Month: January 2022

The topics and trends set to shape the media business in 2022

Key hits: 

• Publishers will be pressed to finalize their strategies for the third-party cookie apocalypse.
• SPACs may no longer be the hot new trend when it comes to media M&A. 
• The challenges of leading remote workforces are likely going to continue in the new year.
• After playing with NFTs in 2021, publishers will be able to apply that technology to more business opportunities.

For the past two years, publishers have been in reaction mode, thinking on their feet as the pandemic altered plans for their revenue streams and where they do their work. A lot of unexpected, immediate challenges were made priorities to face head on. But while much is still up in the air, this year media companies will have to jump back on the horse when it comes to making more long-term plans. 

The year the future of identity comes into focus

With more than a year to go until Google finally deprecates third-party cookies in its Chrome browser, publishers have more time to finish sorting out their cookie-alternative strategies. But its fleeting. This year publishers will be pressed to settle on their approaches so that, by the time the third-party cookie is officially taken off the table, the transition away from cookie-dependent revenue will have already been completed.

A primary focal point for publishers will be assessing the various alternative identity providers to determine which and how many to support.

“We’re all in that stage of there being an overwhelming number of options and not enough time to try everything, so we’re all trying to figure out how to pick the right partners,” said one publishing executive who spoke on the condition of anonymity. “There are the biggest players that are the obvious choices [like Unified ID 2.0], but it’s not guaranteed that any of them will be best suited for how to go forward.”

A specter looming over the situation is Google’s own proposed cookie-replacement effort, Privacy Sandbox. It is presently being reworked with regulatory oversight from the U.K.’s Information Commissioner’s Office and Competition and Markets Authority. Given the renewed attention that privacy regulators appear to be paying to digital ad practices, whatever emerges from Google’s Privacy Sandbox will likely signal what post-cookie approach will be least likely to attract the ire of privacy hawks, which is another aspect that publishers will need to be mindful of as they set their post-cookie plans. — Tim Peterson

SPACs will yield to traditional M&A alternatives  

At the end of 2021, my colleague Tim Peterson chronicled how publishers from BuzzFeed to Forbes to Group Nine plotted to scale up their businesses by creating their own SPACs (special purpose acquisition companies) or going public via a SPAC IPO (read more on the differences here).   

With low interest rates and struggling media companies looking for prospective new parents to swoop in and ease the financial damage from 2020, mergers and acquisitions were all the rage in 2021 and SPACs seemed like an novel way to get the needed funds to participate in the game and grow. 

But after bearing witness to BuzzFeed’s experience going public via SPAC IPO, the expectation is that this will not be as popular of a strategy in the new year. In the days leading up to debuting on the NASDAQ in December, the digital publisher lost 94% of the $287.5 million raised by the SPAC from investors. Now, it’s share price hovers just above $5 per share, down from its opening price of about $10. Still, some media executives aren’t too worried about what this will mean for other media companies exploring this option, with BDG CEO Bryan Goldberg — whose company has also flirted with going public via SPAC IPO — stating he was buying up a ton of BuzzFeed stock in anticipation of it being successful. 

Even still, Forbes and Group Nine, both of which talked publicly about SPACs in the past, have altered those plans thanks to a couple end-of-year acquisitions. Forbes is likely being sold to private investment firm GSV at a $620 million valuation as an alternative to its SPAC merger. And Vox Media bought Group Nine for an undisclosed amount. 

Time will tell if SPACs will be the renaissance financing tool they were heralded to be in 2021, but by the looks of it, they don’t seem the easy play anymore. — Kayleigh Barber 

The changing media workforce

The upheaval in media workforces took many forms last year. Newsrooms felt the stop-start of return to office plans, journalists suffered through on-going burnout, a wave of unionization hit media companies and the push to hold companies accountable for the lack of diversity among their employees pressed on. In 2022, the momentum of those trends are unlikely to waver.

Many publishers have already committed to more flexible and hybrid work policies, such as Forbes, Quartz and Axios. Companies that choose this route will have to develop ways to maintain company culture, as well as adopt better technology and solutions to support remote staff. Hiring will also be impacted by these shifts, as companies are no longer restricted to pools of applicants that can commute to the office. This will undoubtedly affect the diversity of applicants, and likely salaries, too, as publishers hire people in different markets. The work week might also look a little different this year. Some publishers are keeping office buildings open only from Tuesday through Thursday. And there has been nary a peep from management at media companies about a return to full-time, in-person work.

But companies like Hearst and Condé Nast are committed to bringing staff back into the office this year — which has led to pushback from employees. Unions have cited health and safety concerns around half-baked return to office plans. Though the omicron variant has likely thrown a wrench into many of these plans, inevitably some semblance of normalcy will need to be accepted as the world approaches year three of the pandemic. But that doesn’t mean employees will easily swallow that pill. In fact, the U.S. Labor Department announced more than 4.5 million people chose to leave their jobs in November — the most in the two decades the government has been keeping track – perhaps at least in part due to the fact that those moving from job to job are getting faster pay increases than those who are staying put, reports The New York Times. The jury is still out on whether unions will continue to fight management for more thorough RTO plans and greater flexibility, or if employees will begrudgingly return to in-person work this year.

