Month: December 2019

Being able to differentiate between the “good’ data from the “bad” has been tricky for advertisers for a multitude of reasons. Mainly, the largest data brokers don’t want to share too much about their most prized assets as doing so could harm their competitive advantage on quality. Consequently, its left advertisers susceptible to glaring inaccuracies in their audience segmentation, from foot traffic attribution intel that turns out to be wildly different to the number of people who were exposed to a campaign to spoofed location data being bought by advertisers who have no way to verify where it has come from.

The unavoidable reverberations caused by both regulators in Europe enforcing the General Data Protection Regulation and the arrival of California’s ambiguous privacy law next year will thrust data transparency into the spotlight in much the same way former Mediacom CEO Jon Mendel’s now-infamous speech at an industry conference had the same effect on media agency rebates and kickbacks in 2015. Back then, financial transparency was advertising’s giant pink elephant in the room, which Mendel’s public denouncement made impossible for the ad industry to ignore.

The same confusion and urgency that filled advertisers in the wake of Mendel’s comments will grip them again as the ad industry stares down the barrel of big fines for collecting and processing data illegally. Nowhere is this more evident than in the U.K. where the country’s data regulator The Information Commissioner’s Office has warned the clock is ticking for ad tech businesses that are still playing fast and loose with their compliance with the GDPR.

“We’ve set up an in-house team and some of the conversations the execs are having are focused on the data costs that come with buying programmatic media,” said the head of digital at a global advertiser.

Beyond detecting hidden markup fees on data bought from ad tech firms, the aim of the team is to verify both the source and quality of it, said the exec. It’s a change in tact for an advertiser that was one of the more vocal critics of agencies that obfuscated media plans that made them money, even if that meant worse results for their clients. Now, data transparency is just as important as financial transparency, said the executive, who wants to check whether the businesses they share data with are as compliant as they say they are.

When an advertiser trades data with a business, they usually do so on the basis that one of those businesses has signed some sort of contract that says they are gathering and processing data in a legal way. The problem, however, is advertisers take those assurances at face value, said a senior executive at an auditing firm.

“As it stands, too many of those advertisers hide behind contracts that seemingly absolve them of any responsibility for what happens to data, said the executive.

The risks of not adhering to this trust but verify approach are substantial.

“Even if there’s no legal penalty on either an advertiser or a publisher as a result of enforcement action from a regulator like the ICO, those businesses are going to be the ones that get covered in the press because they’re the household names,” said Sam Tomlinson, marketing assurance partner at PwC.

“It’s the middle that gets lost,” said a TV network exec of the streaming wars.

These middle-class companies struggle to vie for subscription dollars. They do not have the money to produce and license — not to mention promote — the loads of shows and movies necessary to compete with the likes of Netflix and Disney. And unlike the genre-centric streamers, their programming is not concentrated enough to serve as an add-on to satisfy subscribers looking to augment their HBO Max or Apple TV+ subscriptions. “To be successful you have to be either really, really big or really, really niche,” said a digital entertainment exec.

That reverse-Goldilocks dilemma will push the members of streaming’s middle class to bundle together within ad-supported aggregators. “For today’s market, you’ll see a lot more bundling happening and move to a free, ad-based model,” said Eunice Shin, who has consulted for companies including Disney, Warner Bros. and NBCUniversal and is a partner at consulting firm Prophet.

Many have already made the move. Instead of standing up their own connected TV apps, mid-sized media companies are creating 24/7 streaming channels on services like Pluto TV and Xumo, licensing programming to aggregators like Roku and producing shows for platforms like YouTube. These companies have opted to be aggregated because the alternative is to be buried on connected TV platforms loaded with hundreds of apps. “We’re not going to survive on a UI with 150 to 200 choices if you’re not part of the first six [apps on the screen],” said the TV network exec.

While bundling can give these companies some cover by giving them easier access to audiences and ad dollars, that aggregation becomes a microcosm of the crunch. The more media companies that are distributing programming on an aggregator, the more difficult it is for those companies’ content to garner attention.

Moreover, the aggregators may feel the squeeze in their own ways. Services like Viacom’s Pluto TV, Amazon’s IMDb TV and Roku’s Roku Channel carry similar shows and movies and have struggled to differentiate themselves in order to establish loyal audiences and lure recurring revenue from advertisers.

“The truth of the matter is they all claim to have really high monthly active users and uniques, but if you do a campaign, you see different levels of impressions on a monthly basis,” said an agency exec.

With these mid-sized companies squeezed into ad-supported-streaming, what will ultimately determine who survives the middle-class crunch will be whether a company can produce programs that can attract a unique enough audience to convince advertisers they have to buy ads against those shows to reach people who are hard to find elsewhere, according to industry execs.

“If you don’t have a young audience, you’re fucked. You’ve got to have the young audience and the IP or product or brand that people want to grow with. If you don’t, then you’ve already set an expiration mark for your business. That’s what we’ve seen in some instances in the cable TV world,” said another TV network exec.

The survey also asked about some other effects of in-housing. Three-quarters of respondents said it had improved speed and agility, while 68% of respondents said it had reduced marketing overhead costs.

The consultancy threat may be overblown.
Most marketers don’t have plans to use consultancies for agency work heading into 2020. In a survey of 47 brand marketers by Digiday Research this fall, the majority of respondents said they have no plans to use consulting firms’ agency services for brand strategy, creative production, media planning or strategy or media buying over the next six months.

Only 17% of respondents said they’re currently using consultancies for any of this type of work, while 14% said they plan to use them for any of this type of work within the next six months.

Retail media will take centerstage in 2020
When it comes to media buying, retail media’s impact and popularity is growing in the industry. More and more brands and retailers are moving spending over to retail media websites — mostly Amazon — in search of more direct, lower-funnel conversion and a supposed “total wallet” perspective that these platforms provide.

Retail media is the third-most-popular and important media channel for respondents across the board, including retailers, brands and agencies.

Among retailers, 42% of them consider “retailer websites” important or very important. For brands, that number creeps up to 53%. And for agencies — who may actually be the most important decisionmakers on this since they do control so much of the spending — that number is almost 60% for agencies that work with retail and 85% for anyone doing retail marketing.

Among retail media, Amazon’s prowess as a retail media channel is growing. Out of 114 respondents, almost 36% said Amazon is important to them as a retail media channel. In comparison, 92% of respondents said Google was important, while 91% said Instagram was important.

Google is still king.
We broke it down further to also ask respondents what channel was most important to them when it came to their digital marketing strategy. The vast majority of respondents said they would prioritize Google, followed by Facebook and Instagram, as their most important channels.

Nobody likes a monopoly. Retailers and brands know Amazon is a juggernaut, and it works, for both sales and advertising. But at the same time, other retailer sites including Walmart, Target and Kroger, have made efforts to beef up what they’re doing in terms of becoming more sophisticated media platforms.

Brands are eager for alternatives.
Fifty-four percent of agencies that do retail marketing for brands say non-Amazon retail media is important to their marketing strategy. That number dips to 16% for retailers, but it’s not exactly scraping the bottom of the barrel.