Month: July 2020

Given these circumstances, Rubicon and Telaria allow them to compete with those companies for a while longer. The companies are largely complementary with Telaria particularly strong at selling impressions on connected TVs and Rubicon strong in selling impressions on basically everything else, whethers it’s sites with display, mobile or video inventory.

“Publishers have been asking for an alternative to working with the non-independent companies like of Google or Comcast and were saying that they wanted an independent alternative that functioned like The Trade Desk on the sell side,” said Magnite’s CEO Michael Barrett. “They want that alternative because they’re reducing the number of partners they sell through and want to work with those that can act as a one-stop-shop for all impressions, whether that’s display or connected TV.”

This seems like the next natural trend for SSPs, given a similar shift from ad tech vendors used by advertisers like The Trade Desk. 

“Companies see the value in being a one-stop-shop since so many brands are looking to streamline processes especially in the wake of COVID,” said Mark Zamuner, CEO at growth consultancyTWO NIL. “For a long time, companies have had to utilize several different brands for different types of inventory, and now it’s being served on a silver platter, backed by two legacy names with years of experience in the market.”

Indeed, Magnite is poised to benefit from the scatter market, where ads are purchased closer to the time they air. According to Barrett, some of those dollars will invariably flow into connected TV given advertisers want more flexibility, particularly when it comes to being able to pause campaigns, given the uncertainties around their own businesses during the crisis. 

“With the cancellation of the TV Upfronts and advertisers holding back that money for scatter markets, that’s the perfect environment for connected TV,” said Barrett. “You’re seeing a fundamental shift in the way consumers and marketers treat connected TV.”

But there’s only so much demand via efficiency-driven advertisers that Magnite’s low fee SSP will be able to extract. It’s hard to be a low-margin ad tech vendor for publishers in a market where the competition are able to direct demand back to its own stack, creating an unfair advantage.

Magnite, however, does have some advantages. Namely, being the only public SSP at a time when publishers, ad tech vendors and advertisers are more selective with their partnerships. As a public company, Magnite must be more financially transparent and subsequently more trustworthy. In other words, the business is a safer bet for publishers and advertisers that increasingly working with fewer scaled ad tech vendors. 

“There’s a flight to safety for publishers in ad tech in that you don’t get paid until your SSP pays you and they don’t get paid until the SSPs get a successfully compelled auction,” said Barrett. “If you have a partner that’s public and has a balance sheet over a $100 million cash, has access to the capital market then they’re a safer bet. We’ve seen a lot of players really narrow down the scope of companies they were working with during this recession.”

Even so, the publisher-focused ad tech vendor will continue to court advertisers and agencies with tools and services designed to make it easier for them to buy impressions from the programmatic auctions it manages. As Harry Houlder, global supply director at Havas Media Group, explained: “A more streamlined, cleaner and less cluttered path to supply should be everyone’s goal, and hopefully we can trust the big ad tech players to lead the way and focus on connecting consumers with brands in the best possible way.”

As much as Magnite will lean into the needs of the demand-side, particularly around connected TV, it won’t abandon its core publisher clients in the process, said Barrett. In fact, one area for growth is helping publishers monetize their own data in the absence of a third-party cookie.

The plan, according to Barrett, is to create software layers that help publishers make this transition. It’s unlikely that there will be a single identifier that replaces third-party cookies in the near term, said Barret, who explained that future solutions would riff on the SSPs ability to help publishers take the data they own to market in a transparent way. It’s a similar tactic other SSPs like Pubmatic have taken — creating software that lets publishers provide additional identifiers in the bid requests they send out. 

“With the depreciation of the third-party cookie and potential mobile device IDs on Apple devices, there’s an opportunity to help publishers manage their data in a way that allows them to create valuable audience segments,” said Barrett. “We don’t have all the answers but our endgame isn’t to create a proprietary solution,” he added. “If we’re going to be part of an industry that competes against the walled gardens then we all have to work together around an open solution not owned by one particular company.” 

BuzzFeed is even considering leaning further into this area by launching a a new sex and love vertical to create a solidified destination for its audience to find sex toy product recommendations all in one place, now that it has a surplus of content from covering sexual wellness for several years.

In April 2020, BuzzFeed reported that sex toy sales were up nearly 600% compared to April 2019, while year-to-date, the category is up 165%, according to Nilla Ali, BuzzFeed’s svp of commerce. Ali would not disclose hard revenue figures from sales in this category.

The Strategist editor Alexis Swerdloff said that sex toys have “always been a strong category” but unlike office chairs, which recently saw a bump as people began furnishing their work from home spaces, sex toys have not seen a significant spike. However, the sex toy category’s sales have increased gradually since the pandemic.

According to Camilla Cho, Vox Media’s svp of ecommerce, some of the retailers that the Strategist partners with in this category are up 10-20% in conversions compared to this time last year. 

Ali and Cho both said that the commission rates in this category are competitive, both from Amazon and from category-specific retailers. “Commission rates vary quite a bit in this category,” said Cho. “But in general, [Amazon and other sex toy retailers] all provide pretty competitive, compelling rates.” 

