Month: October 2019

The streaming market is already considered by entertainment industry experts to be tilted toward the sellers, as distributors look to line up loads of programming that will have subscribers lining up for their services. Vice, Vox Media, Whistle and Group Nine are already vying for those dollars through their respective entertainment businesses that produce shows to sell to TV networks and streaming services.

Expanding the types of shows and corresponding audiences that these publishers-slash-producers can pitch to streaming services is “absolutely something that’s at play [in these M&A deals]. We’d be hard-pressed to ignore just how much money is pouring into the content arms race,” said Michael Cohen, president of Whistle. New York Media, Refinery29, Vice Media, Vox Media declined to comment for this article. Group Nine Media did not respond to a request for comment as of press time.

“There’s this voracious demand for content during these streaming wars, and all these companies that we’re talking about are consolidating to better address that need,” said Peter Csathy, founder of media advisory firm Creatv Media.

New York Media had already been looking to capitalize on distributors’ programming needs before it had considered doing the deal with Vox Media, according to a person familiar with the publisher’s entertainment business. For years, New York Media has been mining its back catalog for articles that could be adapted into shows and movies, such as the recent hit “Hustlers.” But it wanted to be more than an intellectual property oil field. So this year, before it had begun any deal talks with Vox Media, New York Media began to talk with WME — which also represents Vox Media — about hiring the Hollywood talent agency to help the publisher become more of a producer, said this person who added that the publisher is in active conversations about 15 different scripted projects. Becoming a part of Vox Media will help New York Media to further its position as a producer because, while New York Media does not have physical production capabilities, Vox Media does.

“Operationally, the management of all the content and the demands on you to satisfy that demand becomes an increasingly important issue. It’s not just the talent in front of the screen and behind the screen but the talent that’s running the ship,” Csathy said.

In addition to capitalizing on streaming services’ programming needs, the media companies could use the consolidation of their production companies to address their own needs to reduce their reliance on advertising revenue. Publishers may be popping up subscription and commerce businesses in an effort to diversify their revenue streams in the long run. However “they need money coming in right now. So it is prudent for them to refine their creative chops and go sell to Quibi, HBO Max, Snapchat Discover, whoever is buying and have money that’s coming in — because a lot of venture capital is drying up — and use this production financing to actually fund the business [in the interim],” said Chris Erwin, principal and founder at strategy advisory and publishing company RockWater Industries.

In other words, if companies like Quibi are handing out checks to seemingly everyone for every kind of show appealing to all kinds of audiences, why not hold out as many hands as any one (combined) company can? And if the streaming wars are heating up to the point that companies are willing to sacrifice revenue in the name of corporate rivalry, why not try to be a mercenary arms dealer?

However, for these publishers to take fuller advantage of this seller’s market, they need to be able to produce a fuller slate of shows. Vox Media may be able to successfully pitch distributors on explainers and cooking shows given its track record of creating those types of programs for the likes of Netflix, PBS and Hulu. But it would have a harder time persuading streaming services that it could develop a scripted show or a series centered on women’s issues. That’s where Vox Media’s April acquisition of Epic — which is producing a scripted show for Apple TV+ — and now New York Media, which owns The Cut, comes in.

Vox Media “didn’t have a dedicated, strong female storytelling brand the way that The Cut is and now they do,” said a person familiar with Vox Media’s entertainment business. Similarly, Vox Media may have Polygon, which originated as a gaming publication and has broadened into covering more general entertainment, but it doesn’t have the strong voice or recognizable brand of New York Media’s Vulture.

“The Cut is a place where it’s immediately apparent how [the combined companies] would be able to create editorially driven, long-form programming in the same way that the Vox DNA comes through so strongly in [its Netflix series] ‘Explained,’” said the person familiar with Vox Media’s entertainment business.

At the same time as the consolidation could help these publishers score more production deals, it could also help from a defensive standpoint as buyers’ interests shift. Buyers may turn to a media company like Vice when they’re in the market for documentary-style news programming, but they’re unlikely to ask the publisher to come in to pitch a beauty show.

“If Netflix or Snapchat or whoever say they are going to spend more in this genre, it puts the niche players in a difficult position,” said Eunice Shin, a partner at consulting firm Prophet.

