Month: September 2020

The revenue data management service Staq found that display CPMs across open exchanges in the U.S. spent most of August increasing, hitting a high of $1.35 on August 23, up from $1.16 August 1. Those figures draw on revenue data from 50 publishers of different sizes, who generate more than $1.2 billion in combined annual revenue.

During the lockdown, CPMs slid as low as 87 cents in early April, Staq data showed.

Similarly, Ezoic’s Online Ad Revenue Index, which shares CPMs relative to their historic highs, found that August was the best month of 2020, with ad rates closer to December 2019 than August 2019.

And with a flush of political ads poised to come in on top of anticipated fourth quarter demand, many publishers that rely on programmatic advertising are feeling cautiously optimistic about that side of their businesses for the second half of the year.

In the display market, CPMs remain below their 2019 rates, both in the U.S. and abroad, according to Staq data, with brands in many categories of advertising, notably travel, continuing to spend far less than they did a year ago.

But beyond the growth, publishers have been relieved to see that the pattern of ad spending over the past several weeks tracks closely with previous years, offering some stability in a year that has offered little of it.

“For such a unique year, this year is following last year’s patterns pretty closely, albeit at a lower level,” said Andy Ellenthal, Staq’s CEO. “We expect to see a dip around Labor Day, the way we always do, but then we also expect it to come back.” 

While publishers’ ad businesses took a beating this spring, their programmatic businesses were often among the first to rally, in part because those investments are easiest to activate for brands.

At first, the increases were fueled by advertisers who had largely sat out the second quarter. The growth has been sustained, particularly in video and connected TV ad spending, by advertisers who did not commit the money normally spent on the upfronts.

“There’s been some shifts from the linear TV side,” said Anthony Rinaldi, the head of investment at the media agency Essence Global. “Brands want the flexibility now to turn things on and off and not have a pre agreed-upon commitment.”

That growth has many publishers feeling well positioned. “We had a healthy rebound in Q2,” said Jessica Sibley, the chief revenue officer of Forbes, who noted that Forbes’s programmatic revenues were up 30% year over year in the second quarter. “But I’d say we’re very strong, much stronger [in] Q3 than we had in Q2.”

One of the most encouraging signs for Sibley has been the return of programmatic guaranteed deals, which she had entered 2020 expecting would comprise a bigger portion of Forbes’s programmatic revenues. That business was sluggish in the spring, Sibley said, though it has begun to come back over the past couple weeks.

Jeff Hirsch, the chief commercial officer of PubMatic, which helps publishers build private marketplaces, said that the spending has been strongest on mobile private marketplaces, with spending now exceeding pre-pandemic highs.

Not every kind of publisher has benefited from the growth. Many advertisers continue to avoid news as a category, a dynamic that has persisted through the year as controversies continue to swirl around the coronavirus, social unrest and economic inequality. Some of the CPM growth, in fact, may be driven by the absence of inventory from news publishers, Rinaldi said.

That dynamic could become more pronounced as the presidential election draws nearer in the fall. “As you get closer to the election, more sites ramp [news and politics coverage] up,” Rinaldi said. “That’s going to create more pressure for the stuff that isn’t political.”

Then the legacy magazine brand pivoted to video and broadcast television as a way to not only broaden its audience but deepen the brand deals associated with the franchise. Now Time 100 is outpacing its 2019 revenue by 37%, with the projection that it will double year over year, according to the company.

In April, Time replaced its Time 100 Summit with the Time 100 Talks: a virtual event that has since expanded into a weekly show on Time.com, which now averages 5 million views per episode, according to Dan Macsai, executive editor and editorial director of the Time 100.

In May, Digiday reported that the Talks had brought in $1 million in sponsorship revenue but since then, it has been bringing in the mid-seven sponsorship figures, according to Ian Orefice, president of Time Studios. Financial institutions like Citibank and DBS Bank and insurance providers like State Farm and American Family Insurance have been sponsors for this series.

Continuing to capitalize on the success of the video programming pivot, the publisher is planning to reveal its 2020 class of Time 100 honorees with an hour-long broadcast special that will air in prime time on ABC on September 22. The show will include a mixture of mini-documentaries of the honorees, as well as musical performances and toasts from previous honorees.

Macsai said that the goal is to create a living and breathing community of honorees that continue to contribute to the video programming, both for the broadcast and for the Talks.

“It’s a natural progression for the Time 100 franchise” to go to broadcast programming, said Steven Bloom, managing director of enterprise partnerships at Omnicom Media Group. This is because the level of influence that the honorees have across a variety of industries is unmatched, he said. Some past honorees include actress and the Duchess of Sussex Meghan Markle, President Donald Trump, professional tennis player Naomi Osaka and Oscar-winning actress Brie Larson.

