Data-Labor-Technology

Patagonia was one of the first global companies to join the Stop Hate for Profit campaign to defund Facebook in all its markets a week ago. Since then others like Adidas, Verizon and Coca-Cola have made similar moves, though not always as part of the campaign and not always completely off Facebook. For example, The North Face has paused campaigns in the U.S., but continues to run them elsewhere, in markets like Canada, Germany and New Zealand.

While each of these advertisers is united in the rationale behind their stance against Facebook, the clarity of their demands vary. For Patagonia, the social network must take clear steps over the next month to show it can no longer profit from hate speech otherwise it will take its dollars elsewhere. Last year, the advertiser spent $6.2 million on paid ads on Facebook, per research firm Pathmatics.

Digiday caught up with Weller to hear more about Patagonia’s demands of Facebook, and ask where the brand’s Facebook’s media dollars go if it won’t comply, and more.

This conversation has been edited and condensed for clarity.

Why has Patagonia decided now is the time to defund Facebook?  

It’s a stance that’s been building over time but we’ve reached a threshold for tolerance of the dissemination of hate speech on the platform, as well as the resistance to address a fundamentally flawed business model. There have been a lot of catalysts for driving change on Facebook over the last few months and certainly the last month. And yet those catalysts for change haven’t amounted to much. We can’t continue to actively support and feel good about investing our resources into that business.

What does the Patagonia want Facebook to change before the end of July?

We want to see Facebook make policy changes to ensure that its business model can no longer profit from hate, racism, anti-Semitism, climate denialism and the undermining of civil and human rights. We also want to see them commit to accuracy on political and voting matters globally. Finally, we want to see a commitment to regular, independent third-party audits that ensure total transparency on these matters now and in the future.

Will you remain off Facebook if those demands aren’t met? 

We’re committed to stopping hate for profit on Facebook and will stay the course. We’re prepared to stand by that commitment for as long as it takes.

What happens to the money that was due to go to Facebook?

We’ve always thought carefully about the company we keep when it comes to working with media owners and digital platforms. When we work with those businesses the biggest factor for us is how we’re able to use them to reach and mobilize communities around environmental issues, which not only underpins our mission but also makes our current decision to step away from Facebook a challenging one. We’ve always thought carefully about the companies we buy media from, but this is an opportunity for us to take even more thoughtful approach about how we invest our resources to reach communities and engage with real people on the issues that matter most to us a company. It is definitely an opportunity for us to think harder about the company we want to keep. Doing so gives us an opportunity to innovate and test new ways of working with media. 

Does that include looking at how you buy programmatic ads?

Everything is on the table during these incredibly dynamic times. As long as we’re clear that the work we do and the companies we work with are in service to our mission in delivering environmental action and allow our customer communities to mobilize around those issues and take action, then we’ll consider our partnerships. This moment in time presents a myriad of opportunities for us to continue to challenge ourselves as a business.

Is this a safe time to be without one of your biggest media channels? 

There have been a lot of convergent factors that have taken us, and many other businesses, to the point of being off Facebook. One of those factors is not to do with the fact that this is an easy time to pull media spend. July, as a lot of critics have pointed out, is a soft month for advertising, but that’s not why we decided to act now. 

What impact is the boycott having on Patagonia’s business?             

The company has decided not to buy paid ads on Facebook and Instagram in all our markets. There will, however, be a limited number of organic posts about our environmental campaigning we post on those platforms. Facebook and Instagram are not only one of our main advertising platforms in terms of budget but also in terms of how we talk to our customer communities around environmental action, which both underpins our decision but also make it a challenging one. Being off those platforms has an impact on the business, but it’s one of many things we’re navigating, not least a global health pandemic. We’re not going to get too distracted on the financial impact of our decision on Facebook. The financials weren’t a box that we checked when made it. We did it because it was the right thing to do. 

Can you point to any specific examples the boycott has had on the business?            

We use Facebook to financially support the online campaigns of environmental grassroots non-profit organizations across Europe. Those organizations are somewhat dependent on our support in the space and we’re not going to be able to do that for a period of time. We’re working with those organizations to find alternative ways to support them while we’re off Facebook. 