Speaking of unions, strikes at Wirecutter and The New Yorker Union also signaled the increasing power of employee activism. “Staff feel more free to speak up and object when companies are making major decisions,” Quartz CEO Zach Seward told Digiday last year. The NewsGuild, the largest union representing journalists, had 1,542 journalists from 26 workplaces join in 2021. The tech workers union at The New York Times has yet to be recognized by management. More unions will likely form at media outlets this year, and more activity from existing organizations, as emboldened employees demand better pay and treatment from their workplaces. — Sara Guaglione

NFTs will add more value to membership businesses 

NFTs were the unexpected revenue stream of 2021 that has publishers asking what more can be done with this technology in 2022. 

There was a decent amount of experimentation with NFTs happening by the end of last year, ranging from NFT-based games to content studios rooted in NFT and metaverse production, but this year, there will likely be an even bigger push to get mass audiences investing in blockchain-based activations. The plan, it seems, is to focus on fandoms and use their passion for brands, celebrities, gaming or even television programs to get them to activate on the blockchain for the first time ever. 

“We love things like proof of participation. If you’re a fan of a show, you can prove you watched that first episode [by buying an NFT of that episode], and that might have value, because it is social swag,” said Scott Greenberg, CEO of Blockchain Creative Labs, which is owned by Fox Entertainment. “It’s the notion of [being a] part of a club and you can be rewarded for that. This is really about utility that might give you access to a [private] Discord channel, or it’s like owning an episode of the show.” 

While Greenberg primarily focuses on TV shows and video programming, his ideas can — and often are — applied to the media industry. Publishers are beginning to see the utility of NFTs versus the pure value of NFTs because at the core of these tokens is a very secure software programming that protects whatever information is being transcribed from being changed later on. This could mean non-transferable tickets to events or access to content no one else can see.

And that exclusivity can add the value to subscriptions and memberships that publishers have been looking for in the past year as they begin to see a slow down in their subscription businesses. — Kayleigh Barber

What we’ve heard

“We’re seeing more and more spend move out of ‘open programmatic’ into ‘private programmatic’ and there are a number of publishers who are dominating in that space. This is because publishers that have first-party data [backed by consent] provides advertisers and agencies with a stable foundation to buy within.”

— Joe Root, CEO of privacy compliant data management platform Permutive

Numbers to know

1,542: The number of journalists, from 26 different workplaces, who joined the NewsGuild, the largest union representing journalists, in 2021 — a record for the union. 

80: The total number of employees Protocol wants to have by the end of 2022, after laying off about one-third of its staff, 13 people, in 2020 due to the pandemic. The publication will be hiring a total of 25 new staffers. 

$60 million: The price Candle Media paid for a 10% stake in Jada Pinkett Smith- and Will Smith-founded media company Westbrook. Candle Media is a  Blackstone-backed entertainment venture firm led by two former Walt Disney Co. executives Kevin Mayer and Tom Staggs.

75%: The percentage of 120 publishers surveyed in the latest Digiday+ Research that reported year-over-year increases of annual revenue in 2021. More than half reported double-digit increases.

What we’ve covered

2022 spells more podcast partnerships for publishers as the audio field gets noisy:

• In an effort to up their audio games in 2022, a growing number of publishers plan to produce podcasts in partnership with other production companies and media organizations in an effort to stand out in an increasingly crowded field.
• Listenership has plateaued since last summer and the competition for audiences is increasing, however, more shows this year means listeners might become overwhelmed with choices.

Learn more about publishers’ collaborative audio strategy here.

What goals publishers have set for becoming carbon-neutral:

• Future PLC announced in December its plans to go carbon-neutral in the next five years. Meanwhile, Condé Nast has three phases to its five-year strategy. Other companies, like The New York Times and Gannett, are currently in the process of determining their plans.
• Digiday put together a running list of media companies’ sustainability pledges and initiatives.

Read more about publishers’ plans to make their businesses greener here. 

Minute Media’s Rich Routman explains how B2B tech is becoming a bigger part of the media company’s overall business:

• In its tenth year of being in business and after a string of publisher purchases, Minute Media made its first tech-centric acquisition in 2021 with the pickup of publishing tech platform Wazimo in November. 
• In the latest episode of the Digiday Podcast, Minute Media president Routman talks about how the acquisition reflects how tech is becoming a bigger component of the company’s overall business and how its B2B tech revenue is becoming interwoven with its advertising revenue.

Hear Rich Routman’s thoughts about the acquisition here. 

How publishers experimented with NFTs in 2021:

• One of the many trends of 2021 was dabbling in non-fungible tokens (NFTs), which rapidly caught fire across a wide range of industries, including the publishing space. 
• Over the past year, this experimentation included creating new revenue from old intellectual property, rewarding audience engagement and even giving brands and clients more opportunities to spend their media budgets.

Read more about how publishers used NFTs here. 

