Don't Throw Baby Out With the Advertising Bathwater

There are two media markets, and their opinions are fundamentally different. On the one hand, you have those who spend too much time on Twitter. On the other, you have those that are healthy (ignore that hell hole that is Twitter, my addiction). And if you talk to them about advertising, it's different.

But first... A word about our sponsor, House of Kaizen.

There is a lot of talk in the market about subscription businesses. Netflix had its first bad quarter. Inflation is rising. Will growth for subscriptions slow? How can we overcome this and continue to grow our business? 

If you’re on your own, these questions might seem daunting. But if you’re a member of SubscriptionWorks by House of Kaizen, you’ll be armed with the information you need to ensure your subscription business continues to thrive. 

One example of this information? 

Karl Wells, Chief Subscription Officer at Dow Jones, will be sharing his experience in a SubscriptionWorks members-only AMA coming soon. Dow Jones has seen incredible growth in its subscriptions over the past few years (while collaborating with House of Kaizen), and Wells will have unique perspectives to share.

Don’t miss it. Apply to SubscriptionWorks today and mention AMO for special price consideration.

Now let's jump in...

***

As I said above, I spend far too much time on Twitter. And it seems all anyone can talk about is the "fact" that we're in a recession. Brian Morrissey has a good piece on it, lamenting the good times. Adam Ryan also has an article about the recession topic (I'd like to link to it, but I can't because it's not on the site).

It seems that recession is all anyone can talk about all of a sudden. I'm not smart enough to know whether we're in a recession. But it has people spooked. And to some extent, it's not surprising. Marketing is one of the first budgets cut when businesses need to start hoarding cash.

But it's not so black and white. Take, for example, GovExec. I interviewed GovExec's Tim Hartman last week at the Omeda conference. Recessions don't affect his ad business as much because the government tends to step in when things turn sour. The government stepping in is another way of saying that it spends more, with that money needing to go somewhere. And his advertisers are trying to get a cut of that government pie.

And even with the big tech companies experiencing some tough times in the market today, it's not so black and white. Look, for example, at what Uber's CEO, Dara Khosrowshahi, said in an email to staff on Sunday. CNBC has the full email:

There is only a single sentence about marketing in the entire memo, and, even then, he refers to it as "least efficient marketing."

And that's pertinent because I think it points to the reality of advertising and recessions. The Great Recession lasted from December 2007 until June 2009. And spending declined. According to eMarketer, in 2008, total ad spending in the United States was $176.46 billion. It dropped 17.5% in 2009. But it was not as harsh if we look at digital ad spending. Here, eMarketer has an interesting thesis:

Emphasis mine. Read this and then look at what Khosrowshahi says. The reason digital held up alright is that marketers could track performance. And that's basically what Khosrowshahi is saying when he refers to cutting the least efficient marketing.

Now, let's look at what the public media companies are saying about their Q1 advertising revenue. First, we have The New York Times:

And then there's News Corp:

Both saw significant growth in advertising revenue in Q1. We could say, "yeah, but that's Q1. We're already into May." And maybe that's fair. But I think there's something else at play here.

If a recession hits, we will see a flight to safety. And in marketing, that means a flight to what works. And when it comes to audience quality, The Wall Street Journal (a big part of News Corp) and The New York Times are both quality.

This is why I mentioned the two different media markets up top. For many Twitter-first media folk, this possible recession is the end of the world, and, in their opinions, advertising is done for. However, for many of those that are just hunkered down on their business, it's not causing them much agita.

At that Omeda conference, I mentioned the possible recession to one operator. And he said, "it does me no good to spend too much time thinking about something I have no control over. So long as I provide a valuable audience to my partners and have enough cash in the bank, we'll be okay."

Is this operator naive? I don't think so. While I anticipate ad spending slowing down if we hit a recession, we have to be careful not to throw the baby out with the bathwater. Last year's exuberance was intense. It was arguably the most fantastic ad market we've ever seen. But a lot of dumb money was being thrown around. Companies with sky-high market caps were spending on everything.

Now, though, we will see the least efficient marketing get cut. The ad spending that doesn't get cut will be directly tied to performance. So, if there's anything you can do to prepare for a recession, focus on quality. Ensure that you're providing the highest quality data to your partners, focus on ads that really perform, and remain competitive.

The last thing you should do is panic and make harsh decisions. Even during recessions, businesses need customers. And advertising is how they get said customer. Budgets may get trimmed. But you can't control that. So, focus on what you can control. And make sure you have cash in the bank.

Endeavor completes two acquisitions

In separate releases published over the past week, Endeavor Business Media announced two acquisitions. First, it announced that it had acquired Putnam Media on May 2nd:

Then on May 5, it announced that it had acquired Microgrid Knowledge:

Terms of these deals were not disclosed. Endeavor has been incredibly busy this year. This year alone, it has also acquired Construction Business Media, Data Center Frontier, Interior+sources and BUILDINGS magazines, and ISE Magazine and ISE Expo. Like I said, a busy year.

The reality is that the b2b world is unbelievably fragmented. But what Endeavor is doing here is smart. It brings together related publications to help it expand its audience profile across multiple niches. And its a playbook that can work across any industry. Right now, Endeavor isn't in the retail space, for example, but you could easily imagine it expanding into that by acquiring any number of niche, retail publications.

I would be shocked if this is Endeavor's last deal of the year. In a world of fragmentation, Endeavor is looking to centralize as best as it can.

Thanks for reading today's newsletter. Become a premium member to receive AMO on Fridays as well as access to the AMO Slack channel. Have a great week!