Buzzy TV-measurement firm VideoAmp cuts staff and revenue projections due to the impact of the coronavirus crisis
TV adtech firm VideoAmp has laid off 10% of its 200-person staff due to the impact of the coronavirus pandemic, according to a source familiar with the matter. CEO Ross McCray said the firm has also reduced its expected revenue growth this year to 30% to 50% year-over-year, down from growth of 150% for the past three years. VideoAmp is one of a handful of adtech firms that helps marketers measure TV and digital ads to avoid showing viewers the same ad repeatedly. Other adtech firms including MediaMath, Quantcast and Sojern have also reduced headcount in the past few weeks. Click here for more BI Prime stories.
The economic impact from coronavirus continues to cut through the advertising industry, with layoffs and hiring freezes at agencies, brands, and adtech companies. Video adtech firm VideoAmp has laid off 10% of its employees, according to a source familiar with the company. About 210 people work at VideoAmp, according to LinkedIn data. VideoAmp sells measurement software that advertisers and networks use to measure their digital and TV ads. It pulls an advertiser's ad spend together so that advertisers can track metrics like reach, frequency, and attribution across TV and digital. Marketers use the data to figure out which platforms to invest in and can be used to avoid showing viewers the same ad multiple times. VideoAmp's clients include Omnicom and WPP. While investors' interest in advertising and media companies has waned in recent years, VideoAmp has secured big backing from investors including The Raine Group, Ankora Capital Partners, Mediaocean, and RTL Group. The 6-year-old firm has raised $106 million, with its last round of funding in May 2019 with $70 million. Last month, VideoAmp acquired attribution company Conversion Logic for an undisclosed amount. VideoAmp CEO Ross McCray said the company's strategy hasn't changed despite the cut in staff. He said the firm has started offering employees the ability to transfer less than 10% of their compensation from cash to equity in the company. McCray said that he would forgo taking a salary for an unspecified period of time. VideoAmp has not cut employee salaries. VideoAmp also cut its growth estimate. McCray said he expected VideoAmp's revenue to grow 30% to 50% year-over-year this year, which is down from its growth of more than 150% for the past three years. Layoffs are sweeping the advertising industry VideoAmp is far from the only advertising-related company to be impacted by COVID-19. Advertising agency holding companies and digital media companies like Group Nine Media and BuzzFeed have variously laid off staff and frozen pay and hiring while direct-to-consumer brands like Iris Nova and Away have slashed staff and ad spend. Travel-focused firm Sojern laid off about 300 employees, and MediaMath cut 8% of its 600 headcount, while Quantcast laid off 5% of its 600 employees.Join the conversation about this story » NOW WATCH: Taylor Swift is the world's highest-paid celebrity. Here's how she makes and spends her $360 million.
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E-commerce advertising is skyrocketing in the pandemic. Meet 8 execs at Walmart, Amazon, CVS and more who are trying to turn retailers into big ad businesses.
