Data-Labor-Technology

“We’re testing,” L’Oreal Chief Digital and Marketing Officer Han Wen said, when asked about the beauty giant’s use of AI in current marketing efforts. “We are doing a lot of testing in ways that help us be able to meet our consumer goal. As we talk about the acceleration of content creation, we have to think about what the power of generative AI can be to get us there faster.”

Wen continued, “We’re testing with multiple brands that are brand safe, in a way that is also safe and fair to creators we work with in the space. We’re at the very beginning phases of this. The power of generative AI is obvious. The question mark is around, how do we do this and leverage this in a meaningful way that allows us as a marketing organization to deliver better on consumer expectation?” (Wen declined to specify how exactly L’Oreal is testing generative AI for its brands.)

Marketers and agency execs say that while clients are interested in ways to use generative AI for marketing, they are more focused on how AI can be used in the creative process rather than on using AI to create work that will be released to the public. The potential legal ramifications — with the various generative AI platforms scraping publishers, artists and others to learn and create their outputs without consent from said publishers, artists and others — could create an issue for clients who use those platforms to create work. 

“There’s some trepidation about the forward facing work,” said Giant Spoon co-founder Jon Haber. “There are legal battles yet to come. No one wants to be the canary in the coal mine. That’s slowing down clients’ desire to use it for forward facing work.”

Michael Liu, svp and head of innovation at Carat US, said that clients are cautious, given the potential legal issues, and that the agency is talking to clients’ legal teams about generative AI platforms’ methods of data collection.

Ilinca Barsan, director of data science at Wunderman Thompson, echoed that sentiment, noting that marketers and agencies are not using something they’ve built from scratch and have questions about what generative AI platforms have been trained on. “Mitigating risk will be difficult with this technology,” said Barsan, who noted that a “test and learn” phase was a fair assessment of where brands are at with generative AI use.

With that said, Carat US is working with clients on projects using the technology, said Liu, without sharing specifics. He added that much of the focus now is on education and testing and learning, rather than public work, when it comes to generative AI. 

“A lot of PR driven efforts have been released so far to say, ‘Hey we’re doing something here,’” said Liu, adding that marketers like Coca-Cola asking for art and images for their brand are “playing with their own sandbox of assets and that’s the safest way to go” so far when using AI. 

“I’m sure that we are just scratching the surface of what we can do with generative AI in marketing,” said Christian Pierre, chief data intelligence officer at Gut Miami.

“I wouldn’t be surprised if in 2024 most of the ideas in the Creative Data category in any major industry awards show will be some form of generative AI, or inspired from it,” Pierre said.

3 Questions with Dara Treseder, CMO of software company Autodesk

You recently left your post as Peloton CMO to become Autodesk CMO. How has that transition been? 

Over the past five months, it’s been amazing. I’ve reorganized my marketing team and essentially I’m really positive positioning us to continue to deliver for our customers, right and really drive that next wave of growth. That’s why you see some of the work we’ve been doing is around humanizing our brand, and really marketing the totality of what we have to offer to our vast and diverse range of incredible users. We’re going beyond marketing just our products to really marketing the possibilities and the capabilities of what our incredible customers can accomplish with our technology.

What’s the difference between marketing a consumer-facing company like Peloton versus Autodesk, a business-facing company?

My whole thing is business to human. It’s really important that we are focusing on the experience and deepening that emotional connection.

How so?

Just because you are a B2B customer doesn’t mean that you have any lower expectations of the experience that you want to have or that you feel any differently than the brands that you use. At the end of the day as a marketer, your job is to make sure that you are communicating with your audience, you’re educating them [and] you’re inspiring them. — Kimeko McCoy

By the Numbers

What marketers need to know about managing social media through an economic downturn

With talk of economic uncertainty, advertisers are under more pressure than ever to spend efficiently and make every ad dollar count. Many have spent the last half year pushing for more performance marketing efforts to stand a better chance in proving ROI. Moving forward, social media will continue, as it has thus far, to play a pivotal role in terms of both spend and strategy, according to a new report from social media analytics company Sprout Social. See key details below:

•  77% of consumers are more likely to spend more with brands they feel connected to, up from 57% in 2018.
• More than 75% of consumers expect a response from brands in less than 24 hours.
• Failing to respond to customers on time could result in 36% of consumers sharing that negative experience with friends and family. A comparable 31% won’t complete their purchase, and 30% will buy from a competitor. — Kimeko McCoy

Quote of the Week

“Our brand partners are not moving away from TikTok or deprioritizing their TikTok strategy. Still, they are definitely pushing to ensure their campaigns are cross-platform and that there are contingency plans in place should the ban go into effect.”

