Month: May 2019

Retailers like Target and Walmart, which recently announced improvements to Walmart Media Group, are rethinking the potential of their media businesses in the Amazon age. Amazon’s advertising business broke $10 billion last year, doubling the year prior. Other retailers are sitting on both first-party customer data and brand relationships (even if they’re not as vast as Amazon’s) and want a piece of the pie. It’s not going to be easy: Amazon has built a sophisticated self-supported ad business over the past few years that’s both promotional and pay-to-play. That’s given Amazon a big advantage over retail media competitors: Digiday surveyed media buyers in April to find out what retailers they were buying ads with. Ninety-percent said they were buying ads on Amazon, while 23% said they were buying ads on Walmart and 16% said they were buying ads on Target.

To make up for that lag, retail media businesses are being overhauled.

Roundel will tap into Target’s first-party customer data across its online site as well as its mobile app, which can be used to trace customer behavior in stores as well. Target protects its first-party data: According to a Target employee working on the company’s digital ads team, Target doesn’t share customer data with external partners, like customer management or analytics vendors. Everything that Target has done to collect, organize and understand its customer data has been done in house, which, according to Kristi Argyilan, is Target’s advantage.

“The most important piece of this business is that our first-party data allows us to base our audiences off of real people,” said Argyilan. “The results when you market and use data based on real people is significantly better than data pools that are out there.” In return, Roundel offers reporting on ad performance for brands on engagement, impressions and sales. Current Roundel clients include Dyson, Disney, Hasbro and Coca-Cola.

Argyilan said that by allocating more resources and fleshing out Target’s media business, it will not just boost revenue from brand partners — according to the company, Target Media Network grew by double digits this year over last, but it declined to share specifics — but will also improve customer experience.

“The goal is to personalize,” said Argyilan. “We want people to see relevant ads regardless of where they’re shopping, or even when they’re not shopping.”

Digiday research: Amazon wins retail media buys
Target, Walmart and Kroger are all gunning for media buyers’ ad dollars, but Amazon is the clear winner, according to a media buyer survey conducted earlier this year by Digiday.

Breaking down Hims’ marketing strategy
At the Digiday Retail Summit in Austin, Texas this week, Hims’ vice president of marketing and acquisition, Emily Boschwitz, shared how the company is thinking about what new channels to test as it seeks to stand out from the bevy of DTC brands that are heavily reliant on digital advertising. Here are some of the highlights.

Test and learn: Boschwitz said that Hims is testing two dozen or so different channels at any given time. “It’s been a really great way to get around the reliance on digital marketing that so many companies have today,” Boschwitz said. Out of home, audio, and TV are some of the channels that Hims is most interested in currently — anywhere where men’s eyeballs might be for a few minutes any given day. In one of its whackier out-of-home advertising placements, Hims took over all the men’s bathrooms in the San Francisco Giants’ stadium.

Attribution woes: At the same time, it can be difficult to measure the effectiveness of audio, out-of-home, and TV ads. A customer might not use a promo code right away, but those ads may help them think about the brand a few months later when they’re ready to make a purchase. “We’ll do a lot of regression modeling, we’ll do a city lift vs. baseline analysis, where we have a holdout city, we’ll also do a ‘how did you hear about us surveys,’ and really try to bring all that data together,” Boschwitz said when asked how Hims tries to solve for attribution.

Hims vs. Hers: Hims launched its line of female health products, Hers, last November, and Boschwitz said that the company is seeing that it has to tailor its messaging slightly differently to these two demographics. “With our men, we’re seeing that these are big issues that they’re thinking about all the time, but they’ve never thought about getting care for it. And it’s been really an easier conversation to introduce these products and come in and purchase,” Boschwitz said. For female consumers, Boschwitz said that it’s taken longer to establish trust, because many of them have been paying higher prices in the past for these same products, and they have distrust for the company. — Anna Hensel

Walmart’s Gold Stars
A Bloomberg report on Thursday detailed Walmart’s “Great Workplace” program, a new initiative designed to improve conditions for store employees that’s pegged on new leadership and compensation structures, training programs and a gold-star employee rewards system. The program is being rolled out to stores incrementally, but is currently live in 75 Walmart Neighborhood Markets, and will be introduced in 50 Supercenter locations next.