“Moving into broadcast, you’re moving the franchise in front of a much larger audience that wasn’t exposed to it in the past,” he said, making it an even more lucrative opportunity to increase revenue.

Broadcast sponsor, Procter & Gamble, is co-producing and co-financing the show’s production, said Orefice. He declined a request to disclose the revenue earned from this partnership or from licensing the programming to ABC.

Brain Wieser, the global president of business intelligence at GroupM, though, said that an hour-long, prime-time program can fetch upwards of $1 million or more for the publisher.

Time Studios was founded towards the end of 2019 and in just a year is pacing to be a low eight-figure revenue stream in 2020, according to Orefice. In addition to the upcoming broadcast, the studio has also created a number of documentaries and scripted products, some with scheduled theatrical releases.

Wieser said that while this is a new venture for Time as a publisher to enter into broadcast programming, publishers have incrementally been increasing their video divisions and their reach into broadcast for years. Meredith and Hearst now own dozens of their own local television stations, while Condé Nast and Vox Media have created video studios of their own to produce and license out content for their brands in-house.

“Time 100 is a blueprint for what is going to happen with the rest of Time,” said Orefice. For example, later this year, Time for Kids will be following suit by creating a television show for its Kid of the Year franchise that will premiere on Nickelodeon and CBS. “It’s about taking the cornerstone of what has always made this brand great and bringing that to life in new ways,” he said.

Last month, Facebook said the IDFA changes could “render Audience Network so ineffective on iOS 14 that it may not make sense to offer it on iOS 14.” Many gaming developers — particularly those that produce so-called hypercasual games — are reliant on both the Facebook Audience Network and the IDFA to acquire new users. Without the IDFA, the ability for developers to use precision-targeting methods such as lookalike modeling to target the users who are most likely to spend the most time and make the most purchases in-app (known in the industry as “whales”) becomes more challenging.

“This new IFDA-less world will — and already is — speeding up market-consolidation: Many ad tech companies [are] for sale currently,” said Remco Westermann, CEO of German investment firm Media and Games Invest, whose portfolio includes free gaming platform Gamigo Group and ad tech assets including Verve, AppLift and PubNative. MGI remains on the hunt for more ad tech assets, he added.

“It‘s now about having an integrated tech stack in combination with first-party supply,” Westerman said.

The changes to the IDFA threaten to disrupt a highly lucrative advertising market. Appsflyer, a mobile measurement platform, estimated in March this year that app install ad spend in gaming reached $22 billion worldwide in 2019 and that this figure would more than double to $48.5 billion in 2022. Apple’s users are the most lucrative for gaming companies: The App Store generated $11.6 billion in user revenue in the second quarter, compared to the $7.7 billion spent by Google Play users in the same period, according to data from Sensor Tower.

iOS 14 isn’t expected to go live until later this month, but there have already been a number of recent notable examples of gaming companies becoming strategic acquirers of ad tech. 

In May, private-equity backed mobile marketing platform AppLovin acquired Machine Zone, maker of popular games — including “Game of War: Fire Age” and “Mobile Strike” — for an undisclosed sum to add to its portfolio of investments in games studios. Mobile gaming developer Huuuge Games acquired Dutch ad tech company Playable Platform in July. 

There have also been fire sales like MGI’s acquisition of Verve earlier in the year for a price in the low double-digit million range. That’s a trend that could continue if the likes of mobile demand-side platforms and measurement companies find their services diminished due to the IDFA changes. 

“Some of the [consolidation] might be cut price because it’s a bit more [unpredictable]” in the post-IDFA environment, said Abeed Janmohamed, founding partner of growth consultancy firm Volando Global. “Some will be contingent on various milestones: ‘If I buy you today at a lower valuation I can then put milestones in place to realize value over the course of the next three to five years.”

One possible effect of the changes could be an even wider separation between the biggest and smallest companies in the mobile gaming ecosystem, which is the largest category of paid apps. Writing in a July paper to clients, Arete Research said larger games publishers — such as Zynga, Activision Blizzard and Electronic Arts — that can target against first-party data of their already large audiences would have an advantage over the smaller hypercasual game publishers, since they can use ad inventory to cross-promote their other titles. The other trend Arete sees is the acquisition of game studios by ad networks, eager to re-position themselves as “self-attributing networks” like Facebook or Google, said Arete senior analyst Richard Kramer.

For smaller gaming studios, the ability to build or buy ad tech isn’t as straightforward.

