Month: March 2021

Understandably, marketers are feeling the pressure to evaluate the relative risks and benefits of each approach before committing to a preference. From understanding data and reviewing tech stacks, processes and teams, to investigating different identifier solutions and testing contextual solutions, there’s a lot for marketers to unpick. 

“We can’t afford to put all our eggs in one basket when it comes to one of these alternatives because there are still so many unanswered questions about what will and won’t be permitted,” said Frances Giordano, group director at Media Kitchen. “Instead we have our hands in a few different pots so that we can test several different solutions so that we can change our strategy as they are fully rolled out to market.” 

As it stands, FLoC, and Unified ID 2.0 are leading contenders, but there’s no clear winner. 

While PMG has emphasized the importance of diversifying marketing and advertising approaches for all clients, the digital agency will continue evaluating multiple identity tech providers, said Jason Hartley, head of search, shopping and social at PMG. “We’ll continue to poke around,” he said. “We’re looking for a durable approach.”

Even so, much of the initial thought process behind those choices seems to be driven — at least in part — by where marketers stand on user-level identifiers in the first place.  

For some, those solutions aren’t a viable alternative to third-party cookies, not while there are so many of limited sizes around. For context, there are around 37 alternate identifiers in the U.S. and around 55 worldwide, said Matt Prohaska, CEO of Prohaska Consulting. But without enough publishers and the consumers powering them, alternate user-level identifiers are guilty of form over function. 

“Very few publishers or ad tech platforms have been in to talk to us about Unified 2.0, we’ve had to form our own opinions,” said a senior agency exec who was not authorized to speak to Digiday publicly.

Rather than have to work through these issues, some advertisers are playing it safe. In other words, they’re taking the path of least resistance — Google. 

“There is pressure from large advertisers on their agencies to stop looking at alternative user-level identifiers and focus on what Google is doing with the Privacy Sandbox,” said one ad tech exec with knowledge of those discussions. “Advertisers are saying ‘if most of my budget is with Google already, why invest in other identifiers outside of Google when there’s so much uncertainty.” 

To these marketers, the future could be cohort-based in Google’s walled garden. They have already sunk millions of dollars into the Google ecosystem so are more inclined to continue doing so, especially if they prescribe to the online behemoth’s dim outlook on identifiers. 

Google can’t see how the likes of Unified ID 2.0 and LiveRamp’s identifier will pass muster with either consumers or regulators when they use hashed IDs, including emails and addresses, that are by no means a perfect way to permanently mask someone’s identity. Google’s blog post confirmed the suspicions of some advertisers it seems. 

“We’re advising our clients to move away from investing in these alternative identifiers that rely on hashed personal information because it’s not sustainable on a philosophical or commercial level,” said another agency exec who was not authorized to speak to Digiday. “We believe the rest of the industry will have to follow suit because otherwise the risk is being part of a wild west industry around third-party addressability.”

Some marketers share this view of email-based identifiers, but differ when it comes to Google. Sure, Google’s Privacy Sandbox might be better for consumers than many of its counterparts, but concerns are growing that it could also heighten the company’s dominant position in the market. Turns out, Google’s update raised more questions than it answered. 

“We agree [with Google], it is wise not to be reliant on email as the main anchor for identity solutions because of questions over consent and the longevity of its reliability,”  said Andrew Goode, head of biddable media, at Havas Media North America. “Google however misses the point when speaking of solutions where they suggest that the alternative to cookies is to largely seek a cookie-like solution for measurement and attribution.”

The argument being that an online experience for consumers doesn’t happen because several companies have shut off data and intelligence to advertisers. It happens because marketers are able to effectively reach people online in a privacy-safe and consented manner. 

“Any ID solution built on authenticated users will support 20% of traffic, but much of the innovation in identity is developing the other 80% of anonymous traffic through taxonomy to support the creation of segmentation for second-party data sets,” said Goode. “FLoC doesn’t allow a publisher to use their own assets. We believe that it is more meaningful for publishers to be able to share their second-party data, as they are best placed to understand their own user base.”

No one identifier solution, no matter how big, can provide this level of targeting at scale outside the walled gardens. It’s why solutions like Unified ID are pushing for a more collective effort across different solutions, while developing a consent framework for sharing data appropriately between different companies. 

The outcome of these pushes, along with the response of regulators who may have objections on both sides, make the future of the digital advertising market highly unpredictable. 

“There’s a lot of confusion among advertisers about what to do next,” said James Coulson, managing partner of strategy at digital agency Infectious Media. “Because the [third-party cookie alternative] solutions aren’t necessarily clear, a lot of our conversations with clients are around how they organize their first-party data because it’s going to be intrinsic to working with whatever comes to market.”  

