Month: November 2021

What Zoom did have to do, however, was find new ways to balance the new onslaught of consumers, disassociate Zoom with the Zoom fatigue phenomenon and how hybrid work will further take shape in the future. Digiday caught up with Pelosi to talk about those ideas and more. 

This conversation has been lightly edited for clarity.

Zoom has seen explosive growth over the course of the pandemic. How is the company managing that? And what does that mean for your team?

First and foremost is the shift from being known as a “killer app” in the industry, with our video conferencing product, into a true platform. That’s the shift that we’ve been going through over the past 18 months or so. For me, what constantly pops to mind is the fact that there’s billion-dollar valued businesses being built on Zoom. The silver lining is the innovation that’s come out of historically slower moving industries such as healthcare, financial services, and education. They’re innovating at a pace I’ve never seen before. The other is we really started as an enterprise communications offering. Our scale, with the amount of folks that we are connecting around the globe, to do that starting on the B2B side is rare. For us, it’s ensuring that our enterprise and business customers know that we haven’t walked away from them for the consumer. There are so many different use cases for us to support. It’s us keeping focused on that professional use case from a business side of things.  As your use cases differ or change over time, we have different packages that work to support those use cases.

How have the new and different audience segments impacted your marketing strategy?

It’s safe to say that one of the key focus areas for us is [no longer building] awareness around our video offering [because of the way Zoom video conferencing become so popular during the pandemic]. I never thought in a million years I would be in a position where you can check a box on the heart and soul of your company offering. We just launched a new campaign around how the world connects. What that really means is all the ways you need to connect, whether that’s through the video experience, whether it’s through our phone offering (that’s becoming a very meaningful part of our business), [or] whether it’s chat. All of the ways you want to connect, we want you to be able to do that over Zoom.

The elephant in the room is the idea of Zoom fatigue. Everyone has written about it, but how is Zoom thinking about it?

It’s not something I think about on a daily basis. It’s about meeting fatigue. It’s the fatigue of being in your home, trying to be Superman or Superwoman with your time, family and being pulled in a million different directions. I think about what the world is going to look like in the future, so we’re focusing on what’s hybrid. As an industry, we need to define hybrid.

What is the future of hybrid and how would you define it?

That word is getting thrown around a lot, but it goes back to the consumer having choice in when or where they spend their time physically or virtually. It’s taking breaks. It’s understanding, at this point in the pandemic, what I do with my time. If I’m going to have a really early start and I know I’ve got some later things, you can bet I’m going to workout in the middle of the afternoon and I’m not going to have a stitch of guilt about it. It’s taking time to go for a walk, have meetings over Zoom phone. I don’t feel that everything always has to be on video. I prefer video, because you miss those connections and it definitely helps to bring those together. But it’s thinking about your day a little bit differently than what you would have if you had been in an office, physical environment.

How has Zoom been adapting to remote work and hybrid environments? Any thoughts on the future of work in that regard?

If I think about Zoom Events, this is a product that we’ve recently launched, built on the backbone of webinar, an offering from Zoom and other folks for many years but it really hadn’t been innovated. We hosted our Zoomtopia, our flagship user conference recently on it and it was fantastic. We’re looking to do a holiday party for all of our employees and celebrate Zoom’s 10-year-anniversary. It really was a place that felt like you could go and mimicked more of that physical space — the lobby feel, the expo, being able to pick and choose which breakout you wanted to do. We had hoped for some physical components this year. That didn’t happen. But going into this next year, I’m really crossing my fingers and have a lot of confidence that we’ll be able to do that. It’s going to be a first. There’s going to be a lot of firsts that are coming that are really centered around our customers. That’s what this is all about. If you think about the return to office and everything that’s happening there, it’s return to office, Zoom events, what hybrid is actually going to be defined as, and the developers. That to me is what’s next.

It’s no coincidence that this sentiment comes at a time when the public has been hungry for pandemic-related information and news. News viewers are “a smart and curious audience, who are interested in learning about the world around them. Tailoring your message accordingly matters and trustworthiness matters,” said Asaf Davidov, vp of measurement and insights, Disney Ad Sales. Likewise, news content “is just as effective as non-news content, and in some instances more impactful because you’re aligning yourself with trustworthiness as a pretty important component,” he added.

Other findings from the study, which focused on Disney’s news products including all content out of the ABC News division (including World News Tonight), ESPN and other streaming services, include:

• Guidance on ad messaging subtleties between hard news and softer or more culture-driven news. In hard news, a more direct, product focused ad message delivered higher brand impact, with favorability rising 10% over benchmarks, research intent up 5% and purchase intent up 7%. In race and culture news, on the other hand, a storytelling approach for brands yielded 11% better favorability 10% better purchase intent.
• News perceived as “heavy” isn’t necessarily a bad place for brands to appear adjacent to; the study showed it can actually drive brand impact. Brand favorability rose 7% and intent to recommend the brand rose 5% from ads in news perceived as “heavy” or “sad” by participants.
• 57% of the study’s respondents felt that brands should vet the news source before advertising on it, but that rose to 61% among more affluent households (incomes of $100K+) and dropped to 52% among households making $35K or less. 

