Month: July 2020

“TikTok is starting to play with publishers a lot more,” a chief revenue
officer at a large lifestyle publisher said. “[It] has just opened up the
door for publishers to do more together [with them].”

That spending is a drop in the bucket compared the billions TikTok plans to
lavish on creators over the next three years; on Wednesday TikTok announced it
would spend $1 billion funding creators in the U.S. alone over the next three
years, and at least twice that amount globally.

“I think the way they’re looking at media companies is for a stamp of
approval or a stamp of legitimacy,” said Mae Karwowski, the CEO of influencer
marketing agency Obvious.ly. “It’s less, ‘You’re going to power our
newsfeeds.’”

Over the past couple years, TikTok has not been shy about spending money on advertising. It spent close to $1 billion in 2018, according to a report in The Wall Street Journal, and separate analysis released by MediaRadar this spring suggests the platform spent four times that amount in 2019.

The lion’s share of that ad spending — 80%, per MediaRadar analysis — was focused on app installation ads on Snapchat, one of TikTok’s biggest competitors for young people’s attention.

But recently, that balance has shifted. “Now that they are in the mainstream, them solidifying their relationships with media companies is a way to further that,” Karwowski said, adding that recent scrutiny from the U.S. government influenced the dynamic too: Keeping a close business relationship with the media, which helped generate momentum for the conversation around whether TikTok should be banned, makes sense as well, she said.

And on the other side of the coin, publishers, during a challenging business climate, will take revenue wherever they can find it. But having been burned by platforms in the past, they are also approaching TikTok cautiously, even as more publishers join the platform every week. Publishers such as NowThis, Complex and Insider mostly use TikTok as a place to syndicate and redistribute content they’ve made for other platforms. BuzzFeed has been spending modest amounts — usually well under $50,000 per month, according to a source familiar with the matter — to experiment with driving branded content views on TikTok.

Part of that caution stems from an issue that other marketers have with the
platform: Its youthful audience is largely too young to appeal to marketers. “I
look at who’s on the platform, and it’s like, my 11 year-old niece,” the chief
revenue officer said.

“The old days of cable, you had one channel that would go across the different distributors. Now the different [streaming] platforms like to have their own, so it makes it challenging from an operational, branding and marketing standpoint,” said one media executive.

In an ideal world, media companies would be able to adopt a hub-and-spoke model with their streaming linear channels, creating a single 24/7 feed that is carried by each of the streaming services. But that’s not reality. While services like NBCUniversal’s Peacock, Samsung TV Plus and Xumo allow media companies to use a single content feed to fill their channels, Pluto TV requires companies send the streamer their programming for Pluto TV’s own team to program their channels, said a second media executive. 

The split distribution can make it difficult for media companies to treat their 24/7 streaming channels like TV networks, such as scheduling a show to air simultaneously across all services. But it’s not like a media company — in the name of simplicity — could necessarily choose to prioritize Pluto TV over Samsung TV Plus or vice versa. 

“The reality is, if you can’t integrate with Samsung TV Plus and Watch Free from Vizio and Pluto, then you can’t compete because they are 90% of the eyeballs,” said a third media executive.

The two other media executives largely concurred, describing Pluto TV as the service that delivers the most viewership followed by Samsung TV Plus. “Then there’s everyone else,” said the first media executive. The media executives did not have viewership figures to share, but Pluto TV’s parent company ViacomCBS said in May that the streamer attracts 24 million viewers per month.

Yes, but “everyone else” refers to streaming services owned by the likes of Amazon, NBCUniversal and Roku. Even though the media executives said their 24/7 channels on Amazon’s IMDb TV, NBCUniversal’s Peacock and Roku’s The Roku Channel have not delivered large numbers of viewers or watch time, they said it’s too soon to count them out. Peacock only launched nationally on July 15, IMDb TV began adding 24/7 channels starting this year and Roku just added a programming guide to highlight its 24/7 channels in June.