“Facebook [Audience Network accounts for a good proportion of free-to-play ad revenue — they pay some of the market leading e-CPMs,” said Dan Beasley, co-founder of Viker, a London-based mobile games studio. The permission change for IDFA “is a shot across the industry. Studios of all sizes are looking at that and saying, ‘That’s a significant chunk of my daily revenue gone’.”

In a post-IDFA world, ad formats such as sponsorships and integrating advertisers’ products into the games themselves could become more important, Beasley predicts. Studios with a very focused portfolio around a specific genre — Viker’s core focus is social casino-type games — may benefit from advertisers who shift to more broad-based, contextual targeting, he added.

“We’re just going to adapt as an industry — we’ve got no choice,” Beasley said.

And now, doubling down on esports, it has created its own. 

Earlier this week, the advertiser launched ‘Battle of the Best’ on its Twitch channel where some of the platform’s top streamers and personalities will compete against each other in a medley of games between Sept. 1 and Sept. 4.

“There are so many opportunities in this space when it comes to what you can own, whether its broadcasts or even a channel like the one we have on Twitch,” said Joe Barnes, director of sports marketing at Bud Light. 

In doing so, Bud Light is trying to straddle the line between advertiser and content creator. On one side of the strategy, it is pushing into in-game advertising with a deal to have its brand appear in a game nearing completion. On the other side, it’s looking to pull more viewers into its Twitch channel and is looking to sign esports talent to help. 

“Throughout the ‘Battle of the Best’ we had these big, albeit short-term, partnerships with a few popular streamers,” said Barnes. “In the coming weeks, we’ll be announcing a formal partnership with a big streamer.” 

Whether its influencers or in-game advertising, opportunities around gaming for Bud Light are becoming clearer the further esports crosses over into mainstream culture. By 2025, the gaming market could become a $300 billion industry, per GlobalData. For Context, the global film industry made $100 billion last year.

Now, the gaming industry is more than just people buying video games. And when there are rappers like Post Malone who co-own esports teams and the son of NBA star LeBron is part of a professional esports organization, it makes it easier for gaming to reach a broader audience.

The latter point is where Barnes sees the sweet spot for where Bud Light’s esports marketing crosses over into what it does around live sports. Sooner likelier than later athletes on Bud Light’s sponsorship roster could appear on its Twitch channel, instead of a TV ad. 

“We’re being approached by athletes all the time who want to be involved because they like to game,” said Barnes. “We’ll work on the partnerships we already have in place to bring them into our ecosystem on Twitch and the Bud Light channel there. Gaming is where culture is being set.”

The observation is also impacting where Bud Light’s esports content lives. 

“Our YouTube has traditionally been more music-focused, whereas Twitch has been more gaming but we’re starting to mix that,” said Barnes. 

His point is backed by the fact that some of the most popular leagues in esports — including the Call of Duty and Overwatch leagues — exclusively stream on YouTube now. That wasn’t the case a year ago. Meanwhile, Facebook continues to chip away at the sector, having made its own gaming platform more accessible to fans in recent months. 

For now, however, Barnes’ focus is on Twitch where the advertiser’s channel has nearly 35,000 followers. 

In some ways, the coronavirus has been the ultimate stress test for whether or not Bud Light’s investments in gaming over the last five years have been worth it. 

While cheaper to activate compared to other areas like live sports sponsorships, it’s not cheap to do. For example, BMW is paying around $500,000 to sponsor five of the most popular gaming organizations around the world, according to estimates from an exec who brokers commercial esports deals but wished to remain anonymous. 

Those costs are exacerbated on two fronts: shallow measurement and an ad-resistant audience. Overcoming those issues is hard at the best of times, not least during a downturn and the financial stresses that come with it. But for Barnes and his team, those challenges were softened by the experience it has built up over the last five years, particularly when it comes to measurement. For example, it now works with Nielsen’s esports team on brand lift studies and does brand equity studies in partnership with Twitch. 

“We were already well entrenched in esports prior to 2020 and we had the experience that’s meant what we’ve done in recent months has connected with streamers who know we’re a brand that cares about them and tries to offer them something new,” said Barnes. 

That one of the biggest advertisers in Anheuser-Busch InBev is taking a keen interest in gaming is reflective of a broader view. Some advertisers like Adidas are going so far as to look at how they can hard code their brands into games.   

“Esports is a trigger for a much bigger media play around the metaverse concept,” said Itamar Benedy CEO at ad tech vendor for in-game inventory Anzu. “You’re seeing developers build these virtual worlds where people visit for various reasons, from gaming to watching a music concert as seen in Fortnite.” 

“Gaming should be an advertising category just in the same way you look at search, social and outdoor media,” Benedy added.