There are elements of the program that border on pandering. For instance, the gold star program results in rewards like a free lunch with a supervisor, and, according to Bloomberg, a prompt to managers tells them to give out candy in meetings when ideas are suggested. But within Great Workplace is a push to pass along more power to the store-manager level, an initiative that mirrors attempts at other big-box retailers, including Target, Best Buy and Kohl’s, to reform the way that in-store managers and employees operate. Target and Best Buy have all equipped their store employees with handheld devices that enable mobile checkout. Kohl’s, meanwhile, has built a real-time data system that prompts managers with action items based on how items are selling or customer foot traffic.

Walmart’s push to focus on improving the workplace for store employees comes as the company also makes headlines for rolling out in-aisle robots that can monitor stock levels and manage inventory. At least the robots are exempt from the gold star program. — Hilary Milnes

What we’ve covered at the NewFronts

• What we learned at the 2019 NewFronts.
• The once-exuberant NewFronts have a sober tone (and less VR).
• TV networks are blurring the lines between upfronts and NewFronts.

The post Target wants to build a media business to rival Amazon appeared first on Digiday.

“There’s concern among advertisers that ad tech vendors could be using bid shading to take a margin from their ad spend based on the contribution that can’t be proven,” said Jochen Schlosser, chief strategy officer at ad tech vendor Adform. “It’s only the very mature advertisers that are asking us about bid shading, and when they do, they know more about the business model behind it.”

Some ad tech vendors wrap their bid shading algorithms up in complicated pricing structures in order to take a larger cut of media dollars, according to ad tech and agency sources. For example, rather than take a standard 10% cut from bids that are won using bid shading, vendors can charge a higher margin without the advertisers’ knowing the bid-clearing price. It’s effectively another hidden fee for advertisers. Ad tech vendors often use their own proprietary bid shading technology and tend to not want to disclose their internal pricing mechanics as well as prediction capabilities. Those vendors may also be reluctant to provide full transparency into the traffic that they’re buying and how it’s treated, said Joe Were, head of business development, EMEA for ad tech developer Iponweb.

Only a few advertisers spending large sums on programmatic have the know-how to get full transparency into how ad tech innovations like bid shading make a profit. But Google’s shift to first-price auctions has pushed more advertisers and their agencies to demand, evaluate and adopt bid-shading technologies, according to ad tech sources interviewed for this article.

“The marketers we work with don’t know how to feel about bid shading,” said Chris Kane, founder of programmatic consultancy Jounce Media. “They recognize the value that comes with using the technology, but they’re also fearful of the risk they could be exposed to as a result of some of the black box models around the technology.”

Advertisers that talk directly to ad tech firms are a small but growing group. And as real as their interest in bid shading is, the tech is still not a big priority for many advertisers still getting to grips with programmatic. The more advertisers understand how their ad tech works, whether that’s from consolidating their DSPs like Hershey’s or by conducting their own audits like Deutsche Telekom, the more they realize taking on something as complicated as bid shading could be a step too far.

“Moving forward with bid shading could ultimately work out better for brands because it’s probably going to mean they are buying media cheaper than they were without it,” said Dan Larden, Infectious Media’s global strategic partnerships director. “The issue is, there tends to be hidden fees attached to those bid shading models that brands don’t always know about without some investigation.”

When Hershey’s looked for a main DSP vendor last year, for example, bid shading wasn’t high on the list of must-haves for the advertiser. Transparent fees were, however, as Hershey’s head of addressable media Vincent Rinaldi wanted a clear starting point for how it ascribed value to its programmatic investments. Eventually, Rinaldi’s focus will move beyond tech fees given he has already acknowledged there’s a long list of factors such as auction latency and DSP match rates that influence the performance of its bids alongside price. Google’s switch to first price auctions hasn’t caused any major deviations from that plan.

