Month: June 2019

Let’s talk about measurement and attribution. Is there a preferred methodology?
Some clients are doing, probably with their partners, whether it’s IHeartRadio or Pandora or whomever, are doing some of their own measurement around those efforts to learn more. Attribution is the last major hurdle for podcasting. Someone will figure it out, at some point, but I think right now it’s being treated more as upper-funnel for those advertisers. [Preferred attribution methods] varies by client and what they’re trying to accomplish. There isn’t an industry standard yet.

So, there’s movement and desire for an industry standard when it comes to measurement and attribution for podcast advertising but we’re not there yet. What do you think will happen when we get there?
As soon as we have more information and data there that can drive decision making, that will open the floodgates probably for more revenue. [Brand advertising dollars have] pretty significant jumps from year to year in spend. The base is low. Of course, it’s not at all near traditional radio or video or other areas but the growth is really strong. Maybe ‘flood gates’ is a little bit too strong of a word, but once there is more reputable information that’s not client-specific on how podcasting can drive either sales, engagement, brand lift or whatever KPI client is looking for that will be important.

Part of the problem with attribution has been that podcasts have been downloaded by consumers but advertisers don’t know if they actually listened to them. Now with podcast streaming on the rise does that help with attribution?
If we get to the point where the majority of listenership is streaming that will make a huge difference because then you can measure a podcast like you would measure any other digital audio. The switch from downloading to streaming, that is what is going to affect attribution and measurement in the future.

Podcast advertising often comes from hosts of popular shows reading scripts specifically for that show. That seems difficult to scale. How do you solve for that?
We’ve been thinking about how to make that a little bit more scalable. For example, one approach is making it a little less custom. You could record your reads in different ways, like one was a male voice, one with a female voice, one with this type of tonality or whatever it might be. It harkens back to how you think about radio creative that you can then align with multiple podcasts and it has the same sort of tonality and feel. [Scalability is] a challenge. One of the benefits with working with a partner, like a Pandora or an iHeartRadio or Spotify, that has a lot of podcasts on their platform, is that they can manage that creative for you with the host.

Pandora, iHeartRadio and Spotify have started to offer programmatic buying for audio and podcasts. Is that gaining traction?
I don’t think it’s gained a ton of traction because it’s new and different. Clients and agencies have to work that into their process. They don’t generally think about audio as programmatic. They think about display and video for programmatic. We may see a little bit of a sea change there coming up.

The post ‘Growth is really strong’: Starcom’s president of investment Kristina Lutz on podcast advertising appeared first on Digiday.

General Mills said that its payment terms are in line with several other big marketers. But in those terms, agencies see not only a longer wait for payment, but a signal within the industry that marketers may value the flexibility of agencies and vendors more than anything else, and that the trust between agency and brand is in danger.

While the burden of extended payment windows is nothing new, some major marketers have pushed payment out farther and farther over the past decade, turning a tactic initially used to manage cash flow following the 2008 financial crisis into a standard practice, particularly among large CPG brands with marketing budgets over $500 million.

And over the last six or seven months, some big brands have started asking for more. Chrysler succeeded in pushing its payment window to 180 days last fall, according to a source familiar with the media review. (Chrysler declined to comment for this story. Starcom, which won the business this past December, also declined to comment.) And around the same time, in what may be an anomaly, a big brand started asking for payment terms of a full year, according to the 4As, which received complaints from creative and media agencies about the terms. The agencies ultimately said no, but the client reportedly wanted to work out a deal where on paper it looked as if the agencies had agreed to payment terms of one year.

Brands asking for extended payment windows make sure to note that their agency relationships are in good health. General Mills said in a statement that it still works with several agencies and that it has “excellent relationships” with its agencies. Mondelez, a brand that has required a 120-day payment window since 2013, said that it works to make sure the “overall relationship remains mutually beneficial.”

But agencies continue to see a damaging creep. “There’s somehow become this desire to keep one-upping the previous deal,” said 4A’s president Marla Kaplowitz. “We’ve reached that point where you’ve pulled as much as you can.”

