Ozy Media’s reopening faces challenges to re-recruit advertisers and staff

  • Ozy faces a daunting challenge convincing advertisers and employees to stay with the company.
  • Advertising giants WPP and Dentsu have suspended campaigns with the digital media company.
  • Watson said Ozy “is not a house of cards” and is committed to doing better in data, marketing and leadership.

Struggling digital media company Ozy may have made a surprise turnaround this week when it closed previously announced, but questions remain as to whether advertisers and former employees will stick around for its second act.

Speaking on the “Today” show Monday, the co-founder of Ozy Watson said the decision to resurrect Ozy, just three days after announcing his shutdown, came at a “Lazarus moment” after speaking to partners advertisers, readers, viewers, listeners of the company. , and investors. In a separate interview with Axios on Monday morning, Watson claimed that Ozy’s partnerships with advertising giants Dentsu and WPP, announced in March and April respectively, were still active.

Still, sources from those agencies suggested to Insider that’s not the case.

In recent days, WPP’s GroupM initially deleted and then updated a webpage that previously announced its deal with Ozy. On Monday evening, a spokesperson confirmed to have ended the partnership after suspending all customer ads on Ozy the previous week.

Dentsu struck a deal with Ozy earlier this year as part of an “economic empowerment offer” to encourage customers to spend more money on black-owned media. A person familiar with the company said it also removed all listings from Ozy customers as of last Thursday evening. “We no longer see Ozy Media as a partner,” a spokesperson for Dentsu said on Tuesday.

On Tuesday, Watson emailed Insider to tell them that he hadn’t spoken to any of the companies when he made this statement to Axios, so he didn’t know where they stood. He said he later learned that WPP was disabled.

A source from a third advertising company, who asked not to be identified in this article, said Watson had contacted their business to let them know Ozy was not closing. However, this source said the agency is not engaging with Ozy at this time.

Other advertising managers have said they have long been wary of spending with Ozy. Greg James, chief strategy officer at Havas Media, another large agency group, said his company hasn’t invested a single dollar with Ozy on behalf of its clients. An executive at another agency said they spent very little with Ozy because his senior executives were “difficult to hire.”

Questions remain about Ozy’s audience and advertising partners

Ozy is still reeling from the explosive New York Times article published late last month that raised questions about his business practices, including a revelation that Ozy’s COO Samir Rao , impersonated a YouTube executive during a fundraising appeal with Goldman Sachs. The bank ultimately chose not to invest. Ozy now faces an FBI investigation into the matter, The New York Times reported.

The fallout was quick. One of Ozy’s first investors sold his shares in the company. A number of advertisers, including JP Morgan and Ford, have suspended campaigns with the site.

On Monday, Ozy’s investor, LifeLine Legacy Holdings LLC, filed a complaint alleging that Ozy Media “failed to disclose material information” about its activities, including the details of that phone call, when it requested an investment from LifeLine. “If LifeLine had known the above facts, it would never have invested in Ozy Media,” says the lawsuit, which was filed in US District Court for the Northern District of California. Watson declined to comment on the lawsuit.

Founded in 2013 on the promise of creating a new kind of media business aimed at millennials, Ozy has raised more than $ 83 million in funding as of 2020, and the support of many celebrities and prominent investors. (Ozy investors also included Insider’s parent Axel Springer.)

Whether advertisers or other potential investors will look past Ozy’s metrics issues remains an open question.

In a video interview with Insider, accompanied by Phil Singer of Marathon Strategies, who helps him with crisis PR, Watson said that in the areas of data, marketing and leadership, “there are times when we we are mistaken “, whether not to use third-party metrics or inappropriately attribute marketing messages. But he insisted the business was “not a house of cards.”

“I want to take responsibility for the problems we have with data, marketing and leadership, and improve them. But we are not talking about something that is fundamentally broken,” he said.

He said the company will use a third-party metrics provider, which he won’t name, before resuming conversations with advertisers in the coming weeks, and publicly release Ozy’s hearing on a monthly basis. “At the end of the day, I am the CEO and I take responsibility.”

OzyFest 2018

Ozyfest co-founder Carlos Watson speaking at a panel at Ozyfest in 2018.

Brad Barket / Getty Images for Ozy Media


As Insider reported last week, former Ozy staff had raised questions about the actual audience size of Ozy’s newsletter, wondering if the millions of alleged subscribers actually chose to receive his emails.

According to a report document sent by a third-party advertising network to an advertiser in Ozy, Ozy’s “Presidential Daily Brief” newsletter had around 6-8 million subscribers in 2020 and 2021. But during the campaign to advertiser, only about 8-14% of subscribers opened emails containing their ads.

Based on the “open rate” – a common industry standard for assessing a newsletter’s engagement level – Ozy’s newsletters were the worst performing for this advertiser among the dozen publishers with whom he worked for the campaign, including CNN and Condé Nast. The average open rate during the campaign period on all newsletters from publishers, including Ozy, was around 28%, according to the document.

Ozy’s “Whiskey in Your Coffee” newsletter had between 3 and 3.6 million newsletter subscribers during the advertiser’s campaign, for example, but had an open rate of around 7 , 5% to 10% subscribers, according to the document.

Watson pushed back those numbers, saying Ozy’s newsletters had “very good” open rates of up to 25% for “regular readers” and that the company sold newsletter ads on a opens basis. “You only pay for what you get,” he said.

Elsewhere, at this time, it’s unclear which of Ozy’s purported digital ad providers are still working with the company.

Although they are listed on the Ozy.com Ads.txt page – a file that publishers use to show advertisers a list of genuine sellers in their digital ad inventory – the spokespersons for PubMatic, Index Exchange and OpenX said they had never had a direct relationship with Ozy. . Teads said he hadn’t worked with the company for over a year. The other companies listed in the Ads.txt file did not respond to Insider’s requests for comment, declined to comment, or could not be reached for comment.

Watson said the company had tested ad campaigns with PubMatic and OpenX campaigns, but the strategy did not continue because Ozy preferred to sell directly to advertisers.

It is not uncommon for publishers to fail to keep their Ads.txt files up to date, and a brief analysis of the Ozy website suggests that programmatic display advertising was not a significant source of revenue for the business. . Ozy has also generated ad revenue through newsletters, videos, podcasts, and event sponsorships – deals that are traditionally negotiated directly between advertisers and publishers, rather than through programmatic ad auctions.

Some Ozy staff do not plan to return

Three current employees Insider spoke to on Monday said they were shocked to learn Watson was planning to relaunch Ozy so soon after learning the company was shutting down and they would lose their jobs. Watson told Insider some of the staff have rehired, but won’t say how many.

ozy carlos watson

Carlos Watson, will.i.am and Wyclef Jean attend OZY Fusion Fest 2016 at Rumsey Playfield in Central Park on July 23, 2016 in New York City.

Ozy


“Finding out on a Friday that your business no longer exists and then someone saying Monday that I could come back is a huge slap in the face, I think, for everyone,” said one employee.

Of those three staff, two said they would not stay at Ozy, while one was still undecided. One of Ozy’s biggest stars, journalist Katty Kay, resigned last week. Last week, current and former Ozy staff told Insider about a frenzied corporate culture and also voiced their own doubts about the company.

“It’s so wild,” another such employee said Monday. “‘The Carlos Watson Show’ can not keep on going. No celebrity will come. No advertiser is going to advertise with us, at least right now. “

Lara O’Reilly contributed reporting.


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