As COVID-19 cases begin to shoot back up thanks to newer, more contagious strains of the coronavirus, clouds have gathered on the horizon that are darkening everything, including the media business.
The virus’s unwelcome rally has pushed back office return plans, made hopeful commercials seem out of touch, and forced marketers to return to a flexible mode of spending they honed last year. It’s also about to test a mode of selling that had started to take root at the end of 2020 and which had started to feel like a permanent way of doing business in 2021, according to conversations with senior revenue-side executives at five different publishers.
Though most of the publishers feel like this more flexible, measured approach to deal-making will help avoid a repeat of what happened last spring — “There are things that will mitigate [against another slowdown],” the chief revenue officer of one large digital publisher said. “It would take something very, very drastic to shift that” — the reality is that nobody knows for sure. Only two of the five sources Digiday contacted for this story felt comfortable speaking on the record.
“It’s very similar to last year,” that source said. “Every time you thought it was safe to come out of cover, something happens.”
Through the first half of 2021, publishers’ ad sales efforts felt settled into a kind of new normal. The programmatic markets, which had been one of the first sectors of ad spending to rally last summer, finally surpassed their pre-pandemic highs, thanks to healthy growth in private marketplace and guaranteed deals; direct ad deals, after months of being executed quickly and cheaply, involved bigger dollar amounts and longer lead times again — relatively speaking.
“Prior to COVID, the average lead time for us would be about 50 days,” said Clark Benson, the CEO of Ranker. “After that weird two-month period where nothing got sold, we were seeing an average of 15 days. [Second quarter of 2021], we’re at 33.”
Buyers’ outlooks appeared to have settled too. Rather than planning for the full year, many ad buyers now look at things one quarter at a time. “We’re still driving a lot of business in this quarter and into next quarter,” said Jody Rones, svp of brand partnerships at Leaf Group. “This time, in years past, you’re usually talking about Q4 and next year.”
So far, that dynamic has suited many publishers fine. An advertisers planning their media spend one quarter at a time gives publishers four bites at an apple instead of one. “[Some advertisers are] less likely to commit to long-term things,” Rones explained. “Today they’re saying, ‘I want to buy one quarter.’ But now they come back in the next quarter too.”
The new mode also offers more opportunity to drive incremental spending within the deals that do get struck. “There’s a lot of optimization into what works,” said the chief revenue officer of one large digital publisher. “[Advertisers are] reserving budget to put where it’s performant. They give us a $250,000 [campaign], they might in the middle say, ‘Here’s another 80.’”
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The resilience of these relationships will be more important than ever. Over the past 18 months, direct ad sales have become more important to publishers’ bottom lines than they had been in a while. Digiday+ research published this month found that close to two thirds of publishers now say direct-sold advertising is at least a “large” portion of their revenues, up from less than 40% a year ago.
That’s especially true for challenger brands, or those that might not be on the short list of an advertiser or agency’s preferences. “What’s nice about these kinds of optimizing deals is there’s a low cost of entry,” a second chief revenue officer said. “It’s sort of saying, ‘We can test and learn as we go.’”
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