisers share their data with the tech, upload the creative assets, set the financial parameters (think daily budget cap, price per conversion etc.) and sit back and wait for it to report back aggregate results. 

It makes sense then the marketers are taking a trust but verify approach to many of these solutions. 

“For advertisers, they see us a bit like the United Nations when it comes to being able to look at all the different options on the table, test out the use cases of them and then figure out how to get the most out of them,” said Bregman. 

Fulfilling a role like this is tricky to say the least. Not only are the likes of Havas Media Group having to stay on top of thinking about what AI means for their own businesses, they’re having to help marketers do the same thing. And all while making sure they avoid AI becoming another existential crisis. No wonder the group is trying to gather up as much knowledge on the matter as possible. It’s not just building out its own already substantial team of data scientists, it’s also working with academia, startups and platforms too. Oh, and there’s the cost.

“We’re still trying to figure out the numerator denominator of the tech ROI equation, because none of this is cheap,” said Bregman. “Data scientists aren’t cheap and the ones we have here are very busy these days.”

It’s akin to being in an arms race, in many ways. 

Whether it’s Havas Media Group or another agency, they’re all trying to rewire their businesses around AI. The challenge is figuring out how fast they should do it. Move too fast, and the impact the technology has on the structure and subsequent operations of a holding group like Havas Media Group could prove to be too disruptive in a very transitory period. Go too slow, though, and the business could struggle to keep pace with counterparts that are more efficient and adaptive thanks to AI.

“I would love to find a way to make this pivot quickly but with tens of thousands of people to think about across our holding company, it’s going to be a journey,” said Bregman. “Agencies function through really good handoffs because there are so many different teams. The idea of having data at the core would fundamentally change how that works.”

That’s a big concept for any business to get its head around — let alone one where the data team still only accounts for a quarter of the group. That expertise either needs to find ways to permeate further and faster into the business or it needs to grow. Either way, the costs are steep. But they’re also necessary. AI is nothing but a data hog, after all. Indeed, the technologies thrive on ingesting large amounts of data.

“There are no AI-driven agencies today,” said Bregman. “I’m trying as much as I can to push us toward that direction so that we can be an agency of the future but we’re not quite there yet.”

Still, Havas Media Group has time to stick the landing on AI. Senior marketers haven’t even got to the point where they know what they don’t know — the preservation of agencies — when it comes to AI. AI hasn’t even come up in pitches, said Bregman. Eventually, it will, and when it does he wants to be able to respond accordingly.

“AI inputs should be viewed as a creative partner that can be leveraged to frame angels from a messaging perspective,” said Marc Hardgrove, CEO of search agency The HOTH. “But it takes a little practice to hone in which inputs work best for your team. At this point, there shouldn’t be a question as to whether to use AI– that horse is out of the gate and frankly, we all have been using AI tools for years, even before it was the big buzzword.”

First up, what is Lemon8?

Lemon8 describes itself as a “content sharing platform for a youthful community” where its users can discover “beautiful, authentic, and diverse content.” 

Think of it like Instagram and Pinterest, for a Gen Z-type audience, merged together: the polished photos that you’d find on Instagram, alongside the focus on products and categorization features from Pinterest with a sprinkle of the lifestyle topics including fashion and food that have helped set the platform apart from its peers. It could be argued, Lemon8 has taken the best bits of both worlds (or rather apps).

And Lemon8 seems to boast the same algorithm as TikTok, according to a report by The New York Times last week, which said that ByteDance contacted a number of creators last month about the app. In the message, ByteDance made it clear that Lemon8 shares the same “recommendation engine” as TikTok — the one feature that no other social network has been able to replicate or match and put TikTok streets ahead of its competition.

Marketers who spoke to Digiday have said the platform, at least right now, seems to be putting creators first — maybe too much if the oversaturation of influencers on the platform is anything to go on. 

TikTokers Passion Williems (@passionwilliems), Natasha Mathurent (@natashascloset) and Gabrielle Victor (@gabivictorr), for example, are among a number of creators that have already hopped on the Lemon8 bandwagon in the past week or so, in a bid to be the early adopters of the app. They have already amassed 2011, 807 and 186 followers on ByteDance’s other app, respectively.

However, despite the abundance of creator content on the app, there doesn’t appear to be a clear way for them to monetize it. Perhaps that’s why not many of the larger influencers have made the jump to the social network just yet. 

The lack of a creator commercial plan is surprising given the app has existed since at least March 2020, according to Apptopia, which cited the date as when the app launched on both the Apple App Store and Android Google Play store. The social platform, formerly known as Sharee, was launched as an international version of Chinese app Xiaohongshu, just as TikTok mirrors its Chinese counterpart Douyin.

But since 2020, Lemon8 has reportedly made headway across Asia, including Japan, Thailand, Indonesia, the Philippines, Vietnam, Malaysia and Singapore.

Ok, so what do marketers think of Lemon8?

The marketers who do know about Lemon8 are interested. And the ones who don’t will be once they discover it. Marketers are always on the lookout for platforms on an upswing. But the ones who are sizing up Lemon8 now want to be sure there is scalability before investing any significant resource into it.