This is the second time Digiday researched how media professionals are preparing for the end of third-party cookies. In the first quarter of 2020, Digiday asked publishers and advertisers how worried they were about several things, including their ability to target and measure ads without third-party cookies.

The buy side’s concerns about those challenges have subsided somewhat — from 76% last year to 69% this year for the ability to target ads, and from 76% to 70% for the ability to measure their effectiveness.

But on the whole, substantial portions of media’s buy side expect the end of third-party cookies to hurt their businesses. Close to half of brand-side respondents this year agreed the changes would hurt, while close to one-third of agency-side sources agreed.

That gap in concern between agencies and brands was echoed elsewhere in the data. When asked to assess which part of the media ecosystem would be hurt the least, agency- and brand-side respondents shared nearly identical responses.

Several have begun to speak openly about the impact of these pressures on their mental health. CEOs such as Alex Depledge from U.K. architectural startup Resi, Janice Kaffer of Canadian care centre Hôtel-Dieu Grace Healthcare and Matthew Cooper of U.S. fintech EarnUp have been publicly sharing their mental health challenges. 

Now as companies place an intense focus on recovery and growth in the toughest of economic climates, more are beginning to question the status quo. That’s led several to adopt a co-CEO model — the theory being that they can double down on business recovery but without risking working one individual to the bone.

An eye on exponentially accelerating growth is what has prompted the likes of U.K. media company Jungle Creations, European venture capital firm Octopus Ventures and job sharing platform Roleshare to adopt a co-CEO model in the last three months.

All pairs at the helm believe that, despite delineating key responsibilities, what lies ahead sits beyond the scope, skillset and headspace of one person. 

“Octopus Ventures has grown significantly over the last year and intends to keep growing, capitalising on a golden age of European technology investing. This was about building a platform for future growth to allow us to keep scaling effectively,” an Octopus Ventures spokesperson told Digiday.

That’s an attitude shared by Roleshare co-founders Sophie Smallwood and Dave Smallwood a husband and wife co-CEO team who left jobs at Facebook and Paypal respectively to launch the job share matching website.

Jungle and Roleshare co-CEOS both cited their partnerships’ openness as a way of alleviating some of the mental burden of being CEO. Jungle’s Poulter believes having someone to stress- test new ideas against leads to better success, while Chapman is convinced it makes for more effective, hands-on leadership.

For the Smallwoods, it’s an extra layer of confidentiality and vulnerability that not even your closest C-suite ally can offer — regardless of whether you’re married.

“CEO level is a lonely place to be. There are a lot of people who need things from you. There are few people you can share how you really feel with. You can’t always be upbeat and positive, and if you’re by yourself, you’re having to struggle with that alone. In a partnership, you can lift each other up,” added Smallwood. 

That’s not to say the co-CEO model is a universal solution. Software firm SAP abandoned its co-CEO structure after just six months last year, stating “a lone CEO model” would “provide a clearer leadership structure” to tackle pandemic-related business challenges. Tire maker Pirelli’s co-CEO Angelos Papadimitriou also walked out in January after six months, said to be a mutual decision.

In the media industry, Charlie Crowe, founder of the Festival of Media and now a consultant, offers the example of agency Initiative. In the early 2000s it was run by CEOs Alec Gerster and Marie-Josee Forissier, who ended up splitting remits geographically. Crowe said it contributed to a lack of cohesion, resulting in a talented female CEO not realizing her full potential.

According to Steve Hyde, CEO of media and marketing executive recruiter 360xec, organizations thrive on a single leader employees and customers can rally around.

Hyde advised addressing one of the main boardroom issues that would lead to a business considering a co-CEO set up: a “lack of diversity of thought”. That would be an imbalance of left brain, analytical and logistics oriented leaders, like a CFO, CIO or CTO; versus right brain, creative, future thinking people, like a CMO. 

“That’s the problem you might be sticking a plaster over, without digging deeper. If you do, you probably don’t need two people as CEO,” said Hyde.

Yet Jungle’s Poulter argues the complexity and growth of his business warrants the co-CEO model. “Covid has made people and businesses more open to change. With businesses like ours moving in this direction, I can imagine others viewing it as a viable option too.”

The year the media business changed — then didn’t

Since March 11, 2020, the media industry experienced all sorts of changes. Media companies left their offices as stay-at-home orders went out. They laid off employees as advertising revenue dried up. They pivoted to virtual events and remote video production as much of the industry began working from home. But a year to the day since the coronavirus crisis was declared a pandemic, the media business has not been permanently transformed all that much — at least not yet. And it isn’t likely to as a direct result of the pandemic, according to media executives.