Summary List Placement The advertising industry has taken a big hit from the pandemic, but e-commerce...Summary List Placement The advertising industry has taken a big hit from the pandemic, but e-commerce companies are reaping the benefits. With people shopping more from the safety of home, advertising on e-commerce platforms has boomed during the coronavirus. E-commerce advertising is expected to rise 39% to $17.4 billion in the US this year and represent 12% of digital ad spend, according to eMarketer. Amazon has long dominated e-commerce advertising but a number of companies like Walmart, Instacart, CVS, and Boxed are getting in on the action as retail's profit margins get thinner. They're pitching advertisers on data and audiences and rolling out new advertising platforms and features. "Retail media is having a moment right now — COVID has shifted a ton of sales online, and online sales are less profitable than in-store sales," said Jason Goldberg, chief commerce strategy officer at Publicis. "Retailers have to do everything they can do to improve profitability." Business Insider identified eight executives ranging from Amazon Advertising's Colleen Aubrey to Kroger's Cara Pratt who are leading this trend. We compiled the list through our own reporting and by talking to sources in the industry. One notable company missing from the list is Target. Target's top advertising leader Kristi Argyilan is leaving the company's in-house advertising firm Roundel, and Target said it would fill the role through an external search. Below are the eight executives in alphabetical order by last name.Colleen Aubrey, global VP of performance advertising, Amazon Key stat: Amazon is on track to make $13 billion in US ad revenue this year, according to eMarketer. The executive to know: Amazon quietly elevated longtime advertising exec Colleen Aubrey to take on a larger role after ad sales veteran Seth Dallaire left to become Instacart's chief revenue officer last year. Reporting into Amazon's executive suite, she oversees Amazon's search advertising business and has worked on products to build brand loyalty and awareness on the platform. She was a major face of Amazon's ad sales org at AdCon, Amazon's annual advertising conference, this year. Amazon's pitch: Amazon is the biggest game in e-commerce advertising. The retail site is the third-biggest digital advertising seller, behind Google and Facebook, and dominates ad budgets from e-commerce sellers and brands. Amazon pioneered keyword-based search ads that pop up on its website and app when people shop for a specific product like "red dress" — an advertising tactic now used by most e-commerce companies. Most recently, Amazon has beefed up its sales teams and pitch for brands to run ads using Amazon's data beyond Amazon's properties like in its connected-TV properties and programmatic advertising. What advertisers say: While other retailers have brick-and-mortar stores, Amazon's traffic is six to seven times bigger than Walmart and includes thousands of sellers, making it the biggest platform for e-commerce advertising, said Sreenath Reddy, founder of Intentwise, an ad management service for Amazon and Walmart sellers. "The distance between Amazon and everybody else when it comes to online audience sizes and online engagement is massive," he said. "My sense is that as these [other] retailers aim to get more search traffic, they'll always be hamstrung by the limitations of a purchase happening on their site." Erin Condon, VP of front store and omnichannel marketing, CVS Health Key stat: CVS has 10,000 stores in the US with 75% of Americans living within five miles of a location. The executive to know: Condon has held the role of VP of front store and omnichannel marketing at CVS since 2018 and was previously senior director of marketing. Earlier, she had marketing analytics and management roles at UPromise, Sallie Mae, and Discover. CVS' pitch: CVS has run an advertising business that helps brands promote products in stores for years but in August, rolled out a media network to expand its ad sales to social, search, programmatic and video ads on other media properties like Facebook and Google. CVS has run more than 100 campaigns on its media network. Condon said one of the big ways CVS differentiates is with custom campaigns using CVS' data. CVS also makes assets and creative for brands including branded storefronts and landing pages on CVS' digital properties. "The supplier is able to make more efficient use of their media dollars and get more relevant [ads] in front of the consumer," she said. What advertisers say: Elizabeth Marsten, senior director of marketplace strategic services at Tinuiti, said that while CVS' audience is smaller than Walmart and Amazon, CVS produces a strong return on ad spend because there is less competition. She also said CVS has an advantage in its Extracare loyalty program data that goes back many years. Seth Dallaire, chief revenue officer, Instacart Key stat: Instacart works with more than 500 