One ad tech executive, who spoke to Digiday on condition of anonymity, has prodded the advertisers they work with to question their agencies on their approach to bid shading, or advised them to pursue a direct relationship with a DSP to find out. Bid shading isn’t top of mind for the ad tech executive’s clients who primarily view it as a tool used by DSPs to push back against the attempts by publishers and SSPs to inflate the lowest price at which an ad can be sold within first-price auctions, said the executive.

In short, bid shading isn’t much more than a short-term fix to help advertisers better understand the dynamics at play in their programmatic auctions.

The post Bid shading is losing favor with wary advertisers appeared first on Digiday.

ITP 2.2 does not disarm those workarounds entirely. Instead the update is largely intended to ensure that the companies are not using the workarounds to side-step Safari’s anti-tracking feature and persistently track people around the web.

ITP 2.2 significantly narrows the workarounds’ tracking window to 24 hours, restricting the ability of companies like Facebook and Google to measure traffic and attribute ads. “I expect that this has a big impact on attribution,” said Ameet Shah, vp of data and technology strategy at Prohaska Consulting. We break down what’s going on.

WTF is ITP again?
ITP is a feature that Apple added to Safari in 2017 to curtail companies’ abilities to monitor people’s browsing behavior when they visit other companies’ sites. Initially, Apple took aim at the third-party cookies that platforms like Facebook and Google, as well as a bevy of ad tech vendors, place on sites they don’t own that allow them to track people across the various sites that carry their third-party cookies. Then earlier this year, Apple updated ITP to account for a workaround that companies came up with in which they have a site drop a first-party cookie that mimics the functionality of the third-party cookie. With ITP 2.1, Safari deletes these first-party cookies seven days after they were installed on a browser.

If ITP 2.1 already affected these first-party cookie workarounds, what’s different about ITP 2.2?
ITP 2.2 cuts the first-party cookie’s lifespan from seven days to one day. As a result, the first-party cookies that Facebook and Google have introduced in order to continue measuring site traffic and attributing ads will be deleted after 24 hours. As a result, if a person clicks on an ad for a product on Friday and decides to take the weekend to think about buying, then the cookie wouldn’t be around on Monday to register when the person returns directly to the site to buy the product.

“Many actions advertisers are interested in attributing back to digital marketing efforts happen outside the newly implemented 24-hour window, creating a blind spot for advertisers and brands,” said Amanda Martin, vp of enterprise partnerships at Goodway Group.

I thought Apple was fine with companies using first-party cookies to attribute ads?
It was and still is. But it’s wary of companies taking advantage of that functionality to do more than attribute ads or analyze traffic, which is why ITP 2.2 only applies to a certain kind of first-party cookie.

What kind of first-party cookie does ITP 2.2 apply to?
It applies to the persistent first-party cookie that a site drops on a person’s browser on behalf of another company that Apple has determined is able to track people across multiple sites that it does not own. Specifically, the update is concerned with companies that use a method called link decoration to drop the first-party cookie and track people on the site. As it happens, Facebook’s and Google’s ITP workarounds employ link decoration to continue tracking Safari users on third-party sites.

WTF is link decoration?
Link decoration provides a way to attach information to a URL that a person clicks on in order to pass that information to the destination site. For example, let’s say you click a link in FakePublisher’s email newsletter to an article on its site. The newsletter can attach information to that URL — ex. http://fakepublisher.com?referrer=ouremailnewsletter — so that it knows a person navigated to its site by clicking a link in its email newsletter.

That sounds pretty common. What’s the problem?
The problem is that companies can use link decoration to pass information to other sites that enables them to persistently track a person on those sites. This practice is called cross-site tracking via link decoration, and it’s what Apple is addressing with ITP 2.2.