MAGNA and Disney are both taking the study’s findings out to their respective clients. “It aligns with our broader approach on media responsibility, which is ensuring that making this connection to where you spend your money matters,” said Lowcock. “We now have demonstrable evidence that when you spend your money in places that matter, you get a better brand outcome. They’re two good narratives.”

Both Davidov and Lowcock dismissed concerns that the research could be used by less reputable news outlets to try to legitimize themselves. “The underlying thing our research is around is that the reliability and quality of the source is important,” explained Lowcock. “But there’s separate work we’re doing to validate the reliability and credibility of that finding. High ratings do not translate to reliability.”  

Advancing TV

The key hits:

• TV network owners including AMC Networks and Discovery are selling ads on their linear TV networks that are targeted to individual households.
• WPP’s GroupM has developed a program with sibling agency Hogarth to tailor TV ads’ creative for targeting to specific audiences.
• Addressable TV’s higher costs has some TV ad buyers opting out, but TV networks are seeking to make more of their linear inventory addressable.

Often cited under the umbrella term “advanced TV,” addressable TV advertising is beginning to live up to its billing. 

The domain of local TV ad breaks is breaking into the TV ad market’s mainstream. TV networks are making their linear ad inventory available for targeting individual households, and advertisers are gaining means of making their traditional TV ads similarly fine-tuned. These developments in addressable TV’s infrastructure are laying the groundwork for targeted advertising to become as commonplace on traditional TV as it is in streaming and digital video.

“We’ve always said that we think addressability is going to become the norm. It’s a more efficient way to price inventory. It’s a more efficient way to value inventory and to understand what’s impactful,” said Christian Juhl, global CEO of GroupM.

In September, Discovery ran its first test that digitally inserted ads targeted to individual households, according to Steve Silvestri, svp of advanced advertising at Discovery. Ford was the advertiser for the test, and Discovery worked with Vizio to pull data from providers Polk Automotive and Experian about households with people in the market for a car and then cross-referenced that data with Vizio’s smart TV footprint to identify 3 million households to target with four 30-second ads running across Animal Planet and MotorTrend over the course of two weeks.

“It was a real small-scale test, but nonetheless what it did prove was we can deliver a consumer-facing message addressably,” Silvestri said.

That may seem like a minor achievement, especially for anyone familiar with how ads online can be pinpointed to individual persons who are likely in the market for an SUV because they own a certain type of dog, make a given amount of money and recently purchased a snowboard. But this type of targeting remains novel on traditional TV, where targeting often equated to determining which shows were most popular among people in certain audience segments. 

That’s changing, though. 

Over the past few years, companies like Vizio and Comcast have been laying pipes and signing papers with TV networks to enable ads targeted at the household level to be inserted in linear feeds. This work is necessary for addressable TV to account for a larger share of the overall TV ad market. This year advertisers in the U.S. are expected to spend $2.85 billion on addressable linear TV ads, which a 33% increase from last year’s mark but would only account for 4% of total TV ad spend in 2021, according to eMarketer.

In addition to Discovery, AMC Networks has been running targeted ads on its linear networks. The company ran campaigns with advertisers including Best Western during the third quarter, in which the advertisers were able to not only target their campaigns at the household level but also purchase these linear placements programmatically. 

For both Discovery and AMC Networks, the TV network owners had to warm TV advertisers to a new way of reaching audiences while reassuring them that TV’s traditional guardrails remained in place. Discovery, for example, fielded questions around whether the network would ensure Ford’s ads were separated from rival auto makers and that the ads were aired at valuable times of day, rather than loading them up overnight, Silvestri said. 

As TV networks strike a balance between advancing linear advertising while adhering to established practices, advertisers are turning their attentions beyond how to aim their ads to how to tailor the ads themselves.

WPP’s media agency group GroupM and sibling creative shop Hogarth have formed the Addressable Content Practice, which aims to facilitate the creation of ads that are fitted to specific audience segments. The agencies’ aim is to improve the performance of campaigns by making ads’ creative as relevant as their placement.

“The more we can get TV into addressable formats and the more we can break apart what was traditionally linear and give us the tools to target, measure and optimize, the less waste we’ll see in that,” Juhl said.

For all the activity around addressable TV, though, some ad buyers don’t see a need for this form of advanced TV advertising. TV ad buying firm Tatari has “skipped the whole need of addressable in many cases,” according to its vp of media buying and operations Brad Geving. 

Rather than set up ad buys to target audiences at the individual household level, Tatari has opted for a “test-and-learn approach,” Geving said. The firm buys ads against specific programming blocks and dayparts in TV’s so-called “scatter” market — where TV networks sell the inventory left unclaimed by upfront advertisers — based on the inventory options it has measured as most closely correlating with business outcomes, like product sales. These ads are not as tightly focused as addressable campaigns, but they are not as costly either.

