Month: June 2019

“We simply found that the quality and volume of work that we were getting did not match what we could do for the money, internally,” wrote CMO Gene Foca in an email.

“It’s absolutely not to save money,” said Foca, of Getty’s decision to go in-house. “It’s because we believe we can manage the mix better. We have a fairly complicated set of products and we’re managing our investment not just for our return on ad spend, but for a lifetime customer value. In order to do that on an ongoing basis effectively, we find that we do it best if we manage it internally.”

Since going in-house, the company has retooled its strategy, focusing on digital — specifically in paid search, paid social, affiliate and remarketing efforts. While the company declined to share the size of its marketing budget it did say that it has increased its spend year-over-year by 10% since 2017 and that it plans to do the same next year. In the first quarter of 2019, Getty Images didn’t spend any of its marketing dollars on media, according to Kantar Media, which measures ad spend across all channels except for social media. In 2018, the company spent $577,000, down from $722,000 in 2017, per Kantar. After implementing the company’s new digitally-focused approach, which is used specifically to acquire new customers, first-time purchases by new customers has grown by over 35% for its iStock brand, according to Daine Weston, vp of global digital marketing at Getty Images.

Over the last three years, Getty Images has built its marketing team in three regions, the Americas, APAC and EMEA. As the company has grown its internal teams and its capabilities, it has been able to increase its media budget. “Over time we’ve gotten more and more expert at how we deploy those additional dollars,” said Foca. “We are seeing more and more opportunity and as we uncover more opportunity, it becomes very easy for us to justify greater spend and all we’re doing is justifying greater spend by getting a good return on our investment.”

Getty Images is far from alone when it comes to taking marketing capabilities in-house. Marketers like the NHL, Electrolux and Bayer have moved some marketing functions to internal teams. Doing so is not simply about saving money but about marketers’ desire for greater control over their dollars as well as the ability to move more quickly, according to Digiday Research.

Getty Images declined to name the agencies it worked with previously. Getty Images hasn’t ruled out working with media agencies to execute a test or buy for the company.

“We looked at the amount of money that we’re spending on specialty agencies versus what we were spending on media,” said Foca. “And, in many cases, decided that we could manage at least a core piece of the function internally.”

The decision to move work in-house came after the company realized its marketing did not have a clear sense of purpose. Instead of periodically creating brand campaigns, which is what it had been doing, the company decided its dollars would be better spent focused on digital. Given that Getty Images predominantly owns its distribution channels and is, for the most part, looking to drive consumers to those channels to purchase its visual content, switching its dollars to get consumers to do just that made sense.

“We’ve found greater efficiency by focusing on digital channels than we have in focusing on other channels,” said Foca. “All of that activity is much more productive than some of the activity that we engaged in three years ago when we were spending, frankly, a lot of money on things like display ad that had very little return on investment.”

That being said, the company doesn’t only spend its dollars digitally but is primarily focused on digital marketing. “These days, we reserve print as a means of supporting and praising our talented photographers, whether it be related to their groundbreaking work or an award win, or alternatively, celebrating a partnership or relationship,” wrote Foca in an email.

While the impact of in-housing is depended on the brand and its internal team’s capabilities, Getty’s move is a strategic one that other brands should pay attention to, wrote Scott Harkey, co-founder and managing partner of full-service agency OH Partners in an email. “We’ll likely see an increasing number of brands evaluate in-house media buying,” wrote Harkey.

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“The reason we went hard into pure free, ad-supported content was because we were listening to our users, and one of the most important terms that people searched for on our platform was the availability of free content,” says Scott Rosenberg, svp and gm of Roku’s platform business. “We see an acceleration of free, ad-supported channels on our platform.”

A lot of attention — and justifiably so — has gone toward Netflix, Disney, WarnerMedia and the future of TV in the context of subscription streaming video. But, as evidenced by Viacom’s $340 million cash acquisition of Pluto TV, the investments in new video services from Amazon and Roku, and growing advertiser interest in connected TV environments, TV’s future also includes advertising. And the race to own free streaming video is equally competitive — if not more wide open.