retailers, reaching 85% of Americans. The executive to know: Instacart hired former Amazon ad sales leader Seth Dallaire last year to build a business letting advertisers promote products in search results. In addition to Amazon, Dallaire has also held sales roles at Yahoo and Microsoft. Instacart's pitch: Online grocery has long sat on the backburner of retailers' e-commerce initiatives — until the coronavirus hit. Instacart's on-demand grocery shopping business skyrocketed with people shopping from home. It hired hundreds of thousands of contractors who pick up and deliver groceries from retailers like Kroger and Costco. Instacart divides advertisers into five tiers that rewards top-spending marketers with perks like access to an API program and exclusive data about the brands people buy the most. What advertisers say: Instacart's ad business is still small, which makes its advertising twice as efficient as Amazon or Walmart's, said Sam Jennings, lead client strategist at e-commerce agency Marketplace Strategy. However, Instacart doesn't neatly fit into marketers' existing spending buckets, he said. "Instacart isn't a retailer and it's not a digital marketing platform, so I think a lot of people are having a hard time figuring out where budgets come from," he said. Edward Fong, director of business intelligence, Boxed Key stat: The average Boxed shopper buys 10 items and spends $100 per order, with 70% of people buying more than once. The executive to know: Fong is one of the first employees of Boxed, a e-commerce wholesale retailer, and helped onboard brands like Kellogg's to the platform. He's also developed tools like a data portal that shows brands stats like inventory levels. More recently he's focused on Boxed's advertising business. Boxed's pitch: The online retailer sells ads to brands like PepsiCo and Kind Snacks that can be targeted by location and search terms. A search for "soda," for example, could show an ad for PepsiCo-owned Izze. Boxed's pitch is that it has data that advertisers don't typically get from Amazon and Google like where and when people shop. The data is then used to recommend products to people and target ads. "[Advertisers] know that things are being sold but they don't know at a detailed level," Fong said. "We're willing to share data back with them." What advertisers say: Jason Goldberg, chief commerce strategy officer at Publicis, said that because Boxed's sales are smaller than Amazon and Walmart's — Boxed says that it sells about 1,600 products — it can win by emphasizing data and a good user experience. "As you get smaller, you need to offer more benefits — there is valuable data that retailers have not historically wanted to share," he said. Alex Kazim, VP of global advertising, eBay Key stat: 182 million people a month shop on eBay. The executive to know: Kazim is a longtime eBay employee who rejoined the company in June to lead its advertising business. He is an entrepreneur who co-founded news subscription service Ongo and has held leadership roles at Skype, HP, and FuelX. EBay's pitch: EBay was early to the e-commerce boom in 1995 and today has 1.5 billion live listings from sellers. Sellers can promote their listings through display ads, promoted listings, and native placements like email and push notifications within eBay's app. EBay also gives advertisers data like how many items someone looks at and what devices they use that is used to target campaigns. The company recently rolled out a first-party data tool that targets ads without using third-party cookies that are being phased out due to privacy concerns. In July, eBay spun off its classified advertising business for $9.2 billion in cash and stock to online retailer Adevinta. What advertisers say: EBay's e-commerce dominance has waned in recent years and it's marketplace is a fraction of the size of Amazon. Laura Meyer, founder and CEO of the Amazon-focused ad agency Envision Horizons, said eBay's smaller size makes it a tough sell with advertisers. One of eBay's advantages over Amazon is that its design makes it easy for advertisers' ads to stand out to shoppers. "As a result, Amazon can get a little messy if there's a ton of people selling your product," Meyer said. "The advantage of eBay advertising is that if you drive someone to your page, you're going to be the one getting the sale." Erik Keptner, CMO, Rite Aid Key stat: Rite Aid has 2,500 stores in 19 states. The executive to know: Keptner joined CVS last year after working in marketing roles at Western Food Corp. and Giant Food Stores. He is responsible for pushing Rite Aid into more e-commerce and partnerships, and launched a program where Amazon shoppers can pick up packages at Rite Aid stores. Rite Aid also has a deal with Instacart to deliver products to homes. Rite Aid's pitch: A newcomer to digital advertising, Rite Aid recently rolled out a retail media network called Rite Aid Performance Media that places keyword-targeted search ads on its website and app. The pharmacy chain outsources its