Here’s how 2021 went for publishers in five charts:

• If a picture is worth a thousand words, then these five charts are worth enough words for a medium-length Harper’s cover story that chronicles insights gathered throughout the year from Digiday+’s research panel.
• As one chart illustrates, publishers entered 2021 hopeful that they’d be able to get back to something normal-seeming by the end of the year, but it became clear that a return to full-time, in-office work was unlikely.

Read more about the publishing industry’s 2021 trends here.

What we’re reading

Justin Smith and Ben Smith are partnering on a new media venture:

Longtime Bloomberg CEO Justin Smith and The New York Times’ media columnist Ben Smith want to target the 200 million college-educated English speakers around the world with their new media company, according to The Wall Street Journal. Both of the news veterans are leaving their respective roles in order to pursue the new business launch. 

Meta is stopping its VR and AR operating system project after four years:

Facebook’s parent company has ended the development of a new software operating system, which was aimed at powering its virtual reality devices and its upcoming augmented reality glasses, according to The Information. Hundreds of employees worked on the project and its scuttling marks a setback for the company, which attempted to own the software behind its Oculus VR headset as well as any other future augmented or mixed reality devices it had set to create. 

These are the 17 Google executives that are behind the platforms’ biggest business decisions:

There are 17 people working at Google that Insider dubbed as being in CEO Sundar Pichai’s inner circle. These executives are called Google Leads and head the company’s most critical businesses, from search to education. The group, which meets about once per week, is made of product group leaders and some of Pichai’s most trusted advisors, Insider reported. Under former CEO Larry Page, the inner circle was called the “L Team.”

The window for deals is open but not as wide as it was last year when there was a glut of hairy, strategic moves made.

The deals so far …

Expect more deals like those that have already been announced since the turn of the year: Integral Ad Science acquired Paris-based content classification company Context, Human (formerly White Ops) raised $100 million, and now Magnite has acquired Nth Party, a startup specializing in secure audience data-sharing and analysis. Meanwhile, social marketing company Smartly.io this week announced it’s writing a $100 million check for Ad-Lib.io in a bid to broaden its competencies on the Google marketing stack. 

They’re all less glamorous than the flurry of activity that defined 2021 but more focused. The rate of ad tech companies debuting on the public market, on the other hand, is likely to cool. In fact, they have been doing so ever since the fall. There were only three companies to go public during the third quarter versus 15 over the first, per investment bank Luma Partners. 

“You’re already starting to see the makeup of acquisitions shift toward smaller deals,” said Abeed Janmohamed, founding partner of growth consultancy Volando. “Based on the conversations we’re already having, it wouldn’t surprise me if deal sizes continued on this trajectory where they pursue deals that are more capability and people-focused. The reality is a lot of these larger companies already have the back office functions sorted and have already covered off the areas where they can drive economies of scale.”

Not to say there isn’t scope for bigger deals. Microsoft’s purchase of Xandr proves otherwise, as does MediaMath’s exploration of a potential sale that could result in a behemoth. Given the fragmented nature of the ad tech industry, the need for continued consolidation still exists.

Bifurcation of the open web 

Ciarán O’Kane, CEO WireCorp, and general partner at start-up investment fund First Party Capital told Digiday that one impact of the latest wave of ad tech M&A will be the erosion of scaled audience buys across the open internet. He further predicted this will result in a bifurcation of the open web. In one camp there will be “utility publishers” that will seek to outsource their ad tech capabilities, while more mainstream publishers will seek to operate as “mini walled gardens.” 

Utility publishers’ needs will drive funding 

O’Kane defined “utility publishers” as media owners that have troves of first-party data, albeit, without the scale of household, legacy media brands that have historically relied on the ad-funded business model. This ‘new’ cohort of media owners is likely to deem advertising as a potential “nice add-on” and therefore likely to continue to outsource their ad tech. 

Such publishers are more likely to partner with outfits such as Kevel — a company whose website claims it users APIs to help companies including Ticketmaster, WeTransfer, and Yelp — to bolster monetization either through ad serving or the placement of native ads or sponsored listings.

Certain financial backers are placing their bets on such ad tech companies with the fact that Kevel raised $10 million in Series B funding, led by Fulcrum Equity Partners, last month evidence of such a mindset according to O’Kane.

One significant impact of the creeping privacy laws around the globe is the challenges they pose to media-buying teams when it comes to implementing audience-led campaigns at scale, outside of the walled gardens of Amazon, Facebook, and Google, that is.

The rise of ‘mini walled gardens’ 

However, publishers, and ad tech companies, will look to plug this gap, by forming their own “mini walled gardens”, according to O’Kane, who predicted the subsequent return to contextual advertising will spur further M&A deals this year. He described the current dynamics facing the market as “a funny reversion”, albeit a data-driven one, whereby the ad-supported internet is starting to resemble a series of “mini walled gardens.” 

The trend is already underway when we think of M&A deals of recent years such as how Smart Adserver, a company that historically operated on the sell-side of the industry, purchased demand-side platform LiquidM in late 2019 in a bid to gain greater visibility of the market’s pricing dynamics. “We’re probably going to see is a fall back to contextual [media buys],” added O’Kane, “we might see a lot of publishers look to buy ad tech in order to build their own solution, and then sell that into the agencies.”

