Data-Labor-Technology

Word of mouth and advocating for the brand as a subscriber is a top method for garnering high quality new subscribers, according to the leaders of four newsletter subscription publishers: The Hustle, Morning Brew, The Daily Pnut and Finimize. And referral programs that gamify and enable participants to track exactly how large of an impact they have had on growing a newsletter’s subscriber base in many cases make that participant a more valuable subscriber than any other reader.

However, getting a referral program off the ground and growing can be a difficult and expensive task, as often times the tech stacks for such programs are built in house and they also don’t always appeal the top brand advocates in the way that publishers would expect.

Despite this, Morning Brew’s and The Hustle’s referral programs have both been successful in driving up the value of the participants’ lifetime value.

The tech and business newsletter The Hustle, which has a free daily newsletter as well as paid online subscription product, has a total of 1.5 million active users, according to president Adam Ryan. And as of October, it had 10,000 ambassadors, or brand evangelists that are a part of The Hustle’s referral program.

The lifetime value of a referral program participant is multiple times higher than the average subscriber, Ryan said, adding that the open rate is double for a referred subscriber compared to an average subscriber. But there is also important value added from the fact that ambassadors are given first access to beta tests and provide feedback on new paid products.

The Hustle is also planning to launch a new ambassadors program for its annual paid product. The idea is that the company will be able to tap further into “the loyalty that that group has and monetize them more effectively and get more information out of them faster,” said Ryan.

Morning Brew’s chief operating officer Austin Rief said the daily newsletter has over 2 million subscribers and receives, on average, 1,000 new signups from referrals per day. More than 225,000 people have referred at least one person and its referral program also accounts for 35% of growth on the daily newsletter.

The referral program has been successful enough for Morning Brew that the publisher has created referral programs for its vertical newsletters as well, including its Emerging Tech Brew and Retail Brew.

There is “a lot of potential for referral programs and [I] feel it’s an undervalued growth channel for newsletter writers,” said Martijn de Kuijper, founder of editorial newsletter tool Revue. “These readers are highly engaged and have a close relationship and are thus more likely to become an advocate and refer others,” he added.

The Daily Pnut, a daily newsletter covering global news, has more than 120,000 active subscribers and an average open rate around 40%, according to Tim Hsia, CEO of the newsletter’s parent company Media Mobilize. Readers that came through its referral program, however, have a much higher average open rate of 51%.

The newsletter relaunched its referral program on May 26 after shutting down the original program shortly after Media Mobilize’s acquisition of the newsletter in 2016, Hsia said. That the original one was too difficult to maintain from a technological standpoint. The Daily Pnut team ended up building its own referral program tech stack, which Hsia noted was a significant investment both monetarily and time-wise.

Publishers should “plan three to six months to build a reasonable, solid” referral program, he said. And while it has brought in about 2,000 new subscribers in just over a month and a half, both Hsia and his growth marketing head, Nick Chen, said that they are still far off from paying off the upfront investment. 

“This was a long term investment in the belief that the referral will work,” Hsia said.

Not all newsletter publishers have found that their referral program incentivizes their top performing brand evangelists, however.

“We noticed that our most engaged users are not necessarily the people who use the referral program,” said Maximilian Rofagha, founder of financial literacy daily newsletter Finimize, which has close to 1 million active subscribers. Word of mouth, or non-incentivized sharing, is still the ultimate driver for new subscribers, he said.

However, the group of subscribers that came to the brand through the referral program still has a higher than average open rate — its average is around 40% — similar to The Daily Pnut and The Hustle. And since the Finimize’s revenue comes from ads and the CPMs for those ads are dependent on open rates, this group has a higher lifetime value than the average subscriber, he said.

And with the end of the third-party cookie nigh, there is the added value of referral programs collecting more first-party data about readers, said Kerel Cooper, svp of global marketing at email marketing company LiveIntent. 

“There is the short term value of growing your subscription list, which leads to greater monetization, ” said Cooper. “But the long term play is that the clock that’s ticking on the third-party cookie and if you’re building your first party database with email at the center,” then they’ll be in a stronger position than most.

Yet those imbalances are even more pronounced on the sales and revenue side of most media companies, where broken talent and recruiting pipelines, inadequate mentoring, diversity and inclusion practices and double standards create workforces that are disproportionately white and male, according to five sources that spoke to Digiday for this story. All five sources say the events of the past two months have injected urgency into conversations on this subject, and several say that they think there is a chance for real change.