“In the end, I don’t know that much changed. I think for us, and probably a lot of others, we did a gut check on costs, trimmed away unnecessary costs and got in better fighting shape,” said one media executive.

The key hits:

• Media companies’ advertising revenues rebounded by the end of the year.
• The pandemic’s impact on companies’ event and subscription businesses may not last, for better or worse.
• Media businesses have been more greatly impacted in the past year by issues like the outcry over racial inequality and tracking crackdowns from Google and Apple than by the pandemic.

Last spring, media companies’ advertising businesses seemed primed to undergo the biggest permanent transformation. But while ad revenue dropped off a cliff in the second quarter, it rebounded by the end of the year. So much so that multiple media executives said their companies’ fourth-quarter ad revenue in 2020 ended up being higher than in 2019.

“We all thought in March, April, May and June that advertising was shot for the media industry, but it came back strongly in the fourth quarter and is just fine now,” said a second media executive.

To be clear, not all areas of media companies’ businesses have recovered or even stabilized.

Events, for example, remain virtual, but the media executives interviewed for this article expect that, within three years, media companies’ events businesses will not look fundamentally different from what they were pre-pandemic. Furthermore, they expect virtual events will become a relic as in-person events return and people acclimate to the post-covid world. “I don’t know that [virtual events are] here to stay because they’re terrible. Everyone has Zoom fatigue,” said a third media executive.

Additionally, the subscription bump news publishers saw during the pandemic is likely to subside as the news cycle (hopefully) settles down compared to last year. “The subscription bump was more of a demand for news when crazy shit happens. It was a year of crazy shit happening non-stop, so the demand for news and people’s willingness to pay for it will decline,” said the second media executive. “That bump will be reduced.”

More to the point, the pandemic did not really disrupt the revenue mixes for media companies that had diversified beyond advertising into other money-making sources like subscriptions, events and commerce. A rise in subscription revenue helped to offset some of the ad revenue declines that media companies suffered in the first half of 2020, and virtual events lessened some of the sting from losing in-person events. But by the end of the year, media companies’ revenue mixes were largely restored to pre-pandemic form, with advertising as the biggest single source. “In October, I would have said there would be a real material change in the makeup, but then the end of the year was really strong from an ad perspective, which actually restored the previous balance,” said a fourth media executive.

None of that is to say that the pandemic has not made a lasting imprint on media businesses. The shift to remote work, as well as the cost-cutting many media companies underwent to weather the economic downturn, are likely to have some lasting impacts, as will the fluidity of the advertising market. But media executives are still ascertaining how long exactly those impacts may last, for which companies — and to what ends.

Companies are still determining to what extent they will continue to work remotely once it is safe to return to the office at normal capacity. They are also sorting out the permanence of the expenses that evaporated in 2020. Whether companies return to offices will inform whether their real estate and electricity costs return, but business travel is another line item to which companies may take a red pen, not only because it lowers costs but also streamlines employees’ work hours. “There are so many things we do that take an astronomical amount of time, like traveling to the West Coast for a meeting. So much can be done via Zoom,” said the first media executive. And finally, they are getting their arms around whether the shortened pitch cycles for advertising deals as well as advertisers’ focus on tried-and-true ad formats, i.e. units that can be delivered via an ad server versus custom-built branded content, will continue to trend as advertisers in the travel and theatrical sectors return to market — and the third-party cookie ultimately goes away.

Media executives said of all the events in the last year, those not related to the pandemic will have more of a longstanding impact on the industry. Google’s and Apple’s digital tracking crackdowns threaten the status quo of digital advertising and have pushed publishers to collect first-party data from their audiences to strengthen their ad businesses and reinforce their non-advertising revenue streams. Former President Donald Trump’s ouster from office removes a lightning rod that had powered news publishers’ site traffic, video viewership and subscription businesses for four years. And the outcry over racial inequality calls for media companies to finally take significant steps to address the lack of diversity within their organizations, especially among their leadership ranks, or risk losing their BIPOC employees — as well as their BIPOC audiences and the advertisers who want to reach them — to companies in which diversity is supported.

“A lot of the changes were things like Google and Apple [announcing moves that will limit tracking for targeted advertising]. Those are the big changes. Those are going to happen one way or another, but they have nothing to do with Covid-19,” said a fifth media executive. — Tim Peterson

Confessional

“When I first read about [Google announcing it will not support alternate identifiers for tracking people online], it sounded like a cannonball. But when I read into it, it’s basically them saying they’re not going to bring a solution to third-party cookies [going away. They’re not going to service the open web, but they will service the Google ecosystem. Google is sacrificing some business, but focusing on where their core business is… When Google does anything, it’s in their best interest.”

