This past weekend, after Silicon Valley Bank collapsed due to a bank run on Friday and the shuttering of another bank, Signature Bank, on Sunday, the uncertainty of the situation had venture capitalists stirring up a frenzy on Twitter. On Monday, President Biden aimed to instill confidence in the banking system with a short speech telling Americans that the government would protect depositors but that the move was not a taxpayer bailout of the banks.
For agency execs and marketers who work with startups — which Silicon Valley Bank was known for doing — the past weekend was an “existential experience,” explained Katya Constantine, CEO of DigiShop Girl Media, a performance marketing agency that works with startups and emerging direct-to-consumer companies.
Marketers and agency execs say they spent the past weekend analyzing their potential risks and ties to the collapse, a situation that they will continue to closely watch in the coming weeks.
“For the past 10 years, we have specialized in working with growth-stage tech startups and tech-enabled businesses,” said Mack McKelvey, founder of strategic marketing shop SalientMG. “The SVB collapse was particularly shocking, given the extensive integration the bank has in the whole start-up ecosystem. While we don’t bank directly with SVB, my immediate thought upon hearing the news last week is that many of our VC-backed clients do.”
McKelvey wasn’t alone in thinking about potential impact. “Our agency over the weekend was focused on understanding any risk exposure, putting measures in place to mitigate further risk and being available to clients that required communications guidance,” said Marisa Ricciardi, founding partner and CEO of strategic marketing agency Ricciardi Group, and former CMO of the New York Stock Exchange. “Our clients are super focused on their own employees and customers in order to create and instill confidence in the market.”
While the collapse of Silicon Valley Bank in particular has put a spotlight on startups, agencies that work with startups say they aren’t reconsidering doing so now.
“We aren’t re-thinking any current relationships and we don’t intend to stop working with interesting emerging brands, but will definitely monitor those decisions very closely,” said Ricciardi. “However, it’s a good reminder to stay focused on the importance of having good agency financial hygiene (i.e. accounts receivable management, clear payment terms, rolling financial projections, working capital reserves etc.)”
McKelvey, meanwhile, explained that SalientMG “will always work with innovative and disruptive startups” as it is part of the company’s DNA but that the shop is “watching the whole banking sector this week and we’ve been in touch with several of our VC-backed clients and their VCs.” When asked about potential plans to mitigate risk with changes in payment terms, McKelvey said, “we aren’t immediately changing our payment policies, but we aren’t ruling anything out either.”
Marketers and agency execs say that they expect CEOs and CFOs to be going through financials “with a fine tooth comb to make sure I’m not faced with the same existential risk again,” noted Constantine.
The collapse also put into perspective the ripple effects of a collapse — even if an agency doesn’t work with a failed institution they could work with clients or vendors who may be then unable to pay them.
“People are awake to the risk of having all their eggs in one basket,” said Constantine, who added that for agencies who rely on a few clients it makes clear that “having operations dependent on one or two clients is a huge risk for an agency. The need to diversify will be clearer.”
3 Questions with Brian Killingsworth, CMO at fitness company F45
After more than a decade in business, F45 recently launched its first-ever brand campaign. Why now?
The brand is continuing to expand like crazy and we’re looking at North America as a really emerging market for us that we don’t think we’ve really truly penetrated yet. The company has been really successful in selling franchises and cultivating an incredibly tribal member base. We want to really amp up our awareness level for those fitness consumers that are looking for a solution. This is the year to do it and kick it off the right way.
How is F45 working to meet its marketing goals?
We did a lot of research as to who our core consumer is of our brand from a target perspective. That consumer over indexed on a lot of the social channels. They over index on streaming. They over index on podcasts and so it was important for us to deliver across those mediums, and be as efficient as possible with this buy.
We looked at [the media mix] a little bit differently. We looked at three types of media. We allocated 55% of the budget to what we call high efficiency and that includes our social and digital platforms. We look at some of our high reach video platforms as well. Meta, Google all fall under this high effective bucket. Then, 25% of our budget is allocated to high premium. High premium for us is looking at podcasts, Spotify, Hulu, Amazon and that’s a big bucket for us. Lastly, 20% is allocated toward what we call high impact. Those are looking at strategic partnerships that help elevate our brand. A lot of those you’ll see in the third and fourth quarter as we continue to lock down strategic brand fits for us. Specific tactics across those three buckets include YouTube, Meta, Google, Amazon, Spotify [and] digital display, just to name a few.
What’s the biggest change in this year’s media channel mix versus last year?
I still think digital is king for us. Our member base does such a great job of amplifying our brand. So just looking at the digital assets we own and operate, we have our own website, we have our own social channels obviously. –– Kimeko McCoy
By the numbers
The first-ever global live-streamed Netflix show, a comedy special from Chris Rock, is a promising signal of what may lie ahead in the advertising and live-streaming industries as consumers become more and more interested in social media and live content. As per GWI, an audience insights company, consumers in the U.S. like Gen Z are actually less likely than older generations to engage with brands through television ads or online TV shows, which suggests a need to modernize and optimize live streaming platforms and content. In addition to this, GWI found that:
- Netflix (75%) dominates Gen Z’s streaming preferences over Hulu (54%), Disney+ (48%) and Amazon Prime Video (40%).
- Gen Zers watch more streaming services and broadcasts than older generations — viewing content for two hours 13 minutes versus two hours eight minutes.
- A majority of consumers watch comedy, followed by action/adventure (47%), and thrillers (42%). Therefor, Netflix chose to run a stand-up show by Chris Rock over any other topic. — Julian Cannon
Quote of the week
“In real life [experiential marketing] was lighter last year compared to pre-Covid years, certainly. We’re witnessing strong interest and seeing activities that are on-par with previous years.”
— Peter Lewis, chief partnerships officer for SXSW, on the return of experiential efforts at the festival this year.
What we’ve covered
- Netflix is reviewing its ad strategy, considering ‘build or buy’ pivots away from Microsoft
- Fragmented media landscape changes what clients expect from PR agencies
- Digiday’s full special report on social media fragmentation can be found here
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Kristina Monllos