One sex toy retailer, Children of the Revolution, has an affiliate program with commission rates ranging from 5-25%, depending on the product, according to the company’s website. Sex toy retailer Maude’s affiliate program features a standard 10% commission rate, according to its website. And Lelo’s Adult Toys affiliate program gives publishers, blogs and influencers a 5-20% commission on all sales, determined by the type of publisher and their traffic sources, according to its site. 

At the start of the pandemic, Amazon initially slashed the commission rates for publishers promoting products categorized as “non-essential.”

One lifestyle media executive, who spoke on the condition of anonymity, said that while the sex toy category is performing really well since the pandemic, Amazon has cut rates on health products, which includes sexual oriented products. 

“It’s a topic that’s doing really well, but commissions are drastically lower than they used to be,” the exec said. “So you have to take that into consideration when developing a content strategy.” 

There is a competitive upside for publishers when partnering with sex toy retailers, according to Ali. “There are limitations around where they can advertise, so there is an opportunity for content publishers because they are a main channel for discovery. The limitations that the platforms have don’t apply to publishers,” she said. “It’s a great work around for advertisers to get in front of an audience.” 

However, similar to sex toy retailers who cannot promote their products through paid social, Ali and Cho said that they are unable to promote the category on those platforms because it too will be flagged. Sex toy content can also be flagged in Google, making SEO distribution difficult, similar to cannabis content, according to Ava Seave, principal of media consulting firm Quantum Media.

“The biggest challenge with sex toy content is that you’re not able to promote on the platforms. And there are distribution issues with paid promotion,” said Ali.

Therefore, BuzzFeed tends to promote this content on its owned-and- operated channels, which Ali said is “an effective tactic given the scale of our audience.”

Seave said that while affiliate sales are the most logical way for publishers to monetize their sex toy content in a commerce capacity, drop ship sales could also work. For a general publisher trying to create their own inventory business with branded products, however, Seave said that it is something that would not necessarily translate to audiences because general publishers are not specialists on the subject (in the practice?). 

For publishers whose audience appreciates this sex-focused product category, Chris Erwin, principal and founder of strategy advisory company RockWater, said that they have an opportunity to cater to those retailers who cannot advertise on platforms or in other publications.

Especially now when those retailers are performing well in online sales, he said that publishers can enter into a storytelling relationship (what would that look like?) that has the potential to become a long standing partnership even after the pandemic. 

“My gut is that obviously people are quarantined and they’re not having as much interaction with people, so it’s not too surprising that the numbers are going up,” said Ali. “It’s a category that’s doing well and we foresee it [continuing] to do well.” 

As Modern Retail editor Cale Guthrie Weissman wrote last week, that’s an especially tricky situation for DTC brands that have touted their progressive values — be it an ethical supply chain or sustainability or dismantling beauty standards — as part of their differentiation. Some of those DTCs are indeed fearful of being called out for continuing running ads on Facebook amid the boycott. 

“The main thing smaller brands seem concerned about is will [there be] any kind of backlash against advertisers continuing to run on the platform,” said one buyer who mainly works with DTC brands. “[That] would be unfair to them as their businesses and staff are often heavily reliant on the revenue that [Facebook] generates.” 

That said, the Facebook boycott is part of a larger cultural shift towards a more “values-based consumerism,” as Village Marketing founder Vickie Segar put it, that has been going on for some time and likely why DTCs companies felt the need to pitched their values as part of their differentiation.

“People are asking companies to show their values: Are you going to put people over profit? Companies need to get used to making decisions [that support their] values over profit,” said Segar, adding that those that don’t may be called out and “lose profit anyway if they don’t,” as people may not want to support brands that state their values but not stay true to them.  

While this is part of a larger cultural shift, agency execs say that DTCs may have to figure out ways to participate in the boycott or to tweak their advertising strategies while the boycott is on-going. The difficulty of doing so will depend on the DTC brand and the strategy they adapt. 

“Established DTC brands with a business model that is set up for revenue from returning customers (Glossier, Hims) are in a better position [to participate] than those who rely almost exclusively on customer acquisition for growth (Casper, Peloton),” said Katy Wellhousen, senior account director at RQ. Previously Wellhousen was a marketing and growth consultant for DTC startups. “The Glossiers of the world can join the boycott and push harder on levers that target customers whose data they already have,” she said.

One strategy for more established DTCs, added Wellhousen, would be “putting more attention on email marketing, referrals and building relationships with influential customers that are natural ambassadors of the brand.” 

Additionally, per Segar, DTCs could be taking ad dollars meant for direct ads on Facebook or Instagram and put them towards influencers. While influencer deals have taken a hit as some marketers don’t want to have sponsored content post during boycott, others see it as a viable option for DTCs unable to totally sit out advertising on Facebook.

“[Influencers can help] DTC brands still reach the right audiences while pausing their spend on Facebook, giving them an opportunity to use their ad dollars to pressure Facebook into policy changes,” said Wellhousen, adding that “this is especially important for those who have put out statements supporting the Black Lives Matter movement. How can a brand authentically join the fight against racial injustice when they’re using the same platform that allows hate speech to sell moisturizer, vitamins and tennis shoes?”