— Publishing executive

The pandemic’s impact on the local news business

While the pandemic rocked the entire media industry, perhaps no segment was hit harder than the already-struggling local news ecosystem. Several recently released reports and initiatives highlight the exact impact on the local news industry, how diverse communities were disproportionately affected and what can be done to help.

A Knight Foundation report released March 3 argued measuring the “health” of a news environment should include an assessment of the diversity of business models and how newsrooms’ staffs reflect the communities they cover. The report found that in the nine communities evaluated, those with more racial and ethnic diversity have lower levels of trust in journalism as well as fewer journalism outlets and national newspaper chains.

But it’s not all bad news. Report for America reported in February that increased attention on racial inequality in the U.S., the unfortunate economic impact of the pandemic and a call among Black communities for more news by and for African Americans, resulted in funders increasing support for Black journalism. Black Voice News’s income has doubled in the past year, for example, in large part because the publication started accepting grants to bolster its ad-supported business. (The Knight Foundation report also found inequity in philanthropic investment in journalism across the nine communities included in the project, ranging from over $50 per capita in Macon-Bibb County, Georgia to less than $1 per capita in Youngstown, Ohio.)

The Tow Center for Digital Journalism and the Columbia Journalism Review hit the one-year mark of tracking newsroom cutbacks in the wake of the pandemic. One of the key takeaways is that media companies suffered from declines in ad revenue and significant layoffs across the board, though newspapers were hit the hardest. More than 60 outlets have shut down, including 56 newspapers, five magazines, three digital outlets and one radio station.

Meanwhile, ad agency Allen & Gerritsen partnered with Boston Globe Media to launch the Protect Our Press initiative in February, a call-to-action to agencies, brands, publishers and consumers to curb the decline of local news. The initiative asks agencies and advertisers to reinvest 20% of their programmatic ad budgets directly with local news outlets, remove local publishers from keyword blocklists and commit to maintaining existing investments in local journalism. — Sara Guaglione

Numbers to know

22%: Percentage of top editors who are women across 240 news outlets.

70: Number of HuffPost employees who were laid off on March 9 by BuzzFeed, which also shut down HuffPost’s Canadian outlets.

28%: Percentage decline in traffic to publishers’ political news content in February compared to January.

436,000: Number of digital-only subscribers that Tribune Publishing had at the end of 2020.

$3 million: Amount of subscription revenue that Quartz expects to bring in this year.

3 Questions with gal-dem’s Mariel Richards

Digiday spoke with Mariel Richards, CEO of U.K.-based magazine gal-dem, for a story earlier this week about the emergence of agency-run multicultural private marketplaces and why some Black-owned media companies are hesitant to take part in them. Below is more from that conversation, with a specific focus on how independent media companies in the U.K. are banding together to help increase ad spend on their own terms. — Kayleigh Barber

Why do you think that going through agencies limits how brands reach marginalized audiences?

The agency model doesn’t work when it comes to this idea of authentically telling a story to intersectional identities. And I know we’re talking about advertising here — we’re not talking about writing a novel — but the more direct the relationship with the audience you’re trying to reach, the more authentic the story is.

When we look at some of the things that I think affect people’s perceptions of brands and their importance or their necessity in their lives, it is not the display ad that they see on the screen. It’s not even the 60-second TV commercial. The way that Nike has worked to sponsor basketball and football courts around London [and] Adidas sponsoring learning opportunities online, it’s these things that feel specific and direct into a community that I think tell a story of a brand’s intentions. And those things are harder and harder to do the more removed you become from that community.

As a niche publisher, do you worry about the issue of scale that advertisers traditionally look for in media buys?

That’s one thing that clients are kind of scared of. They want to work with you because you’re the niche publisher and you speak to that demographic, but then there’s another one and another one. But the reason that we’re present is because we admit that there is a plurality of voices, and there is a plurality of experiences. We all speak to our communities in different ways from different perspectives. [When] agencies come in and try to sell us as one group, it really tells the story that they don’t understand that plurality, and that we are being sold to diversify something rather than to speak to a specific interest or a specific behavior pattern.

How have you attempted to solve this problem on your own?

One thing that we’re doing more of to try and step away from this network approach is to prove that we’re capable of collaborating with other media [brands] when it’s appropriate. So if a brief comes in and it’s speaking to Muslim women, we’ve got absolutely no qualms about saying, ‘Actually, we need to split this budget, or we need to hand over the majority of this budget, we need to collaborate with Amaliah to reach this target audience.’

We work with other magazines [regularly]. We’re all trying to change the media industry in the same way, so there is less competition between us as startup magazines than there would be between some of the larger houses who wouldn’t necessarily want to share a budget or to share work.