“You hear real urgency now,” said one top sales executive at a legacy publisher, who added that it could take years to manifest meaningful change.

Yet some are dubious that any real change is coming. The factors that contribute to this imbalance are systemic and spread across the entire ecosystem, leaving little chance for a fix.

“I don’t know if there’s a reckoning yet, and I don’t know that there’s going to be one,” said one Hispanic revenue leader at a media company. “You need to fix the entire line [of the ecosystem]. If you have a client that is not a person of color talking to an agency rep that’s not a person of color speaking to a sales rep who’s not a person of color, how is that representative of reality?”

It is difficult to find data that speaks to the scope of this problem in media. The sales profession as a whole remains male-dominated, even after significant gains in leadership made by women in recent years. Research firm Gartner this year found that just 11% of sales leadership positions are held by women, up from just 5% in 2017.

A separate Gartner report published last month found that men and women of color occupy few senior roles of any kind in the arts, entertainment and recreation industries, which includes media: Just 11% of senior roles are held by women of color, and men of color occupy just 16%, the report said.

Claire Telling, the CEO of executive recruiting firm GraceBlue, estimates that people of color represent around 6% of the C-suite in advertising and media as a whole. (A number of advertising agencies have begun releasing their diversity numbers over the past month) In cases when clients are determined to vet non-white candidates for sales and revenue roles, Telling and her colleagues frequently have to look outside of media.

There are abundant reasons for that talent shortage, starting at the most junior level.

“There just aren’t a lot of people getting into the field,” said Keith Hernandez, the founder of the consultancy Launch Angle and a former sales executive at publications including BuzzFeed, Bleacher Report and Slate. “There’s not a National Association of African American Advertising Sales going to Syracuse and Penn State [to recruit].”

And non-white people who do enter the space face a battery of obstacles, including double standards that many say put non-white employees at a disadvantage. For example, where a white sales person might be allowed to miss their numbers, or be given a chance to grow into a role they had not yet earned, non-white employees don’t get similar chances.   

“We’re not always allowed to fail the way others have been allowed to fail,” Cavel Khan, the chief revenue officer of Tumblr, told Beet.tv last month. “You feel this pressure to be perfect every time.”  

Those that do stick it out have to navigate cultural barriers as they try to build relationships and advance their careers. “Golfing, ski trips, these are predominantly white activities, that start to deselect people out,” Hernandez said.  “A guy decides not to go and gets a rep that he doesn’t like to have fun, but really, he just doesn’t know how to ski. You’re throwing people into a situation where they’d hurt themselves more by going.”

While disparities this stark are problematic on their own, these imbalances come with an economic cost for publishers too.

“I find it hard to work with the general market because they don’t give me what I need,” said Armando Azarloza, the founder of The Axis Agency, a multicultural agency whose services include media buying.

Even though many mainstream publications might have the audience and the content that fits well with clients’ objectives, the white reps often do a poor job selling it; mainstream publications are “100%” leaving money on the table because of the composition of their sales forces, Azarloza said.

“They have a superficial understanding of the marketplace,” he added.

Amid these systemic challenges, media companies have scrambled to look for ways to add diversity to the ranks of their sales and revenue teams. Over the past several weeks, Telling said many of her media clients have said that they are eager to find more diverse candidates for positions they have open.

But she cautioned that the jobs have to be real. “People can smell tokenism,” Telling said. “Talent knows when that’s going on.”

More than half (11) of the 20 largest Facebook advertisers to have paused ad spending have been reducing the amount they spend in the U.S. over the last two years. In 2018, those 11 advertisers spent a combined $825.8 million in advertising on the social network, per analytics firm Pathmatics.

In 2019, that figure was $417 million. That’s a 49% drop in ad spending over those two years, based on Pathmatics’ analysis of a panel of opt-in Facebook users and CPM calculations based on the social network’s publicly reported figures. 

The biggest drop over those two years came from retailer Target. Between 2018 and 2019, its spending fell 67%, from $142.5 million to $46.4 million, according to Pathmatics. The smallest drop over the period was at Volkswagen. Its spending fell 7%, from $14.7 million in 2018 to $13.7 million a year later. 

