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[on-hold music] This episode of the Rebooting show is brought to you by Kerv Interactive. Kerv is an AI-powered video creative technology that creates shoppable and immersive experiences within any video content.

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Kerv is the only platform that uses machine learning techniques and AI to recognize depth, dimension, and objects within any video in real-time, and more accurately than you and I.

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Using this technology, Kerv can deliver simplified, automated consumer-first experiences that are dynamic and interactive.

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Recently, Kerv launched the Kerv Active Attention Index, which measures the quality of deterministic user actions as they engage with Kerv-powered videos.

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What this means is that you can qualify user attention based on the time spent and the quantity of interactions across a video creative. How can brands, agencies, and publishers leverage this index? Well, I'll tell you.

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To better inform media buying strategies, smarter in-flight creative optimization, deeper content analysis, improved user experiences. And that's just a start.

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You can learn more about active attention and download the free guide by visiting kerv.ai. That is K-E-R-V.A-I. Or request more information by emailing attention@kerv.ai. Thanks so much, Kerv.

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[on-hold music] The meetings that we're having with clients, we're not talking about buy my campaign kinda thing. We're talking about, "Hey, are we gonna do joint brand partnerships?"

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These brands are in this kind of investment mode. They're like, "Are we gonna invest with Hearst?" And that means not we're gonna buy a fall campaign.

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It means, are we gonna work with you for three or four years, and how are we gonna work together? So media companies of the future really have to be set up to be able to address that.

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[on-hold music] Welcome to the Rebooting Show, Riviera Edition. I'm Brian Morrissey.

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This is day two of Cannes. We just wrapped up the second day of the New Attention Economy at the Kerv Cafe.

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We had a ton of great speakers, mostly around connected TV and influencers, including execs from Roku, Vivo, Twitch, and more.

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My favorite line of the day came from media veteran and current VC, Joe Marchese, who said, "What I've learned about the advertising ecosystem is the lack of transparency is where the money is made."

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No comment, Joe, but I think you're onto something.

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The following is a conversation I had with Lisa Howard, who joined Hearst nearly nine months ago as Global Chief Revenue Officer after nearly a decade at The New York Times.

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We touch on a bunch of topics in this talk, but one that stood out to me is how legacy media companies like Hearst have turned out to have more steady and resilient business models than the digital pure plays, as evidenced by the fate of BuzzFeed, Vox, Vice, and others that were supposed to replace the likes of Hearst.

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But often, the lesson from that era is that scale is dead. And of course, anytime anyone says X is dead, you can be sure that it isn't actually deceased.

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Scale still matters, particularly when it comes to the use of audience data, as Lisa and I discuss. I hope you enjoy this talk, and please send me your feedback. My email is brian@therebooting.com.

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Now here's my conversation with Lisa. [on-hold music] [applause] Joined by Lisa Howard. Lisa is the Global Chief Revenue Officer. Correct? Global? Global Chief Revenue Officer at Hearst.

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You've been at Hearst now for almost nine months, eight and a half- Yes... months. You were at The New York Times, you know, for a while- Many years. Mm-hmm... there. And you've had a long hi-history in media.

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First of all, what sort of attracted you to Hearst from, like, the Times? I mean, the Times was like, you know, doing amazingly. Yeah.

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And I think it's become one of the sort of standout examples of a quote-unquote traditional or quote-unquote legacy business that was able to reinvent itself. Yeah. But what did you see in Hearst?

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Yeah, I mean, it's such a good question. I get asked this a lot. The Times was a plum job. It was a great place to be. For me, I saw Hearst in an earlier stage position than the Times.

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At the Times, we'd kinda done the work to digitally transform, and Hearst is starting that work, right? It's a big, huge company. I mean, and I can share a little bit about kind of how big the company is too.

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That might kinda give it, give some- Yeah... grounding. But, you know, we're over fifty brands in fifty-seven countries in twenty-eight languages. I mean, it's a big kind of just our...

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what we call our magazines operation, which includes our digital properties coming- Yeah... from these brands. But the company itself is also quite big. It's twenty thousand employees.

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It's a twelve billion dollar operation. So, you know, real kind of foundation at- Yeah... of a, of a- And uniquely private, right? And uniquely private. So, I mean, that- And owned... I don't know.

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Was that, like-- Was that a attraction in some ways? Absolutely. Because you can obviously take a longer view of things. I mean, we talk about this a lot.

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We think in decades, not quarters, and that's one of the things that attracted me to Hearst.

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You know, the proposition is: How do we take these brands and escort them really kind of, you know, really kind of bring them into the next fifty years- Yeah... of their lifecycle?

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They've been around, some of them, for a hundred and seventy years. You know, it's the, the company itself is a hundred and thirty-six years old, owned by the Hearst family.

