E19 // “Ghosts of Media Tech Past, Present, and Future” Sarah Chubb, Principal at Sarah Chubb Consulting
Sarah Chubb is a media and eCommerce executive with over 25 years of experience building strong and profitable businesses online. She was the President of Condé Nast Digital and of Gilt City and has served as a senior advisor for IAC Publishing and The Daily Beast. Sarah reminisces on the early days of web publishing and monetizing content online, presents her recommended go-to-market strategy for any new media brand in the era of the Facebook/Google advertising duopoly, and shares lessons about leadership and management.
This episode is available via iTunes, Google Play, Stitcher, and other podcast-y apps as well as below via SoundCloud.
I am also trying something new with a transcript of the conversation available as text, below.
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Conversation Transcript
(edited for length)
Paul Canetti: It seems like you have a knack for being an evangelist. What was it like to work at a traditional media company and trying to convince everyone else that the web is important, and we should be paying attention to it?
Sarah Chubb: I got very lucky because my boss for many years just a curious person about technology, and as a result of his enthusiasm, they started very small digital groups at the newspaper division within Condé Nast. I was at my first Condé job at Vogue which has a long heritage in print and was a very fun place to work. But they asked me if I would be willing to move to run the digital division since I came from the business side, so I moved into a tiny scrappy team.
If we were going to be representing Condé Nast which was the home of Vogue and GQ and these amazing iconic brands, the experience couldn’t look bad and photos took forever. You couldn’t actually make it a satisfying experience, so we fiddled around with what would an ad look like. How would you even serve the ad? This is before ad servers even. It was all just manually coded. It was ridiculous. We didn’t even know what to charge. I would have these fights with ad agency people that I’d known for my whole career around what the CPM cost would be. We didn’t have any stats, so I couldn’t really tell you how many people saw your ad and everything was double counted anyway. But it was fun. It was really fun.
And yet, everything with the early Web happened really fast. Internet connections were poor, so you couldn’t put too much of a load on the page, So there was a central question: how do we connect with the reader with this new medium? At the heart of it: you’re building a relationship. That’s true in print. That’s true in TV. This makes selling an ad easier because the advertiser understood the dynamics of the relationship with the customer, the editorial and their ad. Today: everything is programmatic. Context doesn’t matter.
I feel like that’s actually kind of common when you have these new media paradigms: no one can figure out who’s supposed to pay who. It’s the same chicken and egg thing you hear now about Facebook: before we have the audience, you need the content and vice-versa.
Even 20 years later, many traditional media companies still haven’t figured out digital while legacy revenue channels continue to decline. Why didn’t those early opportunities grow to the point where they eclipsed traditional content forms?
Legacy media companies of any size have figured out the margins and the returns on their traditional media, and the margins are really good on print. Believe it or not, print is still minting money from a profitability standpoint. It’s hard to find a startup, digital media company that’s profitable because Google and Facebook took all the revenue growth. Now, everyone else is just scrambling for what’s leftover.
Even a retailer like Amazon is positioning itself as within the advertising ecosystem. Brands can get super targeted with promoted retail ads since Amazon has the user search data. Now, they’re striking direct relationships that with CPG brands such as Tide and launching branded products such as Dash. There is little brand risk since CPG sells directly to wholesale anyway.
So compare that to a traditional branded placement. Tide would battle for my mindshare so that I’ll consider their product when I’m in the grocery store a week from now. But now, they get the logo on my laundry machine, and it’s actually a button that when I press it, I get Tide delivered to my door.
Exactly! The lines between advertising and marketing are blurred. It is dizzying for all of us in the media business, and it’s equally hard for the buyers. All of these things are expensive to figure out. It’s still expensive to develop and maintain a really good digital product of any sort, and now, you’re getting a much lower return than you used to. So the margins are razor-thin. The leading companies are the ones that are trying to figure out how to live in both worlds in an authentic way. For example, I think the New York Times is a good example. This year has been amazing for their journalism, and they have been constantly trying to push the envelope to the degree where consumers know their brand is about journalism.
Which people can access anywhere on their mobile device.
