Month: April 2023

“There’s been a ton of downsizing, restructuring in some of our client organizations,” said Nichelle Sanders, managing director, Mojo Supermarket. “The effects of that have not been straightforward. We’ve had everything from increasing projects to decreasing projects to delayed work or accelerated work. It’s been really changeable.”

The first quarter was “on the balance more positive than negative,” noted Sanders, adding that agencies usually reduce budgets and focus on projects when there’s a tumultuous economy. But client responses to the economic situation (the current climate is more closely tied to how a specific sector is doing rather than the industry as a whole) varied, explained ad execs.

“We anticipated a softer quarter,” said Andrew O’Dell, founder and CEO of Pereira O’Dell, adding that the quarter wasn’t as difficult as the shop expected. “We knew ahead of time companies were starting to pull back a bit. But at the same time, we also saw a lot of new business activity.”

Per O’Dell, some clients pulled back on spending while others didn’t as “there was no consistent, across the board pattern. It’s industry by industry.” 

Clients are asking for more rigor and specificity in the new business pitches and briefs, according to execs, who say that the pointed briefs make it clear that they expect more scrutiny on marketing in the coming months.

With that being the case, marketers and agency execs say that they expect budgets to continue to be tight going into the second quarter as marketers will remain conservative and push for flexibility. It’s difficult to know what’s to come in the next quarter though, noted Sanders as “seeing quarters into the future is not the reality anymore” with the current economic climate.

Chatter of the looming recession remains, marketers and agency execs say, with some noting it could be during the second half of the year now but there’s also skepticism among marketers and agency execs too. 

“We’ve been talking about this looming recession for so long, the last 15-18 months,” said O’Dell. “It doesn’t feel like we’re in a recession. People say the second half of the year. That’s what people said last year. Everyone is doing their best to protect their businesses.”

3 Questions With Aliza Freud, CEO of influencer marketing agency, SheSpeaks

Why does organic marketing matter so much to Gen Z? 
In general, if you’re going to market to Gen Z you need to be on the platforms where they spend their time. They grew up as digital natives and have been exposed to ads for so long that they’re skeptical of traditional advertising so brands have to be authentic if they’re going to appeal to this generation.

How can brands capture this audience without coming off as inauthentic?
One of the key things we’ve observed about Gen Z is that the message has to be benefit driven. Tell me how your product or service is going to make my life easier or more interesting or better etc. versus focusing solely on the features of the product. That is why when working with influencers, it’s crucial that the brand and messaging is a fit for the creator and feels authentic to their personal brand. 

Could there be a thought of over saturation in both the influencer and marketer space?
With the proliferation of influencers and influencer marketing, what is most likely to be changing is the ratio of sponsored to unsponsored or organic content an influencer has on their channel. Overall, creators are accelerating the amount of content, which helps balance their sponsored brand messaging. Gen Z tends to be more understanding of sponsored content because they recognize influencer as a legitimate profession more than other generations. — Julian Cannon

By the numbers

Compared to other generations, Gen Z consumers have the least tendency to acknowledge that inflation has affected their spending and the least likelihood to reduce their spending as a result of inflation. With the shifting buying power of each generation, Jungle Scout, an e-commerce sellers’ all-in-one platform, has published its Q1 2023 Consumer Trends Report, a study that looks at spending and e-commerce trends among U.S. consumers at the beginning of the year.  Find more details from the report below on Gen Z shopping habits now:

• 43% of Gen Z consumers start their online product searches on TikTok.

• Despite inflation, 32% of Gen Z consumers shop online at least once daily compared to 25% of millennials, 15% of Gen X, and 7% of baby boomers. 

• Gen Z consumers are the most likely to shop secondhand online to save money, with 42% purchasing a pre-owned item online in the past year. — Julian Cannon

Quote of the week

“Given the rise of Reels and Shorts, the cross-platform relevance of TikTok-style content is higher than ever, making the concern over the ban less intense than it would have been before Meta and YouTube introduced those content formats.”