The cutbacks came in the same year that Facebook tweaked its algorithm to favor content from friends and family over news articles and promoted posts from advertisers. 

The tweak throttled the number of ad impressions available on the social network and consequently made competition for marketing space more intense, driving up costs. This happened around the same time that Facebook limited targeting features on the platform, which reduced the number of audiences available and also subsequently contributed to rising costs.

“The main problem advertisers have been facing in the last two years as it relates to Facebook, and other social media platforms, is that there is too much reliance on the platform itself and when the rules change (as we’ve seen in recent weeks for Facebook), advertisers then need to quickly adjust and adapt their strategies to coincide with those changes,” said Jeff Kupietzky, CEO of ad tech vendor PowerInbox’ Insights.

Microsoft, for example, bought $146.9 million worth of ads on Facebook ads in 2018, up 48% from the 76.3 million it spent the year prior, per Pathmatics. In 2019, however, spending on the platform dropped 21% to $115 million. The steady decline in spending over those two years foreshadowed the advertiser’s decision to suspend advertising on Facebook and Instagram in the U.S. in May, per an Axios report that Microsoft confirmed. 

Even those nine advertisers that did increase spending on Facebook in 2018 and 2019 look set to cut back in 2020, according to Pathmatics. Between 2018 and 2019, Starbucks dialed up spending on Facebook, from $51.6 million to $94.9 million. In 2020, the advertiser’s spending is set to dip to $19 million, per Pathmatics. That’s a 79% year-over-year drop.

“As a brand, if I believe my core consumer still exists on Facebook, is it best to either distance or disassociate myself to avoid any adverse consumer backlash from appearing complicit with Facebook’s content policy decisions,” said Brian Leder, president of media agency Ramp97.

That there were advertisers actively pulling media dollars from Facebook prior to this month’s boycott spotlights underlying tensions between marketers and platform. When the #StopHateForProfit campaign launched last month, advertisers like The North Face and Patagonia backed the plan to defund Facebook until stricter policies are put in place to stop hateful, violent, or racist content from being shared.

Despite hundreds of advertisers backing the boycott since then, very few have committed to a permanent exit from the platform. In many ways, the response from big advertisers has been less about hurting Facebook’s financially, and more about trying to reassert influence over a business that hasn’t been as responsive to their needs as other online partners. 

“For a long time, the lure of a logged-in, addressable platform with incremental audiences was enough to make the pain of Facebook not allowing an advertiser to take its learnings elsewhere worthwhile,” said Kerel Cooper, svp of global marketing at ad tech firm LiveIntent.

“This boycott may be the leverage to give advertisers what they want: data to flow to them, not away from,” said Cooper. “And it might be achieved under the guise of demanding a platform with less hostile content for minorities.” 

Perhaps the most unlikely revolt in the media industry is the case of marketing chiefs rising up against Facebook. It’s one that caught me by surprise, and I’ve been trying to understand what is behind it. 

And again I’ve come back to trust. Facebook is reaping what it has sown for many years. It lost the trust of publishers long ago. Yes, publishers should have known better, but they got seduced by dodgy metrics and false promises and bet a big chunk of their businesses on the dream that Facebook would turbocharge audience growth — and eventually lead to similar gains in ad revenue. David Carr in 2014 memorably summed up Facebook as the giant dog galloping at you, leaving you uncertain “whether he wants to play with you or eat you.” It’s safe to say publishers discovered it was the latter.

And now it’s the turn of marketers. On the surface, you’d think there is little daylight between Facebook and its “partners.” Facebook, like Google before it, has done its fair share of wining and dining of marketers. Facebook’s ad revenues have skyrocketed. But along the way, Facebook has ruffled many feathers with heavy-handed tactics. Some marketers have felt bullied by the giant platform, with top Facebook executives going over their heads to company leadership with the basic message that the marketers aren’t doing their job right because they’re not spending enough on Facebook.

Now, the C-suite is alert to the risks of associating with Facebook. The calculus has moved from “efficiency” to reputational risk, a far greater concern for a CEO than getting a lower eCPM. The pullback of big brand dollars, while unlikely to have a big impact on Facebook’s bottom line, will dent its reputation, a top marketer told me. “That is more important to [Facebook] than the dollars.”