What we’ve covered

Digiday’s updated breakdown of 12 publishers’ diversity statistics:

• Publishers’ employee bases continue to be largely white, according to Digiday’s roundup of self-reported diversity data from 12 publishers. Nearly all of the companies included have majority white staff, leadership and new hires.
• There were no Bleacher Report employees at the vp level or above who were Black, a larger portion of promotions went to white people at Buzzfeed than the share of white people at the company overall, and there nearly 80% of people in management level at Hearst are white.

Read more details on diversity (or lack thereof) at publishers including Gannett, New York Times and Vox here.

The Washington Post readies its self-serve buying platform:

•  In the beginning of the second quarter, Zeus Prime, a self-service ad platform, will be opened up so ad buyers can reach users across all of the sites using Zeus Performance, the header bidding wrapper plus ad rendering engine from the Post.
•  Zeus Prime is entering an increasingly crowded field, with publishers ranging from Vox Media to Forbes to BuzzFeed standing up solutions built on first-party data.

Read more about Zeus Prime here.

Why independent Black-owned media companies are not participating in agency multicultural marketplaces:

• GroupM, Havas Media and H Code all launched new multicultural private marketplaces or networks in the past year so brand clients could more efficiently buy ads in Black-owned media.
•  Without programmatic offerings, independently owned publishers struggle to garner interest from buyers, while publishers lament a lack of autonomy over which advertisers appear on their sites.

Read more about the challenges for multicultural marketplaces here.

Google’s ad targeting limits expose publishers with reliance on open programmatic market and first-party data weakness:

• Publishers expect a revenue hit following Google’s changes that will end behavioral targeting in its ad exchange, which drives a significant portion of revenue for some.
• Publishers without first-party data strategies say they are particularly worried about generating ad revenue as advertisers seek authenticated audiences, but while some are testing alternate identifiers, others await advertiser interest in that approach.

Read more about how publishers are planning to counteract the impacts of Google’s latest targeting decision here.

How The Week successfully created a children’s media property amid the pandemic:

• Right before its expected launch, The Week had to tear up its plans for a kids-aimed look at the news when the pandemic hit in order to incorporate coronavirus information for its young audience.
• A survey conducted by YouGov and The Week Junior helped inform how it brought the news to Generation Alpha, a generation who believe in their ability to change the world and consider access to health care a particularly important issue.

Read more about how The Week Junior was born here.

Identity tech providers try to make sense of Google’s plan not to support alternate identifiers:

• Identity tech firms put on a happy face as Google told the world it would not enable its technologies in inventory it sells. But LiveRamp hoped it could partner with Google’s ad exchange to pass its identifier to non-Google DSPs.
• While some identity tech execs dismissed the news, others suggested Google would have influence on whether advertisers and publishers want to invest in alternate identifiers.

Read more about how Google’s decision could affect cookie-replacing identifiers here.

Bloomberg Media is testing paid tiers for virtual events:

• To drive growth, Bloomberg Media is experimenting with a “freemium” events model which includes free and paid offerings for access to additional features at its events which bring attendees closer to its journalists and stories.
• There’s a $125 three-month “New & Networking” subscription tier and a $475 “Premium Pass” for a full-year subscription.

Read more about Bloomberg’s new event model here.

PopSugar Fitness expands health and wellness coverage after success with at-home workout videos:

• PopSugar needs to keep audience momentum going as people return to on-location gyms after turning to its workout videos during lockdown.
• The publisher will launch an online hub to highlight its coverage for Mental Health Awareness Month in May and plans to produce more articles and videos around sleep, stress and anxiety management and meditation.

Read more about how PopSugar is flexing its fitness content muscles here.

What we’re reading

The Wall Street Journal’s SEO strategy:
The Wall Street Journal has known for years that it is too focused on its older print subscriber base. Its solution, improbably, includes a bigger shift toward “What time is the Super Bowl”-esque service content, reported Insider.

Substack’s local news potential:
Substack has already proven it can support small local news operations. Now, with many journalists either laid off or worn out by years of cost-cutting in local news, the newsletter publishing platform is turning its eye toward local news as a growth area, Poynter reported.

Billionaires’ news publishing bailouts:
The benevolence of several billionaire media company owners has been tested during the pandemic, CNN’s Kerry Flynn writes. Even though publishers including Fortune and the Los Angeles Times are just a few years removed from ownership’s assurances of support, they now face a squeeze familiar to the rest of the media.

Teen Vogue’s outcry over its new editor:
Two years ago, Alexi McCammond, the former Axios White House reporter and just-announced editor-in-chief of Teen Vogue, apologized publicly for a clutch of racist tweets she published while she was in college. This week, 20 Teen Vogue staffers publicly repudiated McCammond (and Condé Nast management for hiring her) over those same tweets, according to The Daily Beast.