— Keith Bendes, vp of strategy at Linqia, when asked about the ripple effects of TikTok’s uncertain future and the potential ban for advertisers

What we’ve covered

• How Twitch lost its grip on, and way with, the streaming community
• TikTok discourse exposes need for U.S. federal privacy legislation
• Why DOOH is a big draw for startups and direct response marketers

Part of the reason for that is that brands themselves are realizing that they need to differentiate themselves with consumers, which — according to Lindsey Abramo, the recently appointed CRO of Leaf Group, who was a guest of a live taping of the Digiday Podcast during the Digiday Publishing Summit in Vail, Colorado last month — has opened up an opportunity for Leaf Group to sell it’s existing event franchises to sponsors.

Leaf Group’s art and commerce side of the business, which includes art marketplaces Society6 and Saatchi Art, is not reliant on advertising revenue, according to Abramo. That’s a revenue stream that’s pretty much specific to its media arm, which includes its editorial brands Hunker, Well + Good and Livestrong brands. But now, advertising is being added to Leaf’s other art- and commerce-based events including The Other Art Fair, and through that addition, events have become one of the more lucrative areas of the business, she said.

“Not only are our ticket sales up 25%, but so are sponsorship fees, and this is not over last year, this is up over 2019 prices,” said Abramo. 

Below are highlights from the conversation, which have been lightly edited and condensed for clarity. 

Brands are becoming more experiential at their core

Experimental, in my opinion, is back, but I think it’s taking shape in new forms. One of the things I really think about is that brands themselves are uniquely becoming experiential. They have to be really thoughtful about what products they’re putting in front of their consumers, and how that intent shows up in real life. So you see brands like Restoration Hardware that’s becoming not only a store, but it now has restaurants and hotels and a jet. And you see Home Goods, which is doing [a] curated, travel event businesses on the side, inspired by their seasonal design trends. So they’re themselves having to push to be experiential and I think it offers publishers a really unique opportunity to say, “This is an editorial authority that we have, or this is proprietary point of differentiation that we have,” [to sell brands on their event ambitions]. 

Because of that, you can change brands more 

Per-event revenue for us has gone up and a lot of it is because we haven’t thought about all of the parts of our business through the experiential lens. So it is growing because we’re adding more to things that just didn’t exist in the past. But I also think we’re able to command a bigger sponsorship fee now too. 

On the publisher side – at least from where I came from in the various women’s lifestyle businesses – [events were] sort of a flat concept, which is to bring an editorial concept to life, build it from the ground up, create an audience and plug brands into it. A lot of times, the build was so expensive, you had to have multiple brands, and that became a puzzle, trying to pull it all together. But I think now, brands are looking for more. And so I think you have to think a little bit uniquely about how to do that. And with that, you can charge more.

Making the most of event margins by avoiding intense overhead costs

We’re seeing deals span experiential —only at $50,000 … one deal [was] over a million dollars — and it just depends on all the different programming involved and how many days and just how integrated. 

[At that price range], you really can’t do [a month-long, custom build] because a lot of the times when you’re doing your own custom build, advertising money is packaged into [the deal to] actually get the build up off the ground.

Hunker house, which is … a permanent, physical expression of [our home and design brand Hunker] … gives us a tremendous amount of opportunity to plug brands in more than just a [one] day pop-up and do it really efficiently.

If we were to do a month[-long] takeover of a home [that we didn’t own], it would [cost] $3 million to $5 million, because you’d have to think about what’s the rent, you have to think about all the production pieces, all of the programming. Whereas [the Hunker House] is an extension of our [media] brands who are constantly doing content production [in the house]. We have a whole content production studio [there] so we’re always using it on an evergreen [basis], even outside of brand partnerships for our own editorial needs and use. And so we’re able to just plug in from a much cheaper [standpoint].