The race is heating up and ambitions are high
In January, Viacom bought Pluto TV, a free video streaming service that programs more than 100 linear channels filled with licensed movies, TV shows and digital video programming, for $340 million. If that does not signal how ambitious Viacom is about the future of free streaming video, the company’s COO of ad sales, John Halley, says Viacom expects Pluto TV will make “north of a billion dollars in the medium term” from advertising.

Beyond The Roku Channel, which launched in Sept. 2017, and Pluto TV, Amazon has also made free streaming video a key part of its growing ad business: in January, the commerce giant launched IMDb Freedive, a streaming service delivering licensed movies and TV shows to Fire TV users; soon, it will also launch a free, ad-supported streaming video service for news. Walmart has also gotten into the game with its Vudu service. Other players in this area include Xumo and Tubi, as well as TV manufacturers such as Samsung and Vizio, which are licensing technology from Xumo and others to deliver white-labeled streaming video apps on their smart TVs. TV networks have also jumped into the fray, with CBS leading the way with three free video streaming services spanning news, sports and entertainment news.

These services are also growing. The Roku Channel is a top-five channel on Roku based on reach. Viacom says Pluto TV now has 16 million monthly users, up from 12 million monthly users when Viacom made the purchase in January. CBSN, CBS News’ nearly five-year-old streaming news network, now averages more than 1 million video streams per day. Even YouTube is talking up how its users are streaming more than 250 million hours per day through TV sets.

“We are seeing a tremendous growth in smart TV usage of our app,” says Christy Tanner, evp and gm of CBS News Digital, adding that viewership from Samsung, Vizio and other smart TV providers has grown by triple-digit percentages year over year. “It’s fascinating to watch how quickly that usage has caught on.”

Growth in consumption across a greater number of platform and device sources has naturally led to growth in advertiser interest. In fact, earlier this year, Magna Global revised its 2019 forecast for OTT advertising to grow 39% to $3.8 billion. Ad-supported programming is growing faster (in terms of users and overall consumption) than subscriptions on Roku, according to Rosenberg.

“Everyone is growing,” says Vincent Letang, evp of global market intelligence for Magna Global.

Subscription video market will soon be maxed out
Ask anyone investing in free video streaming services about why they are going the free route and the answer will be the same: The subscription video market is getting saturated. Netflix, Hulu and Amazon are already well-established, and new services are on the way from Disney, WarnerMedia and NBCUniversal (though NBCU’s service will be “free” for those that already pay for existing pay-TV subscribers.)

“How many more [subscriptions] collectively do all of us want to pay for? Nielsen has even reported data that 14% of households are using antennas, versus 10% in 2014,” says Halley. “There’s a rush to subscription services, but there are indicators that consumers are more value-conscious than they have ever been.”

Today, the average U.S. consumer subscribes to three streaming services, according to a March study from Deloitte. Conventional thinking is that most people won’t want to subscribe to more than three or four services as “subscription fatigue” sets in. Compound that with the fact that getting people to pay for subscriptions is an incredibly difficult endeavor, there is a reason why platforms and programmers will take a closer look at free streaming video.

“There’s a reason why YouTube pulled back from [its original content for YouTube Premium] efforts,” says an executive at a major Hollywood film studio. “Subscriptions are tough. That’s why you’re seeing such a big rise with [ad-supported video].”

Amazon and Roku — the platforms — cast a long shadow
The digital advertising market has to contend with Google and Facebook. In ad-supported streaming video, there is the potential that the ad market is controlled by a small number of big players.

Hulu is the current leader with a $1.5 billion annual ad business. Roku’s platform business did $416.9 million last year. Amazon, which can ostensibly match video ads to actual purchases, is also aggressively pursuing TV ad dollars — through its search ad business remains a bigger revenue driver today.

With Amazon and Roku, video programmers and free video streaming services such as Pluto TV and Xumo have to deal with the fact that both companies are both competitors and distributors. IMDb Freedive and The Roku Channel are free streaming services competing for viewer attention and ad dollars; and Roku and Amazon’s Fire TV are necessary for any streaming video service to find an audience today. (Amazon says it has 34 million monthly Fire TV users and Roku says it has 29.1 million monthly active users.)

Viacom’s Halley says he’s not concerned by competition with Amazon and Roku’s rival free video streaming services. He acknowledges the competition, but says it’s mutually beneficial for both the programmers and the distribution platforms to work together in order to grow usage.