Why now?  

Given that Google is less than two years away from retiring third-party cookies, the historic connective tissue of programmatic advertising, the temperature is ratcheting up, resulting in a climate that could be ripe for dealmaking among many publishers’ minds. And with marketers increasingly voicing their eagerness to reduce their reliance on Big Tech’s walled gardens, 2022 could see publishers act on this impetus to buy ad tech that’s available, as long as the price is right.

Smaller, but more valuable, deals? 

While legacy publishers may have a checkered history with ad tech, some believe they may be in the market for smaller acquisitions to build their own. “I think the blockbuster acquisitions [of $500 million-plus] may be a thing of last year,” added O’Kane. “So, maybe we won’t see big ad server acquisitions, but we could see them in the market for tools that can help with first-party data aggregation.”

Ana Milicevic, co-founder, and principal at consultancy firm Sparrow Digital Advisers agreed with O’Kane’s assertion that the ad-funded internet is reverting back to a series of mini walled gardens. She pointed to two of 2021’s “lateral deals” — Microsoft purchasing Xandr from AT&T, and AppLovin acquiring MoPub from Twitter — as prime examples of this.

“Here you take an asset from one company, and you migrate it somewhere else where it makes a little more sense and then you make a new value proposition on top of that,” she said suggesting that Microsoft could look to utilize Xandr as the monetization platform for its string of media properties.

‘Under-explored’ deals 

Although, as 2022 kicks into gear, she tipped smaller companies that have brought a new perspective in emergent, or relatively “forgotten” areas, as potential acquisition targets with companies that have innovated in campaign optimization or emergent platforms as potential targets for buyers.

“There’s a lot of M&A to be done,” she added. “I’m very bullish on under-explored areas such as digital out-of-home and those that can help with automation in narrow-cast advertising such as podcasts, and the same goes for those that can help with sponsorship of email newsletters.

In addition, she cited the creative optimization space as a potential area for M&A in the space, pointing to Celtra’s purchase by private equity outfit Symphony Technology Group in late 2021 as an example.

“Look at areas such as automated creative testing … this has been a very forgotten arena for a while” added Milicevic. “I just think there’s a few of the leading players in a load of those categories that haven’t been challenged in a while, and I think we’re going to see a lot of activity in those areas.“

Of course, then there’s CTV …

And that’s not to forget the rise of CTV, a sector of the industry that kept investment bankers busy in 2021 and will likely occupy the time of M&A lawyers in 2022, but at a (slightly) diminished rate, according to some.

For evidence of just how hot a ticket CTV is, we need only look at how newly minted public ad tech companies made it a priority last year. Outbrain purchased Video Intelligence for $55 million, while measurement rivals DoubleVerify and Integral Ad Science respectively purchased Openslate ($150 million) and Publica ($220 million) within months of their IPOs.

Speaking with Digiday last year, Elgin Thompson, managing director, technology investment banking at JMP Securities, recounted how CTV is the “number one topic in ad tech right now.” Companies that can provide advertisers with holistic measurement of the ROI of their CTV spend will prove attractive, added Thompson, tipping outfits such as Pixability and Zefr as potential acquisition candidates.

“These companies need the full stack to help advertisers identify the metrics and goals then help them craft their story,” he said, “that’s a theme that the market is paying attention to.”

The key details: 

• The platform, called NBCUnified, is built on three separate components: Its NBCU ID, a data marketplace where advertisers can append third-party data to NBCU IDs, as well as technology that allows advertisers to do data-matching, either through interoperability or in clean rooms.
• NBCUnified boasts 150 million individual deterministic consumer IDs, as well as 50 million household IDs. It plans to get over 200 million by 2023. NBCUniversal claims it reaches 230 million adults per month across a combination of different products and content types, ranging from news and sports to theme parks.
• NBCUniversal said NBCUnified will launch in the second quarter of 2022. It is the first product to launch out of a newly created enterprise data group, which added a top executive, John Lee, back in July.

Not first to market, but one of the biggest

Many smaller publishers spent 2021 building businesses for their first-party data products, and an ever-larger number included their data in conversations with advertisers about the new year.

NBCUniversal, which debuted a clean room last year but still hasn’t made NBCUnified available, had a lot more to tie together. But the scope of what NBCUniversal says NBCUnified can connect — content consumption across digital, streaming and linear, commerce and subscription data — is comparable to only a small number of competitors, such as Disney Select, which was announced in February 2021. And the breadth of its offering means it will be able to measure many different kinds of outcomes for advertisers without relying on third-party trackers.

“The NBCU environment by itself is massive,” said Myles Younger, senior director of the data practice at Media.Monks. “The thing about a ‘content fortress’ like NBCU is that it doesn’t need to track people across environments.”

Similar goods on the shelves?

The data marketplace NBCUnified offers will make it easier for advertisers to enrich NBCU ID profiles with information that can’t easily be discerned from media consumption or site behavior. How the goods in that marketplace stack up to competitors — the cloud services provider Snowflake, for example, offers a data marketplace with more than 200 different data sources — is not clear. NBCUniversal did not respond to a request for comment about how many partners it has in its marketplace.

