Data-Labor-Technology

“When Covid hit we, like every business, were like ‘Shit, how do we stay in business?’” said Roger Ramirez, head of account management at Mustache. “With a complete post-production team, we saw an opportunity to be making stuff in post-production.” 

As agencies across the country have worked to figure out how to create new ads for clients that address the current moment while working from home they have often relied on user-generated content or stock footage. By retrofitting ads, Mustache has been able to take previously approved ads from clients and reconfigure them. That the agency already had a roughly 15-person post-production team in-house was crucial to being able to do so. 

For example, one ad that Mustache previously created for Instacart ended with person-to-person delivery. The new version that has recently been retrofitted instead shows contact-less delivery and uses voice over to highlight the “safety” of using contact-less delivery. For Grammarly, Mustache removed scenes without proper social distancing that had previously been part of the brand’s ad.

Even before coronavirus, figuring out different cuts of the same ads has become a more common practice for the agency over the last year, especially for its direct-to-consumer clients that look to A/B test ads more frequently than traditional brand advertisers. The process of doing so has helped the agency retool how it thinks about shooting ads to keep in mind shots that clients might want to use in later cuts or to be more cognizant of the footage they have on hand, according to Marissa Perr, account strategy lead at Mustache. 

When the agency began working remotely, the post-production team went home armed with hard drives full of the productions they had worked on. Following conversations with clients about retooling ads, the agency’s creative directors then worked with editors to figure out new cuts for the ads as well as new scripts for voiceover artists to record. 

“We try to be proactive to say, if you’re thinking of pausing for X, Y, Z reason we can make a change to the spot, rebuild the pieces to make something for the moment,” said Ramirez, adding that while the agency has gone back to re-edit ads before this moment is different “At least in my career, we haven’t had these moments like this where there are universal sensitivities right now.”

The coronavirus pandemic isn’t the only change the ad world has dealt with in recent months as Black Lives Matter protests led to a push for more diversity at agencies. While Mustache’s goal is “always to make the content that we produce as diverse as possible” and “pretty much all of the recent content we’ve shot is diverse already” there’s now even more of a focus on diversity now, per Ramirez.

“We’re continuing to not only make sure talent for shoots are diverse, but that we’re staffing the shoots with diverse crews and hiring decision makers here at Mustache that are diverse as well,” said Ramirez. “We’re continuously assessing all elements of what we do through the diversity and inclusion lens.”

The cost of retrofitting an ad varies but can be as little as “a couple thousand dollars,” according to Ramirez, who added that it’s an “economical approach” as clients are simply paying for an editor, creative director and, if needed, voiceover artists as well as sound mixing rather than standing up a whole new production. The job can entail anything from simply cutting and replacing certain scenes or having to totally rescript an ad with a new voiceover. 

“We’re thinking about how we can change the tone and the pacing with a simple voiceover edit and inserting different shots,” said Perr. “It can completely change the ad.” 

That said, maintaining the essence of what the ad had originally been helps with clients approval the retrofitting. “The previous spots were liked by clients already so we are trying to maintain some sense of consistency,” said Ramirez. “But we’re always looking for the right solution so if it means changing the voiceover or having an actor shoot something to camera themselves that we can edit in, those kinds of things are also things we’re looking to play up when we can.” 

As marketers look to create new ads as they get back into market, using the retrofitting approach could be more attractive than a socially distanced shoot, said Perr. “Now that [some] businesses are starting to open again people are thinking, ‘What does the media flight look like for the next few months?’,” said Perr. “Now everyone is like, ‘We need content to be running’ so we’re thinking about easy solves.”

Share deals have become somewhat more common over the past five years as TV networks have merged or been acquired by bigger companies, providing them more inventory to offset linear viewership declines and giving agencies some assurance the networks will have enough inventory for clients to buy. However, they have not been widely embraced because they can be more complicated to execute than a traditional upfront deal in which an agency or individual advertiser commits to spending a specific amount of money with a TV network or network group. It is unclear whether any share deals have been signed in this year’s upfront market.