Worth the wait?
Brands, sensing they have to sweeten the deal, have begun offering agencies new incentives to agree to those longer windows.

Historically, brands have suggested agencies use supply chain financing through banks to get some revenue in before the brands’ payments are due. Those early payments come with hefty fees, and in recent months, some of the marketers asking for extended payment terms are telling their agencies they will reimburse the agencies for those fees if they agree to extend their payment windows, said an agency-side source familiar with this offer.

But that can also be a big risk for agencies who agree to it, as it’s possible that the client will revoke its offer to pay the fees later, that source added.

It’s unclear if General Mills and Mondelez are among the brands offering this incentive. Both noted that they have either financial tools or ways to help alleviate the financial burden of extended payment windows. Both brands did not respond (Mondelez) or declined to comment further (General Mills) when asked to explain what those are. Major marketers, including P&G, Anheuser-Busch, Coty and Mars, brands known for extended payment windows, all did not respond to requests for comment. Kellogg declined to comment.

“Some of these are the same brands that are sparking off about the need for greater transparency, but they don’t want to talk about the shenanigans for extended payment terms and supply chain financing,” said Tom Finneran, 4A’s evp of agency management services.

Someone will take the deal
With or without these incentives, the agencies who do agree to the extended payment windows set a precedent — and there are ripple effects. While some agency sources argue that the issue of extended payment windows isn’t nearly as widespread as it has been reported, if more brands are able to attain extended payment terms, that makes it much more difficult to stop; one executive at a media advisory firm said some brands now ask agencies if they will agree to 120-day payment terms before they enter the pitch process.

“You give an inch and they want a mile,” said Lisa Colantuono, president of the search firm AAR Partners, adding she believes that industry trade groups like the 4As and the ANAs should work together to take a stand against extended payment windows. “Little by little it’s going to keep increasing. What are we going to do now? Do work and not get paid for half a year?”

Some agency sources said that in asking for extended payment windows, the brands asking are doing so to get more flexibility with their cash flow. That puts agencies in a difficult position, though some in the industry feel agencies should not have to solve clients’ problems.

“Why should large brands be granted such superior rights to abuse agencies?” wrote Paul Knapp, CEO of Young & Laramore, in an email. “Agencies need to take a stand and say ‘no thanks’ — or, charge a healthy premium for the loan they are providing the brand.”

Shit rolls downhill
But when an agency takes the deal, the effect reverberates. “If the big agencies are getting squeezed they’re not going to eat it, they’re going to squeeze suppliers,” said Allen Adamson, brand consultant and co-founder of Metaforce. “Anyone with leverage is going to pass it on.”

As previously reported by Digiday, publishers and ad-tech vendors are also affected by extended payment windows. The problem can get especially precarious for supply-side platforms, as they will have to pay publishers in the traditional 30-day window and are at the mercy of demand-side platforms to pay them back.

“There’s not a lot of recourse,” said one SSP executive. “Because of the relative commoditization of supply relationships with DSPs, those supply relationships are more or less interchangeable. So, if you want to raise a stink and become a problem with payment terms, well then generally it could be easier for them just not to work with you anymore and find a company that is more willing to accept their delays in payments.”

A strained, commoditized relationship
To some, the push on payment windows is a sign of a greater problem within the agency-client relationship as well as the agency-vendor relationship.

“This is the commoditization of creativity,” said Adamson. “Ad agencies are getting squeezed because clients can. It will keep going, with windows getting longer and longer, because if you believe you have nothing different to offer then you’re going to have to compete on price, and once that happens it’s a race a bottom.”

Some argue that commoditization in the media space has been happening for some time. “The dirty secret a lot of media is that the services are commoditized,” said the SSP executive. “There’s very little that really differentiates one agency from another. They’ll all talk about fancy creative terms but it’s all the same thing. And that goes for every step along the way. It’s not just agencies, it’s the DSPs — it’s everybody. So if you have this ecosystem where the only thing you compete on is price.”

For others, commoditization of agencies and vendors is a signal of a larger problem within the partnership.