“Fragmentation is a pain in the ass today, but it means the ecosystem is growing,” said the third media executive.

To call out the potential IDFA impact in the third quarter is significant because Apple’s iOS 14 update is only expected to roll out in mid-September — the last two weeks of that quarter — and it will take a while for all Apple users to adopt the new operating system. Analysts from JMP Securities wrote in a research note earlier this week that the Apple update has the potential to hit Criteo’s revenue by $20 million in the fourth quarter and more than $60 million in 2021.

“It’s very hard for us to extrapolate what [the IDFA changes] will do given that there is no precedent to this,” Criteo CEO Megan Clarken told Digiday.

If consumer opt-in rates are terribly low, or Apple ultimately decides to remove the IDFA altogether, advertisers will choose ad tech partners who have the best access to other forms of audience data, according to Clarken. 

“If there was a worst-case scenario and we are all playing a guessing game … then I think Criteo is in the best spot,” she said. “If you look at the data set we have and the ability even to do contextual stuff, then expand from that to things that are probabilistic and even taking that data and making it deterministic, we have a really powerful position.”

Criteo says it has first-party data integrations with more than 20,000 advertisers and 4,700 publishers. Its ID graph contains data for 2.5 billion users, “of which 98% have persistent identifiers beyond cookies,” Clarken said on the earnings call. That includes data such as hashed email addresses or loyalty card information, which is privacy-protected, Clarken told Digiday.

“If you’re the average [demand-side platform], you probably don’t have anywhere near the level of access to brands’ first-party data,” said Joanna O’Connell, principal analyst at Forrester. “That doesn’t make them immune [to the impact of Apple’s upcoming IDFA changes] — nobody is immune — that’s the reason why there is so much energy around ID infrastructures because we all know that something has got to be done.”

It’s unclear what Apple’s intentions are, but its broad definition of “tracking” in its AppTrackingTransparency (ATT) Framework appears to limit data leakage beyond IDFA, such as sharing email lists, alternative IDs etc.,” said Rocco Strauss, internet equity research analyst at Arete Research, via email.

ID solutions, such as Criteo’s, could be proposed as workarounds that enable user-level targeting, even if users opt out of tracking, he added, but Apple may take steps to block these, as it has with previous workarounds for its Intelligent Tracker Prevention feature in the Safari browser.

“While Apple has no control over publishers’ CRM systems or server-side activity_— and publishers will even more often ask for email addresses to log-in — Apple could (temporarily) block apps when it detects sharing of IDs/email addresses server-side,” Strauss said.

Earlier this year, Criteo began work on what it is calling a “revocable identification system” — a portal where consumers could access their privacy profile and update their preferences for how they can be targeted across web browsers and apps. The idea is that the system will be open source — not owned by Criteo or any other commercial entity — and that it is open to all ad tech vendors, publishers and advertisers. Criteo is aiming for the platform to be ready by the fourth quarter of 2020.

“It gives control back to the consumer, the owner of the ID, and takes it out of the control of the browser or the operating system,” said Clarken, who added that the system had “started to gain traction with the powers that be,” referring to publishers and advertisers but without naming specific companies.

For the second quarter, Criteo reported $180 million in revenue minus traffic acquisitions costs in the second quarter, an 18% dip on last year. Its performance was better than expected as while clients in sectors including travel and brick-and-mortar retail paused or reined in their spending, midmarket and direct-to-consumer companies maintained or increased their activity.

The company attributed a $41 million net negative impact to the coronavirus crisis in the period. Criteo is forecasting third-quarter revenue of between $171 million and $173 million, a 20% to 21% decline from last year’s quarter, which includes a $40 million negative coronavirus impact.

Both agencies include inventory from their respective marketplaces on every campaign, where advertisers have agreed to its use. But the way advertisers buy those ads varies depending on the marketplace. Advertisers can’t buy ads from all of the 300-plus publishers in GroupM’s marketplace automatically through an ad-buying platform whereas they can for the 250-plus available on Havas’ marketplace. In fact, Havas’ offer works like a private auction where advertisers can reserve ads before the publisher puts them up for sale on the open marketplace. Eventually, GroupM will do the same.