Mobile is so fantastic for the consumer, and it’s been fantastic for Google and Facebook. The percentage of time spent on Facebook on mobile has completely eclipsed desktop. My 19 year old daughter; she’s on Facebook off and on off and on all day and it’s always on her phone because that’s how she does anything digital. The margins for online ads were already challenged, and now you have less screen real estate. Ads are bad on mobile. Then Google introduces AMP, which completely pares down the content to load faster. If there are any ads, there are very few of them. So your delivery numbers just completely plummet. You weren’t even aware that they were doing it, until you started looking into what was going on with your inventory and backed into the cause. Suddenly, the projected traffic to make my monthly targets has been cut by two thirds.
Do you feel like you have a duty to sort of come in with a life raft and say, you know, the writing is on the wall and being a media company is just too hard in today’s climate?
I love the media business and I don’t think it’s dead yet. My advice to media companies is to focus on building your relationship with your core audience and accept there’s not an answer for everybody. What could you be doing for that customer that would align properly with your brand and that you can make some real money from. So one of the things that you’ve seen pretty much every magazine company out there do over the past two years is events. Not every brand should be in the event business. Not every consumer wants to go to a lot of magazine events. However, there are opportunities to bring the reader into different kinds of experiences where they spend money and also to bring in a sponsor.
My other advice is to start identifying efficiencies and developing new revenue streams using data. The idea of generating content that’s personalized to your audience based on data is table stakes for digitally native media companies. When Facebook first opened the platform beyond college kids, they didn’t have an ad product because they didn’t have any kind of data targeting. Now that runs their entire business. There are products to be built or services to be offered to your customer that should come from the kind of data you currently have.
Vogue in pre-Internet days was charging a lot of money from advertisers. It’s not so easy to turn around and say well, actually the real customer is the consumer, and you charge them a lot of money instead.
I think that that what you’re starting to see, and I think will continue, is higher prices for quality magazines where a brand can command a premium, and the consumer will pay it. You may see decreases in frequency for a magazine like that, but the production quality increases so they can charge a premium. The New Yorker is actually a great example of this. Publishers have to dig their way out of the user expectation of free content since they lost the ability to generate meaningful subscription revenue growth.
I actually check in with my kids on stuff like this because you read that Millennials don’t want to pay for anything. That’s not quite true: they’ll only pay for things that are good. My 23 year old daughter buys vinyl because she likes the sound, and the records are designed to be beautiful. So she’ll buy an expensive vinyl edition of something because it’s beautiful to look at; like a piece of art you’d want to hang it on your wall when you were done playing it. This is the same generation that grew up with a $.99 download.
The last thing that I want to ask you about is let’s say that you could start a media company today with the right people, the right expertise, and you are well funded. You don’t have the baggage of yesteryear: you are launching in 2018. What would that company look like and what’s the ideal business model going forward?
I think you could build a nice tidy profitable media company if you went very vertical in an area that where there was passion around it and find relevant sponsorship partners who were in that vertical who wanted to align with the mission. I really believe what matters the most is the customer acceptance and passion piece of it. For example: women’s sports. I have gone through the recruiting process for my daughter who plays D3, and we looked at D1 and the money that’s in that world is with the parents. You can’t charge a 16 year old girl who wants to go to college and play soccer, but there are services you could provide to both the coaches and the parents.
The point is there’s money in that ecosystem. There are big global sponsors who are interested in having a foothold early on and many of them already pay a lot of money to be a part of these training camps. If you can create value for the kids: her younger sister is going to want to sign up as well. The key is to build something that actually works its way into the fabric of something people care about, but I don’t think you can do that without having some partners along for the ride.
Why don’t brands like Sports Illustrated just create this vertical and do exactly what you’re describing?
They’re trying to run the magazine, and it’s really hard to do. It’s got a different name and it’s aimed at millennials, so it’s just hard to focus. I think it would be very fun to do nothing but focus on that customer, but they’ve got six other priorities and some of them are doing well and some of them aren’t. So then the only thing you can do is hire more people and there goes your margin. It’s hard to actually make a business out of it.
Oversimplifying it, of course, but it’s never been easier to launch a media company. At the same time, it’s never been harder to run a successful one.
