Month: April 2020

Rather than retreat from new business initiatives to take shelter in legacy revenue streams, Complex Networks is looking to go the other direction. If Complex needs to cancel its biggest event, ComplexCon, it may use its four-month-old Complex Shop commerce platform to virtually replicate ComplexCon’s fashion marketplace. If advertisers are pulling money because they don’t have the right messaging for the current cultural climate but they are still looking to push product sales, Complex could package their products with the line of hot sauces it sells.

“We want to put as little pressure on yesterday’s revenue streams and as much pressure on tomorrow’s revenue streams as possible,” Antoniello said.

That doesn’t mean that Complex is not feeling pressure on its business. The company already fell short of its first-quarter revenue goal despite revenue for January and February being 28% higher than the year-ago mark. Antoniello noted that the company had set an aggressive first-quarter revenue goal and that its revenue still grew compared to the period last year. While Antoniello said the company is still on pace to turn a profit this year, he doesn’t expect the company to hit the revenue goal for the year it had set prior to the pandemic. “I’d love it if it would happen; I just don’t see it as a possibility right now,” he said.

Reacting in time

Several media companies have already taken steps to cut costs in order to deal with the pandemic. Highsnobiety laid off 25% of its workforce and closed its commerce business. BuzzFeed, Vice and Group Nine have cut some employees’ salaries. 

Complex has frozen hiring for the time being, but it has not yet instituted pay cuts or furloughed or laid off employees. The company’s overarching priority at the moment is keeping as many people in the company creating content and monetizing that content, and Antoniello said there are “too many open data points to make a definitive decision with things still changing on an hour-to-hour basis.”

Antoniello took a similar tact when presenting to Complex’s board members. Instead of presenting a 12-month plan for how Complex Networks may be hit by the pandemic and how it would respond to those impacts, in a board meeting on March 30 Antoniello broke down that plan into three-month increments. That quarter-to-quarter approach is mean to give the company to adapt to those impacts without overreacting.

“If you do a massive course correction right now where you’re assuming the worst, the world could be very different in a month, and then you’re actually not set up to capitalize on that moment,” said Christopher Erwin, principal and founder of strategy advisory company RockWater.

Case in point: Complex has not rushed to cancel ComplexCon since the event is not scheduled to take place until November. Similarly, it has not yet decided what to do with its inaugural First We Feast Fest, which is slated for the fall but does not yet have a confirmed date or secured venue.

Contingency plans and preparations

If ComplexCon cannot take place as planned, Complex may not need to completely cancel the event, which is as much of a fashion marketplace as a street culture festival. Antoniello threw out the possibility of opening up the company’s e-commerce site, Complex Shop, to the companies that would have hosted booths at ComplexCon. 

That possibility piqued the interest of Dre Hayes, brand architect and co-founder of The Foundation, which handles U.S. branding, sales and distribution for Kappa, which has paid for a booth at the past three ComplexCons. Not only would a virtual marketplace be more cost-effective for vendors — eliminating costs like building the booth and hiring staff to work it — but also “when you start doing it from a virtual standpoint, then the whole marketplace is the world,” Hayes said.

Considering when its events are scheduled to take place, Complex has some fortune working in its favor. As another example, the company had already shot the episodes for its show on TruTV “Hot Ones: The Game Show,” which premiered in February, “so that money keeps coming in,” Antoniello said. That show has brought in other money. The company launched three new hot sauces in connection to the show, and over the weekend of March 28, the company saw a 14% increase in hot sauce sales above its forecast, he said.

Meanwhile, Complex’s advertising business has not been hit as hard as Antoniello had expected. Mobile and streaming companies have increased the money they spend with the company compared to last year, and Antoniello said that the company “closed a big T-Mobile deal” on March 30. “We haven’t seen a lot of things come out of the pipeline,” he said. However, the company has noticed that advertisers are hesitant to close deals at the moment. “They’re not saying ‘no’ yet. They’re saying ‘give me options,’” Antoniello said.