The negotiation option has popped up in this year’s upfront as a means for TV network groups and agency holding companies to deal with the uncertainty around how much money individual advertisers will be willing to commit to this year’s marketplace, especially as the number of coronavirus cases across the U.S. increases and sparks concern about another lockdown. “It’s a way around not having budgets,” said one agency executive.

“For the most part, clients aren’t ready because there’s so much uncertainty. Agencies at the holding company level have the ability to negotiate overarching deals with terms where they are able to commit some advertisers’ money and others fill in later on. It’s a real puzzle for agencies to figure out,” said a second agency executive.

On the TV network side, the share deals allow the bigger network groups to use their size to their advantage. The idea is similar to how platforms like Facebook and YouTube can position themselves as one-stop shops for advertisers to reach a lot of people rather than piecing together deals with individual publishers. Disney, NBCUniversal and ViacomCBS can parlay their portfolios of linear networks, streaming services and digital properties to convince agencies they have enough inventory on offer for the agencies to commit a percentage of their clients’ budgets without having those budgets locked in. That could help the TV network groups to stem the redirection of large slices of dollars being redirected to the connected TV and digital video platforms that are competing on a more level playing field —money that traditionally goes to the TV networks. “There’s a motivation [among TV network groups] to keep those dollars from leaking outside TV network groups and going to digital partners,” said the second agency executive.

The share deal discussions “are primarily being led by the big guys with broadcast networks,” said an executive at a TV network that is not among those discussing share deals. “It makes a lot of sense. All of their portfolios have gotten larger, and I think the squishiness around sports has led to a lot of me-first conversations.”

However, share deals can be squishy in their own way.

One complication is the general lack of transparency. An agency holding company can say that they will spend 20% of its clients’ cumulative upfront budgets with a network group, but there doesn’t seem to be any way for the network group to verify that it has received the corresponding amount of money. “How does NBCUniversal ever know what Holding Company X’s actual spend is, so how can they confirm that they spent 20% of their budget with them?” said a third agency executive.

Another complication is the difficulty in managing share deals on the agency side, “which is why we don’t do them a lot,” said the first agency executive. An agency holding company would have to monitor clients’ budgets to track their spending against its share commitment with a given network group. But the bigger issue would be if the spending amount is on track to come up short. Then the agency company would be in a position where it may need to push clients to spend their money with the corresponding network group in order to meet its commitment.

Nonetheless, considering that the upfront market has yet to kick into full swing at a time when deals are usually done, the discussions around share deals signal an urgency among agency holding companies and especially TV network groups for the dealmaking to commence. “The networks are really pushing for business to start. Anything that will jump-start the market, they’re willing to do,” said the first agency executive.

The question of whether podcasts have hit the American mainstream is kind of like asking the same about Major League Soccer.

Both have grown for more than 20 years, but remain smaller than their counterparts in media or sports.

In the case of podcasts, advertising revenues grew by nearly 50% last year, to $708 million, according to an IAB/PwC report published this month. The figure is expected to grow by another 15% in 2020, despite the coronavirus crisis that temporarily put a dent in listenership numbers.

That remains much smaller than traditional TV’s shrinking but still massive $61 billion for 2020, according to a recent estimate by GroupM.

Plus, “there remains this massive gap between monetization and the actual engagement of it,” said Nick Quah, creator of the industry-tracking newsletter Hot Pod and host of LAist Studios’ “Servant of Pod.”

Still, the industry has proven attractive enough for traditional players to make significant investments. “The past six years has largely been the story of capital coming in and different legacy institutions finding their positions in it,” Quah said.

Those six years cover the time since “Serial,” the true crime podcast, captured enough mainstream attention to merit a spoof on Saturday Night Live. The team behind it, Serial Productions, will be acquired by The New York Times Company, it was announced last week.