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So yeah, I mean, there's real stability in that, and I think that's incredibly important, especially in unstable times. But the, you know, the other things that attracted me to it are excellent brands.

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You think about Good Housekeeping, you think about Harper's Bazaar, you think about Elle. You know, these brands are women's health, men's health, and I think needed now more than ever, and we can talk about that too.

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Yeah. But, you know, incredibly trusted by consumers. So gi-give me the case for that, because I think one of the things, we're seemingly between eras, right?

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Like, there was the quote-unquote scale era, which I think was defined by a lot- Yeah... of venture capital money going into digital publishing. Lot of money went into ad tech. That's over in the harbor- Yeah.

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[laughs]... right in front of us. Hello over there.

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I mean, Joe Marchese right before said, "One of the things I've learned about advertising is that, like, all the money ends up being in the areas that are, like, harder to actually understand," and that's the ad tech world.

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Yeah, yeah. Yeah, they need to k-kinda clear it up- But-... clean it up a bit.

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But I think one of the things is, that I feel like we're coming out of is, like,Everyone has to fight for their right to exist, I feel like now, right? There's no-- nothing is sort of given to you.

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Like quote unquote legacy is like it's fine, it gives you a lot of like advantages out there in the market, but it doesn't give you any guarantees. Yeah.

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Give me the case for the Her-Hearst brands to be relevant now as they were ten years ago. Yeah. I mean, I think it goes to what I just said.

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It's really powerful brands who have relationships and have had relationships with their audiences for over a hundred years, you know, and it's like, what have we learned from that, and what are we gonna take forward from that?

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And so a lot of what I'm working on right now is how do we look at, you know, the opportunity just since we know we are so big, right?

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Three hundred and twenty-five million people globally are reading our digital products. Our print product's a hundred and seventy-seven million globally.

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So how do we take all of those brands and all of those audiences and escort them into this future of real interaction? So I think it takes a couple things.

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It's real digital transformation, and I think we're in a world right now where that means talent, that means new talent.

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We've announced a couple of key hires and a couple of key announcements that speak to directly how you do that, and some of the talent hires are in product, some of them are in data science, some of them are in analytics.

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These are skills that media companies didn't really have muscle in before.

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We also announced general managers that we're gonna be hiring that are gonna be singularly organized around collections of brands, just a couple of brands, and they're gonna be solely accountable to the user in whatever format- Mm-hmm...

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they want to interact with our readers in.

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So if it's digital, if it's print, if it's an app, if it's, you know, anything, we're gonna be thinking about how we're engaging with them across those formats, and the monetization will come after that.

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But, you know, I think the most important thing is having that direct relationship with our audiences, right? And having a direct relationship with our advertisers, and that's gonna help us- Yeah... innovate.

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So I think, I mean, it's called Hearst Magazines, right? Like, I think we can use air quotes like too, right? Right. Because these are brands first, and some of them do not have physical magazines. Right.

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But like, you know, they are still magazines. So just because it's called Hearst Magazines, and I feel like this is a question that's been asked for a long time- Yeah... is how do you change the internal structure?

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'Cause how you organize... I mean, look, we see what Conde Nast has done, like how magazine companies were organized in a previous era- Yep... doesn't work. No. Right?

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But, you know, everyone likes to talk about efficiency, and they use it mostly 'cause they mean cutting costs, but it sounds better. Every media company has to get more efficient, right? Yeah.

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But how do you drive that efficiency without losing that uniqueness that made these brands so valuable in the first place, right? 'Cause you can get to a point...

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I always say this industry optimizes itself into some weird places sometimes. [chuckles] Yes. Particularly when driven by efficiency. Yeah. I mean, I think it's...

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That was one of the first orders of business when I got there, you know, was to really change the structure because we're looking at, you know, a l- a complexity, a lot of complexity.

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And just in the US alone, twenty-six different brands, right? And they had multiple teams, and they were still structured, to your point, around kind of the magazine culture, right?

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So you had a publisher and you had, you know, sales kind of directing a lot of the work, and we had to really reorganize that.

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We had to think very differently and change the structure, and we did it in such a way that it was just we reoriented it. We said, "You know what? Why are we organized around all of these kind of magazines?

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Why do we not organize ourselves around our clients and their industries?" And so we eliminated the publisher role.

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We kind of created teams of teams that were around industry categories, so fashion and luxury, which is our largest, so beauty and wellness, you know, technology. Like real industries- Mm... that trade in unique ways.

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We organized all of our teams around that, and it's not just the seller. I like to say in the magazine world it was about selling a page, right? And once you sold that page, you were done.

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In the digital world, the job just is beginning- Yeah... once you've sold the program. Yeah.