Complex is able to remain in the mix because, as an entertainment company, it is more likely to attract audiences during the quarantine and to get those people to spend even more time with its content, said Cliff Atkinson, svp and executive director of digital media at RPA. However, “the biggest thing is trying to understand if they can continue to create content in this time to feed the appetite,” he said.

The answer is yes. Six weeks ago, Complex increased show productions to bank extra episodes before the quarantine prevented companies from shooting in studios or on location. It also began developing ideas to produce its existing shows remotely and develop new remote-oriented series, seven of which will debut over the course of this week and next week. 

That programming pipeline can help Complex hang onto ad dollars. “Video content is something that advertisers are definitely still looking for and trying to understand where consumers are going, especially young males since a lot of sports is where we were reaching those males,” Atkinson said.

From its production preparations before the pandemic-induced quarantine to its stay-the-course expansion plan to the potential for a virtual ComplexCon marketplace if the lockdown continues, Complex’s strategy to survive the current economic climate is to give itself as many options in the form of alternative revenue streams as it can. 

“I feel like there’s a way to win here and make this work to the advantage, if you’re willing to not look at everything as a debilitating mistake,” Antoniello said.

Clean.io, a company that offers malvertising protection to publishers, found there was a surge in malvertising campaigns starting Mar. 11. Clean.io’s “global threat level” — a percentage calculation of the number of threats clean.io blocked divided by the number of pageviews it behaviorally analyzed — was 50 times higher during the surge to the end of March relative to the start of the month.  Around 1% of all pageviews Clean.io analyzed over the past two weeks were impacted by malicious ads, compared with a very low baseline of around 0.02% at the beginning of the month.

The U.S. has seen a significantly higher increase in malvertising compared with the rest of the world over the last month, according to Clean.io. The company said it analyzed the JavaScript within ads on tens of thousands of sites and apps that generate tens of billions of monthly page views.

The market forces of lower ad prices and extraordinarily high traffic “have basically brought the rats out of the sewers,” said Clean.io CEO Matt Gillis.

Ad fraud tends to spike over weekends and holidays as more people switch to personal devices versus work devices that tend to have better security settings. But with the majority of people now at home 

Fraudsters have become accustomed to using sophisticated techniques to avoid being detected at the approval stage of their campaigns when they place the ads with a demand-side platform, Gillis said. Some of these bad actors have been masquerading as genuine big-name advertisers — copying the creative used in real ads from brands including Ford, Nike and Mercedes-Benz — and misrepresenting themselves as that company’s media agency of record, according to Gillis.

Continuing their efforts to evade detection, the fraudsters then sideloads malicious JavaScript that only renders when it’s served on a user’s device. The fraudulent activity included click-jacking techniques to trick a user into visiting a fake landing page and auto-redirects informing the user they have “won an Amazon gift card” in a bid to extract their personal data.

Clean.io “saw and blocked malicious ads coming from every DSP in the ecosystem; ones you would expect have only been bringing clear demand to the market,” said Gillis. “I think there’s a misnomer that malicious ads come from low rate networks and b-rate exchanges.”

In an emailed statement, Joel Livesey, lead director of inventory partnerships at The Trade Desk, said the company has a relationship with ad verification service White Ops to block fraudulent traffic “at the door” before it enters its systems. The Trade Desk also has a range of internal systems and partners with other third-party vendors like IAS, Moat and DoubleVerify.

“This set-up works extremely well and we usually see very low single digit percentage points of fraud attempts, most of which we can root out right away,” Livesey said. “When we are concerned that fraud might have occurred, our marketplace quality team works very closely with everyone along the supply chain to follow the dollars and identify the parties involved.”

In an emailed statement, a Xandr spokesman said, “Always, and especially in these challenging times, Xandr makes proactive efforts to prevent malicious advertising in our ecosystem. We support both proprietary processes as well as partner with third-party vendors like Clean.io to monitor for and reduce malicious advertising on our platform.”