Technology companies have a history of getting over their skis with advertisers. It’s hard to imagine now, but AOL used to throw its weight around so much that it was notorious in marketing circles. The precipitous decline of AOL’s ad business was accelerated by this bad blood. The tendency of giant incumbents is to overplay their hand.

Facebook is no different. Mark Zuckerberg has long outsourced relations with the ad industry to Sheryl Sandberg. There is the unspoken but clear message that he finds that part of the business — basically the entire business — distasteful. Right or wrong, marketing executives can see this as arrogance. And that was the reaction of many when he used a Facebook company meeting to call the bluff of advertisers. He said they’d come back and the boycott would not hurt the company. When he met with leaders of the boycott, he stuck to familiar talking points. That also did not go over well, made even worse by the release of a report Facebook itself commissioned that slammed the company for its fecklessness in rooting out misinformation and hate. Poor Nick Clegg, a politician by training, was subjected to an epic “ratioing” when he averred Facebook does not profit from hate.

This is a curious strategic move. He has, in effect, boxed marketers in by making a resolution to the discord impossible without humiliating marketers. That’s never a great idea.

“That was a red flag to the bull,” said a top marketer. “I don’t know how his calculus allowed him to say that. That makes it harder to come back to the platform.”

The longer the boycott goes on, the added risk to Facebook because more data will be collected on the true efficacy of ads on the platform, which many marketers believe to be inflated. Let’s face it, Facebook hasn’t exactly been airtight with its analytics. While the risk of losing these large marketers is manageable, the industry veteran pointed to a potential snowballing if the pressure to boycott Facebook spreads to large gaming companies that pour money into Facebook for app downloads. “It will spread past the brands to those folks,” the insider predicted.

For advertisers, the big question is what victory looks like. There will be the temptation to act the part of Neville Chamberlain, the marketing executive said, declaring “peace in our time.”

“I don’t think many marketers thought through when they joined the boycott what success looks like,” the executive said. “Some marketers have businesses that are entirely dependent on Facebook.”

Maybe it’s time for them to break the circle of misplaced trust.

Experts suggest the current market conditions set TikTok up as a worthy challenger to Facebook’s ad dominance, fairly early into TikTok’s existence.

“I can’t emphasize how aggressively [TikTok] is trying to take share at the moment,” said Paul Kasamis, managing partner of performance at media agency Starcom. “They’re going after Facebook, they aren’t going after Snapchat … that’s the mantra from the business. They are not just here to take a little share: They believe they can be bigger than Facebook in the coming years, and quickly.”

TikTok continues to follow the playbook other social platforms have charted before it, where launching a self-serve platform unlocks a sizable spigot of revenue growth from performance advertisers. Experts have noted TikTok’s product rollout and third-party measurement and ad verification partnerships announcements have amassed far quicker than its competitors. TikTok has been beta testing the platform since last fall and had been talking to agencies for at least two months about its imminent launch, according to two agency staffers. A TikTok spokesperson said the launch had always been planned for the summer and that it has not been expedited.

If past history is anything to go by, the first three months will be a key “window of opportunity” for TikTok to bring new advertisers on board given the supply-demand economics of ad auction marketplaces, said Kasamias. Anthony McGuire, a former Facebook employee who now works as a technology consultant and startup founder concurred. Facebook’s strategy to win around reluctant first-time advertisers was to set them up on a three month test, he said.

Ad rates on Snapchat were around 30% lower than comparable ads on Facebook in the first three months after the former company launched its self-serve ad manager in 2017 and then started calibrating upwards as more advertisers began to use the service, Kasamias recalled. Self-serve cost-per-view rates on TikTok are also currently tracking at around 30% lower than those on Facebook, Kasamias said.

Facebook’s pain is TikTok’s gain

As many larger marketers hit pause on spending in the earlier throes of the coronavirus crisis, CPMs on Facebook plummeted and many small businesses and direct-to-consumer advertisers jumped on the opportunity — especially as many were forced to ramp up their e-commerce operations. Not only that, but many DTC brands reported higher than usual conversion rates, with Facebook and Instagram becoming significant performance marketing channels.