For a traditional addressable campaign, an advertiser can pay $35 to $50-plus per thousand impressions and be required to spend at least $200,000 to $500,000 for the campaign to air, per Geving. By comparison, Tatari’s non-addressable scatter buys, on average, cost $5 to $10 per thousand impressions, with around a $10,000 minimum spend commitment per network.

Cost-effective as Tatari’s approach appears to be, it can lead to advertisers losing out on reaching audiences, if those advertisers are not securing the inventory on a guaranteed, non-preemptible basis. That risk already exists and is a reason why scatter ad slots can be so comparatively cheap. But as TV networks build up their addressable TV ad sales, they are likely to set aside more of their scatter inventory for addressable campaigns.

AMC Networks, for example, has set the goal of making 100% of its linear inventory available for addressable advertising. To reach that goal, the company will need to be able to deputize its traditional ad slots into addressable placements by overlaying them with targeted campaigns. AMC Networks has begun doing this by covering its own in-house promotions with addressable ads. But eventually it will need to work out ways to extend the ads to the rest of its inventory.

In an interview that will be released as the Nov. 9 episode of the Digiday Podcast, AMC Networks president of commercial revenue and partnerships Kim Kelleher shed light on how the network group is sorting out its strategy. Advertisers would likely have questions about any inventory shift, and the network would be transparent about its practices. “But I think if everyone’s honest and open, this is a really important thing for us to crack in our yield management strategy,” she said. “We need to figure this out.”

What we’ve heard

“There’s just this fallacy that we have solved for privacy, full stop. We have not. We’ve gotten mature and pretty standardized solutions for a couple platforms, but for the ones that everybody now gives a damn about — CTV and [streaming] — it’s still very much the Wild West.”

— Media executive

Channel surfing: What’s a YouTube subscriber worth?

Getting someone on YouTube to subscribe to a creator’s or publisher’s channel is inherently valuable. It’s how video makers build an audience. But does the value of having a certain number of subscribers extend much beyond that built-in audience? It’s a question that some media executives have been weighing lately.

“We’ve been talking about what is the value of a subscriber on YouTube,” said one media executive.

To be clear, subscribers on YouTube can have a tangible value when it comes to branded content and sponsorship deals. Subscriber counts continue to be a consideration when advertisers and their agencies are calculating which creators and video publishers to work with. But the media executive’s question is focused on how valuable a YouTube channel’s subscriber number is to YouTube’s algorithm.

“Is it a vanity metric? Does YouTube use it as a signal to serve more ads into content? It has to be some sort of signal. How much time and energy should I spend to convert somebody into a subscriber? What is the long-term impact of that?” the media executive said.

There may not be a quantifiable answer to the question — i.e. X number of subscribers equals Y ad revenue boost — but it seems safe to conclude that subscriber count is not the strongest of signals on YouTube. A YouTube spokesperson pointed me to a company blog post published in September that states, “Recommendations drive a significant amount of the overall viewership on YouTube, even more than channel subscriptions or search.”

That lines up with a second media executive’s assessment of subscriber counts’ worth. “My experience with the YouTube algorithm in general of late is that YouTube has put less of a premium on subscribership to particular channels as getting people to discover videos has gotten harder,” said the second media executive.

Instead, YouTube seems to be prioritizing exposing videos to new viewers based on the content topics those viewers are or may be interested in. “YouTube is going to much more of an algorithmic model here that’s more about topic discovery,” the second media executive said.

Numbers to know

$520 million: How much money Comcast lost because of costs related NBCUniversal’s streaming service Peacock in the third quarter of 2021.

100,000: Minimum number of followers a TikTok creator needs to have to be eligible for a new tipping feature the platform is testing.

71%: Percentage share of U.S. households that have pay-TV subscriptions.

$32 million: How much money streaming service Locast will pay for infringing on four TV networks’ copyrights.

What we’ve covered

How messed up is the CTV marketplace? Bad enough that efforts are being made to fix it:

• Ad buyers continue to be frustrated by inventory overlap, fraud and a lack of control when buying connected TV ads programmatically.
• Omnicom Media Group is proposing a set of standards for CTV ad buying.

Read more about CTV advertising here.

Facebook expands live shopping offering to prepare for a bustling holiday season:

• Facebook and Instagram will air daily live shopping holiday shows that will enable people to purchase products directly from the apps.
• Walmart, Macy’s and Ulta Beauty are among the companies participating in the program.

Read more about Facebook’s live shopping product here.

How a viral TikTok gave Covergirl a whole new angle’ to pitch a classic product and way to work with influencers:

• An incidental TikTok video lead to one of the cosmetic brand’s products nearly selling out online and in stores.
• On average, 15% of TikTok users who click on an ad then add a product to their shopping cart, but for Covergirl, the add-to-cart rate reached 53%.

Read more about Covergirl’s TikTok angle here.

Why a leading Twitch streamer is founding her own talent management and brand consulting firm:

• Imane “Pokimane” Anys wants her company RTS to help improve the treatment of creators across the industry.
• In addition to working with creators, the company counts companies like Facebook as clients.