“Payment terms are the canary in the coal mine,” 360i founder Jared Belsky wrote in an email. “Trust is the larger issue as well as partnership. It is more than fine for clients to be demanding, to ask for the sun, moon, and the stars as it relates to ideas, quality, a great team, transparency, and great measurement.

However, if right before the partnership starts, the client demand is to work for free for the first six months, the better question agencies need to start asking clients is, ‘Is this how you want a successful marriage to start off?’”

The post ‘You give an inch and they want a mile’: Extended payment terms are still a problem for agencies and vendors appeared first on Digiday.

Oxford Road, a performance marketing agency that specializes in audio and television, is busy conducting a pilot with Barometric, a similar technology that tracks podcast ad listeners moving down an advertiser’s sales funnel.

And Megaphone, a monetization platform that works with publishers ranging from Gimlet to Vox Media to Slate, has been busy this year evaluating client campaigns; it has conducted “a couple dozen” attribution studies for clients since the fourth quarter of last year, after doing none over the same period the previous year, said Megaphone’s head of sales, Ken Lagana.

Being able to tie results to spending could accelerate the flow of brand dollars into podcasting. But limited scale, shifting agency opinions and broader issues of separating the effect of podcasts present challenges.

“We’ve had a pretty significant number of brand advertisers reach out: grocery brands, pet food brands, beer and wine companies that don’t have the same direct-to-consumer metrics,” said Marshall Williams, partner at the ad agency Ad Results Media, which helps brands buy both terrestrial radio as well as digital audio ads.

“What they’ve said is, ‘We like this space, we think it has our audience, it has enough reach; is there a way we can quantify whether the ads work?’” Williams continued. “And the answer is, ‘Maybe.’”

While podcasting is still tiny relative to the rest of digital media, its advertising market has been surging. Podcast advertising revenue totaled $479 million in 2018, well ahead of the $414 million projected, and is expected to exceed $1 billion by 2021, according to IAB/PwC research.

A lot of that recent growth has been powered by brand advertisers. Brand awareness ads accounted for more than 38 percent of podcast ads in 2018, also according to that same IAB/PwC research, up from just 25 percent two years ago.

Through the first half of this year, a majority of the advertisers Megaphone works with have been brand advertising, rather than performance marketing, a first for the company, said Andy Bowers, Megaphone’s chief innovation officer.

While some of those dollars are coming out of brands’ experimental budgets, most are coming out of digital and audio budgets, Lagana said. That puts podcasting, as a format, up against formidable competition, including terrestrial radio and digital advertising, where measurement and attribution vendors have spent years fighting for mind- and market share, most recently with digital publishers as the battleground.

And even with agreed-upon metrics in place, podcasting has plenty of quirks. Apple, for example, the leading source of podcast consumption, still does not offer data about whether individual users have listened to ads. Some attribution vendors triangulate around that problem by noting the IP addresses that are sent tracking pixels, then mapping that to a device graph to see whether those users took actions elsewhere.

“There’s a lot of explanation that has to go into this,” said Dave Zohrob, the founder and CEO of Chartable. “Before they [the sellers] even get to the point of what the lift is, you have to give them [the buyers] a 20-minute explication of the joys and limitations of the medium. There’s a fair amount of friction there.”

Publishers also have to put up with the fact that few brands and agencies have set attribution methodologies for podcasts specifically. While some agencies have attribution methodologies in place for performance-based campaigns, there is no industry standard for podcast attribution yet, said Kristina Lutz, president of investment at Starcom.

“Someone will figure it out, at some point, but I think right now it’s being treated more as an upper, upper funnel for those advertisers,” Lutz said. “[Preferred attribution methods] varies by client and what they’re trying to accomplish.”

For now, there is also limited raw material to experiment with. An estimated 62 million Americans will listen to podcasts weekly in 2019, up from 49 million in 2017, according to Edison Research. That growth is healthy, but it is dwarfed by the raw tonnage of impressions available in other digital media. And while a handful of publishers’ shows drive most of the listening, few publishers or ad networks can offer the scale that might necessitate an attribution study.

“There’s probably not 12 publishers [that can offer enough impressions],” Zohrob said. “Somebody the size of Barstool [Sports, a top 10 podcast publisher] could deliver enough impressions, but they’d have to sell all of their impressions to one brand over a month.”

