Month: July 2021

Streaming-only sellers step up

2021 was a leap year for streaming-only sellers in the TV advertising upfront marketplace. 

While the annual dealmaking cycle remains dominated by traditional TV network owners, streaming-only sellers like Amazon, Roku and YouTube are no longer taking a backseat to their linear counterparts. Amazon, Roku and YouTube may not have seized the wheel from traditional TV companies, but they have their hands on it now.

The key hits:

• Streaming-only sellers like Roku and YouTube began negotiating with advertisers and agencies in this year’s upfront earlier than in prior years.
• The upfront approaches of Amazon, Roku and YouTube this year bore greater semblance with traditional TV network owners in some respects but contrasted starkly in others.
• In a shift, the streaming-only sellers are beginning to sign upfront deals with individual advertisers instead of at the agency level.
• The streaming-only sellers sought to exploit TV network owners’ linear inventory limitations and juxtaposed their more flexible cancelation terms with TV’s more rigid options.

Historically, advertisers and agencies dealt with the TV network owners before negotiating with the major connected TV platform owners and ad-supported streaming services. But not this year. Disney and NBCUniversal may have jump-started the upfront market in May, but the streaming-only sellers were right there with them, according to agency executives.

“We saw Roku and YouTube be more aggressive early than they have historically,” said Stacey Stewart, evp and managing partner of integrated investment at UM Worldwide. 

Case in point: On July 12, Roku announced that the CTV platform had wrapped up its upfront deal-making with the seven major agency holding companies. 

Another shift was with whom the streaming-only sellers did their deals. Typically, Amazon, Roku and YouTube secure spending commitments with the agency holding companies, and the agencies then work with their clients throughout the year to direct the brands’ ad dollars to the CTV platforms and digital video streaming service to fulfill the spending commitments. But this year the streaming-only sellers looked to lock up commitments at the individual advertiser level, which is the approach that the TV network owners take.

“The streamers, for the most part, were looking for client-specific registrations as opposed to holding company-level commitments,” said one agency executive. A second agency executive said the shift indicates that the streaming-only sellers believe they can satisfy individual advertisers’ audience needs and inventory demands.

That confidence carried over into the tone that Amazon, Roku and YouTube took in their negotiations. While TV network owners pressed advertisers to make their commitments early and were willing to turn away linear dollars to secure streaming commitments, the streaming-only sellers were more lenient. “It was a tale of two upfronts in that sense,” said a third agency executive.

The streaming-only sellers may have rushed to the negotiating table, but they didn’t rush the negotiations because they didn’t feel like they needed to, according to agency executives, some of whom said they had not yet completed their upfront talks with all of the streaming-only sellers. 

“I did not feel pressure from Roku, Amazon or Google to finalize a deal. If anything, it was more [those companies saying] ‘We know dollars are being pushed out of the linear market. We’re ready to take you because our scale is growing, and we want you to know we’re here to take your money,” said the third agency executive. 

Additionally, the streaming-only sellers sought to separate themselves from the TV network owners by offering cancelation terms more favorable to advertisers. Roku, for example, offered the option for advertisers to cancel 100% of a buy up to two days before a campaign begins to run, while the others held to the Interactive Advertising Bureau’s standard 14-day, 100% cancelation term, per agency executives. By contrast, some of the TV network owners sought to apply their more rigid linear cancelation terms — allowing an advertiser to cancel up to 50% of a buy no later than a month before it takes effect — to their streaming inventory.

However, the biggest factor in leveling the upfront playing field between the TV network owners and streaming-only sellers this year may have been the shift in perspective among advertisers. They see what Amazon, Roku and YouTube have to offer as not so dissimilar to TV at this point. 

“There’s a new definition of TV: watching TV-like content and watching content on the TV screen,” Stewart said.

Of course, it helps that, in this year’s upfront, the streaming-only sellers addressed advertisers’ qualms with their content by offering show-level transparency through data clean rooms. But advertisers also have seen the stats that support updating their assessments. Stats like more than 120 million people in the U.S. watch YouTube on TV screens and the Google-owned video platform matched Netflix’s share of total TV watch time, 

“It’s all about finding audiences with the right messages at the right time and in the right place and for the right price, and having Google in that consideration set is very important for the evolution of where consumption has gone and where clients need to be playing,” said Geoff Calabrese, chief investment officer at Omnicom Media Group. “You can’t just think of the world as you always have.”

What we’ve heard

“It’s getting competitive to get good content for FAST services. A lot of the stuff on our FAST channels are acquired programs, and what used to pass for 50-50 rev-share deals are now commanding significant minimum guarantees.”

— Streaming executive

Stay tuned: Anticompetition and the streaming wars

The U.S. government’s recent moves to restrict companies’ anticompetitive actions could have a host of implications for the streaming market, from reinforcing Netflix’s dominance to checking connected TV platform owners’ power.