Read more about Pokimane here.

What we’re reading

A Roku-Amazon distribution standoff may be in the offing:
Amazon’s deal with Roku to distribute its free, ad-supported streamer IMDb TV on the latter’s competing connected TV platform is up for reveal next year, according to The Information. Per the report, Amazon strong-armed Roku in the initial distribution deal, such as by not allowing Roku to sell a share of IMDb TV’s ad inventory, and that could be a point of contention in the renewal talks. But a potential stalemate may also center around Amazon demanding data on what people watch across Roku’s platform.

HBO’s content chief on programming plans and production pipeline:
HBO’s and HBO Max’s programming pipeline has returned to form “for the most part,” chief content officer Casey Bloys told CNBC. In a Q&A, the WarnerMedia executive talked about how, with HBO Max, the company is going after a broader audience than it’s reached with core HBO, why it’s largely sticking to weekly episode releases and how HBO is updating its international operations through HBO Max.

A check-in on the connected TV device war:
With Amazon and Comcast entering the smart TV market, the connected TV device battle is heating up, according to Axios. As the article states, Roku has operated the top CTV platform in North America, but as has been the case with Netflix in the subscription-based streaming fight, there are a lot of big companies coming for the crown.

The problem for political publishers on YouTube:
Last week YouTube deleted new organization Novara Media’s channel — by mistake, according to The New York Times. As an outlet covering politics, the London-based media company seems to have been the victim of the platform’s attempt to crack down on misinformation, hate speech, etc. It also provides yet another example of the precarious position that media companies in general, and news organizations in particular, are in when it comes to relying on platforms to reach audiences.

There’s been a spate of high-profile IPOs, listings and SPACs with Roblox, AppLovin, Playstudios and Cherry Group to name a few. 

Not to mention investors flush with cash and looking to put their money to work in all manner of businesses across the gaming sphere, from fantasy football game ​​Sorare, which raised $680 million at a $4.3 billion valuation earlier this year to venture capital firm Galaxy Interactive raising a whopping $325 million fund to invest in games and related technology.

Even M&A activity across the sector has been on a blistering run, from ByteDance’s acquisition of VR headset manufacturer Pico Interactive for $2.2 billion to Netflix’s purchase of its first game studio Oxenfree.

“When investors look at the multiples of the valuations behind these companies alongside the revenue they see the potential for large, top tier media conglomerates,” said Christian Facey, CEO of AudioMob, a company that helps game developers earn revenue from audio ads. “We’re just at the beginning of this investment cycle.”

Indeed, dealmakers are on track to end the year with a flourish. In the last month alone there have been several deals of note, from esports organization FaZe Clan becoming a publicly listed company to Riot Games acquiring media tech firm Kanga Talent.

“There was a lot of investment in the ecosystem during the initial franchising cycle, and a lot of learning since,” said Farzam Kamel, co-founder and president of esports organization Andbox. “Investors are no longer just making a macro bet on the industry at this point, they’re identifying which business models are working and targeting the organizations figuring them out.”

It’s a story that feels as old as time but really it goes back to March 2020. When the pandemic took hold of much of the world it sent industries and consumer habits into a tizzy. And in doing so accelerated media trends that were already in play — the pervasiveness of gaming being one of them. More people played games and more people watched them doing it. Companies across the sector got bigger as a result and tried to cash in on the unprecedented attention. Dealmaking became a necessity.

“We have been looking at all the developments around esports for the last five years to find a place our business could play within it all given we’ve not had much experience, knowledge or the network,” said Danny Menken, group managing director at Eleven Sports, the sports media business owned by investment firm Aser Ventures. 

This search led to a joint venture with the esports organization Ninjas in Pyjamas. Shinobi Sports, which launched last month, offering all manner of services from production to media management, to football clubs and leagues looking to make money from esports. More often than not those opportunities will focus on “digital itemisation” — areas like in-game items and non-fungible tokens — which are high-margin businesses if done right, said Hicham Chahine, the CEO of Ninjas in Pyjamas and co-founder of Shinobi Sports. In other words, Aser Ventures is using the joint venture to try and steal a march on what is unfettered ground in sports. “You can’t look away from those revenues despite how well the traditional elements of the sports commercial model hold up,” said Chahine.

For other companies, cutting deals is about something more existential. It’s about endurance. Growth is good but many companies are still trying to figure out what areas they should grow into. So they acquire other companies they think could help them build those pathways to profitability. Super League’s acquisition strategy to date bares this out. It started out as a platform used to organize esports tournaments but now has its hands in pretty much every fact of the industry, from brand consulting to ad tech. Yes, companies like Super League are pursuing M&A to expand, but also because they don’t quite know what their structure or business will look like in five to 10 years and need to constantly bring in fresh ideas and talent to keep things from stagnating. 

“We’re aware of several companies in and around gaming that are set to go public either this quarter or next,” said Michael Metzger, an investment banker at Drake Star Partners. “A lot of the SPACs we’ve seen recently have been very much focused on real metrics and the profitability of those companies. To a larger extent those companies were valued on EBITDA. Many of those companies were highly profitable.”