For a medium that has only just finished ironing out its measurement problems, these are nice problems to have. But the stage is set for a rush of attribution experiments. “We’d like to see more competition,” said Brigid Judge, manager of digital audio investment at Horizon Media.

The post With brand dollars pooling in, podcasters are trying to figure out attribution appeared first on Digiday.

“Instead of spending money on traditional media we’re putting it into influencer marketing,” said Monica Jungbeck, global marketing manager at Malibu. Jungbeck declined to say how much money it spends on influencers, though said they are a major focus for Malibu’s marketing, and dip into social, events, production and traditional budgets.

Other brands are making similar bets even as they struggle to understand what it is influencers deliver beyond reach. General Mills spends as much as a third of the digital budget for some of its brands on influencer marketing, for example. Despite the confusion, spend continues to rise. In 2017, the global Instagram influencer marketing industry, which is one of the biggest alongside YouTube, was worth $1.1 billion and will hit $2.9 billion in 2019, according to Statista.

“We have to take that full influencer knowledge in-house,” said Jungbeck. Everything from the type of influencer signed to the way their posts perform weekly, is watched by Malibu’s own marketers at a global and local level. High-profile influencers, who usually have a short-term contract with Malibu, are managed by global marketers like Jungbeck, whereas local ones, who tend to have quid pro quo arrangements, work with marketers in their respective markets. Those deals are focused on YouTube, Instagram and Facebook. IGTV is also being tested, while the audience on rapidly-merging TikTok is too young for an alcohol brand like Malibu, said Jungbeck.

Before any sort of deal is struck with an influencer, the brand delves into their past for any misdemeanors, and will also scrutinize previous posts to see how fans have reacted. An influencer with between 15 million and 200 million followers is deemed a “mega-influencer” by Malibu marketers, who see any branded post where the number of positive reactions is above 5% as the start of something good. That engagement rate rises to 10% for micro-influencers who tend to have more loyal and reactive audiences.

Having insight like this is crucial in a heavily-regulated market like alcohol, where advertisers skirt long-term deals with influencers to avoid getting burned if they behave badly. “We think the brand needs to have the relationship with the influencer because we want to make sure that person buys into our brand and embraces the campaign,” said Jungbeck.

Malibu decided not to pay celebrity singer Nick Jonas to front its competition in which influencers battle each other in water fights and dance-offs in the Dominican Republic, for a second summer running. Instead, the marketing team opted to go all in on influencers, because Jonas hadn’t connected with the campaign’s fans in the way it had hoped, said Jungbeck. Five years ago, the agency would have made that call, whereas this time they were asked to source the influencer talent.

Sourcing talent remains hard as it relies on relationships with agencies, agents and sometimes the influencers themselves. While many advertisers delegate this part of influencer marketing to media, sponsorship or influencer agencies, more influencer-specific roles are cropping up to handle those efforts exclusively. In some markets, like Argentina, Malibu’s marketers source micro-influencers themselves, said Jungbeck. Micro-influencers are asked to take part in the summer games and effectively localize the campaign alongside the efforts of their larger counterparts.

More advertisers like Adidas and Kellogg’s are turning to smaller influencers for two reasons: it’s cheaper, particularly as engagement on a post becomes increasingly as important as its reach. Secondly, demand for influencers has made them more promiscuous with their loyalties to brands, meaning marketers can sometimes struggle to stand out in a long line of endorsements.

“We’re starting to see brands get creative with how they pull influencers of different sizes together for a single campaign,” said Sarah Whitfield, global CMO at influencer marketing platform Buzzoole. “A brand may have one big influencer who can generate them loads of reach and have their content supported by someone with a small following who is creative and then a handful of small influencers who are close to their followers. Brands are starting to get smarter about how they create combinations of influencers.”

In fact, Malibu is increasingly asking influencers to create posts from scratch. Besides large and small influencers, the brand has started pursuing those that have a creative flair. These influencers have more freedom to create their own posts from Malibu’s content. They’re also the ones who increasingly eat into the budget usually reserved for campaign production. “Influencers are already replacing agencies in some cases,” said Jungbeck. “For the Malibu Games, there’s more emphasis on influencers creating more content for us versus traditional production content.”

