A common complaint from ad buyers is what they dub “knee-jerk” reactions from CMOs. One of the most interesting ones is how the stock market determines spending decisions.
It’s been much more common in the last few months, as big ad platforms like Google, Facebook and Amazon all have experienced a high level of stock market volatility. Two weeks ago, when the tech sector, led by the duopoly as well as Apple and Netflix, led an overall market downturn, I asked a top ad buyer at a major independent agency if he cared at all. “I don’t, but my clients do.”
The buyer said that he’s often had brand managers calling when either Google, Facebook or Amazon experience some level of stock market downturn. When it’s big enough to make headlines, they often call, asking if they should be rethinking their ad dollars. It often doesn’t make sense — the stock market’s machinations are complicated and often irrelevant to the marketing ROI, said this buyer.
“For broader marketing campaigns and media budgets it shouldn’t matter,” said MDC Ventures partner Jessica Peltz. “But when you see something as a media channel independently, you have different things to consider. And sometimes people use the market as a consideration point. One kind of blip shouldn’t matter for big complicated platforms. For something like Snap, it shouldn’t but it often does.”
The problem may sound like a small one, but it actually exposes a larger pattern in the space. For all the noise about data and informed marketing, a lot of the industry often still bases many decisions on instinct and general “feeling.” For buyers, this manifests most often in brand-side executives who call because they see a headline touting voice as the next big thing. “For all the times people ask us if we’ve come up with an AI strategy or a blockchain strategy,” said another agency executive. “I call it decisions based on headlines. The unfortunate thing is we often have to scramble for an answer.” — Shareen Pathak
The Go90 fallout continues to impact digital entertainment companies
Defy Media didn’t shut down only because the Go90 money went away — there were other, bigger factors — but the loss of a major content buyer and licensor certainly did not help the company. As one former senior Defy executive told Digiday, “Advertising was always going to be the dominant business for us, but things were starting to balance out in 2016 when the broader content ecosystem was so robust and frothy — with Go90, Watchable, international players cutting checks for content. You make investments predicated on that components continuing and growing. But in 2017 and 2018 everyone went into media winter, and the pace and level of those [content] investments changed.” Defy Media is not the only casualty here. AwesomenessTV, which at one point was owned by Verizon, received up to $180 million from Go90 over several years. Once those dollars went away, the company’s balance sheet looked completely different as it proved hard to replace the amount of money that was coming in. And AwesomenessTV had a business where it was selling and licensing shows to major buyers such as Netflix.
Other, smaller companies, including studios such as New Form have been forced to reckon with a new content-buying landscape. As some industry sources have argued, it’s hard to walk away from a company that’s willing to pay you a ton of money for content. There’s cautious hope that Quibi, the upcoming mobile video streaming platform, might revitalize the digital content market. And with Netflix, Hulu, Facebook and others continuing to buy shows, there are opportunities to sell traditional TV-length shows and some shorter fare. But there are no guarantees that the digital industry will ever get back to the level of money that was coming in at Go90’s peak. Those days are likely over. — Sahil Patel
The direct evolution
Luxury-quality products without the luxury markups” has been repeated by direct-to-consumer brand founders, from Michael Preysman at Everlane to Ben Fischman at M.Gemi. But Allbirds co-founder and co-CEO Joey Zwillinger doesn’t believe that positioning his products — sneakers made from all-natural materials like eucalyptus and wool — as priced cheaper than high-end peers does the business any good.
“When direct-to-consumer emerged in its current form, the premise was ‘We can get you this product at half the price.’ That’s never the story we wanted to tell. It feels a little too coy,” said Zwillinger on stage at the ReMode Conference in Los Angeles on Tuesday. “What we do instead is take the percentage of business that we would be paying to retailers who distribute us and pass that back to customers not with cheaper prices, but with better product.”
For Allbirds, luxury quality doesn’t mean making products at the same factories as traditional brands. Allbirds sees its value in the fabrics it’s creating from unexpected materials. That makes wholesale relationships trickier to establish, even as other digitally native brands start to cozy up to retailers like Target and Nordstrom.
“It’s not just about whether or not the business economics make sense at scale for us. We need a long gestation period to make a great product, and if there’s discounting or pressure along the way, it degrades our product.” — Hilary Milnes
No more news
People may be consuming more news these days, but advertisers seem to be less interested in reaching that audience, or at least in being associated with the content that audience is consuming. “We’ve had clients saying they were pulling away entirely from news categories,” said one publisher during a closed-door town hall session at the Digiday Programmatic Media Summit in Scottsdale, Arizona, on Nov. 14. Other publishers in the room grumbled their agreement. “It’s almost hypocrisy,” said another publisher. That publisher sells ads on linear TV as well as online, and while the two channels’ audiences are “almost identical demographically,” advertisers are largely limiting their spend on linear TV because they feel they have more control, that publisher said. To regain a level of control of the issue, some publishers are pressing to talk to a brand’s chief marketing officer about what their specific concern is, whether it’s a brand safety issue or a sensitivity to news content. “When we are able to have conversations at the CMO level, it trickles down. But when we talk to the ad agency, it doesn’t trickle down.” said another publisher. — Tim Peterson