Facebook CPMs soon bounced back in May. Then in June, the “Stop Hate For Profit” advertiser boycott gained momentum and hundreds of brands have committed to pausing spend on Facebook for the month of July and in some cases longer. (Some large advertisers have also pledged to remove their advertising from other social platforms.) Yet, many DTC companies were in a bind about participating. While they supported the spirit of the movement, many digitally native brands are reliant on Facebook and Instagram for a majority of their sales, as Modern Retail reported. Small businesses are understood to make up the lion’s share of Facebook’s advertiser base. TikTok’s alternative has arrived slapbang in the middle of the July boycott — and in the same week Facebook flunked an independent civil-rights audit.

“A lot of the SMBs I have spoken to and VCs really do feel like they are over-reliant on Facebook [and there is an opportunity] for diversifying the performance budget options,” said Stefan Bardega, a marketing consultant to small- to medium-sized businesses and former EMEA president of iProspect. As for TikTok’s launch, he added, “If you want to get a slice of the Q4 retail pie you’ve got to start now.”

The new self-serve platform launched as usage of TikTok has soared. TikTok has generated close to 2.3 billion downloads worldwide across the App Store and Google Play to date, according to mobile app measurement firm Sensor Tower. This figure also includes the Chinese version of the app, Douyin. Around 19% of lifetime downloads to date — approximately 439 million installs — took place between March 1 and July 8 as the coronavirus crisis swept across the world. The average time spent per month on the app per U.S. user rose 93% to 855.6 minutes between October last year and May this year, according to Comscore.

SMBs may have only heard about TikTok six months ago and not considered using it as a marketing platform, but that soon changed as the coronavirus crisis escalated, said McGuire. Some SMBs have also benefited from the platform’s early organic reach, he added.

Chiropractor “@dr.cracks,” who remixed the popular Savage dance challenge to demonstrate stretches to relieve lower back pain, for example, has racked up more than 2.3 million likes for that TikTok alone. That said, it’s unclear how easy it will be for SMBs to gain virality as the platform matures.

Credit where credit’s due

TikTok said this week it is committing $100 million of advertising credits at for small-to-medium businesses in 18 countries, including the U.S. and U.K., to be used this year as part of a “back-to-business” program to help companies affected by the coronavirus crisis. That includes a one-time free credit of $300 and any additional spending up to $2,000 matched with another credit. For the $300 credit, there is a daily cap for each region, though eligible businesses can opt to claim it the following day. The credits will be awarded at the same time to eligible businesses at the same time, after a verification process, per a spokesperson.

Free ad coupons for new customers are not unusual in the online ad space, but as the coronavirus crisis began to take hold several large platforms offered ad credits as a way of support. 

Facebook in March pledged $100 million in cash grants and advertising credits to small businesses in more than 30 countries to help them weather the storm. However, at the time of writing (July 9) for 94% of the 36 listed countries listed on the grants program page Facebook says it is still working through eligibility details for those regions. The website says it is no longer accepting applications for companies in the U.S. and Canada.

“Our small business community has been clear that financial support is what they need and we are working to support them,” said a Facebook spokesperson. “Our $100 million global grants program is halfway rolled out, over 10,000 small businesses from multiple countries will have received a grant by the end of the month and we are on track to rollout the full program by the end of the summer.”

Google announced a $340 million ad credit program for small businesses in March. Credits, which varied depending on past spend, were applied automatically to accounts in July, a spokesperson confirmed.

TikTok’s business challenges

Facebook and TikTok are not like-for-like platforms. TikTok’s targeting and measurement options are still nascent, its audience skews younger and uncertainties linger around the quality of its data and brand safety options, experts said. TikTok’s full-screen video ad format that often leverage the “challenges” and dance trends popularized by its users tend to require more heavy lifting in the creative department than an average, static Facebook news feed ad. Yet experts also credited the slick user experience of the new self-serve ad interface — which resembles other ad managers — and the potential to reach audiences in a different way.

“The biggest opportunity is probably the audience: TikTok say 40% of those on TikTok aren’t on Facebook,” said Kat Harding, social director at Havas marketing agency Cake. “It’s unsaturated and you can get a lot of bang for your buck.”