That’s all the more impressive considering all the reasons not to make a deal. The global economy is shaky, the pandemic persists and esports business models are fast-growing but fragile in the main. And yet companies seem prepared to swagger through the uncertainty.

Take FaZe Clan, for example. The business of going public traditionally depends on a belief that things are, if not entirely peachy, at least predictably tame. But the reality is that tame is about as far as you can get from describing the market right now. For all the rhetoric from esports bosses of fandoms, cryptocurrencies and D2C revenues, there’s still a lot of uncertainty ahead. Not only are they running relatively unproven businesses outside of the esports bubble, gaming more broadly is going through profound change, whether it’s the growing influence of the tech giants or the boom and bust of the creator economy. Turning uncertainty into opportunity is never easy. Nevertheless, FaZe CEO Lee Trink isn’t letting it all undermine his own plan. Unsurprisingly, that plan involves more dealmaking.

“M&A in general is going to be something that’s going to be really key for us,” said Trink. “In our pipe presentation, we kind of lay out our strategy, the capital that we’re going to invest in M&A. There are a lot of exciting things for us to build towards.”

He declined to share exactly what he and his team are building toward. But it’s not hard to anticipate that at least some of those investments will try to tackle one of the more pressing challenges for CEOs across the sector: reconciling the discrepancy between attention and revenue. In fact, it was a recurring theme of the pitch Admix’s bosses used to drum up $25 million in investment during its series B funding round. 

“Media dollars follow the eyeballs but in gaming that isn’t necessarily true — yet,” said Samuel Huber, CEO and co-founder at Admix. “There are two billion people playing games everyday, which roughly means the same amount of time people spend on social media as they do gaming. And yet the amount of money advertisers invest in games is two percent of what’s invested in social media. That’s the opportunity.”

Call it strategic opportunism. And it’s motivated by several underlying factors. 

Firstly, there’s an abundance of capital. Private equity firms are sitting on mountains of cash, central banks are dumping money into the economy and it’s cheaper than usual to borrow money. In sum, this abundance of cash created an overheated investment market. Of all the places to put that cash, gaming (in media at least) is one with potentially more upside than most — and it’s not hard to see why. As a medium, it’s taking up more attention as the time people spend watching TV is increasingly redistributed. The more this happens the more people will spend their time in games doing non-gaming activities — an experience best summed up by the buzzword of the moment, the metaverse. Pursuit of this concept is driving some of the more long-term investment bets in gaming. 

“The pace of growth in metaverse platforms relative to the rest of the gaming industry is increasing and where there’s growth, there will always be an influx of capital,” said Matt Edelman, chief commercial officer at Super League Gaming, which recently acquired metaverse ad platform Bloxbiz. “So it’s only natural for the business to look at Roblox as an opportunity for M&A and the deal for Bloxbiz backs that up.”

Still, there’s a note of caution to be considered through all the excitement. 

Investors must take stock of how potential targets are positioning themselves for the future or risk being caught out when the current economic tune changes. There’s only so much money advertisers will push to companies and individuals outside the top platforms, publishers and influencers. So the ones that do come out on top — and therefore are most attractive to investors — will be those that have a clearer idea of gaming at a cultural tipping point and the unprecedented content leverage that ubiquity affords them. 

The contestants are asked to use the new Samsung Galaxy Z Flip3 5G to edit and create videos for a series of weekly challenges. They are ranked on a custom Billboard chart that gives contestants points after every challenge. Eventually, three finalists will perform for an event that will stream live on Billboard.com. The winner will get their own music video and a print and digital cover of Billboard magazine.

“We wanted to make our own version of a competition series,” Holguin said.

While Billboard did not say how much money it would make from the competition, the company said it is “a significant seven figure deal” with Samsung after it began talks with the brand over the summer. With roughly 602,000 followers on TikTok, Billboard has an eight-person social team that, along with the company’s brand experiences and editorial team, is overseeing the competition.

The singing competition is part of the recent big push in Billboard’s audience development strategy to create more consumer-facing programs. In August, the publication teamed up with electronics company Logitech to ideate a monthly chart that ranks creators on social media who contributed to getting songs to trend and wind up on big charts like the Billboard Hot 100.

Billboard is likely to find more success reaching non-industry audiences, such as young adults, on platforms like TikTok than trying to push those people to its own properties, according to independent media consultant Brad Adgate. “You’d be hard pressed to think of a better media strategy than going on TikTok… It wouldn’t surprise me if in a few months [this competition] is more popular than the TV Billboard Music Awards, because of the audience and the platform,” he said.

Billboard was “more like a trade publication” in the past, according to Adgate. But in the last decade or so, the publication has made an effort to create more consumer-facing content, with video series and live events such as music festivals for music fans, “to become the hybrid brand that we are today,” Holguin said. (Billboard’s Latin Music Week held in September brought in “eight figures in revenue,” up 300% from its most successful event in 2018, according to Holguin, who did not provide exact figures.) The creator economy has driven significant interest in the music business, he added, as fans follow talented, unsigned music artists on their journey through the industry via social media.