A year ago, Whistle Sports could have been easily described as niche. But late last year the company dropped “Sports” from its name as it looked to broaden beyond sports. The company, which has historically specialized in unscripted sports programming, has followed up that expansion effort this year. In January Whistle acquired New Form, a studio that has a track record of producing scripted and unscripted series for TV networks and streaming services, and then on October 3, Whistle announced that it is acquiring Vertical Networks, which is best known for producing mobile-only, vertical unscripted shows for Snapchat and also creates interactive shows for platforms like Eko.

Whistle has already seen its efforts to broaden its programming portfolio pay off. Thanks to its expanded production capabilities, the company now has a relationship with Quibi in which Whistle is producing scripted and unscripted shows for the mobile streaming service and is also working with Quibi to create shows to help with the service’s marketing strategy, according to Cohen.

“The ability for Whistle to have all of these capabilities is great for the distributor because I don’t think the distributor wants to have hundreds of partners. I think they’d rather have 10 or 20 great partners that can be more full service,” he said.

The post Digital media companies consolidating should boost their forays into Hollywood appeared first on Digiday.

“TikTok is still a test and learn for our buyers and clients, and the only benchmarks they have are when they compare against reach and frequency buys on other social platforms,” said Paul Kasamias, managing partner at Performics Practices Team. “It’s hard to know what good looks like on TikTok now.”

TikTok’s value to advertisers
Clarifying what advertising on TikTok can do is a priority for the app as it looks to capitalize on the popularity that has pushed its downloads to more than 1 billion since its launch in 2017. The U.K. accounts for a fraction of those downloads, with monthly active users at around 3.7 million, according to the senior buyer, who has met with TikTok’s commercial team. For context, Facebook had 39.2 million monthly active users in the U.K. last month, per Statista. Current size aside, the U.K. is a key market for TikTok as evidenced by the launch of its first brand campaign last December and a more recent push last month.

“TikTok has too much demand, so its team in the U.K. are trying to find a way to scale quickly,” said Kasamias. “There’s a huge buzz around the app, but they don’t have enough manpower at the moment so have been quite focused about who they work with.”

It was a similar story with Snapchat as it took them a while to understand what the potential barriers to entry for advertisers and agencies might be, added the same exec.

A look at where the vacancies are at TikTok in the U.K. shows how keen it is to grow its commercial team. Thirteen of the 24 job posts currently on LinkedIn are connected to developing TikTok’s ad business in the U.K., from ad operations, agency sales to influencers and privacy.

Brand partnerships is another focus, according to the job posts, with three of the vacancies recruiting to strengthen the app’s ties to agency teams. Last month, TikTok stumped up the cash for its first IAB Upfronts session where execs were at pains to show how in step the app is with young, confident, irreverent social media users. TikTok’s Mahmood spoke about how the social network had become the world’s leading destination for mobile short-form video, while brand strategist Ryan Martin talked through the creative aspect of the app, which he said allows people to become their own Spielberg. Snapchat sang a similar tune in 2017 when it was trying to launch its own business across Europe with the U.K as the starting point.

“Clients are signing off budgets to run test campaigns on TikTok, but I can see how in the future the app could get pitched against Snapchat because of how similar their audiences are,” said Rhys Westwell, head of paid social at Zenith in the U.K. “It could be that the money that went on Snapchat now goes to TikTok.”

Many of the challenges Snapchat had in Europe in 2017 mirror those TikTok now faces: Regarded as an age-gating tool that’s still in beta and with limited measurement that struggles to link the site’s vanity metrics to business goals. Nevertheless, TikTok has tried to learn from its predecessor by taking a more aggressive stance to translating its ads business to Europe. Whereas Snapchat took a more phased approach, gradually introducing measurement, targeting and programmatic buying tools to advertisers, TikTok wants to provide all those services over a much shorter time frame.

A pixel tracking tool, similar to other social networks, has been promised to local ad buyers in the coming weeks, said one exec, while another has been told that partnerships with data firms are in the pipeline in order to introduce third-party measurement to the platform. The updates coincide with TikTok’s plan to quickly transition from a direct business, where its own team buys ads on behalf of agencies as a managed service, to a self-serve platform. Some of the unskippable ads that play on TikTok can already be bought on a self-serve basis in the U.K., said Kasamias.