For advertisers not looking to target a younger demographic, YouTube is likely to be a more suitable alternative to Facebook and Instagram, given its audience structure and available formats, said Werner Iucksch, global digital strategy director at We Are Social Singapore

TikTok faces major challenges aside from looking to boost its appeal to advertisers. Several governments around the world have voiced their concern about TikTok’s ownership, the Chinese firm ByteDance, and whether the company might share its user data with the Chinese government. India, for one, banned TikTok — along with dozens of other Chinese apps—late last month. Earlier this week U.S. Secretary of State Mike Pompeo said in an interview that the U.S. is “looking at” banning TikTok and other Chinese social media apps.

TikTok has maintained that it has never shared user data with the Chinese government and wouldn’t do so even if it was asked. The company recently hired the high-profile former Disney executive Kevin Mayer as its chief executive officer, who is based in the U.S. The Wall Street Journal reported earlier this week that ByteDance is considering changing TikTok’s corporate structure to further distance the app from its Chinese parent.

TikTok’s bid to topple Facebook won’t happen overnight. Bytedance recorded $5.64 billion in revenue in the January to March quarter, Reuters reported last month, citing two people with knowledge of the matter. Facebook reported $17.7 billion in revenue in the March quarter.

It’s an odd but obvious reversal. An analysis for Digiday by ZipRecruiter found that in 2016, only 5.6 in 100,000 postings mentioned that work from experience would be considered a plus, according to the company’s labor economist, Julia Pollak. In 2020, that demand is more than eight times more common.

Work-from-home (or anywhere) used to be something you’d have to convince employers to accept. There are plenty of advice columns out there from the BC (before-coronavirus) era advising those who wanted to work remotely how to sell prospective employers on the concept with lists of reasons why it would be good for their companies.

At least a few execs privately said to me in mid March that they worried about their employees not working as hard as they may have if they were in the office—while the check-ins and constant video meetings were well intentioned, there was a feeling of Big Brother about them. 

Plenty of companies (ours included) were built on notions like “you have to be together to be productive” and “company cultures can’t be built remotely.” And plenty of remote workers were for years shut out of jobs because they couldn’t, or wouldn’t, move near the company HQ. At Facebook, employees were paid bonuses of up to $15,000, just to live near its headquarters in Menlo Park, California.

Some of it was undeniably about collaboration, sure. Work offers socializing, identity and purpose for many. But much of work’s very design was driven by this need to be “present,” that somehow logging an eight-hour work week under fluorescent lights under your manager’s eyes meant you were also working very hard. And that was despite decades of research that showed people working remotely, were more productive than those who weren’t. That was despite mounting evidence that the traditional 9-to-5 in-office job wasn’t designed for working parents in mind, and assumed an outdated division of labor in households. Still, offices persisted. 

Plus, there was always this undeniable (no matter what bosses said) feeling that remote workers were somehow second-class citizens. “I got this feeling everyday at my current job before,” said the strategist, who worked out of Norfolk, Virginia, while her firm’s headquarters were in New York City. “It was like I had to beg to be included. I was an afterthought.”

Now, with everyone distributed, there is no remote — after all, who is remote from whom? “Satellite” employees now feel a renewed sense of power within companies. “My manager asks me about my life more than he ever did before,” said the strategist.

Our own research shows how good communicative habits have crept in: About 27% of agency employees and 23% of media workers say their managers have made a proactive effort to learn about them since they began working from home. 

The balance of power has shifted. Add that to the growing list of changes inside workplaces. Some of it is obvious and overt: The overwhelming backlash against the perceived “elites” during this massive global upheaval that found the bosses in opulent homes while their workers worked in small apartments; the conversation around social justice and inequality following Gorge Floyd’s killing, and overall the realization that in the workplace — we aren’t all equal.

Companies like Tulsa Remote, which awards grants to people for relocating to and working from Tulsa, have seen a boom: The program, backed by the George Kaiser Family Foundation has seen applications to the program double — especially as newly remote workers consider where to move to. After all, why tempt a company to move to a city when you can just tempt its workers? Similar programs are now cropping up in Savannah, Topeka and more, reports Bloomberg.

Job search engine Adzuna found that among 4.5 million job postings, data showed an increase in work-from-home in the job description. (They were already up 270% since 2017, yet another point that this has simply accelerated existing trends, not created them.)

It’s certainly not for everyone: Even at Facebook, which says almost half its employees will be remote indefinitely, people in their first jobs, or more junior people won’t be allowed to work remotely post-pandemic. They have to, after all, learn how to work in an office, before being let out of it, according to CEO Mark Zuckerberg, who explained the thinking in an all-hands town hall earlier this spring. 

