Month: December 2020

Ad sellers — as well as buyers — had anticipated streaming inventory to be in short supply this year. In addition to streaming viewership growth accelerating across the board since shelter-at-home orders went out in March, some advertisers’ businesses have begun to recover from the pandemic to the point that the fourth quarter was slated to see a lot of pent-up demand. That has tightened up the traditional TV ad market, which contributed to squeezing the streaming side as well. “Supply is constrained not just with traditional TV and cable but across anywhere with TV-like video,” said a second agency executive.

Moreover, with advertisers concentrating their holiday ad budgets earlier in the season because of this year’s emphasis on online shopping, “we had to front-load as well,” said a second media executive. This person’s company had tried to set aside some inventory that it could sell at a higher-than-normal price to last-minute advertisers. But ultimately so many advertisers sought to place buys with viewership guarantees that the company had to take the backup inventory off the table in mid-November. “We made room and still couldn’t hold out until Thanksgiving,” the executive said.

Said the first media executive, “we had to basically say to [advertisers], ‘We don’t have any way to be sure to meet the needs you’re expressing. We can take your order, and if we have enough growth in viewership in the month, we can try to fulfill it’.”

Of course, some ad buyers believe the sell-out claims to be a bit of a negotiating tactic. Similar to how Dwight Schrute snatched up all the Princess Unicorn dolls to sell at a significant markup to panicked parents, the media companies could be claiming to be sold out only to call on advertisers when extra inventory magically becomes available but at a higher price. “I worry that these partners think they didn’t charge enough [for their streaming inventory in this year’s upfront market], so they’ll cry ‘sold out’ and jack those CPMs up,” said a third agency executive.

However, streaming inventory is not sold out altogether.

Based on conversations with agency and media executives, it seems that streaming ads against TV-quality programming, such as Disney’s Hulu, purchased directly from the media companies, has been in especially short supply. “This might be the first time Hulu is sold out [in two or three years],” said the first agency executive, who noted that Hulu’s audience has expanded so much in recent years that the streamer’s prior supply constraints subsided.

By contrast, lower-quality inventory gathered from smaller streaming properties has been more available, to the point that some streaming ad aggregators, including connected TV platforms and free, ad-supported streaming TV platform owners, have asked media companies that have sold out their own inventory to assist in selling some of the platforms’ unsold inventory, according to media executives. “We’re doing such a good job selling our inventory that partners are asking us to help sell their inventory,” said a third media executive.

“The specialist piece is a key differentiator,” said Future’s global chief revenue officer Mike Peralta. That’s because enthusiast audiences naturally have higher purchase intent for products that are endemic to their passions, he added.

Additionally, Future’s team is able to collect across multiple enthusiast audiences — including fans of music, technology, gaming and photography — with the yet-to-be-named new tech stack platform, which launched last week that Future claims shows that there is crossover potential in interests, and therefore, there is crossover potential for advertisers that want to hit a cross sections of these high-intent audiences. 

Future has run over 200 campaigns through the platform to date and has seen a range of 50-70% better performance on campaigns that use its first-party audience segment data than campaigns that rely on third-party data, Peralta said. 

The data that is collected comes from the company’s three other tech stacks, which it started first investing in eight years ago, according to Future CEO Zillah Byng-Thorne. This includes its own content management system called Vanilla, an ad-tech stack called Hybrid and an e-commerce engine called Hawk.

Because all these stacks are owned and operated by the company, Peralta said his team is able to determine exactly where a reader is on a given site, what they are reading via keyword and contextual targeting and what they are shopping for, either because of an ad or an affiliate link that they clicked on.

“Being able to combine the number of targeting parameters in conjunction with this audience of high-intent [readers] allows us to deliver both audiences that the advertisers are looking for and make new recommendations of audiences that may not be as intuitive,” Peralta said.

For example, one client that Peralta declined to name, recently came to Future looking for new audiences to sell its digital collectible card game. The platform revealed that rock music fans and guitar-related interest groups showed a strong affinity for these types of games so the brand ran its ads against the publisher’s music titles. The company reported that the ads ended-up out performing the ads that were targeted directly to fans of card games, though declined to share by how much.