sales to tech firm Quotient, which sells ads on Rite Aid's website and also co-branded ads on social media, programmatic, and digital out-of-home with messaging that a supplier's product is available at CVS. What advertisers say: Tinuiti's Marsten said that Rite Aid's ad business is an easy way for retailers to test advertising. A self-serve platform lets advertisers turn off and on search ads, which are easier to manage than TV or display advertising programs. "It's a good gateway — it gives you an always-on ability that you can control," she said. Rich Lehrfeld, interim head, Walmart Media Group Key stat: People visit Walmart.com 12 million times a day. The executive to know: In October, marketing exec Lehrfeld was named interim head of Walmart Media Group, filling a role that VP and general manager Stefanie Jay held. The longtime American Express marketing executive joined Walmart last year as SVP of brand, creative, and media and filled in as Walmart's interim CMO recently. The pitch: Walmart's ad pitch centers around data that shows advertisers how people shop in-store and online after seeing an ad. Walmart has recently started handling its advertising in-house after splitting with longtime agency Triad Retail, building out a tech stack and self-serve platform that allows adtech companies to manage ad campaigns for big spenders. What advertisers say: While still smaller than Amazon, Walmart's e-commerce sales are significant enough to command advertisers' budgets. "Walmart Media Group is nicely positioned in that direction," said John Lods, CEO at ad tech and media-buying agency Arm Candy. "The challenge of WMG and the technology that they have is that it's pretty rudimentary." Cara Pratt, SVP, Kroger Precision Marketing and 84.51° Key stat: Kroger's loyalty card data includes 60 million households and tracks 96% of sales. The executive to know: Pratt has worked at Kroger for three years, where she's responsible for product development, sales and advertising operations. She previously worked for shopper marketing firm Dunnhumby, which Kroger acquired in 2015. Pratt is also a member of the leadership team at 84.51°, Kroger's in-house analytics and advertising team. Kroger's pitch: Kroger has loads of data from its big loyalty program that spans its chains including Gerbes, Harris Teeter, and King Soopers. Kroger's ad business has two parts: One arm helps suppliers run direct marketing campaigns like emails and promotions, and the other uses Kroger's shopper data from 60 million households to target ads to people visiting Kroger's website and app. Kroger has also worked to prove people bought a product after seeing an ad, through efforts with Microsoft-owned retail tech firm PromoteIQ and by measuring sales from ads served on Roku's streaming platform. Kroger also has a deal with Pinterest that uses shopping data for ad targeting on Pinterest. What advertisers say: Kroger's ad sales dig deep into its trove of first-party shopping data, said Tinuiti's Marsten.
AT&T is reportedly exploring a sale of digital ad unit Xandr. Here are potential buyers, from Walmart to Singtel, according to experts.
Summary List Placement AT&T's ambitions to become an advertising powerhouse may have hit a wall....Summary List Placement AT&T's ambitions to become an advertising powerhouse may have hit a wall. AT&T made a big bet on using data and media properties to target and measure ads, scooping up media giant Time Warner and later, AppNexus, for about $1.6 billion. It created an ad unit called Xandr to change how TV advertising is sold for WarnerMedia and beyond. But Xandr hit snags, with leadership changes and challenges plugging AT&T data into advertising. Some media buyers have criticized it as not enabling robust enough targeting and expressed concern that Xandr will become a walled garden that limits the number of publishers and data that advertisers can access. And earlier this year, Brian Lesser, who led Xandr and was its champion, left the company. Now AT&T is reportedly looking to sell Xandr in a move to shed less profitable divisions, according to The Wall Street Journal. AT&T is also reportedly mulling a sale of DirectTV. A spokesperson for AT&T declined to comment on the reported selling of Xandr. Business Insider asked several M&A, consulting, banking, and other experts to name likely buyers of Xandr. To be clear, these people did not suggest that any of the companies are currently in talks. Strategic buyers could look at acquiring Xandr at the right price Potential buyers are limited by the price AT&T would likely seek for all of Xandr (well above the $1.6 billion it paid for AppNexus in 2018). Other telecom and media giants like Verizon and Comcast have already built up tech stacks of their own and are unlikely to have the means or desire to take on a massive adtech integration. That leaves Singtel as a potential acquirer, said Corey Ferengul, who has led multiple deals as a buyer and seller over the years and is a board member for several companies. The