Publishers say the competition is steeper than expected for event sponsorship dollars this year
Publishers started 2023 with the hope that event sponsorships would be a bright spot in their advertising businesses, compared to the slow start their other ad offerings experienced throughout the first half of the year. But as the second quarter comes to a close, some media executives said that their events were a much harder sell than initially planned.
What has historically been a marquee quarter for Apartment Therapy’s experiential business, president Riva Syrop said her team made the decision last autumn to push back its tentpole event Small/Cool from the spring — when it typically takes place — to October this year. During a conversation with Syrop on the Digiday Podcast in November, she said the decision to delay the event was made to avoid forcing advertisers to commit to a large-scale sponsorship before they knew what their budgets looked like for the year.
It turns out that was the right move: “We did not see an appetite for experiential [sponsorships] in Q2 at all. Not for individual pop-up things, not [for tentpole events] — not to say that they weren’t existing in the world, but we definitely did not find that that’s what our clients were looking for. At all,” Syrop told Digiday in a conversation this week.
One media exec who spoke to Digiday on the condition of anonymity said their company has been taking a very cautious approach to executing events this year. “We are living in a built-if-sold world where there is no corporate seed money to spend [in the event there are] no sales attached to it,” they said.
This is the reality to the extent that every event that the company has orchestrated so far this year has been planned in a “stair step” approach, meaning once they sell a certain level of sponsorship revenue, they can plan the next stage of the event. “Once we reach milestone X, we lock [down] the venue, once we reach milestone Y, we lock the talent, and so on and so forth,” they said.
The media exec added that, while the ad dollars for high-dollar campaigns are “few and far between” this quarter, the money is there if a publisher is in the right niche and can lean into their authority.
The competition is steep
For BDG, its events strategy around the Coachella music festival includes the annual pop-ups of its NYLON House franchise and ZOEasis. It’s a good example of a publisher capitalizing on its authority in a specific cultural moment. According to a BDG spokesperson, the 2023 pop-ups of these event franchises had 10 total sponsors and saw more than 200% growth in revenue compared to the events in 2022. Overall, BDG’s event businesses made up 12% of BDG’s total direct sold revenue in the first half of the year.
“We have generated more event revenue in the first half of this year than we did in all of 2022,” said Jason Wagenheim, president and CRO of BDG.
Because BDG’s NYLON and The Zoe Report have a history at Coachella and are not in direct competition with a dozen other publishers that host events adjacent to the music festival, they were in a stronger position to win event sponsorship dollars, according to the anonymous media exec.
That’s why this year, the exec’s company is taking a similar approach and is only focusing on selling its existing events, versus trying to launch new ones.
“These events have to be profitable. You can’t bundle them into media plans and hide the costs. They have to actually be profitable or you wind up [with a big revenue hole in your bottom line],” they said.
At Semafor, business “is really being fueled by our success in the event space,” according to CRO Rachel Oppenheim, who added that about 50% of the media startup’s revenue is currently coming from its events business.
Since launching in October, Semafor has generated eight-figure total revenue, though Oppenheim declined to break down hard numbers and how much the company’s events business specifically earned. But between the first quarter and the second quarter, the company doubled total revenue earned.
“I think clients are looking at Semafor as a brand that’s reaching an audience that’s ultra high value to them in a new way and they’ve been willing to put dollars behind testing it and learning and building alongside us,” said Oppenheim. However, “it’s an ultra competitive space. Nothing’s easy to sell.”
The road ahead
The unnamed media exec said that they have one sponsor locked in for a flagship event happening in August, but there is much more selling to be done.
Meanwhile, Syrop is optimistic that Small/Cool will have the sponsorship revenue behind it by October to make it a profitable event this year. “I think [event sponsorship budgets are] shifting back,” she said.
Given the tentpole event’s month-long run, “we always want to cover costs [and have] a little profit [going into it],” Syrop added. “We’ve locked in our first group of sponsors to make us comfortable with the activation in October — we’re good. But I would say in the past 10 days, we’ve had eight potential sponsors emerge and suddenly being like, ‘Can we still buy in?’”
More in Media
Apartment Therapy’s president Riva Syrop took the stage at the Digiday Publishing Summit to discuss the convergence of commerce and sponsorship revenue within its Small/Cool event.
Media execs took stage at the Digiday Publishing Summit to discuss the growing importance of ROI in ad campaigns this year.
CEO Satya Nadella said AI assistants will be as ubiquitous as PCs and will help users navigate across apps, operating systems and devices.