Fresh off the acquisition of PopSugar last October, Group Nine Media vowed to turn a profit in 2020 – putting Chief Revenue Officer Geoff Schiller, a PopSugar transplant, in charge of finding the advertising dollars that will bring the media organization into the black.
A good amount of those dollars will come from video advertising.
While PopSugar had a strong Instagram video presence, Group Nine Media also works with every other social video platform, including YouTube, Snap, TikTok, Twitter and Facebook.
The challenge is getting advertisers to shift their linear dollars to social video publishers, not CTV apps.
“It’s a mindset shift to think they are co-equal,” Schiller said of the two video advertising formats. “The better we tell the story, the quicker we get to profitability.”
With a patchwork quilt of non-overlapping brands, the sales leader is also faced with finding a new unifying force they share. But what could a women’s lifestyle brand, an animal lovers’ site, a science brand, news brand and food-and-drink recommendation site possibly all have in common?
“What binds these brands together is optimism,” he said.
Schiller talked to AdExchanger about his plan to turn a profit and the state of video advertising in 2020.
AdExchanger: What kind of headway are you making in gaining access to the type of video budgets allocated to linear TV?
GEOFF SCHILLER: The dollars are starting to flow in greater quantities. We are seeing more and more upfronts. We have more upfronts partnerships then we’ve ever had before. It’s in the low double-digit range number of clients who have committed to upfront dollars with us.
What’s making advertisers want to commit to digital video upfronts?
On a macro level, companies are consolidating to find efficiencies and control market share. And as they find those efficiencies, there are fewer people making the same decision today vs. yesterday. You see a gravitation toward fewer and bigger because they don’t have the time, and they now have double the work.
As TV programmers undergo the same shift as print media – where nonlinear video ads often are valued less than full screen, linear commercials – how do you think they’ll weather the change?
Video translates well no matter the device you’re on. It can be a three-inch screen or a 50-inch screen. The printed word doesn’t travel well. TV companies are well-positioned to capitalize on over-the-top and DTC businesses because the IP can flow super easily. NBCUniversal has 16 shows on Snap, they are launching Peacock, and their own broadcast and video.
But the same way advertisers don’t value 300x250s the same way they value print ads, TV buyers often don’t want to pay the same rates for shorter ads on smaller screens.
Yes, they may not want to pay the same for a different size screen. But I do think that as decision makers age up and are more used to consuming their content across multiple platforms, CPM will go up or surpass [traditional TV ads].
But the problem we’re really boiling down to is media mix modeling at clients that in some cases are 30 years old. What I’ve heard from a million clients is, “Our model says XYZ.” They see that, no matter how they input it, [the TV] format works. That’s an evolution. As you have new CMOs move in, and a gravitation away from procurement, you’ll see more openness to change. Until that changes, it’s a hard hill to climb.
Video seems to be a greater focus at Group Nine compared to PopSugar. Are you prioritizing selling video ad formats?
There was an equal focus on video, just on different channels. PopSugar was all on Instagram Stories. And Group Nine was diversified across basically every platform. We’re seeing Group Nine push into Instagram Stories, and PopSugar is hopefully going to have an increased footprint across all platforms. These are two companies that merged through a position of strength, and the video expertise is very complementary.
What’s surprised you so far pitching the combined portfolio?
We’ve been in the position before where the advertiser says, “We loved your idea, but we went with somebody else.” Now we’ve been able to see all the business we didn’t get that Group Nine did, and why. The why makes you stronger.
What are the common reasons one brand lost a deal to another brand?
It’s really been the social scale across platforms where we lost and Group Nine legacy brands won. They had the ability to reach a large amount of people at scale. Creative is subjective, and that’s always an issue, whether we were stand-alone or together. We told really compelling stories, just not at the same social scale as Group Nine.
Luckily, it wasn’t price. The hardest thing to do as a sales organization is go up in pricing. This was a business that commended premium CPMs, and robust investments on behalf of brands.
What will inform future acquisitions at Group Nine?
Consumers love brands. We are a house of brands.
Our litmus test is, “If you could acquire a business for free, would you want it?” If you say no, you shouldn’t take it under any circumstances.
If you’re consolidating just to build scale, and you’re not thinking about what you’re actually delivering to consumers, that’s a fool’s errand. A lot of business leaders are looking purely at spreadsheets. I think there’s going to be a chasm between purposeful acquisition and purely economic acquisitions.
How are you thinking about revenue diversification – and the conflict that poses around brand licensing?
This is not a new trend. It’s not revenue diversification, it’s IP diversification. Marketers are used to it. But our strategy going forward is to think about non-advertising category-led brands. Retail is our No. 1 category, so in areas such as retail, beauty and CPG, we want to [introduce] the brand into areas that are the right fit, but also so there is no potential whiff of sales channel conflict. We want to be friction-free.
This interview has been edited and condensed.