How 10 CROs Are Navigating Advertising Uncertainty

In the ongoing attempt to determine whether the U.S. economy has entered a recession, analysts have frequently turned to the advertising industry for clues, as its health often telegraphs the direction of the wider economy. But as recent tech quarterly earnings demonstrate, the digital advertising ecosystem is fractured, with platforms, publishers and brands all experiencing wildly uneven distributions of contraction and growth. So, to better gauge the state of the media ecosystem, Adweek spoke with the chief revenue officers of 10 premium publishers to discuss the advertising trends they have seen, how they are responding and what they are forecasting. To enable the executives to speak candidly about sensitive financial matters, Adweek has decoupled the insights from the companies and individuals who provided them. Like other economic data of the moment, the perspectives the executives shared often diverged, and in some instances they even contradicted one another. But a number of common denominators emerged. For example, nearly every publisher admitted that economic headwinds have led to the reduction, postponement or cancellation of at least one campaign. To help arrive at a clearer picture of the consensus trends affecting digital ad revenue, the key findings from the conversations have been collected and presented below. Deals are taking longer to close Across the board, chief revenue officers shared that deals in the pipeline are taking longer to convert. The uncertainty of the market has led many media buyers to adopt a wait-and-see approach, holding onto their budgets until either a deadline or insight compels them to act. This has required publishers to “win twice,” according to one executive. With the stakes as high as they are, publishers have to convince multiple sets of stakeholders to secure their business. “Recently we were working on an RFP for two months with a huge client,” said one CRO. “They gave us conflicting feedback—and now they’ve decided to re-brief everyone and start the whole process over again.” This Initiative Aims to Help Advertisers Fund Journalism in Times of Crisis Compounding this, several executives cited layoffs and the great resignation as a cause of continued delay, as new marketing staff have opted to review the strategies of their predecessors, creating redundancies and lag. “You could get a $5 million commitment, but then the next day the guy loses his job,” said one CRO. “Then when someone new comes into a position, they want to review everything.” To speed up the process, some publishers have begun working on campaigns before the contracts have been signed, a risky proposition but one that builds in a cushion. The trend toward fewer, bigger, better has accelerated Marketers continue to prefer striking larger, more complex deals but with fewer partners—a trend that the pandemic accelerated and the current slowdown has only exaggerated, sources say. "There is definitely a trend toward working with a single partner on a campaign, which is related to budget tightening and resource limitations on the brand side," said one CRO. "If we’re doing something custom, we are streamlining it in terms of the number of people we work with." This has led publishers to devote more resources to securing their most valuable advertisers, a strategy one executive referred to as “retreating to the core.” The tactic is driven by a scarcity mindset: If a brand will only work with one publisher, there is no reward for second place. In response, several executives have added additional customer success staff to their sales teams as part of a larger effort to hand-hold valuable clients. Others said that they have increased their willingness to collaborate with brands to ensure the performance of their campaigns. Pauses and cancellations, but not at scale Nine out of 10 publishers told Adweek that economic headwinds have impacted their advertising business in some capacity, ranging in severity from one postponed campaign to a 20% decrease in year-over-year advertising revenues. Most experienced soft second quarters, especially June, July and August, while others saw their weakest months at the beginning of the year, in January and February. Several CROs cautioned that early 2023 does not yet look promising. Media buyers are still asking us to bring them big ideas for the latter half of the year.Publisher CRO The only publisher spared any downturn is one that operates a high-intent advertising model, a structure in which readers find their way to niche content through specific search inquiries. Nonetheless, when it comes to tangible business performance, executives said that the perception of a recession has so far outstripped the reality. Most have seen consistent, if occasionally meager, year-over-year growth—and the majority of executives also expressed optimism about the fourth quarter, despite many having less pre-booked revenue compared to historical precedents. “Overall, our revenues are in line with last year,” said one executive. “And last year we had explosive growth, so success this year is just staying in line with last year.” To convert, publishers offer data, performance incentives and guarantees In a down cycle, marketers will naturally gravitate toward performance-based products as they experience pressure to demonstrate a return on ad spend. And while most say that ad budgets have yet to contract, some publishers have already begun sweetening proposals in a bid to shore up their appeal. One executive said they have been offering to incorporate proprietary data into campaigns to boost the efficacy of their campaigns, while another said that they have been structuring deals such that a greater percentage of their payout is based on performance. One plans to introduce a guarantee model in the coming weeks, which will run a campaign at no cost if it fails to meet performance thresholds set by the client. But overall, only a few executives reported seeing the number of their custom campaigns dwindle, a data point that many found encouraging and borderline surprising given their expensive price tags, onerous cancellation terms and long development time. “Custom content has shown over the last few years that it’s actually pretty resilient,” said one CRO. “If somebody has a stomach ache, you can instantly turn off your programmatic or platform spend, whereas the premium content that we create for brands is harder to cut so abruptly.” Diverse ad products accommodate budgetary constraints Although most media buyers have yet to cut their budgets, they have become more conservative in their spending, multiple sources said. In order to accommodate these clients, publishers have more regularly touted the diversity of their ad products, which can offer a more affordable means of achieving similar KPIs. One executive said marketers have begun to prefer “tried and true” products and channels, a contrast to the more experimental mindset that thrived during the chaos of the pandemic. Specifically, channels such as audio and premium programmatic have become more popular, and some clients have opted to re-use previously created custom content rather than pay full price for new material. But while the slowdown has stoked publishers’ anxiety, the steady inflow of RFPs has buoyed their spirits. “Media buyers are waiting to see what comes out with each new economic report, which is challenging,” one executive said. “But they are still asking us to bring them big ideas for the latter half of the year.” Ad Agencies Can, and Should, Do More to Support Journalism

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'Retreating to the Core': How 10 CROs Are Navigating Advertising Uncertainty

In a wildly uneven economy, these common denominators offer clarity

Mark Stenberg

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