On July 9, President Joe Biden signed an executive order that, among other things, called for the Federal Trade Commission to evaluate the level of competition in digital marketplaces and to revisit mergers that have already closed. On the same day, the FTC reportedly opened an investigation into Amazon’s planned acquisition of MGM, according to The Information.

As The Hollywood Reporter has already proffered, both moves may help to preserve Netflix’s dominance of the streaming market and impede its main rivals from sizing up. Amazon’s acquisition of MGM is designed to make its Prime Video service more competitive with Netflix’s programming library, for example. Meanwhile, the planned Discovery-WarnerMedia deal is meant to put the combined company in a better position to keep pace with Netflix and Disney, which could come under scrutiny for its previous acquisition of 21st Century Fox.

Conversely, connected TV platform owners like Amazon, Roku and Samsung could see their positions in the ad-supported streaming market diminished, depending on how the FTC would opt to investigate competition in the streaming marketplace.

For example, the government agency may not like the idea of platform owners also operating their own streaming services that compete with other streamers distributed on those platforms. FTC chair Lina Khan has taken issue with Amazon’s AmazonBasics competing with other merchants’ goods on its e-commerce platform and could apply that perspective to the likes of IMDb TV, The Roku Channel and Samsung TV Plus.

Additionally, the FTC may not be wild about the data that CTV platform owners and smart TV manufacturers are able to collect and use to sell targeted advertising, from both a competitive and consumer privacy perspective. That a smart TV can track everything someone watches may not be a big deal, especially when it that information is used to recommend movies and shows. But the calculation may be different when that information is used to sell ads, especially if it gives the platform owners a better pitch than the long tail of ad-supported streamers already dependent upon them for distribution.

Then again, the FTC may be all for CTV platform owners emerging as potential disruptors to the digital ad duopoly of Google and Facebook. Then again, Google is also a CTV platform owner and that duopoly is actually turning into a triopoly with CTV platform owner Amazon.

Numbers to know

$60 million: How much money Disney’s “Black Widow” earned from people buying access to the Marvel movie through Disney+.

29.4%: Increase in subscription-based streaming revenue in 2020.

53 million: Number of U.S. households that are expected to have traditional pay-TV subscriptions in 2024.

$94 billion: The amount of money that people are expected to spend on streaming subscriptions and on-demand transactions by 2025.

Trend watch: The watch party isn’t over

Virtual watch parties have outlasted last year’s quarantine. This year a higher percentage of people are using co-viewing apps and services to watch shows and movies with people outside their homes than did a year ago, according to Hub Entertainment Research.

In a survey 2,519 people in the U.S., 23% of respondents said they’ve used a co-viewing app or service this year, compared to 20% in 2020, per the research firm.

As might be expected, younger people are more likely to be the ones doing the virtual co-viewing.

Younger audiences seem to be more split in which service they use for co-viewing, though. Amazon Watch Party is the most popular co-viewing service by a healthy margin, and it’s much more popular among older audiences than younger ones.

Of people between the ages of 35 and 54 years old, 57% are likely to use Amazon Watch Party, compared to 37% for people between the ages of 16 and 34 years old, according to Hub Entertainment Research.

What we’ve covered

All Def owner Culture Genesis snags $5 million in revenue after gaining YouTube ad sales rights:

• After acquiring All Def, Culture Genesis has secured the ability to directly and programmatically sell ads on its own and others’ YouTube channels.
• Culture Genesis expects to top $15 million in revenue over the next year.

Read more about Culture Genesis here.

Why Gallery Media is writing songs for brands on TikTok and Instagram:

• The Gary Vaynerchuk-owned media company created a division that would act as an in-house music production company.
• The division is effectively producing jingles for brands that people can use in their own social videos.

Read more about Gallery Media here.

How Faze Clan develops brand partnerships:

• The esports organization has announced a new partnership each week for five straight weeks.
• In May, Faze Clan announced a deal with Microsoft’s Xbox 360 to create co-branded merchandise.

Read more about Faze Clan here.

Confessions of a commercial crew member on the headache of execs returning to set:

• Some brand and agency executives are not thinking to get tested before they travel to set.
• The executives are also not getting the PCR tests that have become industry standard.

Read more about commercial sets here.

What we’re reading

Comcast pieces together its Peacock strategy:
A year after its launch, NBCUniversal’s Peacock sits squarely in the second tier of streaming services, but parent company Comcast seems intent on pushing it up the ranks and pushing people to pay for it, according to Bloomberg. While 80% of Peacock’s 14 million monthly active users are using its free tier, Comcast is paying to pump more programming into its paid tiers. Case in point: next year Universal Pictures’ movies will become available on Peacock instead of HBO but only to paying subscribers.