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And so you need teams of solutions people who are out, you know, building those solutions, whether it's, you know, trafficking a campaign or whether it's like managing to make sure that you're delivering on the KPIs, and so it just was a whole new muscle- Yeah...

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for Hearst. And also creating. I mean, you mar- you have marketing services in your organization too, right? For sure, and I think that's a big competitive differentiator for us. Like marketers, it was...

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You know, it's always... Advertisers are always gonna come to brands like us, right? Content brands like premium brands.

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They're gonna come to us for editorial kind of thematic associations, for credibility in areas that they wanna play in, right?

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So the marketing teams were really set up to be idea oriented, idea kind of marketers, and we've had to kind of expand our muscle beyond that, so that's still really important and a differentiator for us.

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And at the same time, we needed to build the muscle around product marketing, right? Digital products.

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So what we're doing in the, you know, in kind of the digital space around marketing the first-party data products that we have.

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We've launched two of them here this week actually, one around a clean room solution and another around really kind of this hybrid of contextual and behavioral persona targeting.

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And so I think the idea is how do we kind of structure an organization, a media company, in a way that serves the needs of our clients now and allows us to give them what they want and what they need and learn from it and continue iterating.

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Yeah. And that's how... Like, it's funny, the meetings that we're having with clients, we're not talking about buy my campaign kinda thing. We're talking about, "Hey, are we gonna do joint brand partnerships?"

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These brands are in this kind of investment mode. They're like, "Are we gonna invest with Hearst?" And that means not we're gonna buy a fall campaign.

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It means, are we gonna work with you for three or four years, and how are we gonna work together? So media companies of the future really have to be set up to be able to address that.

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[gentle music] Yeah. Is there like an example you could point to? Of a specific client that- Yeah. Yeah. That, that's beyond- Yeah, actually...

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like a campaign. Yeah. Actually, I was just in a meeting, and she said I could say this, so- Oh, good. There we go... I think I'm cleared. [laughs] Put you on the spot, so. Eric, Eric, uh, looks fine. Yeah, yeah.

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He's- He's fine. [laughs] He's not cut-he's not cutting off the mic.

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Yeah, no, I was with Gucci this morning, and we have a quite sophisticated data partnership with them, and I mentioned we're launching a clean room solution. It's not scaled yet.

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What we're gonna do is we're gonna kind of overlap, you know, in a clean room, in a privacy, safe way, our, our customers with their customers- Yeah... and learn from that.

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We already have a big kind of affiliated and content-to-commerce partnership with Gucci that both of our companies are really proud of. We also do, you know, straight-up brand advertising with them.

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So the idea is, in what ways are we gonna activate together now because there's so many levers that we can pull at Hearst on their behalf, both with our scale and our sophistication, and it's just about mapping to their need and then building out the solution, and then looking at it and saying, "Hey, honestly, this is what isn't working so well.

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This is what is working pretty well," and going forward with that intention because it's just not you either won a campaign or you lost a campaign anymore. It's like, how are we gonna get this right? Yeah.

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You know, we always like to talk, like, in sort of simplicities about like... And s- you've mentioned scale, and scale is one of those things. I probably have been guilty of it, like, scale is dead and stuff like this.

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It sounds all good, but of course, it's untrue. Yeah. Because scale still matters quite a bit. Give me why it matters in media.

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I mean, scale matters so that you can be relevant, you can learn, you can understand, you can be relevant for...

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If it's right message, right time, right place, and, you know, we need to get to the right audiences, right? And all of our advertisers, we have a huge variety of advertisers. I mean, our brands are as diverse as...

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We have home brands. We have food brands. We have sports brands. We have fashion brands, and, you know, there's very little duplication between all of those audiences.

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And so in aggregate, we have huge scale, but we can actually break that down or kind of expand it out as needed based on how, you know, targeted a client wants to be or how good we can be at making their campaign relevant.

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Scale absolutely matters. Uh, you know, I think we're focused less on it these days, I'll say, because the thing that we're leaning heavily on at Hearst is that direct relationship- Yeah...

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that direct engaged relationship with our customer, and we know we've had it for a long time, but digitally, how are we nurturing that? Yeah.

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And how are we then gonna be able to unlock for our advertising partners the understanding of that audience?

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And if we can be really insightful about what our customers' interests are, then our clients are gonna do better. Their work is gonna work better. Yeah.

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It's one of those, like, nuanced things where it's so important to have direct connections with audiences, and I think that is usually thought of as the opposite of the scale approach.

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I think when people say scale, they're talking about drive-by audiences that you got from, like, Facebook a lot, you know, s- Google too, maybe less so in this, uh, but that's what they're talking about when, like, you know, scale was, like, flimsy connections.

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But when you're gonna, like, activate against this audience, it's only Tuesday, I'm talking Cannes.