Now Kennedy — who has written about Netflix’s “Ugly Delicious” and food media controversies surrounding Alison Roman and the Bon Appetit Test Kitchen — has more than 3,000 subscribers for her newsletter, more than 400 of whom pay $5 a month or $30 a year for a bonus Friday Q&A. The income means that Substack now functions as Kennedy’s “anchor” gig, freelancer parlance for the recurring job that ensures you can pay the bills.

Kennedy is part of a growing class of newsletter entrepreneurs on Substack. Founded in 2017, the company allows writers to build their own paid subscription businesses, taking a 10% cut of revenue (in addition to Stripe’s transaction fee for payments). Most coverage of Substack has focused on the coterie of writers newslettering full-time who earn salaries rivaling mainstream jobs, but the chaos of the current media moment has widened the platform’s appeal. New writers have joined and different business strategies, such as bundles, are forming. 

As the media ecosystem contracts amid coronavirus, Substack has been thrust into an uncomfortable role — that of a savior. And as more writers go solo, the question has emerged as to whether Substack can become the kind of monetization system that never materialized during the last major internet writer-driven movement, the halcyon days of the early blogging era of the 2000s.

“We live in a world where we’ve lost the alt weekly and the small publication. The barriers to entry at the mainstream publications entry are high. The rates are terrible,” Kennedy said. When it comes to Substack, “It was necessary that something like this happened.”

Substack sees itself as a business, not a savior. Last summer, the company raised a $15.3 million round led by Andreesen Horowitz. “We’re coming in with an opportunity-focused mindset,” said co-founder Hamish McKenzie. “During the first 20-30 years of the internet, in terms of information distribution and media, the innovation has mostly come around an ad-supported model. There’s a whole 20-30 years of innovation to come that more fully innovates around a subscription model.”

The company on Tuesday called for applications for one “senior fellow” on Substack, who will receive a $100,000 grant, and four other fellows, who will receive a $3,000 stipend and $25,000 advance (recouped by Substack through increased revenue sharing).

Substack enjoys a growing profile in the media industry, but it’s not a consumer brand. The company is fine with that. Substack wants to be behind the scenes, taking its cut as writers interact with their devoted readers. More than 100,000 subscribers pay writers on Substack, according to the company.

For top writers like Luke O’Neil, Substack has been a boon. O’Neil said he is projected to gross more than $100,000 annually for his popular newsletter Hell World, a unique fusion of stream-of-consciousness writing and reporting about the harrowing nature of American life. O’Neil began his newsletter as he was on the outs with Esquire, his main freelance job. Gaining a few hundred paying subscribers after only a few months, O’Neil realized his newsletter could be a worthy full-time pursuit.

An acerbic writer and tweeter, he enjoys working for himself, especially after a career of clashing with the higher-ups. O’Neil once wrote in a Boston Globe op-ed that his biggest regret in life was “not pissing in Bill Kristol’s salmon” when he waited on the conservative pundit. The Globe pulled the column. “The idea of being able to do it with no bosses is really appealing to someone like me,” O’Neil said. “For other people, I think it might be scary, because a lot of reporters are nerds and cops at heart.”

O’Neil encourages writers to give Substack a try. “Maybe you only get 150 subscribers and it doesn’t work out. OK, no big deal. We’re all working constantly for free all the time anyways,” he said. “Let’s say all you can get is 100 people subscribing giving you $5 a month. For most freelance journalists, $500 a month is something.”

As more writers join the platform, he doesn’t think there is necessarily a subscription bubble for newsletters. “You pay $10 a month for Spotify and you get every band that’s ever existed. That’s good for the consumer. Or you can pay $10 to buy one album off Bandcamp, and that’s a different kind of transaction,” he said of the platform that allows music lovers to directly support their favorite artists. “[People] feel good about giving people they like money so they can continue to make stuff they like.”

Bundle Up

Although Substack is disaggregated, some writers are already figuring out how to bundle their newsletters — or considering doing so. Group enough newsletters together and what’s left is, effectively, a blog or magazine. 

In April, Nathan Baschez (writer of Divinations) and Dan Shipper (Superorganizers) together created a third Substack called Everything, a bundle allowing subscribers to sign up for both of their newsletters. Within the first month, they grew together from 600 to 1,000 paying subscribers (the cost of the bundle is now $20 a month or $200 a year). “We’ve structured this as a company,” Shipper said. Now, Everything is signing on like-minded writers, like Tiago Forte, who keep a majority of the monthly recurring revenue that they can generate for the bundle. The result is that Everything has become, effectively, a new business publication built on Substack. “I think we’re discovering all the things that made magazines awesome,” Baschez said. Everything has joined the ranks of other news organizations forming on Substack, the first of which was the Dispatch, a conservative politics site that now has about 10,000 paying subscribers.