Singapore-based telco already owns adtech company Amobee and shown it has ambitions to grow its ad business, having used Amobee as a platform to buy other adtech firms like Turn and Videology in recent years. "They have done well with Amobee. I think they could take a swing," he said. Then consider the ad holding companies, which are all loading up on tech to try to differentiate themselves with clients and broaden their offerings beyond creative services. Ferengul said of the holding companies, Japanese-based Dentsu is the most likely to be a potential buyer because it's on better financial footing than its peers. Shiv Gupta, a former adtech executive and founder at adtech and martech education company U of Digital, said while Facebook, Google, and Amazon face too much antitrust scrutiny to make big acquisitions, Snap or Twitter could be interested in adtech to expand their direct-response ad businesses. Private equity is interested in adtech Because there aren't that many buyers for a company the size of Xandr, multiple sources favored private equity firms, which are often on the hunt for big adtech companies where they can cut costs, as the most likely acquirers. Jay McDonald, CEO and managing partner of investment bank Digital Capital Partners, said PE is looking to build large firms that can rival Facebook and Google, and Xandr is one of a few such companies from which to build. Elgin Thompson, managing director of technology investment banking at JMP Securities, said that a private equity firm could build it into a competitor to rival The Trade Desk, an adtech giant that uses technology to help advertisers place ads on publishers' sites and apps. KKR and Carlyle are logical potential buyers because they've looked at this area a lot, Ferengul said. Vista Equity Partners-backed Mediaocean and Sir Martin Sorrell's S4 Capital could also be acquirers, suggested Matt Barash, SVP of strategy and business development at adtech firm AdColony. Mediaocean has deep ties with agencies and could use Xandr to build out its relationships with publishers. Mediaocean also recently acquired adtech firm 4C Insights. S4, meanwhile, has been acquiring specialized firms like Amazon agency Orca Pacific and analytics firm Brightblue Consulting to compete with holding companies including WPP and Omnicom. Retailers want to compete with Amazon's ad business Other observers see Amazon and other online retailers as potential acquirers as they've been building up their advertising businesses over the years. Amazon leads the pack, and Walmart, Target and others are trying to catch up. Xandr has a tech stack, ad sales specialists, and ability to sell TV inventory that could be appealing to them. "They get an instant ad business in a box," Ana Milecevic, principal and cofounder at Sparrow Advisers, said of Walmart. AdColony's Barash said that another possible buyer could be Shopify, which has made inroads with direct-to-consumer brands and larger brands wanting to grow their online commerce business. "They have a massive e-commerce position and are building an end-to-end suite of products to give retailers better tools," Barash said. "Why not package up their data with a media play and let retailers buy or even sell media as part of the package? It could bring Shopify a step closer to competing with Amazon and catch any number of traditional retailers like Walmart and Target off guard." To sell Xandr, AT&T would have to unravel its programmatic ad business from WarnerMedia's assets, said Scott Bender, partner and global head of client strategy at Prohaska Consulting. "The challenge is that you're not buying a standalone company — you're buying technology [and] it's a much different entity than when AT&T bought AppNexus," he said.Join the conversation about this story » NOW WATCH: Why electric planes haven't taken off yet
Inside sports media startup The Athletic, where writers describe mounting pressure as subscription growth slows, ad revenue dries up, and live sports come to a halt
The Athletic recently laid off 8% of staff, or 46 journalists, as the coronavirus crushes sports...The Athletic recently laid off 8% of staff, or 46 journalists, as the coronavirus crushes sports media companies. The Athletic's subscription growth has slowed and a small but growing podcast advertising stream has taken a significant hit. Business Insider spoke with 16 former employees who expressed concerns about growing pressure to hit goals and raised questions about The Athletic's long-term growth and brand potential. Former employees also said that management is reluctant to change, describing the leadership around founders Alex Mather and Adam Hansmann as "yes men." Visit Business Insider's homepage for more stories. On June 5, The Athletic co-founders Alex Mather and Adam Hansmann gathered their staff of nearly 600 people for a grim all-hands meeting on Zoom. The two said that they would lay off 46 journalists, equivalent to 8% of the company, due to the economic crash related to the coronavirus and halting