Apple’s interested in NFL rights:
Apple is among the companies kicking the tires on buying rights to the NF’s Sunday Tick package, according to The Information. Acquiring the rights to air out-of-market games on Apple TV+ would be a boon to Apple’s staid streaming service, and the company could also bundle the package into its Apple One subscription program. But that assumes that Apple ends up with the rights. Per the piece, the $2 trillion company isn’t a serious potential buyer.

Mattel looks to make its mark in Hollywood:
Mattel is the latest marketer looking to break into the entertainment business, according to The New York Times. The toy makers have 13 movies in some stage of development and production, including “Barbie,” which will star Margot Robbie and debut in 2023. As much as this may sniff of marketing, Mattel seems set on this being more a matter of a company squeezing its intellectual property for as much money as it can. Sounds like a traditional entertainment company already.

At present, the shop offers branding, creative work, social media strategy, product activations and services to eight clients, ranging from startups to major tech companies. Slug has worked with Instagram, Afropunk festival, Red Bull and more. Digiday caught up with Bosco to talk more about what being a POC-led creative shop means in 2021, authenticity and creative freedom.

This interview has been lightly edited and condensed for clarity. 

Talk to me about being a POC-led shop founded by creatives for creatives.

People will continuously try to put you in a box and say, ‘You seem all over the place. You should just stick to the music thing. The agency world is just a mess. You shouldn’t even think about doing that.’ I was very discouraged away from this. But I got a group of kids and was like, we’re dope. We’re artists and we want to create community. So that’s kind of how it all started — just as a need for us to show our work, have [a] community that could celebrate what we do, but also have competitive rates for our work.

We’re artists that create for artists. We’re not tech people that create for artists. We’re actually artists ourselves. That’s what sets our agency apart, because we’re all artists in our own rights.

What do you think is the importance of that? How does it impact the work that you do?

[It comes with] a lot of accountability for these companies. We’re strongly suggesting that people of color or Black people are speaking to our people, to our culture. It hasn’t always been that way, but we’ve been educating our clients throughout the years of the importance of using the right type of creators. We’ve been able to walk them through the process with ‘That’s not what we would say. That’s not the right caption. That’s not how we would dress. That’s feeling inauthentic.’ And they pretty much trust us with gearing and steering them in the right direction.

A lot of brands made diversity pledges in 2020. What did that mean for Slug Global?

It’s insane to me that the pandemic actually helped us, which was strange, because of all of the things that have happened in the world. There was a lot of accountability, even for the people that hit us up about doing things and then would ghost because it was performative work. [And] we did say something to those people. It’s like ‘Hey, I know this was very important when all the shootings happened, but you still have to be accountable. Have a good day,’ in a nice email. The pandemic really positioned and shifted us to be thought leaders during that time [given] the need for more accountability.

Are there any challenges that come with being a Black and brown-led creative shop? How did your team overcome?

[There are] certain times you don’t feel like doing anything [but] you’re inundated with the pressures of the world, society. The fear of not being enough or not having enough and not only showing up for yourself but showing up for these people that are counting on you to produce the work of the voice of the now. That was another challenge. 

I felt like, yes, we are a Black and brown agency. But sometimes, it feels like there’s pressure to perform for our allies because they feel guilty for not showing up for us. That was a space that we had to carefully navigate during that time — being able to say, ‘Hey, we need to take a step back for a day from this. We need to regroup,’ and not be afraid to say that.

What does accountability look like for brands and companies wanting to work with Slug?

Us being authentic is remaining true to our core values and our mission statement. If it’s not serving the community, if it’s not bringing visibility to an area that’s marginalized, if it’s not uplifting the Black community, we just don’t take the job. I don’t care how much money it is. This is not a one-time thing. We don’t get to be Black once a day or once a year. We’re Black all year, all day. We’re Black when we don’t feel like fighting and that’s just what it is.

We made healthy boundaries. There was a lot of learning in the beginning of this thing because we weren’t doing everything right, like being afraid to really speak up. But at the end of the day, these people are coming to you for the sauce. Once we realized that, we pivoted and were like, let’s restructure and come at this a whole other way. It’s just been very fruitful since we got rid of the word agency, to be honest.

That number will drop in coming years, the result of local media consolidation and the fact that some media companies simply won’t try to harness digital opportunities.

The report notes that the primary local ad categories spending in digital this year (on the likes of web hosting, SEO and online video production, among others) include real estate, which spent just over $42 billion; automotive, at just under $39 billion; and restaurants/bars at $19.7 billion. All numbers come from Borrell’s Digital Marketing Services database, most recently updated in June 2021. That’s a lot of money local media vendors are chasing.