On the other side of the political spectrum, O’Neil said he has spoken with lefty writers about creating a one-stop digest of multiple newsletters. While not finalized, one of the other players in those talks is Discourse Blog, a collection of eight former writers for Splinter, the political website shuttered in 2019 by G/O Media. Discourse Blog has more than 3,000 free subscribers, according to Jack Mirkinson, a member of the group and Splinter’s former deputy editor. In April, the project switched from WordPress to Substack in order to more easily launch a paid option starting July 6, Mirkinson said.

The new structure has granted the bloggers more editorial freedom, though for now it’s basically  a labor of love. “If we were still at Splinter, we would have to be listening to everything that Trump says at all times, because that’s where the mandate of having a news website in a corporate context drives you. [Now, we have] the ability to try to make a new model, to try to figure out a totally different relationship to the audience, and a totally different relationship to the day-to-day mechanics of putting out a website,” Mirkinson said. “I don’t think anyone could look at the media landscape right now and not just beg for a different route out of the chaos and misery.”

Some Substack writers have sought to monetize through methods other than subscriptions. Delia Cai, who works as a growth editor at BuzzFeed for her day job, writes the newsletter Deez Links, offering a round-up of media news, commentary, and Q&As with professionals. The newsletter has more than 5,600 subscribers, and Cai intends to keep the product free for now. She has tried selling merchandise, but found it to be a difficult business (her Deez Links pins were held up in China for two months because of coronavirus).

“I’m still really looking for exposure and trying to get people to notice me for my writing and hot takes,” Cai said. “I know that if I, God forbid, lose my job tomorrow, the first thing I would do is to go to Substack and turn the paid subscriptions on.” For now, Cai has teamed with Study Hall, a freelancer community and newsletter, to offer classified ads, beginning at $100 per week across both properties. 

Blogging days

For those who were around to experience it, the dive back into newsletters has felt a lot like the 2000s internet, where writers honed their voices on a loose network of blogs. Everything was free. Many writers later found jobs in the mainstream media and in some cases the properties they created, like Nate Silver’s FiveThirtyEight, were subsumed by larger media conglomerates. 

This time, the economics are different. “I got interested in the blogosphere when it first started in 2004. I just sort of jumped in, and I was mostly interested in the potential to be fast and be part of the conversation,” said Judd Legum, who founded the progressive political blog ThinkProgress (where I interned in 2012). In July 2018, Legum branched out with his own Substack, Popular Information, a political newsletter that now has 113,000 total subscribers. He earns “well into six figures,” according to the New York Times, from paid subscribers. 

Legum said that writers are more entrepreneurial with their newsletters than they were with their blogs. He, for instance, has turned down freelance work, which might pay between $500 and $1,000 an article, because it makes more sense to self publish. A recent newsletter with two political scoops garnered 72 new paid subscribers in one day, Legum said. “As a lot of tech startups know, recurring monthly revenue is a good model. There’s stability to it. It’s better than advertising, when for the most part every month you start at zero and you’ve got to build up your pageviews,” Legum said. 

Substack has an eye toward the blogging era, too, betting this time that there has been a shift in the culture. Readers today, they hope, are willing to pay for internet writing. “From a business standpoint, there was this land grab for everyone’s attention,” said Substack co-founder Chris Best. “The people who ended up winning that game weren’t bloggers, unfortunately. It was Facebook.”

Substack isn’t the only player that has sought to figure out small-scale publishing in the platform dominance era. Medium, for instance, has been home to a rotating roster of small publications, but has pivoted often and failed to emerge as the media force many once hoped it would be. Best said Substack’s main focus is the connection between an individual and that person’s audience. Its pitch to writers is that they have complete control over everything — from their content to their distribution lists (there are some limits, like a minimum fee structure of $5 per month if you want to switch to a paid model).

With the wider industry in a period of crisis, Substack has entered into a new phase. The first phase, Best said, was to attract writers with existing audiences to move to Substack. Now Substack wants to bring on new voices. As for products like bundles, Best said it should be driven by writers, not the company itself. 