of major live sports like basketball and football that drive the sports news startup's $60-a-year subscriptions. They also cut most staffers' pay by 10% for the rest of the year; those making over $150,000 took steeper pay cuts. "This is a dark day for the company at one of the darkest moments in recent memory for most of us in the country, in the world," Mather wrote in a memo to staff. "Not a single person leaving is at fault. They did nothing wrong." The tone had changed from March when Mather described The Athletic during a company meeting as a lion that was going to roar back once the coronavirus ended. After the NFL Draft in late April, his metaphor changed to being an airplane pilot expecting upcoming bumps. "Over the last month, the demeanor changed in Alex and Adam — it was a little bit more dour, and you could tell that the numbers weren't going to be great," one laid-off editorial staffer said. Many other media companies, from BuzzFeed to Vice Media, have similarly cut staff in the downturn. Some Athletic staffers were surprised by the depth of the cuts, though, since executives had been taking a salary cut since March and the company had just raised $50 million in Series D funding in January for a total of $139.5 million. Tensions grew as the company faced a world without live sports Five former staffers recalled a meeting at the peak of the coronavirus where the founders announced that 30 execs would take a pay cut. Employees were allowed to ask anonymous questions, and one asked when staff would be able to negotiate raises despite the coronavirus. Mather responded with an expletive saying how lucky the staff was to have jobs given the circumstances, according to the staffers. "It was an awkward, sobering way to end that meeting," said a former employee, adding the message contrasted with earlier messages of "blind confidence" from management during the early days of the coronavirus. Business Insider spoke to 16 former employees who worked in a variety of departments at The Athletic, 11 of whom left in the past couple of months, and two current staffers, who described the coronavirus' effects on a young and growing media company. The former employees spoke anonymously because of severance packages and disclosures that forbid them from talking to the press. They described pressure on journalists to crank out stories and questions about the business model and long-term potential. At stake is the company's well-funded and aggressive push to upend traditional sports media like ESPN and Sports Illustrated. "If this fails, it's going to be the biggest disaster in sports-writing history," said a former journalist at The Athletic. The Athletic had been on a subscription tear, with self-reported subscriber numbers doubling to 600,000 in 2019 from 300,000 in 2018. New subscriber growth had decreased to 20% to 30% during the coronavirus. At the same time, podcast advertising — a small but growing source of revenue that supports The Athletic's big push into audio — has taken a "significant" hit, according to the company. Two out of three of The Athletic's largest advertisers plan to spend money with the company in the third-quarter of the year, though, said spokesperson Taylor Patterson. In addition to the 46 journalists, The Athletic also laid off its freelancers and a programming team on the marketing side and dialed back on video. After hiring TV journalist Armen Keteyian and producers Alan Goldberg and Victor Frank to build a video division, the three left earlier this year after their contracts were not renewed. The Athletic was built on a data-based approach Mather and Hansmann are former employees of Strava, a tracking app for athletes, and sports fans who founded The Athletic in 2016 as a subscription-based sports news site that went deep into covering teams, especially local ones, and a mission of saving journalists from the struggling newspaper and TV businesses, using a data-backed approach. The Athletic talked about a goal of 1 million subscribers by the end of 2019. "We will wait every local paper out and let them continuously bleed until we are the last ones standing," Mather told The New York Times in 2017. "We will suck them dry of their best talent at every moment. We will make business extremely difficult for them." They poached big-name sportswriters like Stewart Mandel and Ken Rosenthal by dangling big salaries and a promise of freedom to pursue in-depth journalism. One recently laid off staffer said that The Athletic offered a 30% higher salary than their pay at a local newspaper. To support the expensive model, The Athletic raised $139.5 million from venture capital firms like Comcast Ventures and Bedrock Capital Partners, giving it a theoretical value of $500 million. The aggressive push for talent sent ripples across the sports media industry, especially since Mather and Hansmann didn't come from media. Most of the recently laid-off staffers said that the sports journalism world has long been skeptical of the model, and several