Figuring out what’s on offer could make a difference.

“Visibility into the specific partnerships will be important to more detailed conversations so we can assess the alignment of each marketer’s existing relationships,” said Kevin Cahn, client solutions director and media planning lead at Kepler Group. “Third party segments are widely available across platforms and exchanges. The ability to match that syndicated data to NBCU’s underlying cross device graph and unified ID is more compelling. This capability will make the offering relevant to an even wider range of marketers.”

This interview has been lightly edited and condensed for clarity.

Why is the older paradigm of games-as-products less effective these days?

I think it just creates such a barrier to entry. I mean, physical goods are becoming a thing of the past; people are living in virtual worlds. I order everything from Amazon now.

For people playing games, they’re expensive; there’s going to the store — even just ordering online and getting it to your house, there’s so much friction that already crowds out a lot of people who don’t have time, who don’t have access, for a $60 title.

The emergence of hyper-casual gaming and these free-to-play games is very powerful, because more people can play, access is easier, and then it’s better for the gaming businesses and companies as well. Eventually, that can be monetized.

Of the emerging business models in gaming, why is THNDR focusing its efforts on play-to-earn?

When people are playing, instead of winning in-game currency that has no real-world value, and isn’t interoperable between games, the rewards are actually Bitcoin — or really a Satoshi, which is the smallest denomination of a Bitcoin. With that, it brings about the possibility of microtransactions — we’re thinking about people literally winning a thousandth of a cent. It’s interesting to see what it’s doing with engagement and retention. That’s one of the things I’m most excited about, in terms of business models: just opening up gaming to a wider audience.

You’re telling a mom who has two kids, ‘hey, you’re not just wasting time, you’re actually earning Bitcoin, which is one of the highest-performing assets in the past 10 years.’ It changes the value proposition of gaming and having fun, creating a world where people can game and actually earn value. At THNDR, we’re focused on creating a financial foundation for play-to-earn and just keeping it super simple with Bitcoin. We have folks in Venezuela who are paying for their groceries using Bitcoin that they won in-game; it’s pretty incredible.

So you believe that the rise of play-to-earn could lead to demographic expansion in gaming?

60% of all gaming is mobile; that’s greater than console and desktop gaming combined. And it’s reaching more demographics. More people of color are playing and one of the fastest-growing demographics is women between the ages of 35 and 50 — they actually spend the most money, because they often manage the finances, or have access to the finances of a family. 

One of the reasons that brought me to Bitcoin was fair and equitable financial access. I went down to El Salvador recently, and there’s people down there for whom Bitcoin has been the first way they can actually have a bank account, and therefore access to the global economy. It’s a growing market, but it’s also the easiest way to give access to gaming and access to financial freedom to people in underserved places, like Venezuela, El Salvador and the Philippines.

How much can we attribute the aforementioned changes in consumer behavior to the COVID-19 pandemic?

I really do believe that it’s had an impact. I was reading somewhere that half a billion new players came to gaming over the course of COVID. At my old company, we were doing our team water cooler conversations or meet-ups in Animal Crossing. People are now more used to doing that kind of thing; having a meeting on Zoom is the norm for everyone now, so having these interactions in-game also makes sense.

How does play-to-earn gaming fit into the concept of the metaverse?

I think everybody’s metaverse looks different. For me, personally, although I love the metaverse in Snow Crash — I just love that book regardless — I don’t want to be in Mark Zuckerberg’s metaverse, whatever that is. But once we enter this totally virtual world, virtual economies are going to be something greater than all these games; they’ll be global virtual economies, where everyone has an equitable say in what is going on.

A big thing with Bitcoin is that there’s no one central authority who’s governing over how these tokens are issued. One Bitcoin equals one Bitcoin. It’s never going to be like, ‘here’s a token, and guess what, we’re going to print 300 million more of these and inflate the virtual economy.’ Something that’s super important to me, when thinking of these virtual economies, is that we don’t just recreate the problems that we have in non-virtual economies. For instance, in the U.S. economy, inflation is over 6% right now because of money printing. And so I think that’s something that people aren’t really thinking about when we shift to this global virtual economy: it is going to be a real economy, and it’s not something that we can just play around with anymore. These in-game economies are going to become our real world economies very, very soon.

This conversation has been edited and condensed for clarity.

You’ve seen tremendous growth in the last two years. Tell us about that. 

We’ve tripled in size this year after doubling in size in 2020. Even in the midst of COVID, it has been a crazy run for this team. We brought on a ton of enterprise clients too so we have all these big Fortune 500 brands like Walmart, IBM, Microsoft and Meta that are using Rosies for programs. We finally feel like we’ve reached the place where we’ve fully created the category [of freelancers working with brands and agencies through our market place], we’ve normalized this way of working. CMOs are setting aside budget[s] for us on an annual basis. We’ve fought the good fight to create the new category of legitimized flex work and marketing. And now it’s time to accelerate everything we’re doing across the board.

Given that We Are Rosie is working to normalize marketers working with freelancers, I’m curious about your take on the future of the agency business.

