Publishers are taking a longer form approach to event activations

Similar semi-permanent event spaces have been used by home and design publications like Apartment Therapy and Hunker, as well as by lifestyle publishers during the holiday season, to convene together audiences and sponsors in real life and to sell products.

As Gallery Media Group becomes the latest publisher to launch a months-long residence in New York, it begs the question, how successful are these businesses given the overwhelming overhead that comes with the territory? 

A short-term lease of just three months in New York City is likely to come at a high cost, according to Eric Fleming, partner at experiential agency Makeout NYC. So maximizing the total number of sponsorship opportunities that can take place within that timeframe is crucial to offsetting that overhead cost.

“House of Wow will be profitable,” said Ryan Harwood, CEO of Gallery Media Group. “Overhead is definitely a big consideration, which is why we’re doing it for more than one weekend or month. We’re able to amortize costs out of the buildout.” 

Harwood declined to share the lease terms but said that Samsung, Clinique, Wayfair and Unilever have already signed on as sponsors to host events in the space during the three-month timeframe. And while he also declined to disclose how much each advertiser paid to host an experience in House of Wow, he did say that so far total sponsorship revenue has surpassed $1,000,000. The sales team is still working to sell activations in the space throughout the holiday season, according to the company.

“They’ll be able to get a much more precise handle and stand the chance of being profitable, if they have that longer term commitment in place with that space because they’ll know what the total cost is. There can be such volatility for shorter run activations,” said Fleming, adding that it gives Gallery Media a slight advantage to sell sponsorships for events in a space that is pre-existing and maintained by itself versus finding venues for a client. 

Gallery Media’s lifestyle brand ONE37pm, aimed at a primarily Gen Z male audience, was the guinea pig for this multi-month-long experiential model this past summer. Harwood’s team rented out a cafe space in the West Village neighborhood in Manhattan and called it the ONE37pm Clubhouse, which was open from May 1 to June 30. During the day it served as a workspace for the brand’s team and in the evening it was an event space for both editorial events as well as sold sponsor events. 

“It really was my attempt to see if you make the office a profit center instead of a cost center,” said Harwood, who added that the clubhouse ended up being a profitable business, but the true take away was that it gave him “the gall and appetite to do it bigger with PureWow.” 

Sponsorships will make up the vast majority of the revenue earned by House of Wow, but he said that there is a possibility of ticket sales for things like the live podcasts, though that money is expected to be marginal in the grand scheme. Commerce revenue will not play a part of the strategy, despite the shopping activations that are pitched to sponsors. Any advertiser who hosts a commerce-based event will keep all of the profits for sales. 

The experiential business is expected to contribute about 10% of Gallery Media’s total revenue this year, up 80% year over year, according to Harwood, and the goal for 2023 is to invest in growing this business significantly. To do that, the brains behind Refinery 29’s traveling event franchise, 29 Rooms, Anna Plaks, was hired as the company’s chief creative officer to further develop House of Wow and other large scale experiential projects.  

The six-month check-in

As Gallery Media sets out on its new experiential business, it’s important to look at publisher predecessors to learn how successful businesses are created – or not –  out of these long term event spaces. 

In April, Hunker launched its Hunker House, a three-level beach house in Venice Beach, Calif., that the company is renting for an undisclosed period of time. Meant to be a permanent extension of the brand, according to the brand’s svp and general manager Eve Epstein, the first floor serves as a product showroom where items are available to purchase via QR codes and two levels of residential space on the upper floors that brands could take over and use for month-long activations, primarily rooted in content production. 

Sponsorships have ultimately been the primary source of revenue for Hunker House, despite having the commerce-oriented floor. The affiliate revenue generated from any sales made in the house remains a small but growing portion, but she declined to share a revenue breakdown.

A month is the shortest period of time that Hunker will sell a sponsorship in the House in order to get audiences in the door and generate enough impressions. In the six months since launch, six total sponsorships have been sold incorporating the house, including two major partnerships with Tuft & Needle and Gap Home Kids, which used the House for month-long residencies. Together, the deals have exceeded Epstein’s revenue expectations, though she declined to share how much money the house has generated to date. 

When not actively sponsored, however, Epstein said it’s become a priority to have an “always-on programming approach” in the House and focus on the editorial content and giving readers the chance to be in the space in non-monetized periods as well.

According to Dan Gregory, CEO of creative agency TEAM, long-term residencies like this are expensive for the brand, so when managing a client’s experiential media budget, he said that there needs to be some trade off to justify the activation. 

“[Publishers need to] think about how do you get some type of ROI model back [to brands] if you want them to do a longer period of time,” Gregory said, pointing to a six-month-long theater residency that was part of a campaign for his client Havana Club rum, which sold $3 million worth of tickets to shows over that time period as an example of a worthwhile activation.

Give it time to recoup the losses

Operating an event space almost needs to be a long-term business model because from a sponsor’s perspective, particularly those using agencies to navigate their experiential budget, a lot of lead time is needed to plan for and budget an event.  

“We’re typically planning out [experiential budgets] six to nine months in advance,” said Gregory, who added that for one particular client, his team is nearly done planning out the event programming budget for all of 2023 and has been working on that for about three months already. 

Epstein said that the clients who have been sold on the Hunker House have come through direct deals with brands, rather than through an agency, which tend to be less flexible about diverting a certain portion of a given budget to something that’s experiential. 

And if short turnaround times are a deterrent for getting sponsors on board this quarter, the fact that New York City-based venues are so expensive right now could be a saving grace to get sponsors to buy any remaining dates in House of Wow.   

“We’re doing a lot of experiential, particularly in New York, in Q4 and venues have been difficult. The short term rental leases are super expensive right now,” said David Jacobsen, marketing agency Invisible North’s vp and head of integrated production. So for brands that are unable to secure space for a solo branded event, co-branding with a publication can be a way to save some money as well as get the event done within this quarter. 

And on top of that, for any brands looking to produce an event without the six- to nine-months of lead time, Jacobsen added that working closely with a publisher to create editorially-backed programming and talent-based activations can be a strength to make sure the event is still a success. 

“There’s this halo effect of just having the brand have that physical presence and that’s the sort of intangible value that could result in more subscribers, or it could help the brand from a brand awareness perspective,” said Fleming.