“Over the last few months, there’s been a reevaluation of media decisions,” said Susan Schiekofer, GroupM’s chief digital investment officer. “Clients that don’t usually ask about how they can support certain publishers want to do so now, and those that already did are coming to us for ways to do more.”

Time will tell whether advertisers will follow through on that intent. After all, being ethical isn’t cheap, particularly when it would normally mean paying extra for technical and commercial nouse needed to broker deals with certain publishers. These new curated marketplaces, however, don’t come at a premium — at least not yet. Instead, both GroupM and Havas seem prepared to take a commercial hit on these marketplaces in order to give advertisers fewer reasons not to spend.

Neither of the agencies will demand advertisers commit a minimum amount of spend to those marketplaces. As Schiekofer explained: “We’re not going to insist on minimum commitments because if we do that then we might lockout a few clients.”

This pragmatic approach extends to publishers.

“Publishers with minority-focused audiences don’t always have the scale to integrate with some of the larger marketplaces on the market,” said Lashawnda Goffin, general manager of the supply-side partnerships and development at Colossus, an ad tech vendor focused on selling impressions for those publishers.

Ideally, both GroupM and Havas would like their marketplaces to be filled with minority-owned publishers. If they stuck to these stances, however, then the marketplaces would be smaller than what they are now and potentially less attractive to advertisers. Instead, both marketplaces only sell ads of those minority-owned or focused publishers that have passed a series of quality checks against areas like viewability, brand safety and whether the sites are regularly updated. 

“Our key criteria is that the publishers themselves are [Black, indigenous, people of color] or LGBTQ+ (for their respective private marketplaces) owned,” said Andrew Goode, head of biddable media at Havas Media North America. “We otherwise, apply the same quality criteria and management as any of our broader partners.”

More publishers are set to join these marketplaces soon. GroupM is already in talks with various publishers, while Havas plans to work with more ad tech vendors that sell ads for publishers. 

Moves like this tread a fine line between racial profiling and targeting specific audiences. And yet both marketplaces do not segregate audiences, per their owners. Yes the audiences in these groups tend to be endemic, they said, but this does not mean the agencies will exclude underrepresented audiences from our other buys.

Curated marketplaces aren’t a new concept. For years, agencies have been using them to secure preferential access to premium inventory from publishers at a discount, which can then be passed on to clients. Until recently, however, demand for those marketplaces has been limited when it comes to minority-owned or focused publishers.  

“Advertisers are starting to realize that if they’re not smarter about how they spend media budgets then they’ll continue to be complicit in some really unpleasant practices,” said Harriet Kingaby, co-chair of the Conscious Advertising Network of over 70 organizations committed to ethical advertising principles. “It shouldn’t have taken the death of a black man in police custody two months ago to make advertisers think about where their media spend is going but it has.” 

Nevertheless, with racism in the headlines, advertisers are reckoning with their role in shaping the discourse around it.

“This Social Equity Marketplace [from Havas] is the place where [faucet brand] Moen is placing more immediate focus because the issue of under-representation is quite pervasive in the programmatic space and a large portion of our overall media investment, like many brands today, is bought programmatically,” said Delphine Francois Chiavarini, vp of global marketing at Fortune Brands Global Plumbing Group, which owns Moen. 

Comments like this suggest there is enough demand to see why GroupM believes it could double or event triple investment in its own curated marketplace by year’s end. 

“Yes we’re looking at growing the marketplace to those volumes but what we really want is 100% client engagement,” said Susan Schiekofer, GroupM’s chief digital investment officer.

While it’s too early to say whether this crisis of conscience among advertisers is the result of deep introspection or canny PR, it’s got a lot easier for advertisers to act on either motivation thanks to curated marketplaces.