Building an ads business
The well-trodden self-serve path taken by the likes of Snapchat, Facebook and Instagram lets TikTok reach a much broader set of advertisers. In fact, the dynamics of a self-serve platform are heavily reliant on TikTok gaining a critical mass of advertisers in order to drive up average ad prices. As it stands, cost-per-thousand impressions on the social network sit somewhere between Snapchat at £1.50 ($1.83) and Facebook at £3.50 ($4.27) agreed the execs.

“TikTok currently has a grace period,” said Westwell. “It’s come out of nowhere and has a lot of users, so advertisers are excited about it. They’re not necessarily looking at the business metrics or the eventual challenges that come when a platform like that gets bigger.”

Aside from brand safety, TikTok’s biggest concern is visibility among buyers. For example, some of the agencies contacted for this article did not know enough about the platform to share their views on the platform, even though the social network has been in the U.K. for over a year. It seems plans are underway to address this issue, however, with execs from the commercial team willing to offer incentives to advertisers that can help raise its profile in the industry. According to one exec who spoke on the condition of anonymity, TikTok will make creative for certain advertisers and will even give away free media to get them started on the platform. Even influencers are being wooed with the promise of boosted posts. The more popular influencers on TikTok, the more advertisers will pay to reach them.

“TikTok wants more influencers to come into their office so that it can work through ways to support them over a 12-month period,” said Ben Jeffrie, CEO of influencer marketing platform Influencer. “TikTok is also prepared to boost certain content out on its page to drive up follower counts for certain influencers.”

The post ‘Still test and learn’: TikTok’s European business expansion appeared first on Digiday.

Naturally, the method and approach varies depending on the type of publisher. But their motivations are the same: To combat the loss of third-party cookies on Safari and Firefox browsers and control their audience monetization in a world in which data-privacy regulations are far tighter, and browsers like Apple Safari continue to crush workarounds to their anti-tracking policies.

News Corp, home to titles including The Wall Street Journal and The Times and The Sun in the U.K., has established a news ID for individual readers so they can be identified without the use of third-party cookies. The media group has created 590 million global anonymized user IDs, according to the publisher. News Corp had 156 million unique users across its U.S. properties in August, according to Comscore. From those, it has created close to 100 million de-duplicated user profiles.

“We’re the holders of the [reader] relationship,” said Chris Guenther, global head of programmatic for News Corp. “That spans our journalistic properties from the Times of London to The Wall Street Journal but also the tools we offer through a site like Realtor. The [data privacy] regulatory environment and the moves of the browsers have highlighted how important it is to embrace that stewardship and ensure our users come to us.”

Having a single ID for each user means that News Corp knows when the same individual is reading content across its different sites, and what kind of content, in order to establish a set of insights around readers’ habits and preferences, all anonymously. Each title has its own data management platform, which then feeds the data from each title into the centralized customer data platform to unify it. Advertisers can then access those segments programmatically via its News IQ platform.

Natural language processing is used so that category data like keywords can be ingested and in time, sentiment analysis will be introduced, according to Guenther. All data ingested into the CDP is anonymized so as to avoid any regulatory stipulations around personally identifiable information, he added. “We take the privacy regulatory environment very seriously. If we mess up once and make users feel that we aren’t handling their data properly, that resonates more broadly.”

“It’s about looking across our data properties to see what first-party data we haven’t yet captured,” added Guenther. “Given the size and number of properties we have we are constantly looking and auditing where we can continue to ingest [first-party data] and also for the purposes of product development and utility.”

Others are also pushing hard into creating IDs that are based on first-party data. Insider spent the last year developing hundreds of millions of reader IDs, against which it maps first-party data that isn’t personally identifiable but provides in-depth insights into reader behaviors, interests and intents, in order to create effective targeting segments for marketers.

Meanwhile, The Washington Post has created a first-party data ad targeting tool that offers detailed contextual targeting capabilities along with user-intent predictions for marketers. The Post wants to both provide ad-targeting options for advertising clients that want to wean themselves off reliance on third-party cookies. But it also wants to license the tech, called Zeus Insights to other publishers, to help compete with the big tech platforms, and naturally, provide another monetization stream.