Or to be more specific, they want to know more about the momentum behind the app and whether it’s likely to become the next TikTok or the next clubhouse. So far, Lemon8’s users are rising. The platform has currently seen 6.3 million downloads worldwide in the last six months, per Apptopia data. And since its soft launch in the U.S. in February, the app has already received more than 256K downloads.

This quick rise has seen the social network take pride of place in the number one spot in the App store’s Top 10 chart for lifestyle apps in the U.S. in the week after TikTok CEO Shou Chew testified before Congress. Though perhaps that timing is just a coincidence because the app wasn’t once mentioned during the hearing. Understandably, this recognition has sparked curiosity about Lemon8 among marketers, including the five Digiday caught up with, firmly planting it on their radars.

MMI Agency, for example, is currently exploring the app and is active on Lemon8 to get a feel for the app before they consider introducing it to clients. “My team is keeping a pulse on anyone of influence using the platform, whether consumers are active and what the engagement looks like,” said Jordan Robuck, director of communications at the company. “We are constantly looking for the next emerging platform to see if it would fulfill any one of our clients’ goals within our roster.”

But while advertisers are in exploratory mode, there’s still been minimal action from brands.

Take Movers+Shakers, for example, which is often at the forefront of any new social platforms on the horizon. Evan Horowitz, co-founder and CEO of the agency noted that while they are exploring Lemon8 with some clients (though Horowitz did not specify which ones), the team has not yet activated with any.

Aside from it still being too early for any marketer to invest heavily in the platform, Lemon8’s links to ByteDance have caused understandable hesitation.

Ties to TikTok

The connection between Lemon8 and TikTok has undoubtedly grown in the weeks since TikTok CEO was grilled by U.S. lawmakers, and yet it’s still not crystal clear to many. There is no listing of Lemon8 on the ByteDance website or vice versa.

Lemon8 instead lists Singapore-based private company Heliophilia Pte. Ltd as its owner — a company which was incorporated on May 25, 2022, according to the Singapore Company Registry.

That same registry shows that Heliophilia is located at 1 Raffles Quay, #26-10, Postal 048583 — the exact same address as TikTok’s local Singapore office. Furthermore, Reuters reported last year that Lemon8 is overseen by Alex Zhu, svp of product and strategy at ByteDance, and also the former CEO of TikTok.

So while it appears that there are little to no digital links between ByteDance and Lemon8 — and the jury is still out on whether or not that has been a more recent strategic move to distance the app from the company and any sister ties, given the incredulous scrutiny TikTok is currently under — its becoming easier to spot the connections between the two. 

For instance, when ByteDance contacted a number of creators last month, the company was inviting them to become launching creators on its “new Lemon8 platform” before it officially rolls out in the United States, while further noting the success of its “sister company TikTok”.

Added to that a number of Lemon8’s employees on LinkedIn have either previously worked at ByteDance, TikTok, or both, before joining the lifestyle app or they explicitly mention that they joined the platform to launch “TikTok’s sister brand” in new geographies.

So there are clear signs. ByteDance just isn’t shouting publicly about them.

Are brands getting involved?

But it comes as no surprise that until the official TikTok verdict is announced, brands are watching from the sidelines. MMI’s clients for one, won’t be signing up to Lemon8 just yet.

And that agency is not the only one with this view. Keith Bendes, vp of strategy at Linqia said, “As TikTok ban conversations have intensified, brands are more concerned with how that saga will unfold rather than adopting a new app that is owned by the same parent company.”

Indeed, as thrilling as it may be to be the first to an emerging platform, the fact is, Lemon8 is owned by ByteDance. And until Congress makes up its mind about TikTok’s future, marketers will remain cautious.

“Advertisers that are already wary about placing their budgets on TikTok are not going to risk rebuilding an audience on yet another app that could be blocked from the U.S. market,” said Babar Javed, director of public affairs at Z2C Limited. “It remains to be seen whether all apps of Bytedance are taken down or only those that reach critical mass and threaten the duopoly of Alphabet and Meta.”

The fact is nowadays more marketers are well versed in how closely linked TikTok employees are to ByteDance employees. And given that Lemon8 is another app by the Beijing-based parent company, it’s likely that at some stage it will be under similar scrutiny with regards to its links to ByteDance and the Chinese Government. 

“With shared resources, the source code and wireframes stay the same, making Lemon8 the perceptual wolf in sheep’s clothing,” said Javed.

It’s understandable then why ByteDance has seemingly let the app fly under the radar of Congress, rather than turn it into its next big project. There’s a chance that it gets pulled into attempts to dilute ByteDance’s influence over tech platforms in the U.S. Simply put, Lemon8 isn’t really a backup plan given how U.S. lawmakers are averse to all things ByteDance these days. 

Still, it’s easy to understand why ByteDance might want to hedge its bets with its Lemon8. So far the U.S. government discussions have not been around Chinese-owned companies as a whole, but rather just TikTok, Bendes pointed out. “So the more diversified ByteDance is in the U.S., the better for them should a [TikTok] ban take place,” he said.