While Samsung’s sponsorship of the singing competition is “driving some revenue,” if this competition “goes well, it’s an [intellectual property] licensing opportunity,” Holguin said. That could mean Billboard singing competitions end up on streaming platforms, broadcast TV or a live event with streaming components, he suggested, without saying how that IP would support the competitors. “This year we will learn a lot and figure out where this could all go,” Holguin said.

Beyond TikTok, Billboard is emphasizing building up its video portfolio. Starting this December, the publication will change its approach to magazine cover stories by converting them into video-first projects. 

While previously a writer would sit down to do an interview with the featured person off-camera, and then they would do a scheduled photo shoot with behind-the-scenes video, that kind of content “does not necessarily move the needle as much as it once did… because social media is entirely a behind-the-scenes ecosystem,” Holguin said. Going forward, Billboard will “prioritize video as the format of choice,” he said. Interviews will be conducted on camera. Headlines will now be the theme of what he described as a “mini documentary,” with articles and photoshoots spawning from the video shot.

“Obviously we can’t move away from text-driven content,” Holguin said. “We are not sacrificing anything by taking this approach, but we are modernizing how we approach our cover shoots.”

Founded as Habbo Hotel in 2000, Habbo is an online community marked by pixelated avatars and items existing within an arcade-evoking isometric landscape. The platform allows users to socialize in virtual “hotels,” with public rooms accessible to all and private rooms that can be tricked out with custom-crafted digital items. At the moment, the platform boasts about 850,000 monthly active users and 320 million total accounts, according to Jorge García Guerra, a product owner at Azerion, a digital entertainment firm that acquired Habbo developer Sulake in January.

During its heyday in the mid-2000s, Habbo was wildly popular among teens and early adolescents — including this Digiday reporter, who made an account as a 12-year-old in 2007. At the time, the platform’s shoddy moderation practices were par for the course for the early internet, and it soon developed a shady reputation, culminating in a 2012 VICE article titled “We Met a Pedophile on Habbo Hotel.” “The situation has changed a lot since 2010–2012,” García Guerra said, listing safety tools such as mute buttons, 24/7 monitoring and word filters blocking the sharing of personal information. 

It also helps that Habbo’s user base has grown up alongside it. The Habbo power user Pulx, who was elected its “president of fun” in a platform-wide election last year and requested anonymity, has logged in almost every day since creating his account in 2005. “These days, it’s quite rare to actually talk to somebody under the age of 18 on Habbo,” Pulx said. “I’d say that the core demographic is 20-plus.” 

Nowadays, the average Habbo user (or “Habbo”) uses it as more than simply a distraction from homework. Instead, these older and wiser Habbos are beginning to take advantage of the platform to live their lives in increasingly metaversal ways.

“I know people that have met on Habbo, got married, had children — there’s literally all of that,” Pulx said. “I logged on Habbo during COVID and I met somebody that I was friends with when I was like 13 or 14. There are cases where people have passed in real life, and their stuff is still in the game, and people sometimes go in their rooms and sit down and kind of grieve that person.”

These behavioral and demographic shifts have been a priority for the developers of Habbo as they have built “Habbo 2020,” a rebooted version of the platform designed with the Unity game engine. When early versions of the rejuvenated Habbo lacked longstanding elements such as item trading, the user base erupted in protest, and the developers tweaked the platform accordingly.

They also took steps to ensure that users would be able to transfer their decades worth of virtual belongings into the new Habbo space. “It’s such a beautiful, strong community that everything we do, we have to really take care of the community to make sure that they like it,” said Jurriaan van Teunenbroek, vp of games and content at Azerion. “And so that’s one of the most challenging tasks to do.”

Like Habbo, other still-extant social games from the early internet are beginning to realize the value of their proto-metaversal status. IMVU, which began in 2004 as an avatar creator inside AOL Messenger, now markets itself as a metaverse, boasts 7 million monthly active users and has acted as the staging ground for non-fungible token fashion shows. “If you look at the audience on those platforms, and I’ll talk about Roblox, their core age range is 9 to 12, and they skew more male,” said IMVU CEO Daren Tsui. “Our core demo is actually 18 to 25, and it’s actually over two-thirds female. I think that’s another unique piece of how we compare to others, especially in the metaverse sense.”

The bulk of IMVU’s revenues come from in-platform sales of virtual clothes and furniture — which are likely to increase as users invest more of their time and attention in IMVU. “Over half of our revenues come from users that have been on the platform for over a year,” Tsui said. “That’s how sticky they are.”

Perhaps the biggest advantage that holdout social games such as Habbo and IMVU offer over newer and more prominent platforms is that these early contenders come with loyal, baked-in user bases that are both accustomed to owning virtual items and in many brands’ target demographics. This is an advantage over platforms such as Roblox and Fortnite, whose users are overwhelmingly minors with limited money to spend. “We have the opportunity to reach different target demos, because Habbo probably has more of a Gen-Y millennial target demo,” said Madelon Smittenaar, a business development manager at Azerion. “They’ve grown up along with the product and the game.”