Quah joined the Digiday Podcast to talk about that acquisition, Spotify’s recent spree of purchases (including a massive $100 million deal with Joe Rogan) and whether there’s a place for paid subscription podcasts.

Here are highlights from the conversation, which have been lightly edited for clarity.

Before and after ‘Serial’

The last six years was the formation of the industry foundation. Before 2014 [and “Serial”], there was commerce and a nascent business in the making. There was podcast ad network Midroll, which tried to figure out advertising at scale for the medium. But there was still a sense that podcasting needed to validate itself in the eyes of large advertisers. That was the real shift — when capital started coming in and different legacy institutions started to find their market positions, even as new players entered to find their place within those ranks.

With new money, what happens to the podcasts recorded in a garage?

Film and television is an interesting comparison point. While there are structural differences there, I think what happened in the ’70s, ’80s and ’90s to the creative filmmakers — there’s still spaces for those filmmakers to be creative and independent today —it just looks significantly different than the heyday when people were getting really weird and they could be supported by relatively smaller studio structures. I feel like we’ll probably end up in a place where there will always be space for scrappier, weirder operations to make their stuff [and] maybe access an audience. But it’s a fundamentally different sub-genre of the market compared to what most podcasting is going to be, which is more Will Ferrell, more Conan O’Brien, more rich, white, mostly men doing stuff. That’s just kind of how this capitalistic structure of media works. It always privileges the core elites.

Gambling on Joe Rogan

There’s this understanding that the kind of people who listen to Joe Rogan are not exactly the kinds of people you can get from other podcasts — The Daily, This American Life, Bodega Boys, whatever. There’s this sense there’s a unique bucket of people there. There’s also ethical problems with that. Joe Rogan is a controversial person who brings on controversial guests. He’s ‘just asking questions,’ a quote, unquote free thinker. It pushes Spotify into this possible liability area where they have to deal with the Facebook problem: Are you a platform? Are you a publisher? Do you have any responsibilities of what’s being said by people you sign deals with? So $100 million could backfire here. That’s not to mention misinformation, something every platform is dealing with. Spotify has yet to get there, even though they did port over a bunch of Covid-19 podcasts in the initial wave, some of which were rife misinformation distributors. But we didn’t see any sort of real flashpoint.

Most quality podcasts are free, making paywalls a tall order

You have an infinite competition issue, because I can get millions and millions of true crime podcasts anywhere else for free. Why would I pay for this one in particular? That value proposition has to be very defined. I believe in the argument that there’s more yardage if you were to build a paid subscription business around a niche that hasn’t been well served by podcasting just yet — maybe it’s fiction, maybe it’s sports — and be very disciplined about it. And when it comes to the technical stuff, podcast distribution is decentralized still. Most of it seems to be routed through Apple, and [increasingly] through Spotify. If you’re going to try to build a paid subscription business, you’re either in the app marketing game, in which case you’re in one of the hardest games in the business, or you’re going to play ball with one of these bigger distributors [and] you’re an ant in a savannah of elephants.

Join us on Friday, July 31 at 12 p.m. ET on The New Normal, a weekly interactive show focused on how publishers are adapting their businesses. Allure editor-in-chief Michelle Lee will talk with Digiday editor-in-chief Brian Morrissey about the future of the beauty and wellness industry — and of the newsrooms that cover it. Register here.

There are already restrictions in the U.K. preventing HFSS ads being shown during children’s programming. But the U.K. government said these rules don’t account for the amount of time children spend watching shows between 6 p.m. and 9 p.m. and the fact that much of their media consumption takes place online. In fact, it’s considering banning online junk food ads altogether.

Advertising trade groups are predictably “disappointed” with the news. They have argued in statements that the impact of a ban on children’s obesity levels will be minimal — the government’s own assessment suggested tighter ad restrictions would only reduce children’s calorie consumption by around 1.7 calories per day. Meanwhile, the negative consequences for the media and advertising industries could be drastic at an already fraught period for the sectors.