For buyers and marketers, it’s the combined behavior, engagement and shopping data that publishers with the scale of Future can offer that appeals to them when making a media buy, according to Sargi Mann, evp of digital strategy and investment at Havas Media.

It will “not only allow brands to utilize high intent audiences, but also navigate the world of brand safety [and] suitability guidelines for brands with their highly curated content,” Mann said.

A lot of this audience targeting was already being done manually during the day-to-day conversations with advertising clients, Peralta said, “but this platform allows us to work at scale and read and look at more data and come back with better recommendations.” 

Future’s overall revenue for its 2020 fiscal year, which ended on Sept. 30, was just under £340 million (approximately $459 million) and it had an operating profit of £93 million ($125 million), according to the company’s 2020 annual report. Both figures were up 65% and 56% year over year, according to the company’s 2019 annual report.

Future earns 70% of its revenue from its digital businesses, with digital advertising making up 60% of that and e-commerce making up the other 40%. This year, digital advertising earned a total of £140 million ($189 million) or 41% of the company’s total revenue.

Mann said that these types of first-party data collection plays are exactly what publishers should be doing to adapt their business models and keep a competitive advantage in the ad market.

“The deprecation of third-party cookies is an advantage and a second chance for the publishing industry to establish themselves as a meaningful partner for brands,” said Mann.

These join other marketplace forays including Outpost, the Infatuation’s New York-specific shop for food and classes, and the Complex Shop, which launched late last year and has grown its customer base 20x in its first year, according to a spokesperson who would not share raw numbers.

While advertising remains the principal source of revenue for most of these publishers, many are bullish on their marketplace’s prospects, not just in terms of near-term financials, but in terms of the long-view strategic implications of building more direct customer relationships with their readers. “In the first year I expect it to surpass our affiliate revenue,” said Kate Spies, the gm and svp of Well + Good. “It’s much more effective from a business model standpoint…Moving forward, it allows us to explore white-labeling, to explore a product line.”

Spies would not share specifics about how much of Well + Good’s revenue comes from commerce, but she did say that the growth of the site’s commerce business played a key role in its strong performance in the second half of the year; the site’s revenues were up 39% year over year in the third quarter, Spies said.

In the abstract, many publishers have the raw materials needed to build successful marketplaces: Direct connections to large, engaged audiences with clearly understood needs on one side, and established relationships to advertisers or sellers, many of whom are looking for new sales channels as e-commerce grows more important on the other.

For example, Narcity CEO Chuck Lapointe said Narcity’s editorial team had a list of hundreds of local Canadian merchants ready to recommend to Bonsai, the technology vendor that plugs into the merchants selling on Narcity Market. As the market grows, Lapointe said, the Narcity editors will recommend hundreds more.

But historically, publishers have stayed away from marketplaces because they require skillsets and technology that few have at their disposal. While most of the publishers dipping their toes in these waters already have some experience with affiliate commerce, direct connections to their loyal chunks of readers, and in some cases, a customer relationship, the scope of what’s being asked is very difficult.

“We have a database of people we have a monetary relationship with, but this is definitely a whole new frontier for us,” Spies said.

The Infatuation, for example, chose to hire an outside consultant to manage the sellers side of Outpost, the marketplace it launched this fall (it used members of its events and experiential staff to manage its customers on the other side).

Spies said that growing the marketplace arm of Well + Good’s business will require adding several different kinds of staffers, including merchandisers, business data analysts, community and customer care specialists, as well as dedicated editorial support for the shop itself.

Adding that talent, in turn, should give the publishers exploring this model the resources necessary to diversify into even more goods.

“Our focus the next few years is, ‘How can we diversify from programmatic and branded content to start making money from our users?’” Narcity’s Lapointe said. “From there, it’s about, ‘What products and features and experiences can we launch to test out that theory that we can transition to make the majority of money from our users?’”