BOW thought: Chamber of Secrets

Well well well, another week, another think.

Hope you strip off the Sunday Scarries and take a think with me.

Shout-out to our first recurring sponsor, Jason Schulweis. Jason is a fantastic human being, and his blend of kindness and generosity bleeds into his business dealing: I have never worked with a more collaborative media partner than Jason.

Sadly though, as the good times keep rollin’ here at your favorite media newsletter, prices must increase.

$2.52 is now the cost to sponsor. We’ve had some nibbles (shout-out to growth ninja and analyst wizard Barbara for the interest), but we operate exclusively on a first come, first serve IO basis.

Be like Jason and let me effusively sing your praises. It’s even better if you’re an enemy; I’ll be forced to praise you.

Today’s update is a BOW (beginning of week) thought on industry secrets no one - NO ONE - has the mustard to really admit. I’ll have a mid-week brain dump of more loose threads ready around Wednesday.

DISCLAIMER: this one is a little long, a little inside baseball as my Dad would say, and the closest I’ve felt I’ve been to toeing the line of media cancellation. If that doesn’t get you to read on, I’m not sure what will (apologies in advance Jason).

Onto the thought…

BOW thought

Open secrets. Here are a few open secrets we marketers know, but keep hush hush about. Just like a great insight, deep down we know these to be true.

So here are 3 I’m passionate about…

Niche doesn’t work. The media wants us to believe that small, is now big. The MASH or Friends finale got 100 million viewers; Succession was lucky to get 3 million. Invest in a small community of passionate fans, and your budget will go farther for your business and in the culture than peanut buttering it to more people.

But that’s bullshit. If it were true, ad revenue would be pouring into smaller guys and ignoring the big ones like Google and Meta. But the opposite is true - Meta and Google storm on, while Snap declines, Reddit pushes IPO plans, and Buzzfeed trades for under a dollar.

So why doesn’t niche work? Three reasons:

• Small does not equal niche. ~80% of Snap’s customers can be found on Instagram, which has better tech / targeting and more straightforward ad formats. I’ll get into Snap in another email, but their lack of success boils down to a lack of focus.

• They won’t accept being niche. Twitter gets all the attention, but 2023 Reddit is a masterclass in effing up your business. Instead of leaning into their counter-culture, subculture roots, they copy-cat the big guys. Instead of big and interesting brand activations, they shove direct response ad formats down media buyers’ throats. Why? Because they want to scale, and are not content with their role as a niche home of vibrant communities. So, they lean into advertising that is worse suited for their business; their targeting and tech is far worse than others, and Reddit results often lag competitors. To boot, they piss off their actual product - their people - with rule changes, crying poverty, while paying for ads promoted to people like me on LinkedIn. Not great, Bob!

• They’re overpriced. Why pay $5-$10 CPMs with better targeting and reach, when you can pay $25-$50 CPMs with more clutter and less influence? That’s the choice you often make going niche. Some of this is because of individual operators. There’s the podcast host who reaches 10k people, and stuffs 8 ads into their show just to pay their high inflation bills. (After all, beehiiv is about to start charging your favorite neighborhood Let Me Thinker $50 / month - why do you think it’s now $2.52 to sponsor this newsletter?). Then there’s the other side - niche partners with less influence than they’d like to admit. The influencer who needs to put $ behind their organic posts, because they can’t actually guarantee their reach. Or the publishers who don’t have strong fanbases as much as they have small ones, or rely too much on an open web increasingly becoming less relevant than the new homepages of the internet - your social newsfeeds. Finally, there are the partners relying on brands to fund their bloated business models. Streaming services like Peacock are losing $3 billion a year because they’ve been underpricing their services in the hopes of grabbing subscribers. So who do they want to foot the bill? Advertisers, charging them $50+ CPMs to keep them afloat. Pricing needs to come down considerably for media partners focused on niche communities to work, and I’m not sure they actually can afford to.

Safety doesn’t sell. YouTube gets trashed in the press for their shadiness - but buyers can’t quit them. Why? Because they have the perfect mix of scale, tech, attention, and targeting - oh, and they deliver business results to advertisers.

The best media partner I’ve ever worked with at pushing product? Barstool. Why? Because of their creativity, flexibility in pushing through new ideas and ad programs, energetic hosts, and rabid fanbases - oh, and they deliver business results to advertisers.

The flipside of this is the brand safety mandate. Advertisers are guilt-tripped into paying premiums to ensure their ads only surround the most premium of content. Nevermind that premium digital ad inventory is often an oxymoron - as my friend Barry Dan pointed out to me, premium digital inventory is similar to TV and OOH: there is only so much to go around, and with so many programmatic orders in the system, it’s impossible for everyone to get a piece.

So you pay mark-ups for smaller pools of inventory, and similar to the last section on the overpricing of niche, the mark-ups are ridiculous. You dilute the reach of your media buy in favor of brand safety, and can’t deliver on your goals - business or reach-based.

I’m not saying brand safety is not important. It is. And I understand people feel as if they can’t put a price on not seeing your brand’s name in a report like the one Adalytics dropped last month.

But what’s the point of brand safety if you don’t have a brand, because you’ve spent all your money ensuring its safety over its growth?

Research is biased. I read a lot of research on the ad industry, and use it to convince clients on various projects. But what always bugs me is that on most pieces of advertising research, lives an ulterior motive.

The Video Advertising Bureau funds research touting the effectiveness of linear TV. Based on their name, did you think they wouldn’t?

Les Binet touts the need for long-term demand generation and brand building. He is employed by DDB, an creative agency focused mostly on those two things.

In Cannes, there was new research touting how people respond to ads differently on different platforms, and therefore tailored, specific creative is needed for each property - certain ads for YouTube, different ads for TV, etc.

I do believe that is true, in my gut. People watch different platforms, differently, and therefore ads should correspond to those differences.

But it’s also convenient. This research was peddled at a conference of creativity, where ad agencies need to justify their increasingly higher costs to C-suiters in attendance, including the rationale for why they need to make multiple creatives vs. just 1 :15 or :30.

Is everything just part of some conspiracy, some creative or media ad industrial complex? Probably not, but maybe a little. And I can’t help but wonder if we need a bit more independent, third-party research flowing through our industry vs. research backed by people who could be thought of as tipping the scales.

Alright, that was a lot. Take a breath. Hopefully your eyes are a little wider now, and you’re a little more comfortable talking about things you see but others won’t say.

Don’t keep your thoughts in your head. But stay thinkin this week.

I’ll see you Weds (or Thurs? who knows…)

Danny