“There is no one unified way people are tackling it [the diminishing third-party cookie],” said Isabelle Baas, managing partner, digital, data and technology at Starcom. “But it’s a good development that publishers are finally open to really investing time and effort into generating and monetizing their first-party data sets.”

Second-party data deals are of increasing interest, as is the decoupling of first-party data from a publisher’s media inventory. Pre-GDPR there were a growing number of examples of publishers looking at selling their first-party data separately, so that agencies could then use it to target users on sites outside of that publisher’s properties. In the wake of GDPR, a lot of publishers shelved that approach, deeming it too risky as they couldn’t guarantee how that data was then used once outside their own walls. But it’s now becoming more popular again, according to Baas.

Some publishers are attempting to standardize and scale ad-targeting capabilities via alliances. For instance, Ozone, an alliance between The Guardian, The Telegraph, News UK and Reach, has created a unified taxonomy for how they contextually target ads to make it easier for an advertiser to scale contextual buys. Typically all publishers have a totally different way of identifying audiences for those purposes.

However, the lack of global ID standardization is likely to be a challenge for some time. Meanwhile, much as publishers pushing for non-third-party cookie alternatives and building first-party data packages, agencies are still very much reliant on the use of third-party cookies for their own requirements like frequency capping and measurement. That’s putting the buy and sell sides at odds.

“Publishers still need to gain [user GDPR] consent to build audiences regardless of whether they’re using first-party data or third-party data,” said Matt McIntyre, head of programmatic for Essence across Europe, the Middle East and Africa. “Once they’ve gained that consent, agencies and brands still mostly use third-party technologies based on third party cookies for verification, brand safety and other hygiene factors.”

That means building the audience on first-party data is good for the publisher across those cookie-limited environments, but it doesn’t avoid the fact that consent for a large number of third-party technologies will still be needed for most buyers to continue buying using the current methods, added McIntyre.

The post As the third-party cookie crumbles, publishers scramble for alternatives appeared first on Digiday.

But for target companies that have raised considerable sums of money, all-stock acquisitions often mean that whatever common stock executives or investors held, at the target as well as at the acquiring company, is now worth much less. That can make it harder to keep the talent they have, and it also makes it harder for other media startups to dangle those stock options in front of talent they might try to lure away from bigger, more established rivals, particularly those outside of media.

“It can be demotivating,” said an executive at one media company involved in a deal this year. “The hope is through the merger [the combined company is] worth even more, but it pushes the goalposts out even more. And in a market that hasn’t seen any cash acquisitions in a while, it’s really daunting. And depending on how these deals are structured and how much capital they’ve raised, a lot of that stock can just be going to the investors.”

While mergers and acquisitions have dominated media headlines this year, some of the biggest, including the three most recent ones, have been all or mostly stock-based deals.

• Group Nine Media acquiring PopSugar in a stock deal that values PopSugar at $300 million.
• Vox Media’s inked a deal to buy New York Media in a $102 million all-stock deal.
• Vice Media bought Refinery29 in a deal that valued the women-focused digital publisher at $400 million, and the combined companies at $4 billion.

In a perfect world, a target company would prefer a cash offer. But recently, cash from banks is harder to come by, according to Aaron Solganick, the CEO of investment bank Solganick & Co. And with both buyer and seller facing immense pressure, both in the market and from investors, these deals are typically transacted using common stock, whose holders can only redeem it after investors with preferred stock have been compensated first.

“If the target company is running out of money, or it doesn’t have a lot of other options, they don’t have a lot of ground on which to dictate terms,” said Anand Sanwal, the founder of CB Insights, which tracks venture capital and M&A activity.

This may also make it tougher to hire, particularly for startups that aren’t swimming in hype. “Startups are having to get more creative and aggressive,” said Mary Gallic, director at the executive recruiting firm Grace Blue. “I don’t think [top executives] care about the snacks or the office space.”

Gallic said stock options remain a popular offer in executive compensation packages. But today, thanks to a dearth of major media IPOs, they often have to be mixed in with large, upfront payouts.

They also don’t guarantee smooth sailing for the business going forward. While some deals, such as Vox Media’s merger with New York Media, have been framed as “opportunity,” the reality is that many of these recent media tie-ups involve at least one business that is losing lots of money.

“In the interim, if you need to keep talent and you want to save some face, it’s a good move,” Sanwal said. “But to some degree, it’s going to come out in the wash at some point.”