“It’s like a boxer in the ring taking a lot of punches and you’re just waiting for the knockout blow,” said independent media analyst Alex De Groote.

Take ITV, the U.K.’s biggest commercial broadcaster, which has a roughly 50% share of the U.K. TV ad market. The company has taken a hammering throughout the coronavirus crisis. The company disclosed its revenue was down 7% in the first quarter of this year and advertising slumped 42% in April alone. Production has been severely disrupted and earlier this month major investor The Capital Group halved its holdings in the company to 4.91%. And that’s all ahead of a potential no-deal Brexit on December 31.

ITV generated £1.7 billion ($2.2 billion) in ad revenue last year, of which around £100 million ($129 million) came from food marketers and £300 million ($386) came from the retail sector. De Groote estimates the ban would put around £100 million of ITV’s revenue at risk and, extrapolated out, some £200 million of U.K. TV advertising revenue as a whole. And it goes without saying that broadcasters also sell a significant amount of online advertising, too. 

The U.K. government has said it will launch a “short” consultation —probably around six weeks — as to how it might introduce a total ban for HFSS ads. Its full consultation response will be published later this year and the government aims to introduce any TV and online advertising restrictions by the end of 2022.

Opponents to the plan are likely to — somewhat justifiably — argue that the benefits of online advertising are the targeting options available, which let advertisers exclude certain groups of people from their campaigns. Plus, the U.K. ad industry also runs under a self-regulatory framework, policed by the Advertising Standards Association, that does not allow advertisers to target junk food ads at children online. A complete ban could disproportionately impact premium publishers as they tend to attract larger advertisers. 

“There’s clearly a problem around obesity but … sweeping blanket moves like this have unintended consequences,” said Jon Mew, CEO of the U.K.’s Internet Advertising Bureau. “It just needs more thought.”

Mew gave the (very British) example of a fish and chip shop owner being prevented from running search advertising on Google Maps before 9 p.m., but it’s perfectly fine to advertise afterwards when the venue is closed. Similarly, advertisers from other categories could be affected, such as those who want to show imagery in their ads of families enjoying a Christmas dinner, Mew said.

Moreover, TV and online ads aren’t the only channels marketers have at their disposal. A Kantar study found when assessing the impact of a total HFSS TV ad ban, 82% of that spend would be redirected to other forms of media, including online, outdoor and direct mail. Of course, those food companies might also just advertise their healthier options instead — a win all-round.

Another risk, as Enders Analysis pointed out in a report published earlier this month, is that those advertisers would simply shift to promotional and discounting strategies. The government has said, however it will legislate to end deals like “buy one get one free” for HFSS products.

If the TV and online publishing industries are the wounded boxer in the red corner, campaign advocacy groups in the blue corner are taking victory laps. Food and farming charity Sustain called the advertising restrictions announcement “a real game-changer,” while Cancer Research U.K praised “a landmark day for the nation’s health.” Action on Sugar and Action on Salt praised the advertising and promotion announcements, but said the government could have gone further and set mandatory reformulation targets for manufacturers.  

Enders Analysis concluded earlier this month that a pre-9 p.m. junk food advertising ban is more of a symbolic gesture rather than really being an initiative that can truly effect change. Given that obesity is a multi-faceted issue, it’ll be difficult to draw a straight line between an ad ban and any decline in the country’s obesity levels. But with many governments around the world facing criticism at the moment for the way in which they handled the coronavirus crisis — and obesity linked with increasing a chance of dying from the virus — there’s a good chance other countries will be following developments closely. After all, the U.K. led the way in banning TV ads for cigarettes way back in the 1960s.

Dylan Collins, CEO of kids-focused tech company SuperAwesome, said proposed moves “should make all platforms, and their boards, ask themselves the question: ‘Are the ads we’re serving truly good for our ecosystem and stakeholders?” or at least think about the true ‘societal CPM’ of ad dollars from certain parties.”