Shortened Sales Cycles and Cancellation Clauses Stoke Publisher Concern in 2021

While a number of digital publishers are enjoying a plentiful end to the year, the shortened sales cycle, market instability and nervous clients pushing for cancellation clauses mean there is much less in the pipeline for early next year. This is causing some vexation, according to five chief revenue officers interviewed for this story, all of whom spoke on the condition of anonymity as some of what they shared is not publicly known. For one global publisher, revenue for the second half of 2020 is up 22% year-over-year, with still more deals to close. That’s high by any standard. With most of Europe and the U.S. bracing for a second Covid-19 wave, early next year's revenue health is still too uncertain to tell, and the CRO is cautious of being too bullish. “Everything is happening later, that's for sure," they said. "We’re in a positive position, but we won’t know whether that will all come in Q1." Two other U.S.-based digital media executives said that revenue from the last three months of 2020 will balance the books, making up for the headwinds they suffered between March and May. However, they were also concerned that the momentum was not yet stable, as the nation grapples with the pandemic and cash flow could become a concern by the end of March next year. “There is a delay on Q1. Everyone is holding back, wondering if people are going to make real decisions in Q1,” said a fourth digital publishing CRO. “We’ve closed quite a bit, but not what I would have expected from this year.” The last three months of the year are often the best-performing as marketers spend as much of their budgets as they can so they don’t evaporate the following year, coupled with flashy holiday campaigns. This year, pent-up demand, political ad dollars and an extended shopping season have been a blessing for publisher ad revenue. Media Organizations Are Developing Products Faster Than Ever During Pandemic Marketers, uncertain of whether budgets will be cut again, are demanding a faster tempo market. Publishers like The Wall Street Journal have said that campaign timeframe, from conception to launch, has shrunk from roughly three months to four weeks. Thanks to Google and Facebook, where it’s not uncommon for multimillion-dollar buys to be booked days before the campaign launch, this short-termism had a foothold before the coronavirus. Baking in cancellation clauses Digital publishers with a network of brands and diversified revenue streams will win out for their ability to switch content campaigns to podcast, display or video ad spots across titles. As with previous recessions, ad spend leaves old mediums and returns quicker to new ones. Global digital ad spend is predicted to decrease 2% this year to account for 51% of global ad spend, which is higher than previous forecasts, according to Publicis Media agency Zenith. Audio, premium OTT and addressable video saw early surges between March and May. The marketing mix has a chance to reset. Digital ad budgets were turned off quickly between March and May, but rebounded quicker because of the flexibility of digital formats. There's no reason for marketers to secure ad spots for months in advance. That only becomes a real problem when it’s inventory-based versus creative-based, said the fourth exec. “There’s no gun to their head unless you’re offering a discount," the exec said. "We have to rely on sellers selling great ideas aggressively; we can say, ‘I am holding this for you but I have to let that IP fall to other advertisers.’ We sell on the power of ideas and the notion that we cannot sit on competitive pricing for six to nine months.” With clear-eyed memories of earlier in the year, marketers are baking cancellation clauses into their media buys for 2021. “The CMO from one of our bigger clients told me her team is prioritizing that every line item on the media plan has some form of cancellation option next year,” said a fifth CRO at a digital publisher. “While she knows that’s not 100% feasibly possible, they are pushing partners to show the kind of flexibility they are looking for.” One digital publisher lost $300,000 in canceled campaigns at the height of the pandemic. While that’s a drop in the bucket for an organization generating eight figures in annual revenue, when times are tight, it’s not to be sniffed at. Flexible, not vulnerable That leaves publishers wrestling with how to balance offering flexibility without leaving them fully vulnerable to the financial implications of full cancelations. All this puts more pressure on forecasting. The fifth CRO said the company is currently forecasting between four and six months into the future, which is already “an order of magnitude reduction in what visibility looks like.” Publishers are playing to their strengths, demonstrating that they know what their audience cares about right now, investing in surveys and research like The New York Times’ Pivotal and The Atlantic’s Brand Partners. This holiday season will be an extended one as concerns about supply chains and delivery times while people stay indoors has driven more shoppers online earlier. Nonetheless, publishers say the dynamics that characterize the year will persist into 2021: Marketers will be smart and selective with budgets, invest in digital formats and value flexibility. Premium digital businesses appear optimistic about the future, as long as they have scale, brand equity, ad innovation and client relationships to drive businesses forward. “It’s not a foregone conclusion that everyone in the market will win,” said the fifth exec. “But the cream will rise to the top.”