— said Keith Bendes, vp of strategy at Linqia, when asked about how cautious brands are being given the potential (once again) for a TikTok ban.

What We’ve Covered

• What to watch for in TV advertising’s 2023 upfront market
• How agencies are shaping the future of DEI beyond their own walls
• TikTok’s CEO faces bipartisan skepticism in first Congressional hearing on security concerns

Still, the launch has left a few major investment execs — and their clients — feeling underwhelmed with what Netflix brought to its ad-supported launch back on Nov. 3, 2022. One major holding company head of investment noted that several clients expressed a strong desire to be part of that launch, despite very few subscribers (the ad-supported tier now counts about 1 million subs), but the exec was disheartened to find the streamer had not cut  back further on its $55 CPM (which was down from an initial $65) or offering some sort of added value for launch advertisers. 

“Since then, I actually polled the team to see how much interest there been post launch among clients feeling like they needed to get on Netflix? [There was] Zero,” said the head of investment, who spoke on of anonymity.

“A lot of clients dropped out at that point, because they said that it’s not worth it,” continued the exec, who thinks Netflix would be more fairly priced at between a $45-50 CPM. “Those clients that dropped out because of the price obviously haven’t come back in. But then we also haven’t had clients post launch that came and said, ‘Well, I wasn’t in the launch, but now I really want to be on Netflix.’”

The head of activation at another major media agency group noted that make goods continue to be offered to advertisers. “They literally are giving money back because they can’t actually deliver what they sold in due to their low subscriber base,” said the executive who also spoke on condition of anonymity. “They’ve pissed everyone off by overcharging and underdelivering.”

The first exec also pointed out that the ad sales operation needs to get more sophisticated. “They’re still in their infancy with their ad model, meaning their targeting is not yet up to par with some of the other streaming providers.”

Even the tech side of Netflix’s ad business is being scrutinized, although Netflix isn’t being singled out per se. “Many AVOD/OTT companies are experiencing similar challenges in determining how to balance and optimize their own subscriber dynamics with the growing expectations of advertisers who demand measurable outcomes,” said Herman Yang, head of Moloco Enterprise, which is pushing AVOD providers to move to machine learning solutions with dynamic pricing.

All that said, the activation executive did acknowledge that despite the frustration, media agencies need to work with Netflix because of its immense potential once Jeremi Gorman and Peter Naylor, the two execs hired away from Snap last August (mostly after launch deals had already been secured), have their teams in place. Which is apparently happening now. 

“At some point they will figure things out and you don’t want to be last man in,” explained the exec.

A third executive at another major media agency network agreed that Netflix will ultimately be a must-buy at some point, just not today. “Considering how much time and space Netflix occupies in consumers’ lives, that incremental reach will come at a premium,” said the exec. “Netflix is betting on quality over quantity. It’s a bit of a long-game approach.”

Where that Microsoft deal — a bit of a head-scratcher to media agencies — goes from here remains unknown, as Gorman and Naylor lay out their plans for selling the balance of 2023, including in the upfront.

For its part, Netflix believes it’s right where it needs to be. “We continue to be excited about the growth and performance of our ads business, and we are confident that we are building the best team to deliver on our clients’ objectives,” read a statement from Netflix. “As we expand globally, we will keep evaluating how the industry is evolving to ensure we are best positioned to build a forever advertising business.”

One vocal supporter of Netflix in the media agency world is Matt Kramer, who’s head of brand investment at Media.Monks. “It’s unfair, I think, for us to think that they’re gonna get it exactly perfect from the very beginning,” said Kramer, who said his team did their homework to know what to expect at launch and, as a result, weren’t disappointed. “As Netflix grows their ad supported subscriptions, that supply and demand will become more equalized, and we will see that reflected in the CPMs.”

Kramer said he is seeing a dramatic ramping up of Netflix’s abilities since launch. “They’re building an amazing team, an amazing roster, and I think they’ve learned a lot from the launch,” he said.

“They now have more data, they now have a better understanding of how quickly they’re going to be able to grow the AVOD portion of their business. And so I think their forecasting, as well as the talent that they have there, is amazingly better than it was in the very beginning.”