But for others, it’s a welcome reversal from being a second-class citizen, away from the center of the action. And it’s nice to put some of those hard-earned skills to use.

Rebecca Sullivan, who runs PR at ad agency MullenLowe in Boston, worked from home as an independent business owner for 16 years before she joined the agency in February in the office. She said there is a “leg up,” of a sort. “I can get more work done in a short amount of time,” she said. There’s a learning curve for others, new to working from home that she is way past.

“Some of this is I already worked through it: I had to work through my ideal workload, I figured out how to stay motivated and how to stay busy. How to get an area for working. I realized how I needed office buddies who I chat with all day,” said Sullivan. “I know what works.”

Zetland, founded in 2012 and 30-staffers strong, generates all revenue from its 16,000 paying members. The standard membership rate is 129 Danish kroner ($19.61) a month. It publishes up to four long-form news stories a day such as what the world looks like if the temperature rises by five degrees celsius and tech giants building giant data centers in Denmark. It says it broke even in fall 2019. 

On a good month, Facebook — with its huge scale, precision targeting and easy attribution — generates roughly a third of the new members for Zetland. The publisher wouldn’t share exact numbers but it’s worth noting that these are small. Still, that didn’t make the decision any easier.  

“This was no easy decision, we felt our hands shaking when we made it,” said CEO Tav Klitgaard. “We are an antidote of what social media represents. At the same time, we are in the market for people’s attention, that is a dilemma, and not an easy dilemma.” 

Like others, Zetland saw a membership bump during the coronavirus crisis — this month, its membership is 70% higher compared with the same period last year — but it has been on a growth trajectory for the past year since it began imploring current members to spread the word. 

Over 1,000 advertisers have sworn off Facebook for July as part of the Stop Hate for Profit campaign. Most publishers are now enjoying cheaper Facebook ad rates to drive demand, sell subscriptions and boost reach on ad campaigns. But a few publishers like Zetland are staying away for the time being. For example, New Zealand news publisher Stuff quit posting editorially to the platform this week citing examples of social ills on Facebook that aren’t compatible with trust. 

“Few have the courage to [quit], and I really encourage [publishers] to try it because the trial at [Danish boradcaster] TV Midtvest opened our eyes regarding the unfocused ways time can be spent on social media for media companies,” said Nadia Nikolajeva, media consultant and former TV Midtvest executive.

Zetland is more able to quit Facebook than other publishers for several reasons: It’s a small, more specialized publisher reliant on reader recurring revenue rather than driving ad money through clicks. When it asks its readers for help, they respond. Just don’t call Zetland’s move a boycott.

“We don’t say we’re part of the boycott, that would be hypocritical,” said Klitgaard. “Facebook will not die if we move away so we don’t want to say big words like, but we can chip in.” For that reason, it doesn’t have specific demands of the platform like some other marketers.

Zetland has wanted to reduce its dependence on Facebook as a marketing channel since the beginning of 2019. But it’s still publishing organic links to its articles on Facebook and Instagram to drive new readers and generate chatter about its pieces. Nearly 29% of its referral traffic comes from social media, 85% of that is from Facebook, according to SimilarWeb stats. If a paying member shares a Zetland article on Facebook, anyone can read it.

Previously, 98% of Zetland’s marketing budget was spent on Facebook, where the cost per customer acquisition is roughly 300 Danish krone ($45.67). Now, the money will go towards hiring more journalists. It’s also asked readers if they have suggestions for small, grassroots companies they might be connected to that Zetland should sponsor.

Klitgaard notes these higher than usual conversions this month are from asking its current readers to help by introducing new members. Without Facebook, it’s tougher to say exactly where these new recruits are coming from.

The crux of Zetland’s problem with Facebook is the platform’s business model is designed to grab as much attention from people as possible. Ultimately, this leads to clickbait, polarization and hate speech. 

Ultimately, Facebook is impossible to replace as a marketing channel but other media can drive similar performance on one of its key characteristics. Podcasts, for instance, rival Facebook for ease of attribution.

“Zuck is right, people will come crawling back because [Facebook] has a superior product, a company like ours can be on the front line because we build relationships with the customer,” said Klitgaard. “In three months, probably not much will change, but in five to 10 years it will, the platform will have to work differently and ad-based journalism will be much harder.”