Google and MediaMath did not respond to requests for comment in time for publication.

The rise in malvertising activity is another kick in the teeth for publishers who are already taking body hits from multiple angles as the coronavirus pandemic wears on.

“Publishers are frustrated. [Malvertising] is hurting the brand, the user experience and the user is being misled,” said Jayson Dubin, a revenue amplification platform that manages more than 450 publisher sites. “Why does it keep happening? I honestly think the onus really lies on DSPs allowing in these nefarious characters.”

Catching the criminals isn’t easy, however. The bad actors often use resellers that offer white-label versions of DSPs in order to load their ads into the marketplace, meaning they don’t need a direct seat at the original DSP themselves, said ad fraud researcher and consultant Augustine Fou. Ultimately, ad fraud is the risk publishers take on by offering their inventory to the open marketplace.

“If you can shift your mix to more direct-sold and publisher-hosted ads, you reduce the percentage of ads being serviced in by programmatic sources,” Fou said. “As long as you have programmatic sources sticking ads in these slots, this problem won’t be solved.”

It’s not just advertising fraudsters hoping to turn the coronavirus pandemic into an illicit money-making opportunity. The Federal Trade Commission said on Tuesday the agency has received more than 7,800 coronavirus-related reports and that complaints spiked in the past week. Consumers reported losing a total of $4.77 million — a median loss of $598 — to coronavirus-related scams.

Let’s start with the basics

Post-auction discounts happen when a publisher agrees to make money off of winning bids for certain impressions from an agency. So if an agency wins an impression in an auction at one price, the actual fee they pay will be lower once the discount kicks in. The theory behind the deal isn’t new. Agencies already have similar, direct deals with specific publishers in place, where both have agreed to trade impressions for an agreed fee and amount of spend in private marketplaces. What’s different with post-auction discounts is they happen via an ad tech vendor like a supply-side platform and tend to be focused on inventory bought from the open marketplace. Those discounts can range anywhere between 1% and 50%, according to Index Exchange, which has built a tool for agencies to strike those deals. 

“We’ve had a few of the agencies we work with mention these discounts to us,” said one ad tech exec on condition of anonymity for fear of jeopardizing those deals. “They’re telling us they want the commercial benefits of being big buyers to apply to the open marketplace.” 

Why do agencies need SSPs to be involved?

When an advertiser negotiates a discount with a publisher it’s a little complicated but possible to respect that preferred price in private marketplaces. It’s harder, however, to strike those sorts of deals in the open marketplace where Google’s ad server, which is the only way publishers can get access to the ad exchange that has historically delivered the highest prices, doesn’t work so well with independent SSPs like Index Exchange. In effect, post-auction discounts are a workaround by the SSP for publishers to be able to pass on discounts to agencies.

Rubicon and Xandr are other ad tech vendors that have talked to agencies about building tools that allow these sorts of discounts to be set. 

If post-auction discounts are set at an SSP level is that bad news for publishers?

Not necessarily. In fact, it’s the publisher that sets the discount that GroupM’s buyers get on bids made via the Index Exchange SSP, for example.

Those discounts are for specific impressions so are neither applicable to all GroupM’s transactions with the publisher or all its deals handled by Index. In other words, the publisher sets those discounts and decides when they kick in.

“The feature is designed to give buyers and publishers the same ability to create financial agreements in programmatic that they do in other media transactions,” said Michael McNeeley, vp of product at Index Exchange. These discounts are controlled and set by the publisher and they will help them incentivize spend.

So what’s the catch?

On the one hand, these deals give publishers another way to convince buyers to spend more with them in return for discounts. The risk, though, is that the agencies buy the same amount of impressions with the publisher but pay less for it. Some media execs argue that these discounts work on the basis that both the SSP and the publisher absorb the difference between the winning bid and the actual price paid for an impression. Essentially, both ad tech vendors and publishers must commit to losing some of the margin made on each successful bid from the agency to ensure they spend more money with them and less through their rivals.