I think that there’s always going to be a place for retainer contracts with agencies for bigger brands. All of our Blue Chip clients should have an agency of record and I think they always will. I think we’re going to continue to see a lot of movement. A lot of clients are getting frustrated with their agencies in terms of not having the butts in seats that they’ve been promised, and they’re getting, as we all know, more savvy about keeping tabs on all of that. Some of those talent-related frustrations are boiling over onto the brand side. And so we’ll continue to see a lot of movement and agencies coming up for review.

Are there other trends you’re seeing?

One of the things I really see as a huge trend, and of course it’s from my vantage point, we work with 40 agencies, and they’re starting to promote people into positions that are like vp of the talent community, which is not just an HR position, or a people position. It is like a layered workforce position. How are we going to complement our full-time traditional employees with part-time talent? With freelancers? Flex talent? Partnering with small, independent agencies?

This layered workforce idea is just permeating all of the industry, and we’re certainly seeing it on the brand direct side as well. It’s going to continue to proliferate amongst agencies as well. I think the folks that ignore that are going to keep seeing their accounts coming up for review, and they are going to keep seeing their partners on the brand side pushing them and getting frustrated because they don’t have the right talent to do the work.  So we’ll continue to see more flexibility across all of the agencies and the holding companies are thinking about how work could get done within their own kind of four virtual walls these days.

Lots of people have been talking about the talent war at agencies and the Great Resignation. Do you have any advice for agencies and brands on recruiting talent now?

They really have to understand that the power dynamic has changed. It’s probably the first time in my career that I could say confidently that the people doing the work have more power than the employers and a lot of ways. They have a lot of options, they can go to other [agencies or brands]. Because of the talent shortage, there’s no shortage of jobs for them to hop to and get more money or better perks or a better way of working.

It’s also never been easier for people to become an entrepreneur and kind of stand up their own shop, or to collaborate with people on the other side of the world and build their own kind of mini agency. So I think they really have to embrace that people have options and choices. And that, you can no longer treat talent like you have all the power because you don’t. And that’s going to be a big eye-opening lesson because the people that don’t understand that are going to continue to see [people] trail out the door.

Monk most recently was managing director for Mercury Media, an independent performance agency until 2018, but she built her media experience at Digitas (pre-Publicis, she points out), KBS+ and Grey, as well as time at Condé Nast. One of her driving motivations is to move her DTC clients past easy solutions peddled by algorithms and programmatic, and dive into whether a client’s media execution matches its strategic marketing goals — which she has found often doesn’t match.

“People are afraid to tell the story of complexity. They’re afraid to tell the story that sometimes you just don’t know all the answers,” said Monk, as founder and CEO, has a team that includes chief data science and analytics officer Chris Novak, head of performance Susan Rowe and head of integrated planning Suzanne Silber. “Chris likes to say we want to migrate them from performance media to media performance — not planning and buying your media based on what channels that can be measured but being incredibly smart about identifying audiences and then measuring the impact of that. The emphasis has been wrong because these clients get caught in an optimization trap.”

“This all sounds like [a] statement of the obvious if you have been in the media and marketing space for a long time,” she added. “And yet the amazing part is, it is the antithesis of how the DTC and e-commerce worlds understand marketing and media.”

Kendra Prasad, The Farmer’s Dog’s director of acquisition, has worked with Eden Collective since 2020, which helped refine the brand’s focus while opening the aperture of the DTC brand’s marketing, resulting in a five-fold increase in media spend. Prasad did not provide exact figures. “When they first started, they took our existing buy and said here’s what needs to change immediately. Over a few months, we changed our buy completely, buying into national markets, doing scatter and fixed buys by that summer, and things we didn’t think about before. Our business was scaling tremendously along with this, so there was definitely a correlation to growth and the scale of TV.”

Monk acknowledged Eden Collective moved The Farmer’s Dog from “relying on algorithms” and “pure performance media” to a place where the brand could find the audience en masse — “where there’s a high-quality delivery of impression,” said Monk.

“I firmly believe that performance media has attempted to replace talent with algorithms,” added Novak, whose experience includes stints at Dentsu and Merkle. “Organizations tend to over-rely on these models, which can hold them back. We help centralize and integrate, and then ensure that everything is orchestrated and executing to actually align with their strategy, going back to that media performance.”

Jackpocket, a lottery app that operates in 10 markets where it’s legal, has also increased its spend — in part because more markets are opening up as states ease their digital gambling rules, but also because Eden Collective has guided the app to smarter use of media.

“On a straight ROI basis, we definitely saw better performance, because of the way the buy was managed,” said Michelle Wong, vp of marketing at Jackpocket, who said the brand’s media spend will likely expand from single millions into double-digit millions in 2022. “They treat our money like their money. And they really get into the actual measurement — we weren’t getting that kind of analysis in a timely manner with the other partner we had worked with before.”

Wong said she appreciates the consultative depth to which Monk and her team will go. Eden Collective “helps review our media buys from an objective point of view, even though they’re not placing the buys,” said Wong. “I don’t think I’ve ever seen anyone else do [that]. And they’re not getting anything extra from us for that.”