“Here’s the thing: this always comes down to the programming,” Halley said. “People don’t watch distribution. We feel confident about what our lineup is on Pluto — and I’m sure others will have compelling offerings as well — but at the end of the day, this business is written on content.”

For its part, Roku sees The Roku Channel as an important part of its ad business, but a component of an overall ad strategy, says Rosenberg. The executive declined to say whether The Roku Channel was the most important part of the company’s ad sales efforts, but it’s clear why the service matters to Roku: it’s the place where Roku has full control over the ad experience and collects the greatest share of ad dollars.

Roku plans to continue investing in The Roku Channel. In addition to free movies and TV shows, the service offers more than 20 linear channels from programmers such as ABC News and Newsy. Soon, expect Roku to expand those linear feeds into new evergreen verticals outside of news, Rosenberg says.

“We think there is a big tent,” Rosenberg says. “The appetite for free and discounted content is still underserved.”

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An Amazon spokesperson did not respond to a request for comment by press time.

Amazon’s acquisition of Sizmek’s ad server may give the company even more of an edge among advertisers at a time when Amazon’s ad revenue growth is decelerating. As the name suggests, an ad server is used by advertisers to decide which ads to serve on publishers’ properties. That means the ad server has a view of everywhere an advertiser has ads running online, including ads that are purchased programmatically as well as those bought directly from a publisher. “Typically your direct buys will be imported into your ad server so you have a holistic one-stop shop from a reporting perspective,” said one agency exec.

Being able to see an advertiser’s direct buys would give Amazon a view of the digital ad market that it otherwise would not be privy to because it would be able to see “every single detail of the buy, including rates,” said a second agency exec, who works at an agency that uses Sizmek’s ad server. However, it’s unclear how much of that information Amazon will actually have access to. According to a former Sizmek exec, Amazon will only be able to see rates in the ad server if an advertiser or agency allows it.

While Amazon said in a company blog post that Sizmek’s ad server will operate separately from Amazon’s advertising business “for the time being,” industry execs widely expect that Amazon will eventually link the ad server to its DSP. Given the upside for Amazon in doing so, it would be surprising if the company didn’t connect the two ad tech products.

Combining a DSP and an ad server “enables you to de-duplicate campaign activity, individual measurement, manage reach and frequency, manage conversions across traditional buys and your programmatic buys,” said Ari Paparo, CEO of ad tech firm Beeswax.

Ad server as a source of truth
Being able to attribute ads to business results, like product sales, has been among the biggest pain points for advertisers. Amazon has taken note of that with its attribution pixel that is meant to gauge how effective ads on Amazon’s sites are in getting people to purchase a product.

Advertisers are generally wary of Amazon’s attribution tool because of the concern that the platform is effectively grading its own homework — true of its competitors, including Facebook and Google. Sizmek’s ad server can address these concerns because ad servers are considered to be a source of truth that is objective compared to a platform’s internal reporting systems, according to agency execs.

Given the broad view that an ad server has into advertisers’ campaigns, Amazon could use the ad server data to broaden its ability to attribute ads.

“This Sizmek acquisition is going to really help them to attribute back everything that runs on their platform and runs through the ad server to be able to attribute back to their own domain. I think that’s an incredible advantage. I think that’s what they were lacking to bring on clients,” said Kolin Kleveno, svp and head of programmatic at 360i.

Amazon DSP deficiencies
Agency execs’ descriptions of Amazon’s DSP range from “pretty basic” to “not super robust” to “okay” to “lacking.” The biggest complaints with Amazon’s DSP are that it is too difficult to use and does not provide the deep level of reporting that advertisers and agencies expect from a DSP.

The DSP’s user interface is not very intuitive and too complex for an inexperience programmatic buyer or an analyst to navigate, according to Berani. The overcomplicated interface is a major sticking point to using Amazon’s ad tech, according to one brand exec.

The interface is far from the only sticking point. Before Amazon updated its DSP within the past month, if an advertiser wanted to extend a campaign’s duration after it had started running, they would have to create an entirely new campaign, according to the second agency exec.

Additionally, the DSP does not provide advertisers with the log-level data that ad buyers increasingly crave in order to have more transparency into advertisers’ campaigns and for agencies’ data science teams to do the advanced analytics necessary to fine-tune their clients’ programmatic buying strategies, said a third agency exec.

