This week’s Rundown features a look at our year-end issue, Amazon’s boundless ambitions, Twitter’s brand pitch and Snapchat’s marketing.
Year in Preview issue: The duopoly under fire
We’ve started work on what will be the eighth issue of Digiday magazine, which will reach subscribers before the holidays. Our theme for the second year: the year in preview, a look ahead to the big trends and themes our editorial team believes will define digital media in 2018.
One of the big themes is no surprise: the duopoly in the crosshairs. On Oct. 31, executives from Google and Facebook (along with Twitter) were on Capitol Hill to be grilled about their role in Russian meddling in the last presidential election. Not lost on many: The tech giants didn’t send their CEOs — they sent lower-level executives. In 2018, these questions will only intensify as a result of a shift in elite perception of tech giants not as infallible examples of American ingenuity, but as aloof and unaccountable nonstate actors wreaking havoc on many industries and democracy itself.
Politics and opinion typically overcorrect. The rose-colored glasses view of tech platforms was naive; the correction will inevitably go too far. In Berlin last week at a DLD event, I listened as German publishing exec predicted that within five years, a governmental authority, most likely in Europe, will break up Amazon. Governments typically move too slowly. But change will probably come. One of our “bold calls” in our next issue is that ad targeting will get regulated. This will start with political advertising, but platforms are fighting this because regulations tend to creep from where they start.
On the regulatory front, our U.K. editor Jessica Davies is examining the industry chaos to come from the implementation of the General Data Protection Regulation, a sweeping European regulation that will touch every media, marketing and tech company. The GDPR is a regular worry among Europeans, but Americans mostly ignore it. The broadness of the regulation will come as a surprise to many American publishers and marketers that belatedly concern themselves with it. But in discussions with publishers at our Digiday Publishing Summit Europe, much confusion still exists as to how it will be enforced — and critically, what companies regulators will target as examples.
Our issue will also feature big-picture looks ahead with media and marketing leaders. One is with New York Times Co. CEO Mark Thompson. The Times continues to make progress in its shift to a model driven by consumer revenue. (In its third-quarter earnings out on Nov. 1, it reported that digital subscriptions crossed 2.5 million.) Here’s a preview from the Thompson interview:
Q: The New York Times is changing its mindset to become a consumer company. What’s the thinking behind that?
A: It’s essentially about recognizing that the early days, first 15, 20 years of the internet were wrong. The whole concept that infinite free distribution would solve all the business problems associated with journalism and there’d be a perfect way of matching news to users has just turned out to be wrong. There is demonstrably a market for high-quality news for paying customers. So that’s a significant change.
Look for more in December. — Brian Morrissey
Amazon’s coming for you
I spent a lot of late last week chatting with small to midsize businesses that sell on Amazon — everything from office supplies to home goods to other items. One theme that kept coming up was how afraid these brands were that Amazon, which is key to their survival, may also end up crushing them. One operations executive at a small brand told me he’s sold a product for about five years on Amazon, and just last week, found that Amazon has created its own version of that product under its “basics” brand. (The product even has the same name.) “We’re asking a referee to call foul on itself,” said this person. He said he’s opened a case but isn’t hopeful. Another brand reported that Amazon was coming to its factory in China to ostensibly do an audit, but it’s more concerned that Amazon plans to go direct with its China factories, cutting the brand out. “If they can do it internally, they will,” said the brand. It’s certainly cause for concern: AmazonBasics is a major part of Amazon’s private brands, which cover everything from clothing to phone chargers. Basics is the third-best-selling brand on Amazon.com and is a key part of Amazon’s strategy, moving beyond “filling in” gaps in its portfolio to becoming a national brand. — Shareen Pathak
Twitter’s pitch to brands
Outside of Washington, it’s business as usual for the tech platforms. Twitter hosted a presentation for a few media folk on Oct. 30, the first of its kind, to drum up press about how it’s going about selling to video-hungry advertisers. Twitter doesn’t have anywhere near the audience or data that Google and Facebook do, so its pitch is around the ever-timely topic of brand safety and the quality of its audience. Twitter says its inventory from hand-picked publishers like BuzzFeed, AOL and The New York Times is brand-safe (more convincing) and that people are in a discovery frame of mind when they’re on Twitter and hence more receptive to advertising (less convincing). It’s still a tough sell. The jury’s still out on whether people are going to Twitter to watch live video and want to see ads there in the first place. Most importantly, the audience and data Facebook possesses has some buyers asking, why use Twitter at all? — Lucia Moses
For some content partners, Snapchat Discover is marketing
TV networks have been active about doing original content deals with Snapchat, mostly to produce original daily and weekly shows for Snapchat Discover. Publicly, these companies will say that Discover shows provide them an opportunity to reach younger viewers who are no longer regularly watching linear TV — and to some extent, that’s true.
But privately, some executives have also admitted a more cynical version of that answer: Snapchat shows are for marketing and public relations and not something these companies expect to make a huge profit on. One executive at a company with an original content deal with Snap said he does not expect to turn a “profit.” “We have an 80 percent chance of breaking even on this deal,” he said.
A big reason for this is that Snapchat evenly splits ad revenue for shows inside Discover — and does not provide funds to cover production costs. With Snap struggling to fill ad space inside shows, it’s difficult for media partners to profit.
“But we will do it for PR and marketing,” said this exec. Because there’s still media value (with advertisers) in saying that you’re doing interesting stuff on Snapchat Discover. — Sahil Patel
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