Monk and team are in the process of pitching a handful of fin-tech clients, so it’s possible Eden will expand beyond four to six clients. “All of our business has come through referral,” she said.

But beyond political marketing windfalls, the holding company has its eyes set on an even larger prize — widening the aperture of Stagwell’s offerings, both geographically by expanding into Latin America, Asia-Pacific and EMEA, as well as by discipline, as the company loads up on digital-first assets. That way it can continue to laser focus on its strengths but also compete on a level playing field with its rival holdcos in its array of services for clients. 

“We’re looking to connect the consumer all the way through the entire [Stagwell] enterprise” for its agencies’ clients, said Jason Reid, Stagwell’s chief investment officer. “We’ve made some secular bets: political, communications, research. And now we’re adding ancillary services to our portfolio to become a marketing services provider that can win contracts anywhere from $20-$30 million on up.”

For the last six years, Reid, who handles an annual investment warchest of between $50 million and $100 million, has been responsible for finding suitable candidates for purchase, then negotiating and closing the deals. 

In that time, observers say Reid has carved out an identity for Stagwell that’s distinct from legacy competitors like WPP, as well as newcomers like S4 Capital. But those observers also think Stagwell is still searching for bigger jewels to enhance its crown, particularly when it comes to its media business. And as it keeps growing, it has to continue proving that the assets it acquires can be greater than the sum of their parts. 

“We’re a different animal,” Reid said. “We aren’t like WPP, because with them you’re basically selling yourself to a company with four or five competitors in your space already. We’re creating a loose federation to win business locally.”

Reid and Penn go back six years to when they met and worked together at Microsoft — Penn the chief strategy officer and Reid the senior business strategy manager. But when Penn became president and managing partner at Stagwell in 2015, he took Reid along. 

In the time since, Reid and his team have cut some 35 transactions for Stagwell, said Penn, including Code and Theory, as well as a decent media agency network formed out of The Media Kitchen, Assembly, Gale Partners and ForwardPMX, handling some $5 billion in media spend.

“Jason takes a studied, highly intellectual approach to evaluating M&A for Stagwell,” said Penn. “He really has the numbers skills that you need. On the other hand, making acquisitions is often a leap of faith, and I think he really understands the personal aspects of that as well. For the people [being acquired], it’s usually the only transaction they’re ever going to do in their life and so its important we understand them, and they understand us.” 

Dan Gardner, CEO of Code and Theory, not only went through being acquired by Stagwell through Reid and his team, he’s also gone hunting with Reid to expand Code and Theory’s terrain in the communications landscape, acquiring specialty shops like TrueLogic and, more recently, Kettle. He declares himself a believer in their approach and methods.

“Jason’s very creative and flexible in partnering to figure out how to make the best deal,” said Gardner. “There’s closing the deal and then structuring it so incentives and performance align with business outcomes — whether it’s how to integrate certain centralized capabilities together, or outcome of the performance of the economics, or even how to ladder up to a broader Stagwell perspective. He’s very good at making sure the deal’s structure gets done in a way that’s most effective for the longer-term operating.”

The pace of acquisition for Stagwell won’t let up anytime soon. Besides looking in Asia, the Middle East and Russia, Reid said Latin America is an especially intriguing region to look for digitally-savvy shops to acquire. “Not only is it in similar time zones, but the talent pool is incredible down there,” said Reid. “People grew up on their cellphones —and the younger generation is so digitally focused.”

Stagwell knows it’s not the only holding company looking for shops to scoop up. But Penn and Reid feel confident they have a winning approach. Both dismissed the likes of S4 Capital and the traditional holding companies as considerable competition when it comes to finding new businesses to buy. 

“We built a $2 billion network in the last six years that dwarfs what [Sorrell] has done,” said Penn. “Our biggest competitor is usually the errant private-equity firm that thinks they know something about the space. They tend to pay more than is appropriate. But then [the acquisition] targets tend to find out the [PE firms] don’t have the strategic system like we have.

“We’re generally not the first bidder, we’re usually the second,” he added. “Because when someone is going to look at their return, it’s not going to be the cash they receive. It’s going to be how they grow. The total benefit to the deal four or five years down the road can be so much greater.”

One agency CEO, who’s observed Stagwell from afar but has been through several acquisitions himself, including having a past agency bought by a holding company (not Stagwell), credits Stagwell with its focus on PR and communications. 

“Penn drove this interesting wave in the last few years, which was really driven by PR, but then went out and bought Code and Theory, one of the best in the industry,” said the executive. “And they added a bunch of digital assets.” 

But, the CEO added, “They have all these talented agencies that have become mediocre in their ability to grow, like Crispin [Porter & Bogusky]. And media is just not a big part of their business — how are they addressing that? What’s the crown jewel at Stagwell?”

Jay Pattisall, Forrester’s principal global agency analyst, credits Stagwell for at least trying to make more of its media-side assets by putting them together in one network. “It’s considerably more than what was Assembly by itself or Forward PMX by itself. The combination doubled their size in terms of buying power,” said Pattisall. “What was once basically two separate media agencies suddenly has the presence of a smaller but significant media network.”