Amazon does share aggregated data with advertisers. However, the delivery of the data “is very much delayed, so we’re not able to pull the reporting accurately from the previous day until 11 a.m.,” said Bradley Nunn, svp of technology strategy at Varick. By comparison, other DSPs such as Google’s and AppNexus typically send those reports around 7 a.m. eastern time, which means that Varick’s growth managers cannot see Amazon campaigns’ performance until four hours after they have begun to process the other campaigns.

Despite those deficiencies, Amazon’s DSP allows advertisers to access Amazon’s first-party user data. That makes it “a pretty easy sell to clients because it’s the only way to reach those audiences,” said the third agency exec.

Competing with Google’s ad server
Google’s DoubleClick Campaign Manager is considered the most widely used ad server among advertisers and agencies by a large margin. “I don’t think any server really touches DCM,” said Nunn. Sizmek’s ad server is considered the next best option, though it’s “not as robust as DCM,” according to one agency exec.

However, while Sizmek’s ad server is not as seamless to use and does not have as many integrations as Google’s ad server, it has had one advantage over Google’s ad server: dynamic creative optimization, a fancy term for technology that uses data to pick out the right ad to server to an individual person on the fly. If an advertiser is using Google’s DSP and ad server, they probably have to rely on third-party DCO technology, said Berani.

Advertisers have taken an increased interest in DCO because they recognize that tailoring a message to a particular context, such as the time of day and whether someone is on the go or at home, can make the difference between whether someone overlooks an ad or clicks on it to purchase the advertised product. “The creative side of programmatic has been a little bit of a forgotten animal,” said Sean Corcoran, U.S. president at MullenLowe Mediahub Global.

Sizmek’s DCO capabilities would pair well with Amazon’s ability to recommend products to people based on their purchase histories and other information that Amazon has on its customers. “It would be an easy win for them to show the value of their shopper data,” said Kleveno.

Convincing advertisers to switch servers
Amazon would appear to have a strong case to make in trying to convince advertisers to adopt Sizmek’s ad server. Nonetheless, it faces an uphill climb, as evidenced by Facebook’s ultimately failed attempt to convince advertisers to adopt its Atlas ad server. “Switching an ad server is like an infrastructure change,” said the first agency exec.

Amazon may also be forced to carry the baggage that advertisers levy on walled gardens in general. Many of the gripes that brand and agency execs have with Amazon, such as a lack of transparency in its DSP’s reporting, are the same complaints directed at Facebook and Google. As a result, advertisers could use Amazon’s efforts to sell them on its DSP and Sizmek’s ad server to try to keep at least one of the walled gardens in check. “Amazon and Sizmek clearly want to go more head to toe with Google, but they’re just taking an ad server and putting it into another walled garden. I don’t know how advertisers are going to accept that,” said the third agency exec.

Convincing advertisers to switch from Google’s ad server, in particular, would be a challenge for Amazon, according to agency execs. Google’s ad server is at the heart of its entire ad tech stack. The majority of advertisers that use Google’s ad server use its other ad tech products, said the third agency exec. “That’s the whole benefit of being quote-unquote integrated. If you strip out the ad server, what’s the point of [using Google’s DSP and analytics tool]?” this exec said.

Amazon’s intention could very well be to make advertisers choose between its ad tech stack and Google’s. However, it doesn’t have to play a zero-sum game. The rise of walled gardens like Google, Facebook and Amazon has met with the decline of the tracking cookie to fragment the digital ad landscape to the point that, for advertisers and agencies, needing to support multiple ad tech stacks is becoming no more ridiculous than needing to use multiple DSPs. “It’s becoming harder and harder to have a true holistic view,” said the third agency exec.

All Amazon really needs to do is to make a strong case for why it should be in the mix. Then, once in the mix, it will need to prove how much value it is able to deliver compared to the competition in order to steal a larger share of advertisers’ budgets.

“I don’t think there’s going to be that pure de-duplication where there’s one ad tech stack to rule them all. I think the other changes that are happening in the industry are going to prevent that from being the case,” said Kleveno.

Seb Joseph and Kristina Monllos contributed reporting.

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