Figuring out how to square public values and where ad dollars go will likely continue long past this boycott. For DTCs, it could continue to be a tricky road to navigate. 

“With values-based consumerism there isn’t room for error,” said Segar. “People will knock you down if you don’t stick with what you’re saying.”

The CPRA is effectively a proposed addendum to the California Consumer Privacy Act, the privacy law that was passed by the state legislature in June 2018. It took effect on January 1 and the California Attorney General’s office began enforcing on July 1. But it’s only a ballot initiative at the moment. California’s Secretary of State announced on June 24 that the CPRA will be put to California residents for a vote on in November. If approved, the CPRA won’t take effect until January 1, 2023, but — similar to how the CCPA covered data collected the year prior to the law taking effect — it will apply to data collected starting January 1, 2022.

WTF is California doing with another privacy law?

The people behind the CPRA — an organization called Californians for Consumer Privacy — don’t think California’s other, just-enacted-this-year privacy law is strong enough. They are also the same group—led by Alastair Mactaggart—that came up with the ballot initiative that formed the basis for and was replaced by the CCPA, so they would know. 

How does the CPRA make the CCPA stronger?

For starters, it creates a government agency — called the California Privacy Protection Agency — specifically dedicated to enforcing California’s privacy laws. The CCPA enlisted the state’s AG’s office to enforce the law, but as overseer of the state’s entire legal and law enforcement arm, the AG’s office has a lot on its plate. That could explain why it took until June 2, less than a month before the AG’s office could begin enforcing the CCPA, for the AG’s office to submit the supposedly final draft of the rules it would use to enforce the CCPA. Creating an agency whose sole purpose is to enforce the CCPA and the CPRA would likely lead to more businesses’ compliance practices being scrutinized and companies being potentially penalized.

Additionally, the CPRA makes companies responsible for what other companies do with California residents’ personal information that is collected by the former and shared with the latter. For example, the law would require that a company monitor that service providers — like ad tech firms processing publishers’ data to facilitate ad targeting — don’t add California residents’ data to the service provider’s own database of consumer profiles unless the company and service provider signed a contract agreeing to that use.

It also puts the service providers on the hook for helping the companies that collected a person’s personal information to comply with requests related to that information, such as deleting it. The CPRA will also give people the option to correct the personal information that companies have collected from them, which could be a way to finally tell the ad tech ecosystem that you, in fact, actually bought those shoes three months ago so all the retargeting can stop please.

Wait, go back. The rules stating what companies need to do in order to comply with the CCPA weren’t available until June 2?

Not exactly. The AG’s office sent out the first draft of its proposed regulations back in October. But then there was a public comment period that led to revisions and then more revisions. The final regulations weren’t so different from the previous draft submitted in March, which confirmed Do Not Track signals can double as opt-outs under the CCPA. And anyway, even though the AG’s office is supposed to have been able to enforce the CCPA starting on July 1, it has to wait until the California Office of Administrative Law approves the regulations. As of July 2, the AG’s regulations were still under review.

So the CCPA is still being sorted out and now businesses might have another privacy law they’ll need to comply with?

Yes. But the CPRA could help businesses to figure out how they need to comply with the CCPA by clearing up its murky definition of sale.

How would the CPRA clarify the CCPA’s definition of sale?

The CPRA would set a new category to describe what companies may do with the personal information they collect from California residents. The CCPA defined a sale as exchanging data for some type of financial consideration, a murky definition that probably applies to targeted advertising, but not everyone is convinced. Plus, some companies don’t want to say they’re selling people’s information unless they are directly trading data for dollars. The CPRA settles both issues by splitting sharing people’s personal information into its own category but with the same requirements applied to the data that companies sell. So it’s a semantic issue, but because this is legalese we’re talking about, it was a significant issue.

Does the CRPA introduce any changes to what is considered personal information?

Yes, by creating a new sub-category of personal information: sensitive personal information. Sensitive personal information includes log-in credentials, precise geolocation (like GPS coordinates), race or ethnicity, biometric data and any data related to someone’s “sex life” or sexual orientation. 

Why does the CRPA create a sub-category of personal information?

To make California’s privacy laws less onerous on businesses in a way, it seems. The distinction between data types will allow California residents to tell businesses to treat their sensitive personal information, like their religious beliefs, differently than their regular personal information, like unique device identifiers. If California residents only care to regulate companies’ collection and use of their sensitive personal information, companies may not lose out on the, implicitly, non-sensitive personal information they might use for ad targeting purposes.

What if California residents vote against the CPRA?

That’s a possibility. But even more likely, the CPRA may be off the ballot by November. The CCPA was supposed to be a ballot initiative, but state legislators opted instead to pass it into law themselves so they could amend it. They could do the same with the CPRA, even though one of the CPRA’s aims is to prevent California lawmakers from weakening the state’s privacy laws. So hang tight. One of these days, California’s legal privacy picture will come into focus.