“Businesses now spend more than twice much on digital marketing services as they do on advertising, which has existed for generations,” the report states. “Considering that the digital services industry
didn’t exist a generation ago, its growth has been extraordinary.”

“Why aren’t all local media companies selling digital?” asked Borrell Associates CEO Gordon Borrell. “It could be in some cases that ownership doesn’t want to change things up too much, and in a lot of cases it’s a financial issue where companies are trying to maintain bigger margins from which digital can sometimes distract.”

Tom Cheli, CEO Of Frequence, a software provider looking to automate local media buying and selling, which sponsored the report and provided some of the data, said he sees significant upspend in local. “There’s just a tremendous amount of untapped dollars … that’s why you’re seeing this explosion in these agencies,” he said.

The report uses Frequence sales data collected between 2019 and 2021 from 35 different media companies, from which Borrell ranked four groups of media agencies: the digital cognoscenti (those most focused on digital sales, which generated an average $1.46 million in sales during the 25 month period); the digitally savvy (which generated an average $327,000), the digitally progressives ($64,000) and digitally struggling ($43,000).

“Among the digitally struggling, the complexity of digital and the lack of sales experience in digital caused a lot of [sales] proposals to be frozen,” explained Borrell. In other cases, he added, the sales staff being used to power these digital agencies are pre-digital veterans (at one local media company, he noted, the top selling rep is 90 years old).

Frequence’s Cheli sees only upside as time marches on. “The local market is generally underserved, and there’s tremendous potential, which is the big takeaway when I look at all the data,” he said.

Retailers have many touch points they can use to foster first-party relationships

The idea of “value exchanges over time” is not unlike the marketing funnel. For example, for a retailer, a consumer might click on an ad, they might visit the retailer’s website and decide to follow them on social media if they like what they see. If that retailer has a brick-and-mortar location, the consumer may stop in, peruse the aisles and ask a salesperson questions. These would all be considered upper-funnel engagements that mark the beginning of the retailer-consumer relationship. Every touch point matters — marketing is not the only team building that trust or relationship. 

In fact, this was one of the key discussion points during LiveRamp’s recent Data Strategy Institute advisory board discussion, which is part of MMA’s Data in Marketing Think Tank (DATT), whose members include marketing leaders from such brands as E*Trade, Unilever, Hershey’s, Peloton, Samsung and T-Mobile, among others. 

The critical question to ask is, “How can I help this person with what they need?” and not, “How can I get this person to convert?”

Continuing with the retailer example, deepening first-party relationships requires delivering valuable experiences across all interactions. They should provide opportunities to move customers down the relationship funnel, such as allowing them to create a wish list or favorite items they enjoy. They could also use a newsletter to alert customers when a favorite topic is posted or a text message when a coveted item is back in stock. Consider this mid-funnel — the point at which retailers can obtain an increased level of authentication or “hand-raising.” Continue to nurture the relationship by always creating value. 

Over time, if a brand has done its job well, the consumer will move to the bottom of the funnel and willingly provide a greater level of first-party data. At that point, they’re converting into a longer term customer. For some brands, that might be the end game. However, for the leaders, that’s just a milestone in what is hopefully an enduring relationship. 

Publishers foster first-party relationships through personalized content delivery

For publishers, the principle is similar but building the relationship looks a little different. A consumer may find an opinion piece on a publisher’s website through a social share from someone in their network, via a Google search or a direct site visit. They like the article and go down the rabbit hole of consuming other pieces written by the same author. Next, they may allow their browser to notify them of a new article by that author, sign up for notifications with their email address or get an alert within an app. As with any brand, they might also choose to follow the publication or author and/or engage on social channels. 

It’s critical to continuously test and iterate on when and where it’s okay to ask consumers to authenticate and provide some level of first-party data. Whether it’s the website or a mobile app, be sure to take every opportunity to offer compelling content before prompts like Apple’s ATT are displayed. The critical point here is understanding when to make ‘the ask’ to convert. Too often, gates or permission dialogues are forced early in the process. This is understandable with so much focus on collecting data, but it can also cause a poor experience for customers early on in their engagement.

From there, publishers can nurture a relationship by providing content recommendations on the same topics or from similar authors the consumer might enjoy. Provide a weekend edition or wrap-up newsletter each week that encourages further engagement. For those registered on the publisher’s site, tailor their viewing experience and emails based on what they’ve indicated in a preference center or through their activity on the site.  

For subscription-based publishers, provide the content and experience the consumer enjoys and they may become a paying customer. Publishers will be able to strengthen first-party relationships and deliver more relevant experiences to consumers, regardless of whether they pay or authenticate.

With tectonic changes impacting how brands and publishers use data to know and serve their customers, creating a new data strategy is essential. Building first-party relationships will be the critical foundation for success for brand marketers, retailers and publishers.