This week we start with somber news, a week after BuzzFeed announced it was cutting it’s staff by 15% news landed that Vice was cutting 10% of its staff globally. We stick with news with a talking head from industry legend Rob Norman on why a belt & braces approach to brand safety can have unintended consequences.
From here we turn to AdTech & look at Spotify who this week acquired two businesses as the look to grow their podcast offering, could it be programmatic ads in podcasts that boost scarce supply in this space? Finally we turn to the client side & look at news that MightyHive are helping Electrolux take their digital planning & buying in house.
Vice & Buzzfeed Cut Their Global Headcount
I hate to start a newsletter with sad news, but there’s been lots of it in the publishing world over the past fortnight; At the back end of January news hit that BuzzFeed was cutting 15% percent of its global workforce, Late last week Vice Media told employees it was cutting 10% of its 2,500 global workforce.
Not so long ago BuzzFeed & Vice were media-industry darlings, but in the space of 2 weeks they’ve sadly had to let go 500 employees between them. So what driving this?
Both raised a significant amount of investment as start-ups, BuzzFeed ~$500 million & Vice over $1 billion, with an influx of capital comes expectations from investors on returns. The recipient of the investment could therefore be said to be incentivized to show growth in the short term, hire accordingly & then worry about profitability later. If the returns are lower or slower than expected, then businesses need to re-size accordingly.
Running a newsroom at a profit is notoriously difficult, & whilst some have successfully augmented advertising revenue with subscriptions/donations, for many that’s simply not possible because of the type of content they create & their audiences ability/willingness to pay. The key question is why might profits be lower or slower for news brands who don’t have a subscription model?
Buzzfeed News famously went all in on programmatic midway through last year, but with many brands increasingly reticent to advertise in edgy news environments (more on this below) & with prices low due to abundant online supply, growth is tough.This sadly means that cutting costs when results are not as investors expected is almost inevitable. Long term I believe both will remain important news brands, whether or not they remain independent or chose to partner with other news brands with whom they currently compete is another story.
Rob Norman On Brand Safety
Rob Norman is one of the smartest guys in media, I found this 5 minute video with him on @Beet_TV with him on brand safety incredibly interesting:
Rob talks about the growth in awareness about brand safety amongst advertisers over the past three years & how a belt & braces approach to brand safety can have unintended consequences. He says if we’re not careful there’s the potential for all of what is sometimes called hard news, being classified as bad news. He calls out the potential danger of this is the under funding of news content.
Whilst it’s impossible to draw a line between the challenges Vice & Buzzfeed have experienced recently (indeed most feel the issues lay elsewhere), with brands increasingly avoiding hard news, it’s easy to imagine how the belt and braces approach might have had a contributory impact.
There’s obviously content that all advertiser would want to avoid, but what is brand safe will vary on an advertiser by advertiser basis, this is especially true when looking at risk within what’s by an large a brand safe environments such as a news site. The key is balance, the industry has come on leaps & bounds in the past half decade, I’d imagine as the verification industry further evolves ever more nuanced approaches will develop benefiting all parties in the programmatic ecosystem.
Spotify Are Growing Their Podcast Offering
Podcasting is a funny medium, it is remarkably popular, but almost entirely ad free unless of course you count the native ads (aka sponsorships) in the episode you’re listening to. This might change as the worlds most popular streaming service looks to get into Podcasting:
The commercial specifics of the deals have not been disclosed, but for those of you who are not familiar with the two businesses Gimlet is a producer of podcast content & Anchor leads the market for podcast creation & monetization (sponsorship) services.
It’s well known that programmatic audio has really taken off on Spotify (& elsewhere) over the past twelve months, in Spotify’s case programmatic is growing twice as fast as direct bookings & now accounts for 25% of their revenue. This coupled with the fact that podcast users spend almost twice the time on the platform as non podcast users, makes this a savvy acquisition & could create a perfect (monetization) storm for Spotify: Programmatic ads in podcasting!
I’m sure lots of buyers would welcome this. As is the case with video, audio inventory is relatively scarce. I think a key challenge in this for Spotify would be ensuring exclusives, it’s highly unlikely a listener would sit through an ad if the same show was featured in their phones native podcasting app without the ads. One approach to secure these exclusives could be upfront payments (not unheard of in the world of streaming), another could be an AdSense style revenue share between Spotify & podcast creators to incentivize them to post to one platform, think TrueView but for Audio. Maybe far fetched but certainly possible. Regardless of what happens I for one am really excited to see how this pans out.
Electrolux Partner With MightyHive To Take Digital In House
MightyHive is a business that has gone from strength to strength over the past 12 months as advertisers increasingly look to take greater control over their marketing operations. It recently announced it is helping Electrolux take its digital planning & buying in house:
The businesses began working together in October, with the white goods giant looking to bring all of its digital media buying in-house in North America & longer term Europe & Latin America. To do this Electrolux opened up four new roles on its 45 people strong US marketing team, a digital strategist and three media buyers.
I warmly recommend reading the article on this in DigiDay, which highlights the drivers behind this change. You will note the consistent theme here that I did, an increasing number of advertisers stating they are looking to have total control of their data, a more complete view of the customer (linked to the first point) & also to find efficiency both in campaigns & in staffing costs.
With regards to the last point Electrolux have said that without agency fees, the company will save anywhere up to half of the $1.5 million it was spending with their WPP agencies, who will continue to plan and buy TV on behalf of Electrolux & hold the businesses creative work.
The rate of change in digital marketing over the past 12 years has been incredible, but what I find interesting about this trend, is that as programmatic pipes become the infrastructure for talking to consumers not just in digital, but more widely in TV & Out Of Home, we could be on the cusp of the biggest change in the marketing services industry in the past 20 years. What does this mean for the future agencies looks like? That’s TBD, but they are renowned for being highly adaptable so it will certainly be interesting to watch this play out.
Okay that’s the newsletter done for another week & thank you for making it this far!
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