So far, Habbo has enthusiastically jumped into the brand partnership fray. In March, the platform partnered with The Coca-Cola Company to advertise Fanta, creating a dedicated Fanta area on the platform with virtual assets modeled after the drink. The activation “was specifically for Brazil,” Smittenaar said. “We have these language communities, so we can host local-specific integrations or global ones.”

Azerion has also partnered with clothing companies such as BALR, the Dutch apparel and lifestyle brand, to create virtualized garments and hosted virtual concerts in its games, similar to those in Fortnite and other metaverse platforms. 

Though Habbo still boasts hundreds of thousands of regular users, it has yet to reattain the glory days of the mid-aughts, when it was the most prominent social game. Despite its tightened moderation practices, Habbo’s unsavory reputation still looms large in the minds of some former users. “I’ve actually been seeing TikToks about Habbo lately,” said Cayley Plotkin, Digiday’s event programming manager and a former frequent Habbo user. “I think that they have a hard reputation to beat, because everything I’ve been seeing about them has been about child grooming.”

But Habbo and IMVU’s re-emergent successes indicate that metaverse platforms don’t necessarily need to reach a massive scale to be successful. Rather, it is more important for platforms to accurately and naturally recreate the experience of socializing and forming one’s identity in ways that build community and keep users logging in day after day.

Many of both platforms’ millions of regular users have lived their lives in them for over a decade, making it incredibly difficult for them to walk away. It’s easier for them to double down on their involvement instead, living more and more of their lives in the metaverse — and creating new and exciting ways for brands to reach them there.

The value of first-party data and direct consumer relationships is skyrocketing as the reality of a permissioned, privacy-first digital world unfolds. In both areas, publishers have a tremendous upper hand. The challenge, of course, is that the legacy digital advertising landscape has long devalued the individual publisher’s role in the larger media ecosystem. It has typically aggregated audiences into heavily cookie-dependent targeting schema, with little consideration for the value of the content, context and publisher dynamics around which ads appear. 

The loss of cookies represents a short-term monetization hurdle for publishers — and yes, it’s a significant one. But they mustn’t lose sight of the forest for the trees. The loss of cookies also represents a wholesale reinvention of a system in which publishers were not able to realize the full value of their deep audience connections. And that means there’s an opportunity to turn things around for the long haul.

Publishers hold all the cards — but they need to hold on tight

Today’s publishers own a direct relationship with consumers and participate in an overt, concrete value exchange with their audiences. In other words, users trust publishers with their personal information and give it to them knowingly because they value what they receive in return. As such, publishers represent the cornerstone of the identity ecosystem. 

Moving into a cookieless world, there’s been plenty of discussion around the identity solutions that are primed to help bridge the cookie gap for marketers and advertisers. What’s not being discussed is the source of the fuel for these solutions — the authenticated audiences on which they’re built. 

Where does this authentication process occur? It occurs between publishers and their readers. 

Without publishers and their immensely valuable audience relationships, the identity solutions vying to fill the gap being left by cookies cannot function, much less thrive. The value exchange that occurs between publishers and their audiences is fundamental to the exchange of identity data on the open web. 

Publishers must resist the urge to relinquish their upper hand in the identity game for a short-term fix to cookie deprecation — the one being proposed by many of today’s identity “solutions.” Rather than disintermediating themselves in the complicated ecosystem that exists between advertisers and consumers, they must focus on long-term opportunities rather than simply throwing their first-party data into the identity black hole and hoping enough revenue comes back to permit survival. 

Publishers have the opportunity to rewrite the narrative for effective, long-term solutions

Given the erratic nature of the digital landscape over the past two decades, publishers have grown accustomed to survival mode — a mode in which every new short-term patch represents another day of business and, thus, is worthy of pursuit. But it doesn’t have to be that way. Publishers have entered a pivotal window in which they have the opportunity to rewrite their narrative so that the future becomes a known quantity and the right partnerships and data strategies can yield predictable, sustainable revenue. 

Ultimately, publishers know they need to be growing their first-party data and ensuring their advertising partners can derive value from it. That means enabling a degree of interoperability across the online ecosystem. However, in making their data interoperable and more widely accessible, publishers must ensure they’re still protecting and caring for their core enterprise asset — their audience relationships. 

Many emerging identity solutions offer a quick path to a semblance of data interoperability, but few represent long-term solutions that derive maximum value from a publisher’s growing first-party assets. Rather, they seek to capitalize on publishers’ short-term desperation and thereby cement themselves as long-term intermediaries in the publisher-advertiser monetization chain. But these partnerships don’t fully appreciate the powerful role of the publisher within the media value exchange.