said that during the interviewing process, they grilled the company about the economics behind The Athletic, which include benefits and big travel budgets for reporters in addition to high salaries. "When traveling around, I would see other writers sometimes be a little bit envious of our situation — mostly how we were allowed creativity in our work and how involved we were with everybody across the company. Double bylines were not just encouraged, but pushed," said one former writer. "Especially early on, there was an emphasis on taking your time and making the extra call." Staffers said The Athletic lowballed its subscriptions to the press Spokesperson Patterson told Business Insider that the startup was nearing its 1 million subscription milestone, without giving a timetable. But the last number it publicly disclosed was more than 600,000 subscribers in August 2019. As live sports ground to a halt, they acknowledged there's been a slowdown in acquiring subscribers and people have cancelled subscriptions. The Athletic upped its discount to a 90-day free trial to attract readers, up from its usual discounts of a week or month free. Mather and Hansmann routinely share basic data about subscribers with staffers like retention and churn rate, a measure of how many people renew subscriptions. Hansmann told Digiday in October that 80% of subscribers renew their subscriptions every year and 90% engage with content during busy sports times of the year. Multiple staffers said it was unclear to them how close the company is to hitting its subscription goal, as data like total subscriptions is held closely by top management, as is common for subscription-based publishers. Three former staffers said that the company would often tell media outlets one figure and then tell its own staffers a higher number, lest information leak to the press. "A lot of it is murky," said a recently laid-off journalist. The Athletic also needs significantly more than 1 million subscribers to build a long-term, profitable business. Hansmann said in the interview with Digiday that he wanted to rival large subscription publications like The New York Times and The Wall Street Journal, which are long established, have millions of subscribers, are general news-focused and often charged as a business expense. "Being in that rarified air, we would feel at that point incredibly secure," he told Digiday. "We're not profitable yet but we're obsessed with profitability long-term and getting to a level of subscribers and revenue that will support and sustain the work that we do." The Athletic expected to be profitable this year before the coronavirus The Athletic's goal was to be profitable in 2020 when the coronavirus struck. "Going into March, we were well on our way to achieving this goal," Mather wrote in the June 5 memo. "But as the pandemic has set in and as the sports calendar has remained frozen in place, it has become clear to us that those best-laid plans have irrevocably changed." "Pre-COVID, it was always about 'What's the latest good news?'" said one former writer. "This is what happens when you're a sports website and you go for three months without any sports — it's just not easy." One former staffer said the good life for journalists there made it easy to ignore warning signs. Writers and editors didn't have to shoot video to go with their stories like they had to do at newspapers. Expenses were easy to file through a software program. And the founders lavished praise on in-depth reporting. "Alex and Adam are really good at making you feel good about yourself, and there was a real effort to make the culture and everyone feel good. In hindsight, that may have allowed people to overlook questions," said the former writer. Journalists spoke of growing subscription pressure The Athletic reporters have quotas ranging from 10 to 20 stories per month, depending on the sport and if it's in season or offseason, as well as subscription goals. Before the virus hit, former employees said there was growing pressure to crank out subscriptions. Staffers have loads of data to figure out what stories drive subscriptions. A Slack bot pulls in stories that accumulate five subscriptions within 24 hours. Stories that hit 100 subscriptions are known as home runs and pieces that generate 500 subscriptions are dubbed grand slams. But several people said that subscription goals are hard to reach and tend to favor big names and mainstream stories of national interest like ones on the Los Angeles Lakers' LeBron James or the New England Patriots — not the local teams and sports that they were hired to cover. "It takes a lot for them to come together — it has to be the right subject and you can't force them," said one former writer. Jon Krawczynski, a senior writer at The Athletic, pointed out that big hits like home runs and grand slams need to be balanced with smaller stories to keep sports fans interested. "Once you get a subscriber to subscribe, you have to give them reasons to stick around. They didn't sign