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[laughs] You need scale because without scale you don't need a data clean room to figure out, uh, the matches between Gucci's data and your data 'cause you don't have enough data- Right. It's not gonna matter...

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to like do much matching. [laughs] Yeah. Two people and a cat is just not enough to be competitive in this- Yeah... world.

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But I do think that there are lessons from that scale era of venture capital publishing because I think these companies were set up as the successors to Hearst, to Condé, to The New York Times, and when we're looking now in twenty twenty-three, well, that bet di-didn't pan out.

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Yeah. It goes a, a step further than that even. It wasn't just that some of the pure plays thought they could kinda hurry up and get there by chasing scale and playing all the tricks.

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It was also that their bet was in front of the ad tech port, here we are in Cannes, like, they made their bets on this idea of programmatic, and they did not nurture direct relationships with brands probably as much as they should have, and I keep hearing them over the last, like, twelve months.

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You know, they're all like, "We're really gonna focus on direct, our direct relationship with our advertisers," and we've already been here for a hundred years.

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There are a couple things I should say about kind of my belief system in advertising- Mm-hmm... having been doing this for thirty years. One is relationships absolutely matter, and in the a-Ad business, it's critical.

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I mean, you've seen it. Yeah, yeah. People know each other. People, you know, remember things and- That's one of those cliches that's true. So true. It's a cliche for a reason. [laughs] So true. So true.

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And, you know, I think relationships matter.

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A- and the second thing that I've really learned is that, you know, for all the arguments and all the kind of goose chases we've been on around what's the next great revenue stream, the reality is advertising.

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Advertising is always gonna be number one. Subscription, you may have a business where subscription is bigger, but advertising will be the most profitable.

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You looked at the last three or four years of media companies, and they're all kind of coming back to advertising in the last year, and that's because it is stable. It is an engine, and it is profitable.

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There are other businesses that we're in commerce, we're in events, and actually I can talk about commerce in a moment. But- Yeah... but we're in all these other... We're in memberships and subscriptions.

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You know, these areas matter, but it's about having kind of that full plate rather than saying, "Oh my God, there's gonna be this one next thing that's gonna save me."

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Yeah, and it's always a portfolio, and, like, the portfolio, like all portfolios, change, like, based on the environment.

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And like you said, I think that people were probably-- didn't have a lot of treasuries probably in their portfolio until recently. [laughs] Yeah. And now all of a sudden people are like, "Hey, treasuries, love it."

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[laughs] And I think similarly, you know, with the digital economy, people probably over-indexed a little bit in subscriptions. And we saw,

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like everything, this is an inpatient world, and everyone scrambled to get subscriptions. And the way you scramble to get a big top line of subscriptions is you offer the dollar discount. Yeah. Yeah.

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Like I see the dollar... I mean, you know how in a magazine- I do. I know it well... obviously that works. And, you know, the problem is now you start to realize, like, wow, ads are-- it's a high margin business- Yep...

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that's pretty good. And like, you know, subs, you know, you hit a wall, and you're seeing it with Washington Post has been going in reverse. It just gets harder. Yeah. And, and I will say it doesn't mean, like...

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I'm not negative subscriptions. I think there's this beautiful unlock that you can get if you have a truly engaged audience that's willing to pay for something. You know, that's the background. That's where I came from.

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But I think what we learned in my last, you know, job and that I'm carrying over here, you know, is how do you, like, marry those two things? How does one benefit the other, right? Yeah.

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So, like, how do we understand our audiences both to make us better at getting them to convert to a member or a subscriber and to make our ads more performant? Yeah. Because it's not like either/or.

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It's one of those things, if you have a strong subs business, it should feed a stronger ad business- Exactly... because you will know more about your customers. You have a direct relationship with them.

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I mean, over the years, everyone would talk about... And this is the sort of scale thing when I think about it. People would talk about these numbers that on the face of them were, like, absurd. Yeah.

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Like, it was just simply absurd. I remember a vice slide at some presentation in Europe that, like, literally it's like we're reaching, like, one in three people on the planet every, like- Yeah.

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And I was-- So I'm like- Yeah. "Well, that's absurd." Yeah. Like, that's obviously untrue. You started to kinda become numb to the numbers. [laughs] Yeah. Yeah.

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Well, then until you started to think about them, and you're like, "Wait, of course this is not true." Yeah. This... Like, you can't really believe that. Yeah.

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And I think that's where, you know, things went a little haywire. [upbeat music] Thanks so much for listening, and we will be back tomorrow actually with a new episode. And thanks so much for listening.

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Thank you to Jay Sparks for producing this podcast. If you have a podcast that you're considering making, you should check out Podhelpus and what Jay can do for you. Go to podhelp.us.

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