“We were like we can’t do this, it would be ridiculous to not acknowledge that the world had changed and there are many unknowns,” said Wengroff. Instead of putting up Hiki’s deodorants and other sweat-resistance products up for sale, Arfa decided to donate its initial slate of inventory to health care workers and first responders. Earlier this month, Hiki decided to finally put its products up for sale.

After months of Instagram posts about how “we’re all in this together,” and turning their factories into production centers for masks, direct-to-consumer brands are finally starting to return to business as usual. That’s particularly evident by the number of new startups entering the market. Over the past several weeks, new entrants on the market have included alcohol-free aperitif brand Ghia, multiple DTC air conditioner startups, and shopping app The Yes.

But for brands who do decide to move forward with a launch, the playbook has changed. Launches always come with a number of unexpected headaches, but even more so in the age of coronavirus. Startups that launch today can’t ensure a steady lineup of glowing press pieces about their launch, as publications have been slammed covering both the fallout from the coronavirus, as well as unrest following protests over the death of George Floyd.

Rather, these new brands have to curtail splashy marketing plans to keep more cash on hand, revamp their messaging — and even product assortment — to better speak to the new shopping habits created by the coronavirus, and virtually connect with customers that they can no longer get feedback from in-person.

Direct-to-consumer startups have crashed and burned by spending too much money on paid marketing in their early days, and letting customer acquisition costs balloon. So, while the crop of startups that have launched during the coronavirus outbreak may be experiencing trial by fire now, it could be beneficial in the long run by teaching them how to do more with less.

“We were definitely considering [postponing] our launch, as a handful of investors advised us to hunker down and ‘wait it out’ until at least the fall,” said Kim Pham, co-founder of Omsom, which sells Asian pantry staples and launched on May 13.  “That advice really scared [me and my co-founder]. As first-time founders, you often think your investors know best.”

Pham said that the coronavirus has impacted Omsom’s launch in a number of big and small ways. Post-launch, Omsom was hoping to promote its products through influencer dinners and pop-up showcases. Now, those are out of the question. In another instance, a big photo shoot for Omsom, that was planned the week that New York City went into shelter-in-place.

“I propped, shot and manned all of our recipe videos myself. Everything came out a bit grittier, but it was kind of a blessing in disguise,” said Pham. “I think consumers want real and raw right now.”

“This is certainly a stressful time for people, and when you are starting a new business that in and of itself it is stressful,” said Mike Mayer, co-founder and CEO of Windmill, a direct-to-consumer air conditioning startup that launched in the middle of June.

Windmill is lucky in that the coronavirus hasn’t destroyed consumers’ appetite for air conditioners as it has for say, suitcases. But, Windmill’s unveiling still wasn’t able to go exactly as planned. The company was hoping to launch in May, but had to push it back until mid-June because the company’s Chinese factory was closed for two months.

“It was not easy to push out a launch — we had been working on this for two years,” Mayer said. What Windmill decided to do instead was still create a pre-launch list, so that customers could still sign up to be notified when Windmill started shipping. Mayer said that within 24 hours, 3,000 people had signed up for the waitlist.

 “One thing that stuck out to me as I’m responding to customers, is just how supportive everyone has been,” Mayer said. “Everyone is on the same page — we’re all working from home, they get where the world is right now, they get that supply chains are backed up, that factories had to close.”

Delaying launches has allowed some brands time to get more feedback from customers. Wengroff said that by delaying the launch, Hiki was able to spend more time testing out its website. Arfa describes its business model as a “collective” where members sign up to serve as product testers, and in exchange get a percentage of the company’s profits. Arfa has hundreds of collective members, according to Wengroff.

So, in the several months between when Hiki planned to make its products available for sale and when it actually did, the company was able to spend more time getting feedback from the frontline workers it donated products to, as well as from its collective members. For example, collective members told the company that they wanted Hiki’s body powder to be more skin inclusive. In response to the current crisis, Arfa also decided to produce and sell hand sanitizer under the Hiki brand.

“It’s so important to stay agile — we’ve really seen 5-10 years of trends happen in the last six weeks,” said Wengroff. “Now is an incredible opportunity to think through not only being direct with your consumer, but someone who is hopefully going to be part of your company’s journey.”