up just for the big, salacious story — they also want to be informed regularly," he said. The model also makes it harder for younger journalists and people covering small markets to succeed as much as the bigger-name hires, three former staffers said. Three former staffers said that data analysts started recommending stories for journalists from publications like Bleacher Report over the past year, which one worried would water down The Athletic's promise for exclusive stories. Staff diversity is a challenge at The Athletic The founders' tech background is felt at the company headquarters in San Francisco, where its marketing, product, finance, and engineering staff are based. Three staffers on the business side described The Athletic's management as "yes men" who always agreed with Mather and Hansmann. "The way the company is structured is very much like a boy's club where what Alex says, goes," said a former marketing employee. "If you questioned that, you'd get fired." Patterson pushed back on the idea that management is not flexible and said that 60% of Mather's direct reports are women. As for The Athletic's reporters, two sources said the company leans on staff recommendations in hiring, which has worked against hiring a diverse staff. Most of The Athletic's staffers are white men. When The Athletic cut freelancers in March, it impacted the site's WNBA coverage and women journalists in particular. "It was like a good old boy network," said one former writer. The sports media industry overall is known for being hard for women and people of color to break into. In January, Sports Illustrated cited diversity in hiring practices in its decision to form a union with the NewsGuild of New York. Current and former employees said that The Athletic has worked to build a diverse staff and noted staffers like national NBA editor Khalid Salaam, DC editor in chief David Aldridge, and NFL managing editor Lisa Wilson as prominent Black and female hires. "Diversity in every newsroom in sports writing is a challenge — I think Alex and Adam would be the first to tell you that we've done a good job but let's do better," said Dana O'Neil, a senior writer at The Athletic. "While we try to hire established people, there is also an understanding that if there is a really talented young person, let's give them a chance to settle in." One former writer also said that the publication explicitly gave writers freedom to cover the reckoning around racism and protests surrounding George Floyd's death. Staff writer Tony Jones published a piece about why he's glad sports have taken a sideline to the protests. Another article chronicled experiences that The Athletic's Black writers and editors have had with racism. "They let reporters have their voices — there was a lot of freedom but they also wanted to make sure that people were being responsible with what they wrote in difficult and sensitive times," the writer said. "I thought they did their best." Some question if The Athletic can build a long-term brand Live sports will eventually come back, and with it, likely, The Athletic's subscribers. But beyond the current coronavirus-related challenges, The Athletic faces questions about its ability to build a lasting brand that can stand up against the likes of ESPN and Sports Illustrated. Readers have a strong connection with The Athletic's journalists, but that doesn't necessarily extend to the publication's brand. Minutes after The Athletic journalists started tweeting about layoffs on June 5, readers flooded social media to say that they planned to cancel their subscriptions. "The Athletic just lost a ton of subscribers today," a reader tweeted at longtime LA Lakers writer Pete Zayas after he announced he was laid off. @TheAthletic just lost a ton of subscribers today. — art ayala (@archurops) June 5, 2020 The Athletic has hired some of the best-known sports reporters, but some laid-off journalists said the site has struggled to differentiate itself from giants like ESPN. Local sports, meanwhile, has been covered by corporate-backed newspapers for decades. On Twitter, The Athletic's main account has 95,000 followers compared to Bleacher Report's 8.7 million Twitter followers and SBNation's 315,000. "There were a lot of people that knew my work but weren't sure where I wrote," said a former staffer. Neither Mather and Hansmann come from marketing backgrounds, and one former marketing employee said the founders believe that The Athletic markets itself. "I'm a firm believer that their written content is top of the line, but what I struggled with is, if you have the best content but nobody knows that it exists, what's the point?" said the former marketing employee. "They don't have a brand identity, and whenever marketing people would want to bring it up, they would get black-balled."SEE ALSO: The pandemic has upended the TV industry's $20 billion in upfront deals, and it could give advertisers more control over future ad buying Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America