The post ‘It can be demotivating’: Digital media’s all-stock deals are the new normal appeared first on Digiday.

What’s Firework?
A free smartphone app, Firework enables its users to find, create, and share homemade 30-second videos. It also features its own original content series. Firework curates these short videos from unlikely sources for its users, organizing them by content type and trending topics, using machine learning and human curators to tailor suggested content based on their personal interests.

To encourage users to share content, Firework enables them to collect and repost videos on Firework and other online platforms, and weekly sponsored hashtag contests encourage users to create related video content in exchange for cash prizes or to fundraise money for social causes.

On Firework, users cannot comment anonymously on shared content; that form of communication has been replaced with conversational person-to-person direct messaging.

Why it’s a potentially attractive buy
Purchasing Firework would give either platform — Google or Weibo — deeper entry into the fast-growing world of short video content of only 15 to 60 seconds in length, all shot and meant to be shared on mobile.

For Google, in particular, adding Firework to its portfolio would broaden the scope of its video-based content platforms, which includes YouTube, which Google bought for $1.65 billion in 2006. Today, YouTube has more than 1.9 billion users per month, making it the world’s largest online video platform. Analysts estimate that YouTube alone generates 20% of annual advertising revenue for Google’s parent company, Alphabet.

But newer upstarts, TikTok and Firework included, are gaining traction and attention, especially from younger users, and becoming increasingly more attractive to brands and media publishers alike. In a pitch deck TikTok sent to U.S. agencies this February, the company said it has 26.5 million monthly active users in the U.S., 60% of whom are ages 16 to 24 years old. Users, TikTok reported, also open the app eight times a day and spend 46 minutes per day, on average, on the app.

Beijing-based, SoftBank-backed ByteDance, the $75 billion company behind TikTok, reported in June that it has more than 1 billion active users across all of its apps, with TikTok as its most popular. TikTok was the second-most-downloaded non-gaming app worldwide in September 2019, with more than 60 million installs, according to market research firm Sensor Tower.

TikTok and Firework aren’t alone, either, and the short-form video platform space is seeing tremendous interest from others in the media establishment. In November, Facebook quietly launched a TikTok clone, called Lasso. Currently, Dom Hoffman, one of the creators of Vine, one of the original short-form video platforms, is beta testing a new video looping app called Byte. Snapchat, too, has also increasingly added more features to its platform that mimic the video looping capabilities of TikTok and others

Who uses Firework
In its launch press release, Firework said it was the “fastest social media app to achieve 1 million users in only five months while still in beta, growing more than 200 percent quarter over quarter.” The company, however, did not disclose any demographic data about those users. According to Sensor Tower, the app had approximately 50,000 downloads worldwide in August.

Firework’s brand partners include Refinery 29, Amazon Music, Fandango, NBC Universal and Chinese technology firm DJI. Early adopters of Firework include Vine star Marlon Webb, celebrity Frankie Grande, YouTube comedian Dang Matt Smith, and model-influencer Olivia Jordan.

Who’s behind the app
Loop Now was founded by former executives from LinkedIn and Snapchat. Loop Now Chief Revenue Officer Cory Grenier was Snapchat’s first director of sales and marketing. Co-founder and CEO Wenjie (Vincent) Yang previously co-founded and served as the CEO of EverString, an artificial-intelligence-backed software as service sales and marketing platform.

A funding round from earlier this year generated $30 million from venture capital firms that include IDG Capital, Lightspeed Venture Partners China, and GSR Venture.

What makes Firework different from the rest
While Firework, at the outset, doesn’t seem all that different from its competitors, it does have a unique, patent-pending feature, called Reveal, that lets users both shoot and view video content horizontally — a break from the vertical video formats you find on other platforms such as Snapchat, Instagram and TikTok.

Earlier this year, Firework also launched its own original streaming content platform called “Firework Originals.” The first series to debut from Firework Originals was “Fireside Chat featuring Molly Tarlov,” in which the actress and comedian interviews stars in 15-second segments. Other series include “Extra Fire Sauce,” “Banger,” “FOODz” and “Style Sector.”

The post Everything you need to know about Firework, the TikTok competitor Google wants to buy appeared first on Digiday.