How does cross-site tracking via link decoration work?
It’s a three-step process that involves attaching a tracking monitor to a link, having the destination site store that tracking monitor and notifying the company that set the tracking monitor when the person who clicked on the link has visited the site, even if it has been days since the person clicked that initial link. Essentially, the link gets a unique identifier, which is then stored by the destination site in a first-party cookie. Then, when a page loads on a site with Facebook’s pixel or Google’s tag, those tracking mechanisms look for the first-party cookie, pull the click ID and send it to Facebook or Google, along with whatever other information that may be designed to attached, such as the page URL which enables them measure product purchases if it’s a transaction confirmation page. This enables Facebook and Google to track a person’s visits to the site long after they had clicked on the initial link, so long as the first-party cookie has not expired.

OK, but is this a big deal?
In some ways, yes. But it’s limited to Apple’s Safari browser, which limits the scope of its impact. On desktop, Safari accounted for only 4% of browser sessions worldwide in April 2019, according to NetMarketShare. However, for mobile, Safari accounted for 26% of browser sessions that month.

What are Facebook and Google doing about this?
Unclear.

“We have solutions in place to help our clients continue to measure their advertising in accordance with Apple’s policies,” said a Google spokesperson in an emailed statement.

“We are working with our partners to better understand these latest updates and how they affect Facebook. We plan to share more guidance for businesses in the future,” said Facebook spokesperson Joe Osborne in an emailed statement.

Facebook and Google could follow Microsoft’s example. In January 2018, the company’s advertising division introduced its own ITP workaround that is similar to Facebook’s and Google’s examples except that it uses a session cookie that expires once a person closes their Safari browser. ITP 2.2 only applies to persistent cookies that remain on the browser after it has been closed.

Are Facebook and Google the only companies affected by ITP 2.2?
No, though they are probably the biggest ones. ITP 2.2 would affect any company that uses link decoration to track people around the web. That includes ad tech vendors, measurement firms, affiliate marketers and certain types of influencers.

How would affiliate marketers and influencers be affected?
Publishers and individual bloggers use link decoration to get credit when people click on a product link featured on their sites and purchase the product on the merchant’s site. These publishers and bloggers would not be credited with a purchase made more than a day after a person clicked on that product link from their sites. Without that credit, the publisher or blogger may not be compensated for contributing to the purchase.

“That’s one key area that we’re going to start seeing companies or this market of small businesses start going out of business if they’re not going to get compensated properly. These are downstream impacts from those bad actors [that take advantage of link decoration to follow people around the web],” said Desiree Toto, vp of product development at affiliate marketing network CJ Affiliate.

The post WTF is Apple’s ITP 2.2 update? appeared first on Digiday.

The decision to include the brand studios makes sense in a moment when the branded content business is getting more competitive. In terms of value, the NewFronts allow publishers to stand out in a room full of marketers. This doesn’t immediately lead to a deal, but most publishers also said that including the studios can help initiate a relationship that often takes months to consummate.

“[The point of the presentations] was never to sell a particular thing. It was selling a process which could get people hungry enough to get us invited in, or to say ‘yes’ when we asked to come in,” said Greg Coleman, entrepreneur in residence at Lerer Hippeau Ventures and the former president of BuzzFeed.

On some level, selling the brand studio to NewFront attendees is an imperfect fit. While the promise of video series still represents the NewFronts’ foundation, the brand studio pitches aren’t necessarily relevant to everybody in the room. At Vice’s NewFront, one brand-side attendee, which spends most of its marketing budget on direct response advertising, said branded content was not something they’d bother investing in.

A second brand-side attendee said they relied on an in-house creative team for most of their content. “Why pay extra?” that source said.

This year, some publishers emphasized that they could help with more than just content creation. Ryan Mack, COO of Vice’s agency Virtue, talked up its access to “proprietary intelligence” and its ability to help advertisers figure out how to navigate third-party platforms, such as Netflix and Hulu.

