Survival Above All Else
Earlier this week, I wrote about how media companies that are feeling pressure to open their COVID-19 content might still be able to grow their subscription business with smart, benefit-driven calls to action.
That prompted a conversation with a founder friend of mine who was thinking about doing something similar. He explained that, if things got particularly bad, he would be inclined to do it. He asked me what I thought of that.
So, I told him the truth. I thought it was an idea worth trying.
Apparently, that was a controversial statement to the rest of media that he was speaking with. All of the other feedback he had received was that only hard news organizations can get away with that and that it would be a bad look for the brand.
A bad look for the brand… You know what’s a bad look for a brand? Going out of business. No one will remember the good takes or the bad takes; they’ll just remember that the brand went out of business, or worse, forget that the brand existed entirely.
During times of crisis, the most important thing you can do is survive.
This requires a mentality shift. While I feel that this topic gets way overplayed and has become dogma in Silicon Valley, the concept of a peacetime vs. wartime CEO is worth reading. Ben Horowitz writes:
In wartime, a company is fending off an imminent existential threat. Such a threat can come from a wide range of sources including competition, dramatic macro economic change, market change, supply chain change, and so forth.
My greatest management discovery through that transition was that peacetime and wartime require radically different management styles. Interestingly, most management books describe peacetime CEO techniques while very few describe wartime.
In this case, it’s a pandemic coupled with a dramatic macro economic change. Advertisers are already pulling back and I expect they will continue to pull back more over the next month.
One final part in Horowitz’s post is particularly important:
Peacetime CEO knows that proper protocol leads to winning. Wartime CEO violates protocol in order to win.
During the past decade, as many of these digital media businesses grew, their structures and protocols became more rigid. They had to. Process is one way of achieving efficiency. What worked as a 10 person team no longer works as a 100 person team and most certainly doesn’t work as they continue to grow.
Along the same path, companies got stricter with their business models. As a small company, it may have been normal to be flexible with monetization opportunities. As scale was reached, new ideas became a risk to legacy monetization.
It’s easy to rest all this structure and trust in its ability to keep the business going. This is fine. Until it gets in the way.
Protocol says that my friend’s media business shouldn’t be asking for a monthly subscription because that’s not what his type of media business does. Peacetime friend may have agreed with that, which is why he never really thought to take his business in that direction. Wartime friend doesn’t care. He wants to ensure his business stays alive. Therefore, if he believes that it can help, he’ll do it.
So, what do we do?
We adapt. Business models evolve. Experiment with new ideas that might present an opportunity for revenue.
If you’ve been noodling on an idea to engage with your audience in a new way, perhaps now is the time to try it out. This might be an opportunity to introduce a paid product that you didn’t have before. If you’ve really built strong IP, this could work.
Or, if you’ve got a new ad product idea that you thought might cannibalize the big brand business, this could be the time to try and pitch it to advertisers. Brand budgets are already dropping, so what’s the worst that can happen? They love it?
Maybe an advertiser comes to you with an idea and, under normal circumstances, you wouldn’t do that because it’s distracting and it ‘“doesn’t scale.” Now, though, it’s about survival above all else, so you do it. In good times, you’ll stop doing it. But now? Sure.
I can’t offer specifics because each publisher is different. However, there is one thing that I think is very important to talk about.
There’s been a discussion about what is going to change about media post pandemic from a business model perspective. Sean Griffey over at Industry Dive shared his thoughts here:
For much of media, advertising is all about branding. We get away with saying things like “we don’t sell clicks” and “banner ads are about branding.” We are excited when an ad might generate 10-15 clicks per thousand impressions.
However, with budgets pulling back, only the most successful campaigns are going to remain.
The best measure of a campaign’s success is if it drove business. Therefore, how can your ad business shift to being focused on demand & lead generation?
On the B2B side, this is something we think about regularly. The B2C side less so. Consumer media has always had large brand budgets to play around with. Those are likely to pull back considerably.
Here’s what I mean…
This image has been floating around for years, but media consultant Thomas Baekdal added the Google line.
Everyone likes to talk about how Google and Facebook killed the newspaper business. It’s so easy to say. However, I posit that newspapers, in part, killed their own businesses because they got lazy.
In my piece lamenting media entitlement, I wrote:
Before Facebook and Google, advertising was a lazy business. Ask a media sales executive what it was like to sell print advertising. These guys sold a piece of paper, made a boat load of money, and there was no accountability. There was no reporting required. Maybe the advertiser would do a brand study to see if there was any lift in awareness, but by and large, the business was so simple. An advertiser never knew how many people saw their ad.
Facebook and Google changed that. They said to advertisers, “we can tell you how many people saw it.” Google helped advertisers get in front of the person based on their intent to purchase with AdWords. And Facebook helped target to specific people based on hundreds of various data points.
Is it creepy? Yes. But it’s also a better product for marketers.
It doesn’t stop there, though. The way media people talk about this revenue, it’s so possessive. They call it “their” money that Google and Facebook stole. No. Wrong. It’s not their money. It was and always will be the brand’s money. This level of entitlement around a brand’s dollars is insane to me.
Demand generation has always mattered. During good times, there is plenty of advertising budget available, so publishers can benefit from the “brand advertising” dollars. However, when bad times set in, performance matters. That’s why Google and Facebook have been able to grow even during the Financial Crisis. They were able to drive performance for their partners.
This time should be different if publishers get focused. What sorts of ad products can you build that are explicitly about driving demand for your ad partners? We’re already seeing this with publishers moving more into commerce, but it’s important to continue experimenting with other opportunities—even if it hurts the “brand advertising” play.
Take advantage of the stimulus bill
One final point that I think is worth mentioning…
For my subscribers here in the United States, the House of Representatives is due to sign the new stimulus bill.
According to Axios:
$350 billion is being dedicated to prevent layoffs and business closures while workers have to stay home during the outbreak. Companies with 500 employees or fewer that maintain their payroll during coronavirus can receive up to 8 weeks of cash-flow assistance. If employers maintain payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.
In a separate Axios article, a few other points are worth mentioning:
The bill will allow businesses that have 500 employees or less to qualify for loans of up to $10 million, with loan forgiveness possible if the funds are used to pay employees’ salaries over the coming months, per Wharton.
The vast majority of the people that subscribe to A Media Operator likely work for media companies with fewer than 500 employees.
If the bill passes, I imagine there will be more details available on how to take advantage of those loans. I’ll report back if I find anything actionable.
Let me sum it up…
Each and every operator is currently wrestling with the fact that there are far more unknowns than knowns. And each of your businesses will need to try different things to survive.
But at this point, the maniacal focus needs to be on survival. Process and protocol during good times is likely going to be ignored during bad times.
Let me know your thoughts… Are you making changes? Trying new experiments? Have questions? Either leave a comment or hit reply. Have a great weekend and see you on Tuesday.