Nevertheless, perhaps that crown jewel just hasn’t been bought yet. Whatever businesses Stagwell purchases in the future, Penn promises that there won’t be duplication. “We’re not going to buy six of the same thing — we’re going to fill in all the skills so we can be the most effective marketing organization,” he said. “Strategically, post-combination, we’re going to look for acquisitions that really make sense in terms of growth of the business and individual needs.”

As Code and Theory’s Gardner will vouch, Reid and his team consciously avoid a templated approach, in order to accommodate the singular elements of each acquisition.“There’s flexibility in the structures of the deals — it’s not one-size fits all,” he said. “Other holding companies have a format on how they do deals. But Jason partners so well in structuring the deals, to deliver on both the business and human outcomes.”

Taking place from January 5-7 both in-person and virtually this year, CES faced a wave of in-person booth cancellations by major companies such as Amazon and Procter & Gamble when Covid-19 cases started spiking. In beauty and personal care, brands opting out of Las Vegas were prepared with virtual experiences to showcase their new launches. While futuristic beauty devices continue to have a big presence at the event, virtual beauty also continues to take off, especially when it comes to the metaverse.

“As a leader in providing AI- and AR-powered digital experiences, we’re well-equipped to mimic the in-person feel of CES for attendees at home with the interactive virtual booth experience,” said Alice Chang, CEO and founder of Perfect Corp, who decided to take the company’s CES booth virtual due to the pandemic. 

Perfect Corp set up a metaverse-style virtual booth to exhibit its new developments, which include expansions in AR try-on tools, as well as a foray into the metaverse and NFTs. Visitors to the online booth can live chat with company representatives to learn more about its announcements. 

Perfect Corp’s new virtual try-on tools highlighted include a new foundation-matching tool, video chat AR makeup application and jewelry try-on. The company is also the latest in the beauty tech world to get into the NFT craze. It announced it plans to incorporate beauty and fashion NFTs into virtual try-on experiences, and work with brands to create NFTs for AR. 

“Immersive brand experiences and NFTs in the metaverse will be essential for beauty brands to forge meaningful connections with their consumer base,” said Chang. “Much like AR and AI, virtual try-on technologies have become essential to drive customer engagement; engaging experiences in the AR metaverse will become equally as important for beauty brands.”

Procter & Gamble went fully virtual with its CES booth, as well. Similar to its presentation last year, the company is hosting a virtual booth dubbed LifeLab, complete with video game-style navigation. Attendees can virtually walk up to representatives from brands such as Gillette and Oral-B to chat with them. 

Procter & Gamble also launched its BeautySPHERE metaverse experience in partnership with London’s Royal Botanic Gardens. Users can walk through a gamified virtual tour of the gardens to learn about ingredients and the company’s sustainability initiatives.

“Facebook’s rename to Meta has created the metaverse frenzy as you see it today, but I have been working through what this could be for quite some time,” said Alexis Schrimpf, vp of design, skin and personal care, and co-founder and chief design officer for SeeMe Beauty at Procter & Gamble. “Our brands have been on a journey in digital for many years,” with a wide range of immersive virtual experiences that predate the “metaverse” label, she said. 

Following the theme of high-tech devices from previous years, beauty and personal care gadgets continued to roll out in 2022. Among major conglomerates, L’Oréal unveiled an at-home hair dye device, while Oral-B revealed several new oral-care products. In the startup space, Ninu introduced a “smart perfume” handheld device to create a personalized fragrance with connection to a smartphone app.

Fresh off of a successful first funding round, Beautigloo co-founder and CEO Clara Lizier flew from Paris to Las Vegas to present the brand’s new launches at CES. A member of L’Oréal’s and LVMH’s accelerators, Beautigloo introduced a new beauty fridge with an intelligent thermal system to keep the temperature and humidity constant. It also revealed a patented cryo-stick able to cool in five minutes. The brand opted to keep its physical booth despite the lower crowd numbers.

“We [planned to] have an event with retailers and distributors just before CES’ opening. It has been canceled because of the pandemic. A lot of buyers and retailers couldn’t come,” said Lizier. She plans to rely more heavily on a virtual presentation and the CES app to chat with potential clients, buyers and retailers.

Oral-B, meanwhile, virtually launched its new electric toothbrush models with high-tech digital features. In the pilot phase is a phone camera attachment to examine teeth, while it also unveiled its newest models of electric toothbrushes. Its iO10 connected toothbrush model comes with Bluetooth-linked notifications on its charger, giving users feedback on the time and pressure of their brushing, while pointing out if they miss a spot. The data syncs to the Oral-B app, which they can share with their dentist. When users have successfully brushed correctly, the charger lights up with celebratory lights to encourage people to keep up the good work.

​​”We have data showing that people actually brush longer and more often because, believe it or not, they look forward to [that reward],” said Sherrie Kinderdine, an R&D group head for Oral-B and Crest. 

Overall, brands said they see value in participating in CES, even without as many people on the physical showroom floor in Las Vegas.

“Of course, there will be less opportunities, but we will do our best to reach our goals and also to be more visible,” said Lizier.