Facebook’s TikTok copycat:
Facebook is trying to learn whether Reels, its TikTok-esque videos created originally for Instagram, can get traction inside Facebook’s news feed, Reuters reported. The test, which is being conducted in India, is the latest move Facebook has made to try and breathe life into its version of the widely copied short-form video format.

Oprah Winfrey’s continued TV draw:
As streaming giants race to lock up exclusive deals with A-list talent, it can create collaboration headaches. Case in point: Oprah Winfrey’s news-making interview with Meghan Markle and Prince Harry had to air on broadcast television partly because Oprah has an exclusive deal to create content for Apple TV+, while the ex-royal couple has a $100 million deal with Netflix, according to The New York Times.

The IAB’s Best Practices for User-Enabled Identity Tokens address the use of identifiers, many of which work by transforming identifiable data like email addresses into encrypted ID signals to replace cookie tracking. The proposed guidelines, now open for public comment through May 7, are meant to reduce privacy threats as these technologies are distributed across the digital media supply chain.

“These are working documents and early concepts, and several large pieces of the puzzle are still missing — including the crucial piece of consumer reactions and how willing we will be to provide consent,” said Georgie Haig, product lead of identity at programmatic marketing agency MiQ.

When presenting the proposal on March 9 — part of a package of technical standards for privacy, accountability and taxonomy for contextual advertising — IAB Tech Lab CEO Dennis Buchheim said, “We need to create and present options to consumers for privacy and personalization.”

The identity token best practices state that first parties — typically website publishers — that gather email addresses and other personal information to build identifiers must provide people with “transparency and control subject to the relevant legal requirements in the applicable jurisdiction.”

However, they do not provide guidance for how that transparency and control should be made accessible to site visitors beyond stating that the controls “need to conform to the requisite consumer transparency and control features defined by local law and policy interpretation.” That lack of guidance risks creating a situation in which compliance measures vary, with some companies taking such lax approaches that consumer advocates criticize the advertising industry for an overall lack of compliance and government regulators decide to impose stricter requirements.

Rather than forcing the industry in a specific direction, said Mathieu Roche, CEO of identity tech firm ID5, as an industry body, “[the IAB’s] job is say this is the minimum threshold we should hit.” He added, “Transparency and consent haven’t been front of mind for the industry for the last 10 or 15 years.”

The legal landscape around privacy and data is becoming more restrictive as new state laws come on the books in California, Virginia and elsewhere in the U.S. Both California’s updated privacy law and new legislation passed in Virginia give people the right to opt-out of the sharing of their personal information for the purpose of cross-context behavioral advertising.

And as pressure for comprehensive federal privacy legislation mounts — even from the IAB itself — signs indicate that today’s identity tech approaches may not pass muster with regulators. Already these email-based identifiers got the cold shoulder from IAB member Google, which noted in a March 3 blog post that identifiers using PII graphs based on people’s email addresses won’t meet rising consumer privacy expectations or regulatory restrictions.

When companies do address user consent, many identity tech providers and publishers that use these technologies consider the fact that someone has provided an email address in exchange for content to be a form of consent for using that email to create an identifier to track them. And publishers’ privacy policies rarely mention by name the companies, such as identity tech providers like ID5, The Trade Desk or others, with which publishers share people’s information.

Industry needs consumer engagement framework
Today’s approaches to consent for use of emails or other login information to enable identification of users is a “slippery [slope],” said one digital agency executive who spoke on the condition of anonymity with Digiday. “If I have a consent banner on NYTimes[.com] to set a first-party cookie, what they choose to do with it and how to integrate it is up to them,” said this person.

The agency executive added that when they explain these technologies to new hires they tell them that people’s attitudes have changed around the need for more explicit consent. Merely presenting information about identifiers in a privacy policy might not be enough, the agency executive said. “That ship has sailed.”

“We look at this as establishing the baseline,” said Travis Clinger, svp and head of addressability and ecosystem at identity tech provider LiveRamp of the IAB Tech Lab’s identity token best practices.

LiveRamp helped draft the best practices along with nearly 300 people from ad tech firms, ad agencies, media outlets and other identity tech providers. “We also need, as an industry, a framework for how to engage with consumers,” he said. LiveRamp requires publishers to name the company in their privacy policies, which is reflected in policies from Newsweek, Salon and iHeartMedia.

Technologist Ashkan Soltani, who helped craft the California Consumer Privacy Act and served in the Division of Privacy and Identity Protection at the Federal Trade Commission, questioned the IAB’s acceptance of email-based identifiers. “IAB’s move to track users via email-derived identifiers seems incredibly tone-deaf in this regulatory climate, particularly as this tracking is even more privacy-invasive than third-party cookies.”