Malibu’s intent to do as much as it can direct with influencers won’t treat agencies solely as talent scouts. The Vice-owned agency Virtue has acted more like a consultant to the brand for the Malibu Games campaign, having helped come up with the idea.

The post ‘We have to get the knowledge in-house’: Why Malibu does its own influencer marketing appeared first on Digiday.

Other advertising and media industry execs offer a similar sentiment. On a different panel, Antoine DuBois, svp of marketing global strategy at French hotel chain Accor, said he expects Netflix to one day have some type of advertising offering; Carlo Andrea Patticini, a media, ad production and procurement exec at Italy-based Barilla, said Netflix will need to because the other option is raising — maybe even doubling — prices.

Ads on Netflix have been a frequent topic of media and ad industry conversations — and often used as “bold calls” by those convinced that Netflix will one day have to offer ads. The reasoning is quite clear: Netflix has taken on tens of billions of dollars in debt and continues to borrow more money as it funds a seemingly endless supply of original movies and TV shows; and as the streaming service looks to grow in more price-conscious international markets, Netflix could significantly raise its revenue and profits by embracing advertising.

“Just look at the balance sheet,” said Daniel Bischoff, marketing director at RTL AdConnect, the ad sales division of European broadcaster RTL Group. “They will either need advertising or will have to raise prices.”

There are plenty of reasons — from potential damage to the user experience to infrastructure costs — for why Netflix isn’t likely to introduce advertising anytime soon.

Netflix has been pretty firm in saying it has no plans to introduce an ad-supported version of its streaming service. The fear of a consumer blowback after years of saying it would never include ads is a strong deterrent, but ads could also significantly change the Netflix user experience.

“Finding the right consumer experience balance is going to be extremely hard,” said Jesse Redniss, evp of data strategy at WarnerMedia. “Consumers expect to ‘Netflix and chill’ with a constant stream of pure content — introducing advertising will disrupt that flow and execution will be paramount.”

What’s more, building up an ad infrastructure — across different, unique markets — would be cost and resource intensive, making it unlikely that Netflix can turn on an ad-supported experience anytime soon. For instance, scaling an ad ops organization from scratch takes time, and scaling an ad ops tech solution into an existing subscription stack would add even more time. A high percentage of video buffering — “the wheel of death” — is also tied to ad calls that are being made while the content is loading, Redniss said. And currently Netflix doesn’t have to deal with third-party tracking tags or ad calls in their system; rebuilding the video player to incorporate that architecture is a “monumental task,” the exec added.

“Currently, [Netflix’s] thousands of engineers are singularly focused on video delivery and consumer experience,” Redniss said. “Adding ad experience, ad decisioning, trafficking, creative versioning, reporting, third-party verification and more is a major disruptor.”

That doesn’t mean Netflix won’t accept advertising, but it could increasingly come in the form of non-traditional forms such as brand and product integrations.

Aaron Frank, svp of marketing, strategy and insights at Branded Entertainment Network, which has placed brand and product integrations inside Netflix shows such as “Queer Eye for the Straight Guy,” said Netflix is likely to look at embracing more integrations within programming, especially as the company produces more of its own original movies and TV shows versus exclusively licensing them from outside studios. (That said, most forms of non-traditional advertising on Netflix has come from outside studios who would sell integrations for shows sold or licensed to Netflix.) Netflix has already experimented on this front with a marketing partnership with Coca-Cola tied to the next season of its hit series “Stranger Things” — though Coke didn’t pay Netflix for the product integrations, according to a report from Bloomberg.

While Netflix continues to take on debt, the company is also more likely to venture into merchandising, licensing and even video games to create new revenue streams, Frank added. Last year, Netflix hired Disney exec Christie Fleischer to be in charge of its global consumer products team. Her responsibilities include overseeing retail and licensing partnerships, publishing, interactive games, merchandising and events.

The post Advertising and media execs really want Netflix to have ads appeared first on Digiday.