WNIP has just spent the first two weeks of September visiting a swathe of publishers including, amongst others, Hearst Publishing, Bauer Media, Haymarket Publishing, Condé Nast, Immediate Media and other industry specialists including Lotame, Sovrn, InfoSum, YieldMo, as well as WARC, the World Advertising Research Center.
We found an industry cautiously optimistic about the future, but with a firm eye on managing costs and navigating a decidedly uncertain economic downturn. Here are our key TL;DR takeaways based on Chatham House rules and which cannot be attributed to any one single publisher or vendor:
1. Advertising is down but not out
There is no question that the UK advertising market is softening, but as one exec told us, it just means that the rate of growth will slow down – not stop completely, “We estimate the ad industry will still grow in the low single digits in 2023, but the emphasis will be on retaining clients, not new business. Next year will be about growing the clients you already have.”
Over the past three years, the ad industry has shown it is very resilient, flexible and agile – people have become used to disruption and the industry has proved it can successfully navigate changing conditions quickly. Recession will have a sizeable impact but the industry is robust.Ad industry exec speaking to WNIP
Our findings dovetail with Sara Fischer over at Axios who in her latest Media Trends e-briefing writes, “While advertising growth has slowed significantly this year following record gains in 2021, analysts don’t predict the market will crater, despite fears of a recession.”
Keep in mind the global economy is unlikely to go into a recession even if some individual markets will.Brian Wieser, global president, business intelligence, WPP’s Group M speaking to the Guardian
2. Hybrid office work is here to stay
Rental agreements can account for an average of up to 5% of a large company’s total operating budget and are a “line-item expense that a company can work to mitigate” writes Digiday’s Sara Guaglione as New York City sees media companies downsize office space.
Ditto London, with many publishers and supplier companies introducing a flexible remote work-office hybrid model. Few execs we talked to could see a return to a five-day week, office environment. Indeed, the abiding impression was a sense of relief at being able to enjoy a better work-life balance whilst simultaneously cutting fixed costs.
How the hybrid model will unfold isn’t yet clear – one publisher told us how they had siloed their teams into vertical product niches and then allowed these teams to rotate the specific weekday they would visit the office. This strategy backfired when execs complained that the arrangement played havoc with childcare arrangements.
Another publisher told us how they are planning ‘anchor days’ which involve the entire company attending the office on the same day – the intention is to retain the dynamic, collaborative culture that comes with a full rather than half-empty office. For publishers with unbreakable leases this strategy makes sense, but maintaining a largely empty office is a financial non-starter for most publishers.
3. DEI initiatives
A number of publishers are making startling progress with their DEI initiatives. However, it became clear that publishers with the most success were those that integrated their DEI programs within a wider remit of employee wellbeing, mentoring, and learning & development. One publisher we talked to was ranked within the top 5 workplaces within the UK, and it was easy to see why given the company’s focus on creating an exceptional 360° organizational culture.
Amidst recruitment issues at many companies, one publisher also told us that having a dynamic DEI policy was now instrumental in attracting new employees, “One of the first questions we get asked is what is our DEI policy?”
4. Sustainability is the single biggest issue moving forward
Whilst the current European energy crisis has propelled environmental issues to the forefront, the ad industry has already been moving at breakneck speed on the issue – The Advertising Association’s Ad Net Zero Summit, WARC’s Ad Net Zero Guide, and Advertising Week’s Ad Net Zero podcast all symptomatic of an industry collectively getting behind the cause.
This is being driven by brands themselves who, as part of their own supply-line net zero initiatives, are demanding that agencies and ad tech vendors are not only matching their obligations but also ensuring that publishers are too. Indeed, one publisher told us that a number of brands had approached them directly to know the sustainability initiatives that the publisher had in place before buying any media.
Whilst we see this as a huge incoming trend that many publishers are ill-prepared for, it was also clear that the solutions aren’t cut and dried. One magazine publisher told us they had reverted back to using plastic shrinkwrap because the compostable shrinkwrap they had been using was causing havoc with local authorities’ refuse collection machines.
5. Identity and third-party cookies remain a huge challenge
Just as we found at Cannes LIONS in June – our report is here – the debate surrounding third-party cookies remains as confused as ever. Whilst we were correct in our forecast that Google would push the sunsetting of third-party cookies back another year (or more – just you watch), the ad tech industry and publishing community are no closer to a resolution.
If anything the debate has become even more complex because what works for a publisher of one size might not work for another publisher with lower traffic. Likewise, some third-party solutions were clearly highly regarded yet were criticized because they couldn’t scale up. For large publishers with millions of page views, harnessing their first-party data was clearly the preferred route.
Whatever the publisher size, the key watchword is ‘interoperability’ as well as ‘keeping your options open’ so that solutions can be adapted quickly if market conditions (or legislation) change. One vendor also warned publishers not to confuse identity with privacy, “they are related but are not the same, and demand independent strategies”.
We’d like to thank all the publishers, vendors and industry execs who so graciously gave of their time to spend many hours with us discussing industry issues and challenges.