The IAB document does address the need for “technical safeguards that hold industry parties accountable to their preferences, and which allows the actions of 1st and 3rd parties to be reviewable and actionable by consumers.” And it points to a related Accountability Platform proposal for standards for moving user restrictions and preferences along the digital ad supply chain.

Nonetheless, Peter Day, CTO of Quantcast, which offers a consent management service for site logins for identification, said of the IAB’s proposed guidelines — “It would be great to see stronger accountability” for transparency and consent.

Dorsey created a tokenized version of the tweet, an NFT, that gives the buyer the digital rights of ownership.

What is an NFT?

NFTs are non-fungible tokens. They act as a non-duplicable digital certificate of ownership for any assigned digital asset. Basically, it is a smart contract that is put together using bits of open source code, which anyone can find from platforms like GitHub, and used to secure that digital item. Once the code is written, it is then minted, or permanently published, into a token (most commonly a token called an ERC 721) on a blockchain, like Ethereum.

Some popular forms of NFTs include jpegs, gifs, videos and, of course, tweets. But really any digital asset that the creator wants to make unique can become an NFT, like articles or event tickets.

Once the NFT is purchased, the owner has the digital rights to resell, distribute or license the digital asset as they please. The only caveat is that the creator can program in limitations in the NFT’s code for how it gets used, such as the asset cannot show up on a specific platform, like a TV network, according to Shidan Gouran, co-founder and president of Global Blockchain Technologies. NFT creators also have the opportunity to earn royalties off of future reselling transactions.

In the case of the first tweet, it will still exist for on Twitter for other users to see, but only the sole owner gets the “bragging rights” of owning the digital asset.

How is it different from a fungible token?

Fungible tokens consist of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), and traditional currencies like USD or EUR. NFTs are unique assets that do not have a one-to-one value with other NFTs. Meaning that while $1 equals $1, one NFT does not equal another NFT.

The value that an NFT has is based on how well received the item is by the people who are willing to buy it, usually using cryptocurrencies like ETH. If an item, like the first tweet, is very desirable, its value goes up. And the fewer there are of the item, the more exclusive it becomes, also likely driving up the value.

Why would someone buy an NFT?

NFTs can be a financial investment, a sentimental purchase, a collectible item or a way for the buyer to feel more connected to the NFT’s creator, like an artist or a brand. It is similar to how people collect baseball cards, sneakers or even Beanie Babies.

Sometimes that desire is tied to brand affinity. Loyal fans of Nike might try to buy one of only a few thousand pairs Jordans when they drop. So similarly, if Nike decided to drop a collection of 25 NFTs of a Nike swoosh gif, those same diehard fans will try and buy one of those as well when they drop.

“People have a desire to have a collection of things in an online portfolio, which demonstrates themselves as an individual similar to the way that the way they would wear clothes,” said Chris Allick, svp and creative technology director at Deutsch LA. “The desire to own scarce objects is real.”

There is also a community aspect to NFTs. For example, some artists that create NFTs of their digital artwork will give buyers exclusive access to a private channel on the chat platform Discourse that only purchasers of that artist’s NFTs have access to, thus forming an exclusive club.

Who verifies that the NFT is legit?

An NFT code has a signature from its creator that authenticates the token on any server, browser or platform, making it verifiable in a decentralized way. Therefore, no one entity is responsible for hosting an NFT.

For example, if an NFT is created of a concert ticket, that ticket does not have to be verified through a ticket selling platform like Ticketmaster. It can be verified through any blockchain.

There are three dominant blockchains where NFTs are built: Ethereum, Dapper Lab’s Flow and Polkadot.

And there are three main marketplaces for buying and selling NFTs, all of which are run on Ethereum: OpenSea, Rarible and Nifty Gateway.

The marketplaces act essentially as an eBay for crypto where people can either place bids for NFTs or outright buy an NFT, depending on how the creator set up the selling process. NFTs with limited quantities are typically auctioned off and then resold where as NFTs with set prices and no cap on how many can be minted are available for direct purchase.

How are publishers using NFTs?

Crypto publisher Decrypt has gotten creative in the cryptocurrency space, including launching its own utility token attached to a rewards system for loyal users of its app. But the digital media company is also capitalizing on the emergence of new NFTs by selling sponsorship campaigns for the NFTs’ creators ahead of and timed with drops.

Decrypt worked with Treum, a company that helps supply chains improve their businesses with blockchain technology, to create a launch campaign for its two NFTs: Swether (a holiday sweater themed collectible) and Euler Beats (an art and music piece that is created using mathematical formulas). The campaigns ran as display ads that enabled Decrypt’s readers to sign-up for alerts for when the NFTs launched, giving them first access to the limited inventory.