In pivoting to a long-term sustainability mindset, publishers need to prioritize their commitment to their audiences above all. In doing so, they must seek technologies and partners that facilitate their relationships with their users, rather than disintermediating it. These technologies and partners are distinguished from short-term solutions in the following ways:

• They protect publisher revenues by ensuring publisher data continues to be available and actionable at scale.
• They enable publishers to continue to monetize their data assets when third-party cookies no longer exist.
• They ensure stable future growth of publishing businesses by making their solutions interoperable and extensible across buyer activation channels.
• Above all, they prioritize interoperability and extensibility, enabling publishers to explore a variety of identifiers and signals that can be derived directly from their first-party data.  

Publishers have a brief, shining window of time where they can pivot their approaches for long-term sustainability. But to do so, they’re going to have to resist the urge to glom on to short-term, incomplete industry solutions to the immediate revenue pinch. In an industry that’s rife with companies offering crutches, it’s time to find the partners that are offering new legs.

Another misleading narrative is that publishers need to compromise between maintaining consumer privacy and achieving their desired business outcomes. Without the support of third-party cookies to maintain and grow their revenue, first-party data is critical for both publishers and advertisers, especially since not every property can move to a paid subscription model.

Publishers need to build relationships with their audiences that they can then connect to advertisers. Companies must also simultaneously architect internal systems around data custodianship to protect consumer data. In fact, consumer privacy and business outcomes are closely correlated in a complementary way. The companies that champion consumer privacy and work to create a sustainable omnichannel ecosystem that drives better results for every constituent will be the winners, now and in the future.

When consumers trust a brand’s, advertiser’s or publisher’s intentions, they are more willing to authenticate themselves through actively logging in with their phone number or email. Building that trust, however, requires a commitment to developing positive brand interactions and guiding language that clearly explains the value exchange — providing personal information in exchange for better experiences — allowing people to signal both what they want and what they don’t want.

To make this a success, brands and publishers large and small can take three important first steps toward a consumer-first future.

For publishers, putting privacy at the core of data utility is essential

Publishers use data to connect relevant content to the right people, offer first dibs on discounts or early access to new offerings. In the future, the true innovators will be those who place privacy at the core of data utility. Technology used for consumer authentications to connect publisher data with marketer data must be rooted in a trusted value exchange and be privacy-forward.

As the backbone of the open web, publishers may consider tactics that claim to offer the allure of scale but don’t pass the sniff test when it comes to privacy. 

For example, publishers should be wary of anything referred to as “probabilistic signal identity.” If it involves unauthenticated elements being pieced together to create a new identifier, it’s likely fingerprinting — pooling a set of signals from various user-device settings and characteristics such as screen resolution, operating system and model to create a “synthetic” ID in place of a cookie — and therefore lacking a privacy-centric approach.

Authentication leads to better customer experiences and increased inventory

Publishers who lean into the consumer value exchange will authenticate more users. Consumers who trust a publisher enough to provide an email or mobile number tend to be heavier users — and more engaged users deliver higher CPMs. Even with authentication rates starting between 10% and 30%, the impact can be disproportionately valuable. If authenticated users consume more content on average, they can deliver more page views. 

For example, a DTC brand running a campaign buying RampID inventory saw an 82% lift in ROI and Microsoft Advertising CPMs increased by over 40% with ATS — a win-win for all players in the ecosystem with higher CPMs for publishers and better ROAS for brands. 

It’s important that publishers also provide authentication experiences that present people with clear options. Participation shouldn’t be seen as a requirement. Earning trusted relationships with consumers is a real benefit, and the ability to personalize experiences and grow those relationships is even stronger. Microsoft Advertising conducted a series of research studies in 2019 on the importance of trust when it comes to brand love and loyalty. The research showed that 85% of people only consider purchasing from brands they trust, indicating that a privacy-conscious and transparent approach is the only path toward building brand love and long-term loyalty. 

It will take time for publishers and brands to move to this new way of monetizing inventory and connecting with consumers. Forty percent of the world is already cookieless, so to start benefiting from increased authenticated CPMs, publishers should begin to layer in authentication capabilities to build first-party relationships now. 

Building better customer relationships to rival the data networks of walled gardens

In 2020, over 50% of all ad dollars flowed into walled gardens in the U.S. The widespread data fragmentation and the complexity of how data is used are prompting advertisers to seek out simple-to-use addressable solutions that deliver strong results, and the walled gardens have effectively built addressable audiences of consumers who have shared their data. Organizations outside of Big Tech and across the open internet can learn from the walled gardens and build stronger consumer relationships through meaningful experiences. 

Brand and consumer interactions based on authentication and consent provide the opportunity to prioritize privacy and simplify media planning, buying and measurement. They also enable the fortification of meaningful connections across the digital supply chain.

During the past year, changes in the advertising industry have, and will continue to have, a long-lasting impact on all members of the ecosystem. If the goal is a more sustainable, healthy and competitive open web that works better for everyone — prioritizing consumer trust and transparency is not only ethical but essential. With authenticated inventory, publishers don’t have to choose between enhancing consumer experiences and maintaining or even increasing the bottom line.