Digital media brands are course-correcting to focus on profitability – and PopSugar is no exception.
The media brand has been profitable for a year by following the playbook of diversifying revenue and improving the margin on existing revenue.
Offline, the millennial women-focused publication is cashing in on the generation’s obsession with experiences, throwing a signature event, “Playground,” that attracted 15,000 attendees this year. Combined with branded experiential events – like a pop-up cafe for “Golden Girls Day” in Miami – events will account for 15% of revenue this year.
The laundry list of other ways PopSugar pulls in money includes affiliate links to Sparkle, an SaaS product that makes it easier to execute mobile purchases. PopSugar-branded clothing and makeup is showing up in stores, thanks to brand licensing deals.
Meanwhile, PopSugar’s core business is focusing on improving its bottom line. Branded content margins have expanded – important since it accounts for 73% of all advertising revenue.
Chief Revenue Officer Geoff Schiller updated AdExchanger on PopSugar’s new revenue lines and push into profitability.
AdExchanger: The last time we spoke two years ago, PopSugar was very bullish on its “pivot to video.” What’s happened since then?
GEOFF SCHILLER: We stopped playing that nuclear arms race for video views. We looked at platforms that were more organic for us relative to audience consumption. So we’ve leaned heavily into Instagram, and it’s been highly successful and highly profitable for us. Instagram revenue is up 204% year over year. Followers are up 24%.
What’s the secret behind your Instagram strategy?
We have invested in singular, verticalized communities [@popsugarbeauty, @popsugarfitness, @popsugarhome, etc.]. The audience gets a pure, organic content experience. On the advertising side, there is no waste. A beauty brand is not going to be a celebrity Instagram story, they’re going to get a beauty Instagram story. It’s not going to be next to a celebrity Instagram story.
What role do you play as CRO in brand licensing deals?
My job is to make sure that it’s all incremental revenue. I’m working in tandem with the VP of brand development, with [CEO] Brian Sugar, [President] Lisa Sugar and our CFO to say, “Is there risk here? If we launch a product, what is the ad side reaction?” If it’s net neutral or net positive, there are different conversations.
Have you ever lost a client because you launched a competitive product?
We have been lucky that it’s had minimal effect. With our Kohl’s line, retail is our No. 1 advertising category. It’s the new reality. We have had conversations to articulate and remind brands that this has been going on for 50 to 75 years.
You have brands like Better Homes & Gardens that are the most licensed in the world, but they still drive ad revenue because they’ve been doing it for so long. When digital publishers do it, it’s more heavily scrutinized because they don’t have the track record, or people don’t have long enough memories to remember that this is how brands grow. We hope our value supersedes any potential concern.
Do ads perform better when they’re for your own brands? Like your clothing partnership with Kohl’s?
Generally speaking, the media investment tends to be mutually exclusive with the line. Our media conversations are all geared 100% toward Kohl’s and their initiatives. Separately, for the line, we constantly drive promotion through house ads, social, creating lookbooks.
The reason why we chose to work with Kohl’s is because it was a super organic, iterative evolution. First, they ran banner ads. Then it was content, then events, then doing a line together. Once the line started, we’ve continued running all these different experiences. Kohl’s activated at Playground, we create content for them and banner ads. It’s four trains running in parallel.
Does focusing on more engaged viewers support brand licensing efforts?
Our editorial team has been best in class since we launched. As far as chasing page views vs. engagement, we’ve always focused on engagement and quality. We have 150% more views per visit than the competition [per Comscore]. That’s our editorial foundation. They spend a ton of time with us, they trust us, and the writing style is a bridge between inspiration and action. That translates to performance by brands, whether it’s branded content, events or affiliate.
BuzzFeed and Vox Media have been doing more with programmatic. Why not follow suit?
It’s really a supply-demand issue. We have high supply and high demand, with 40 million uniques [June Comscore numbers], a tremendous amount of page views. BuzzFeed was unique because they had extremely high demand with zero supply, and overnight became massive supply. For them it made sense, but I think they’re an outlier.
Other brands have figured out how to win in programmatic but not elsewhere. They are typically brands in categories that don’t have high sell-through, like astrology or sex and relationships. Advertisers don’t find the brands attractive in terms of content alignment.
No one would pursue the programmatic path just for fun. They are doing it because they have to monetize, and if they could monetize through direct, they would.
The branded content market was in a bit of a bubble. Has it popped for you?
Our branded content business continues to grow significantly, especially as it relates to margin. We have double-digit margin growth year-over-year.
We have been somewhat immune to some of the critiques about native and performance: We have been able to connect branded content to some outcome, whether it’s driving sales or sign-ups, and have been singularly focused on being the bridge builder between inspiration and action. That’s how we structure campaigns. Retention has been high. Eighty percent of our top 20 advertisers in 2018 are actively spending with us in 2019.
Is there any rigor around data or measurement you can bring to event activations for advertisers?
Last year, I was very passionate about creating a return-on-experiential metric. We were able to track foot traffic, time spent at each activation, how many miles were walked, and we could pass that on to brands. The average person walked 3.7 miles in the 90,000-square-foot space. We also did verbal surveys about brand affinity.
Is PopSugar going to be in the black this year?
Yes. [CEO] Brian [Sugar] is our Chief EBITDA Officer, and his commitment is to rally the organization around margin and profitability. Even people on the editorial side have attended workshops to understand what profitability is, what a P&L is.
What do you think of the idea of digital brands forming a media holding company?
There is no middle class of publisher anymore. Brands that are strong will survive. Brands that are weak will need to find a safe haven. When you look at the brands being acquired, none of them are titans in their industries. They are mostly distressed properties. But I don’t think the holding company being the savior is the answer.
This interview has been condensed and edited.