Euler Beats, for example only has 27 minted NFTs, with a varying number of prints of each (similar to an art print) and the originals sold out within minutes of the drop, according to Alanna Roazzi-Laforet, the site’s CRO and publisher. The top selling Euler Beats NFT sold for 20.9 ETC (nearly $40,000).

While the ad campaign drove traffic to the NFT site, Decrypt does not earn any commissions from the sales or a royalty every time an NFT is resold. This was purely an ad revenue play, but she said she sees this as a vast area of opportunity as the industry embraces NFTs.

Roazzi-Laforet added that crypto publishers are not the only ones that can get involved in the world of NFTs.

“NFTs are just another example of something that’s hit hard and voraciously and [are] now deriving value from the marketplace. And each publisher needs to start figuring out their strategy quickly for how they’re going to help monetize their world, help monetize their business and add new business lines,” she said.

Bleacher Report collaborated with musical artists Quavo, Lil Baby, 2 Chainz and Jack Harlow to design four different digital basketball gifs, similarly to how the sports publisher collaborated with hip-hop artists to design its NBA Remix clothing collection. The digital basketball NFTs were available in two editions, Gold and Silver, the former only having 10 available of each and the latter being available at a flat price of .4 ETH ($736). 

Called the B/R Open Run NFT collection, the NFTs dropped on the OpenSea marketplace last weekend and in less than a week, all 40 of the Gold edition basketballs sold at auction for a total of $591,775, according to a company spokesperson. The top selling NFT was a Gold edition basketball created with 2Chainz for 38 ETH ($63,232).

How are brands using NFTs?

Taco Bell debuted its NFTacoBell collection this week, which consisted of five taco-inspired gif illustrations that were sold on Rarible. Each gif had five copies for a total of 25 NFTs. Allick’s team at Deutsch LA helped create the NFT collection, which ended up selling out within 30 minutes.

The original prices were set at $1, the price of a taco, but the reselling of the NFTs have increased some of the prices to more than $3,600. With each resell, Taco Bell earns 0.1% in royalties, which will be donated to the Taco Bell Foundation.

The original first round of buyers for the NFTs were also rewarded with a year’s worth of free Taco Bell, something that was not advertised ahead of the drop, but was included for the people that “were ambitious enough and willing to play in this space with us,” Allick said.

But a tangible component like a gift card, is not a requirement for brands to enter the space, he added. There is a market for people who are super fans and want to spend their money to feel closer to a company or a product.

“Don’t undervalue your brand. Don’t undervalue offering people access to your brand,” Allick said.

What are the flaws?

The current system for cryptocurrency and NFT transactions is massively unsustainable from an environmental perspective. Gouran said that one cryptocurrency transaction consumes as much energy as 700,000 Visa transactions.

This is because cryptocurrencies and blockchain are run through an algorithm called Proof-of-Work (PoW), which was intentionally created to be computationally inefficient in order to be more secure, according to a post on Medium by Memo Akten called, “The Unreasonable Ecological Cost of #CryptoArt (Part 1).”

“Even if you take away carbon emissions, if we move Visa to the same system as Bitcoin, you would still heat the planet up by more than one-and-a-half degrees,” Gouran said. “Just the heat that the system would create would be unsustainable.”

A single minted NFT is even worse, as the creation, buying, selling, reselling and storing all adds up to multiple transactions that all require energy:

“The average NFT has a footprint of around 340 kWh, 211 KgCO2. This single NFT’s footprint is equivalent to a EU resident’s total electric power consumption for more than a month, with emissions equivalent to driving for 1000Km, or flying for 2 hours.”

From Akten’s Medium post, published December 14, 2020.

There are also two main security risks with NFTs at the moment

• Copyright. Someone tries to create an NFT for a digital asset that they did not create.
• No permanent storage solution. After an NFT is purchased, the content is not stored on the blockchain but stored on a server, leaving it open to the chance that it could inadvertently be deleted, said Michael Iles, co-founder of Serotonin, a marketing and communications firm for blockchain companies

What should I keep my eye on?

Facebook is working to launch its own blockchain — Facebook Diem —which has the potential for being the least energy consuming blockchain available, according to Gouran. Formerly known as Libra, the social media platform finally passed the regulatory hurdles to possibly launch its blockchain and cryptocurrency as early as this month, according to a report by Business Insider.

Are NFTs here to stay?

Short answer: Yes.

We are in an intense gold rush right now that is turning a jpeg of a scribble into a million-dollar product, said Gouran, but once those “outrageous valuations and hype around the space settle down, the idea of having tradable digital collectibles will be here to stay.”

“We haven’t begun to see the the broad spectrum application of the blockchain,” said Allick.