Some of the week’s presentations did not exactly get rapturous receptions. The sizzle reel that T Brand President Amber Guild introduced during the Times’s presentation drew no applause from the audience; during Virtue and Mack’s presentation, chatter could be heard creeping in from the back of the banquet hall where Vice staged its NewFront.

Yet, there are plenty of reasons to get through any awkwardness. Michael Wolf, head of U.S. investment at Dentsu Aegis media agency Amplifi, said that the branded-content presentations make sense for clients who prefer the convenience of one-stop shopping. And even though some agencies might see a publisher’s creative studio as a threat, Wolf said that more specialized agencies that don’t handle certain sides of a client’s needs — such as experiential marketing or custom content creation — are happy to see those options.

There is also evidence that showing off your brand studio at the NewFronts can drive results, too. One source from a publisher that showcased its brand studio at the 2017 NewFront said their decision to showcase their brand studio paid off in some new business, with multiple seven-figure deals, including several from non-endemic advertisers. In 2018, just months after finalizing its acquisition of Time Inc., Meredith managed to sell multiple Foundry-driven projects to NewFront attendees, a spokesperson said.

The deals did take a long time to materialize, however. “You go in, and there’s a hope you’re going to be doing deals right away,” that source said, who said some of the deals weren’t closed until nine months after the NewFronts were over. “But the week or two following NewFronts, there was so much fatigue. You’d call buyers, they couldn’t even remember which ones corresponded to which publisher.”

The post NewFronts publishers plug their brand studios, but deals will still take time appeared first on Digiday.

Currently, those funds are being spent on a celebrity seeding program aimed at influencers, partnerships with publishers and a targeted email and affiliate marketing strategy using Boundless Labs. At SXSW, Zenpup partnered with Nylon on a festival showcase. The brand is currently in talks to also work with Paper Magazine.

Zenpup recognized the power of influencer posts after celebrity hairstylist Jen Atkin posted about the brand. The company saw that Atkin had adopted a dog who was suffering from separation anxiety and sent her product with a personalized note for her dog. Atkin then organically posted about it. Since then, other influencers like model Bella Hadid have posted about the brand after receiving products which have helped the company’s Instagram following grow to almost 19,000 since December.

“We kind of doubled down on that when we saw this traction that we’re getting in the celebrity and kind of higher-end market,” said Zenpup co-founder and CMO, Nicholas Charles Weatherhead. “We devised this whole influencer strategy in the celebrity seeding a program to get the word out organically.”

Using word-of-mouth to market CBD is commonplace, according to industry analysts.

“Over the last two years almost all the growth that’s taking place in CBD has been based on word-of-mouth marketing and that still has a ton of traction because with formal advertising we’re really limited,” said Jamie Schau, head of research for Brightfield Group, a market research group that tracks the CBD and cannabis market.

Zenpup considered using banner ads but, after talking to various ad networks, decided to eschew that for now because they don’t want to end up with banner ads on Grindr or Pornhub. “We couldn’t really nail down where the hell our stuff would end up once we did the buy,” said Weatherhead.

Platforms like Facebook, Instagram or Google are off-limits for CBD brands’ advertising, as the U.S. has yet to legalize marijuana on a federal level. That’s why other CBD brands like Scotch Porter and Medterra have used similar approaches, tapping influencers and experiential partnerships at SXSW, respectively. Still, for a small niche brand like Zenpup, the lack of scalable marketing tactics can be tough.

Instead, Zenpup is focused on growing its organic social followers producing blog content to educate consumers, its email marketing strategy and its publisher partnerships. To date, the company hasn’t paid influencers for their posts.

The CBD market is expected to reach $21.8 billion in sales by 2022 but CBD infused pet products will make up just $1.1 billion of those sales, per Brightfield Group’s projections. Pet products made up 5.1% of the market in 2018 but Brightfield expects that to decline to 3.5% in 2019.

