As he prepared to speak Wednesday on his first Advertising Week panel since becoming Fox Networks Group’s president of advertising revenue in May, Joe Marchese warned attendees that some of his thoughts about the industry would be “controversial.”
And Marchese didn’t disappoint, using his two Advertising Week sessions—speaking with Nielsen about innovation and waste on Wednesday and with FX about comedy on Thursday—to give the industry a preview of how he plans to use his new role to shake things up and to challenge many traditionally held beliefs. For starters: ad-blockers, Marchese said, “should exist everywhere.”
This industry disruption is exactly what Fox Networks Group president and COO Randy Freer was looking for in his next ad sales chief, and part of the reason why he took eight months to fill the position. “This isn’t a 12-month or a 24-month decision. This is really a three- or five-year look at where the business is going,” Freer told Adweek earlier this year.
As the only major ad sales chief who spoke at this year’s Advertising Week, Marchese (who gave Adweek an early look at his new approach to the job in June) had the spotlight to himself, and he made the most of it. Among his biggest proclamations, which provided insight into his new approach as he evolves Fox Networks Group’s ad sales strategy:
Ad blockers and ad-free programming tiers are actually good things.
Much of the industry is decrying ad blockers, and is worried about new ad-free programing tiers like his company’s FX+, which launched earlier this month, but not Marchese. “I’m pro-ad blockers and pro ad-free options. I think they should exist everywhere, mostly to wipe out the junk that’s in the industry running in the background,” said Marchese (though he did tease FX Networks CEO John Landgraf about FX+ on Thursday, asking him, “Why are you trying to put me out of a job?”).
“These all exist because somewhere as an industry, we forgot that your CPM rate is somebody else’s time. We’ve tried to depress CPM rates as much as possible by spreading it as thin as possible, and it’s not a fair trade anymore. My goal is to get people their fair value for their time, and see if we can’t fix the model.”
Shonda Rhimes’ leaving broadcast for Netflix should be celebrated.
When Shonda Rhimes, announced last month that she’d be moving her production company Shondaland, and all her future shows, from ABC to Netflix, many saw the news as further proof of linear television’s inability to compete with its new streaming rivals. To Marchese, it was a cause for celebration, and a much-needed wake-up call that the industry needs to change its legacy thinking and approach to remain competitive and relevant.
“I might have been the only person truly celebrating that day. One, because I no longer had to compete with ABC/Shondaland for ad-supported [revenue], and also, because it was an example of going to every advertiser and saying, ‘There is one more storyteller that you can’t put your ads into,’” he said. “It’s one wake-up call after another to the industry.”
Legacy pricing is the industry’s “biggest problem.”
Marchese came up in the digital world, and now that he’s overseeing linear as well, he has found that “everything is based on legacy impression pricing,” which he calls “the biggest problem the industry has. … Why is a cable impression worth X and a broadcast impression worth Y, when a 100,000-view YouTube video is worth the same price as a million-view YouTube video? Legacy pricing, that’s it.”
Marchese explained people are only transacting on 18- to 49-year-olds, because that’s the demo that advertisers base their buy on. The problem is: brands aren’t always seeking that broad of a demo for every ad they buy.
“Why? To get a cheaper price for all your impressions. We all know that. It’s like an open secret, a thing people don’t say in rooms,” Marchese said.
While it used to be permissible to have “some waste in the market,” there are too many options for consumers to avoid ads these days, whether skipping them on DVR or buying Hulu’s ad-free tier. “So what we should be doing is saying, okay, let’s be honest. This is what we’re actually trading on. If you can get me to here, I can pay this, if you get rid of this many ads.”
Buyers should stop saying they’re paying “more for less” each year.
“The worst argument I hear each year is, we are tired of paying more for less. It’s cost per thousand [CPM], you’re paying more per thousand,” said Marchese. “But the problem is, there’s less time. People’s attention is worth more than it has ever been, because there are more things to watch than ever before. There’s a compression on number of impressions. … The industry would like to have a place to put money. We’re all guilty of it, even the publishers, who are like, well, I guess I need a bunch of these crappy impressions to make sure I have more inventory. And we all do it.”
Brands should know when to stay in their lane.
After Landgraf talked about the difficulty of making premium shows, and FX’s approach to making series that will be “timeless” and not just “of the moment,” Marchese said that sometimes advertisers will tell him, “‘We’re not in the paper towel business, we’re in the content business; we’re in the storytelling business.’ Which I look at and say, ‘Uh, I’m not sure you really want to do that, because you make paper towels!’ You hear people like [Landgraf] talk about what it takes to break through, to make a story, make it timeless … [but] you need to sell paper towels tomorrow.”