As for that talent, a LinkedIn search shows that Netflix has filled several sales director positions since January, including Kinsey Osberg Tamberrino, fomerly senior vp of national sales at Vevo; Doug Brodman, who was most recently with Twitter; Victoria Morris from Google/YouTube; Valerie Bischak who most recently was at Amobee but has considerable sales experience at Viacom; and Michaela Giovengo, who most recently was with Disney Ad Sales and Hulu before that.

Call it damage control. 

And there’s a lot to control. Some 16 myths, to be precise. All of them are featured below in the document TikTok ad execs have been sharing with marketers following the congressional hearing. 

For those readers who are short on time, here’s the cliffsnotes: 

• Ownership 

There have long been concerns about TikTok’s ownership – namely that ByteDance is a Chinese company, and that company has ties to the Chinese Government. TikTok states that while ByteDance was indeed founded by Chinese entrepreneurs, around 60% of it is owned by institutional investors: Carlyle Group, General Atlantic and Susquehanna International Group – so it’s predominantly a private equity-backed business nowadays. And let’s not forget its five-strong board; three out of five of which are U.S. based, with the remaining two residing in Singapore and Hong Kong, respectively.

• Ties to Chinese Government

It’s well known that to operate news and information products within mainland China, media licenses are required, and the Chinese Government will legally own 1% of those entities. But TikTok doesn’t operate in mainland China, only its Chinese counterpart Douyin does, so those rules don’t apply.

• Content 

TikTok has always positioned itself as an entertainment app, meaning the content is predominantly UGC — not content created by the Chinese Government. And given that TikTok can’t be accessed in China, it makes sense that the app’s content moderation takes place elsewhere, by the platform’s U.S. and Ireland Trust and Safety teams, which oversee the content for the US and Europe, respectively.

• Data use (or abuse)

Since Trump’s loud call to ban the app back in 2020, TikTok has touted Project Texas as its way of appeasing concerns about how user data is managed. And even at the hearing, Project Texas was used as a response to answer numerous repeated questions from Congress. But since June 2022, 100% of U.S. data has been routed to Oracle and USDU infrastructure, which is managed by, you guessed it, Americans, in the U.S..

• Surveillance 

There’s an ongoing narrative that the app has the capability to spy on U.S. citizens. This was made clear when it was announced last month that the FBI and DOJ are investigating ByteDance’s use of TikTok to spy on Forbes’ journalists.

Here’s a copy of the full myth-buster document:

The fact that such a document exists says everything there is to know about where TikTok’s priorities are now: distancing itself from Beijing authorities. To be fair, this isn’t the first time those ties have dominated the political and cultural discourse. Back in 2020, former president Donald Trump ordered the ban of new downloads of the app in the U.S. 

This time, however, it’s different. 

Marketers are warier than ever of the geopolitical issues around TikTok. Should they act on those concerns and start pulling ad dollars from the app then it could compound what is already a very precarious situation. To be clear, this isn’t an immediate threat. Most marketers who spoke to Digiday have said they intend to keep advertising on the app. That said, mud sticks. So much so that those same marketers are keeping a watchful eye and are ready to adapt their strategies and budgets, should the situation change at any point. 

Little wonder then why TikTok execs are taking steps to try and change the narrative around the business. 

“The concerns we’ve heard from a handful of clients that aren’t on TikTok yet are more around not wanting to invest in the platform if it’s going to get banned,” said Adam Telian, vp of media services at New Engen. 

Whatever happens next, TikTok’s ad execs are going to be doing more than debunking myths over the coming weeks. Marketers will demand it. After all, they have a lot of unanswered questions that neither the congressional hearing, the Transparency and Accountability Center or Project Texas have been able to address. 

“It’s been three years since these concerns were initially raised,” said Kaela Green, vp paid social at Basis Technologies. “How long does it take? TikTok’s CEO said that they’ve spent about $1.5 billion on these efforts, that the data will be protected in this way — but why is it not [protected] right now? Why has it been deprioritized? Why aren’t we in a place where we can very confidently speak to it yet?”

More and more marketers are starting to concur. Indeed, sentiment from them toward TikTok is slowly starting  to shift. 

“If confidence in TikTok’s longevity is continuously undermined, brands and creators are going to start using other platforms with more frequency,” said Jess Phillips, founder and CEO of The Social Standard. “It’s a simple hedge that will be necessary.”