That’s why, for a brand like Zenpup, the differentiation of being a luxury brand will be key. The company, which sells its CBD treats and sprays for between $25 to $60 a pop, recognized that many of the brands in the space come from mom-and-pop creators and use traditional cannabis trades to get the word out. Zenpup is modeled after Hims with an elevated brand proposition. By using a specific, clean aesthetic and getting celebrity influencers involved the company is aiming to be that luxury brand.

“People are over the novelty of being able to purchase some no-name brand at the gas station,” wrote Andrew Hemingway, president of Toasted Collective, an agency that has developed a programmatic approach for cannabis brands, in an email. “The brands catering their product and messaging to specific ideal customer profiles — from lux to affordable and everything in between — will rule the day.”

The post Zenpup is using (human) influencers as it tries to break into the CBD market for pets appeared first on Digiday.

The strategy was pegged on a fast-growing DTC channel: In the first quarter of 2018, DTC revenue was up 17% compared to the year prior, the sharpest spike in sales the company had ever seen for the DTC business. But for the past couple quarters, growth and revenue share has slowed. The athletic apparel provider reported during its first quarter 2019 earnings Thursday that its direct-to-consumer sales fell by 6%, while wholesale sales increased 5%. DTC sales now account for 27% of Under Armour’s business, compared to 30% a year ago.

The decline wasn’t unexpected. Under Armour president and chief operating officer Patrik Frisk said last quarter that Under Armour was projecting a slight decline in its direct-to-consumer sales in Q1. He attributed the slowdown to the fact that Under Armour isn’t selling as much product at a discounted price online and in its own stores to drive sales: In the past quarter, it cut its promotional days by three.

For a traditionally wholesale brand like Under Armour, driving direct sales has become table stakes: It affords the retailer clear insight into its customers, control over pricing and branding, and higher margins. Its biggest competitor, Nike, reported that its DTC sales grew 16% in 2018. A dip is cause for concern, too: Jessica Ramirez, a retail research analyst with Jane Hali and Associates notes that it is “rare in this day and age” for a legacy retailer to report a sales decline in its DTC business, given that many of these retailers are just starting to build them out.

Under Armour executives have told investors over the past year that they believe the key to growing its DTC channel is by establishing itself as a premium brand. To do so, its focusing its efforts on opening more of what it calls Brand Houses — new store concepts that it started piloting in 2015. They’re specialty retail stores that offer some of the company’s highest-end products and often feature exclusive products for that city.

But the reality is that much of Under Armour’s physical footprint is still located in outlet malls. In North America, Under Armour currently has 80 Brand Houses compared to 217 Factory Houses, the name for its outlet stores. Construction has also slowed on Under Armour’s planned flagship store — located on Fifth Avenue, the store was originally supposed to open in 2019, but now its opening is delayed until 2021.

Tiffany Hogan, a senior analyst with Kantar Consulting, said that Under Armour also has more opportunity to personalize its assortment in some of its brand stores in local markets. Not just to offer products that are only sold in that city, but to also use the data its collecting through its DTC channels to create special sections in its stores with the products that are most purchased within that area, like Nike has done in its House of Innovation stores.

Under Armour did say at its investor day toward the end of 2018 that it has made investments in uniting the data collected by its sites, stores, fitness apps, and social media, to create broader customer profiles that it said should help it in its personalization efforts. UnderArmour also has a suite of health and fitness apps that it’s acquired over the past five years — MapMyFitness to track runs, Endomondo to come up with personalized training apps, and nutritional coaching app MyFitnessPal, — which will give the company a leg up in understanding what kind of physical activities (and accompanying gear) its customers might be interested in, and collecting more customer data.

“I think activewear is also an incredibly competitive space for this as well,” Hogan said. “Nike’s site is very good, Adidas’ is also really good. I think really making sure that they have the experience down pat and that it’s unique to [Under Armour], and not just, you know, carbon copying one of their competitors I think will really be important.”

The post Under Armour’s direct-to-consumer business is declining appeared first on Digiday.