NYT’s New Ad Chief: Digital Publishers Need More Than Ads To Survive

“The Sell Sider” is a column written by the sell side of the digital media community. Sponsor Message [Ready to go Server-Side?]( [Download your guide to the transition now]( [www.rubiconproject.com/the-move-to-server-side-header-bidding]( [AdExchanger Heading] “[The Sell Sider](” is a column written by the sell side of the digital media community. After this exclusive first look for subscribers, the story by AdExchanger’s Sarah Sluis will be published in full on [AdExchanger.com]( on Wednesday. Many digital publishers have had nothing but bad news to share this Q4 – from golden child BuzzFeed [laying off]( staff to Mashable being sold for a bargain-basement price. But The New York Times is telling an upbeat story about its business with a new storyteller at the helm: Sebastian Tomich. Tomich, the company’s former SVP of advertising and innovation, began overseeing the global advertising and marketing solutions group in November, filling a leadership hole left since June when CRO [Meredith Kopit Levien]( became COO. Since joining the Times in 2013, Tomich has helped launch T Brand Studio, introduced new ad units such as Flex Frame for mobile and overseen Fake Love and Hello Society, two agency-focused acquisitions made last year. But he’s not convinced that an ads-only publishing model can work. Advertising generated just 29% of its revenue [last quarter](, with the bulk coming from subscribers, including 2.5 million paid digital subscriptions. That allows the Times to tell advertisers a story about quality and engagement instead of scale. “When everyone is out there touting massive scale, something has to be off,” Tomich said. “With clickbait and autoplay videos, it’s too easy to drum up accidental scale. It’s not signaling any real brand affinity.” Once the Times hooks advertisers on its audience value, it looks for more ways to serve them. Next year, the Times will create vertical-specific ad products – sort of like sponsored listings for the real estate section, but customized for luxury, tech, automotive, financial services and CPG advertisers. “Instead of trying to have a one-size-fits-all approach, we customize the ad products we see for our ad categories,” he said. Tomich talked to AdExchanger about the Times’ recipe for success in the current ad landscape. AdExchanger: Many saw BuzzFeed [adding programmatic]( as a sign that branded-content-only businesses can’t work. Does that validate the Times’ diversified approach to advertising? SEBASTIAN TOMICH: I would question the viability of any purely ad-supported publisher business. I don’t think that’s a viable business model. It’s incredibly important to have diversified revenue streams, and we have a business that’s probably more diversified than the competition. The foundation of our business is supply. Programmatic is essential to our business model. No matter what, we need that guaranteed revenue, and layered on top of that are our direct relationships with brands and agencies. Does being part of a business where the majority of revenue comes from subscriptions free you up from the pressures that 100% ad-supported businesses face? Ha. It doesn’t free me up. We have a public goal of $800 million in digital revenue, and we haven’t said a specific amount needs to come from the advertiser or consumer business. I am such a fanboy of our strategy: the idea that we are going to be valuable to readers and something worth paying for in a world where there are too many publishers, and scale is too easily attained. That was a bold decision for the Times that predates me, but it’s what distinguishes us. It makes our inventory more valuable. And it allows us to walk into a room with a chip on our shoulder and say, “No, you really need to think about us differently.” There are some difficult media people who say they can get our readers elsewhere. But I would argue, tooth and nail, that is not possible. It’s hard to get our entire audience in one place where they are paying attention. What is the basket of ad products publishers need today to be successful? For the publishers that compete for brand marketing dollars, you need great creative talent. The lion’s share of RFPs we get are around ideas, not media placements. Gone are the days of selling scale. Scale is not a differentiator anymore. You can’t go into a marketer’s office and talk about how many unique visitors you have. Second, it’s good to have distinct ad products. We talk to a lot of marketers who lament about sameness, where every publisher comes in and talks about their studio, some video products and targeting the home page. When we launched [Flex Frames](, it was about our unique position as a consumer product. You see the work [The Washington] Post has done, positioning itself as an ad tech company, and what Bloomberg has done around data and artificial intelligence. These are compelling stories for publishers to tell. What other ad opportunities does the Times have that others don’t? A select group of accounts have popped up over the past year and a half that have expressed interest in doing work with us that’s more about creating new things with our news room, tech department or product team. In the case of Samsung, we did the [Daily 360]( program with them, where we outfitted the newsroom with 360 Samsung cameras and published one 360 video from around the world a day. It was a huge success. They used the footage as creative for their ad during the Oscars, so the program itself became creative IP for them. We are right in the middle of a Google Home partnership, where we created a custom kids’ version of The Daily for Google Home and sent Google Homes to 50,000 of our subscribers. For new tech like drones, AI and augmented reality, there are going to be a lot of possibilities. We see huge demand, the products are fun to work on and readers love them. For the marketers, there is huge benefit in creating something new with the Times that isn’t necessarily advertising and that readers know and love. Are there practices you see at other publishers that you say no to because of this value-to-readers proposition? If you are chasing scale, you’re thinking about “How do I write a story that generates the most scale?” and have stories with the tricky headlines and top five lists. That is something we just don’t do. I also see Facebook autoplay videos where publishers are chopping up generic PR videos and pumping them through Facebook to get cheap views. You will see the same video from four publishers. Another one we have always said no to is the whole world of paid recirculation – Outbrain and Taboola. We just don’t believe in them, and that’s a byproduct of not having to rely on ad revenue. In your new role, you’re going to be overseeing sales. What’s different about the digital salesperson 1.0 versus the talent you need today? I have been very vocal about advertising becoming a creative business. You have to lead with creative, and that’s a big shift for this industry. We used to have a small creative services team and a huge sales team. At this point, we have north of 160 people in creative services, which is more than we have in sales. Salespeople still need those classic account management skills – likeability, the ability to pitch and close the deal. But in this new world, salespeople have to think creatively on their feet and understand production, what it takes to build something. That’s more like a creative agency account person. We are watching the publishing side become more like a creative agency. Some publishers are very quick to say that they don’t compete with creative agencies. Is that the case for T Brand Studio? Publishers are absolutely competing with creative agencies. Whoever is saying that is not speaking the truth. If you are paying to produce a film, either the creative agency is going to make it, the client is going to make it or you as the publisher will make it. What’s ahead for the Times? This is the best time of year – when I’m most excited. No brand has said no to us yet. We are answering all the big briefs and are in 2018 planning mode. There is so much momentum behind the Times brand because of the political climate. Next year, we will be doing a lot of work with our innovation lab, StoryX. And look out for us to do work in the ad tech and data science space – we are looking to make a big push there. This interview has been condensed and edited. --------------------------------------------------------------- Sponsor Message [Ready to go Server-Side?]( [Download your guide to the transition now]( [www.rubiconproject.com/the-move-to-server-side-header-bidding]( © 2017 AdExchanger.com | 41 East 11th St., Floor 11 | New York City | NY | 10003 AdExchanger and AdExchanger.com are trademarks or registered trademarks. All rights reserved. To make changes to your email preferences or to unsubscribe, please [click here](