Last week brought news of a second round of layoffs at Netflix, where 300 staffers were cut, per Variety. These came just a couple weeks after Netflix laid off about 150 people, with particularly deep cuts felt in its marketing arm and its brand publishing division, Tudum. The “worsening macro environment” also led Masterclass to cut its team by 20% in preparation for a recession, while cutbacks are increasing across the board. Salesforce is slowing hiring and cutting expenses, including for some offsites, according to Business Insider. Companies including Uber, Meta and Microsoft have all slowed down hiring in an effort to cut costs. Robinhood cut 300 people, the content team at Food52 was laid off, while VC firms like a16z are slowing investments.
By all accounts, a recession is looking increasingly likely. As far as some are concerned it may already be here, as costs continue to balloon and companies scramble to tighten their belts and control their spending.. For brand publishing, the effects of a recession may deliver some much-needed clarity – and may also lead to some painful, but necessary winnowing.
Brand publishing may fare better than other channels.
Marketing and advertising expenses are generally among the first to be cut during any economic downturn. They are generally seen as a discretionary cost, similar to company offsites and travel. And like personnel, they’re also variable. In this environment, it is possible that brand publishing may weather the storm a little better than advertising or brand marketing. One reason is cost. Brand publishing is a relatively lean activity, and content is less expensive to create than TV ads. Most good brand publishing is created in-house, not by external ad agencies. Teams also tend to be lean. At First Round Review, two people create the bulk of content – for a company that raised almost $300 million in its most recent fund. When it comes to slashing costs, less bloated infrastructure and smaller team sizes may work in brand publishing’s favor. Brands often express surprise when I tell them how many people it takes to create a steady stream of high-quality articles. It’s often a lot fewer than they think. The key, of course, is consistent editorial processes, top-notch hiring and editorial standards and creativity.
Quality content will shine
Quality content has always been important. But it will become even more important in an era of belt tightening. There are some cues to be taken from traditional news publishers, where the last three recessions – the 2020 COVID-related slump, 2008’s financial crisis, and the dot-com bubble from 2001 – led to an incredible amount of bloodletting and job losses. This time around, things seem to be different. At least a few media observer types have noted that publishers have become much smarter about their overall business models, consolidated their structures and – this is key – put quality content first and foremost.
This applies to brand publishing just as much. The last couple of years have meant an absolute deluge of brands looking to build media brands. Many of them have made big, splashy hires and major announcements about what they’re looking to do. But the content that is produced has been middling at best. In a tighter market, there is less room for error. There need to be more swings, and more hits. Ultimately, those with strong editorial propositions will fare much better than those who prized expensive wireframes at the expense of quality content.
There will be increased focus on ROI
In our experience, there are two ways companies choose to publish. One is focused on prestige: CEOs who like to tout their publications at conferences and at board meetings. Another is much more practical: They understand how brand publishing can help them lower customer acquisition costs, gain customer loyalty, build trust among employees and gather first-party data.
During boom times, there is more room for the first. But when times are bad, CFOs start looking a lot more closely at whether efforts like these are showing returns. That means brand publishing that is actually lowering customer acquisition costs, improving brand reputation and influence and providing true value and service will win. From what I hear from most editorial leaders, the coming tightening isn’t going to mean some sort of death knell for what the future of brand-funded content looks like. Instead, it’s going to bring on a welcome rightsizing and refocus on content that actually helps the business.
Fewer proclamations, more work
The overall consensus seems to be that there was a significant amount of bloviating going on in the industry about brand publishing, which led to inflated expectations, a rush to market and hiring far, far ahead of results. As anyone who’s worked in publishing knows, content is a long game, better suited to patient temperaments willing to wait to see the results. The recession will mean some tempering of expectations, and only good news for the brands who chose to build editorial publications and teams in a slower, more measured way. For those teams, the coming economic headwinds may pinch a little, but it won’t hurt the way those who overhired and spent more on infrastructure and resources than they should have.
Talent may get cheaper
There has been a significant amount of bloating in editorial talent lately. Freelance rates have risen dramatically, say editorial leaders inside brands. A lot of this was driven by the companies themselves; in order to attract top talent away from traditional journalism to brands, they had to pay top dollar. Among our clients and recruiting partners, we saw compensation levels from brands were between 1.5x and 2x those of similar roles at news organizations. It was also extra hard to find good talent – nearly every single brand we worked with said their most difficult challenges were in finding and training great people. But the churn in the market may also now afford some brands to attract editorial talent they may not have been able to earlier.