One thing that Substack does promise: no ads, ever. “Any time you’re doing ads, it’s all about the lowest common denominator of engagement: clicks,” Best said.

But how the practice is viewed by publishers is changing as there are more ways to drive up inventory without hampering user experience and performance, like viewability.

Each new impression served after a given time frame generates incremental revenue for publishers. Most exchanges and vendors combine other refresh triggers with time elapsed, like user action (mouse movements and scroll depth), content change or a combination. But it’s a fine balance for publishers. While ad refresh can increase publisher inventory, after the first impression is served it can decrease viewability and click-through-rate—eventually hurting publisher revenue. 

Tight programmatic ad market conditions mean that publishers are naturally looking for ways to push harder on revenue generation. In May, display ad revenue (excluding social and video) in Europe was down between 25-28% on the prior year, according to the Interactive Advertising Bureau. In the U.S., CPMs on open web display ads were 34% lower than original forecasts for the period between April and May, according to the IAB U.S. Mat Bennet, managing director at OKO, which helps publishers monetize ads, has seen an increase of interest from publishers in refreshing. And tech vendor Automatad has seen demand for its ad refresh product increase substantially, with 35% of its existing publisher clients signing up to it since the coronavirus outbreak began.  

“Advertisers are really against it. Revenue wise it’s amazing,” said Emily Roberts, BBC Global News programmatic trading manager for Europe, Middle East and Africa. Still, BBC Global News doesn’t refresh ads. “If you have multiple sizes in refresh it can make the experience for readers quite bad as the page is constantly jumping around,” added Roberts.

That’s the rub. Ad refreshing, especially automatic ad refreshing, carries a stigma since publishers historically used it to prioritize revenue over user experience. The added load can slow down pages. As such, ad refresh still falls into a category of revenue-generating practices that have shady connotations, like content recommendation widgets and autoplay video.  

“Stop refreshing ads on your page,” wrote Ryan McConaghy in his May 20 Last Week In Adops newsletter. “I don’t care what sorts of tests you try to show me, refreshing ads make each incremental ad less effective, period…It makes your ads less effective. Buyers don’t like it, readers don’t like it. Isn’t that enough?”

Ad buyers have mostly viewed ad refreshing with vexation. Ad refreshing practices aren’t standardized, although Google created standards in its exchange in 2016 which some have followed. Not all vendors declare whether the ad is refreshed or when, after the first impression, each subsequent impression is served.

“Ad refreshing is annoying but is managed by the SSPs, they all have slightly different policies in what the allow publishers to do,” said Matthew McIntyre, vp, programmatic Europe, Middle East and Africa at agency Essence. “We don’t have any controls to see when we have bought refreshed inventory or to stop buying it on the open exchange.”

Cutting off the call-to-action in a direct response campaign could harm the performance, but for brand building campaigns the potential impact would be less, he added. 

Ads that appear later in the refresh sequence may not be subject to accidental clicks — good news as Google’s ‘confirmed clicks’ is causing headaches for publishers and advertisers — so they could perform fine for objectives like brand lift, recall or conversions. 

“The best-case scenario is we’re clear on what’s happening,” said Zenith’s head of programmatic, Matt Bushby. “Either the DSP offers that targeting option for us or the publisher shares that insight on what triggers it’s based on.”

As long as one of the triggers to refreshing is time spent in view then viewability is protected in spite of ad refreshing, which has been a common concern. Automatad sets ad refreshing every 25 seconds of active time in view. After analyzing 150 sites over three months it found that viewability increased on average by 48%. 

Nathan Chase, co-founder of U.S. movie-ranking site Flickchart said using ad refresh from Automatad increased incremental ad revenue by over 100% (also helped by access to top-tier bidding partners via Automatad) and viewability of the ad units being refreshed increased by 27%.

“[Automatad] helped us rethink our ad placements, offered us ad layout flexibility and customization [and] were cognizant of our unique site mechanic requirements,” he said. 

U.K. publisher Serious About Rugby League increased ad viewability by 23% in the first two months of using the vendor’s header bidding wrapper and refresh tech.

“Done well it is an easy win for most,” said OKO’s Bennett. “As with most things monetization, the advice is ‘results may vary, but it is worth testing.’”