Month: January 2022

Nick Folger, founder, and CEO 4 Mile, who previously served as the director of engineering at Looker, said that his outfit helps clients “make insights actionable.” This is performed by helping them to access and aggregate their first-party data in order to improve their media operation, including their marcomms operations.

He explained to Digiday how 4 Mile recently helped a Fortune 500 client retrieve its ad placement data across a number of platforms, such as Facebook, to automate campaign execution. 

“We have built them an application for [assessing] their ROI,” Folger added. “It automates the ingestion of ad media, and figures out, in an automated way, what to place and when based on a variety of different data sources.”   

Meanwhile, Tyler Pietz, global evp, data, Media.Monks, explained to Digiday how the integration of 4 Mile will enhance his company’s offering which consists, nominally, of helping marketing teams to navigate major platforms such as Amazon, Google, Salesforce, etc.  

“One of the biggest challenges that clients have is that they have insights that are blocked in silos and aren’t making their way through the bloodstream of the business,” he said, adding that 4 Mile’s talent pool of 45 data specialists will help alleviate this. 

“There isn’t enough talent out there that knows how to operate within these major infrastructure platforms … work with the data, model it and surface it in a way that is actionable for someone inside the business.”      

Financial terms of the deal — Media.Monks’ parent company S⁴ Capital has cut more than 20 such deals since forming in 2018 — were not publicly disclosed. Although, 4 Mile, whose headcount is close to 50 and generated $6.5 million in revenue last year, is set to come under the Media.Monks banner.  

Sorrell on the current state of M&A  

In its 2021 full-year market report, LUMA Partners described 2021 as “an emphatic rebound year” for the overall digital marketing sector with deal-making activity up 82% from 2020 — the total number of deals numbered 399. 

Additionally, the investment bank forecast “elevated M&A activity in 2022” as both strategic and financial buyers join the buying frenzy. 

Speaking with Digiday, Sorrell, arguably the most recognizable name in advertising who helped build WPP into the biggest holding group in the business through a series of M&A moves, shared his views on what’s driving the market. 

He discussed: his opinions on how the major internet platforms are helping to drive consolidation, just how his outfit is looking to disrupt the holding group model and ‘the insecurities’ of entrepreneurs.   

This interview has been edited and condensed for length clarity.  

Do you think the scarcity of development talent is driving the current M&A landscape?

I think it’s not about the acquisition of talent per se, it’s about the acquisition of capabilities within which there is significant talent. You can’t say that this [4 Mile deal] is purely about acquiring talent … it is about acquiring, or merging with, and bringing in capabilities around Looker, Snowflake and others.   

The way we go about this is to identify three core practice areas: content which is 60% of our business, data-analytics and digital media which should now be about 30% of our business, and then tech services which should be about 10%.

All these are about digital marketing transformation, which is the business we’re in, and 4 Mile happens to have the best people for developing capabilities in some of those areas. 

How much do you see the privacy moves implemented by the major platform providers as driving M&A?     

We are very focused on the implications of what Google is doing with third-party cookies and Apple’s IDFA decisions. This has driven clients into mining and consolidating their first-party data and using the [data] signals from the platforms, so everything we do in the data and analytics is around those areas.    

To answer your question, if we see other companies which are in high-growth areas — content, data-analytics, digital media and tech services — we will go for those too. 

If you look at everything we did over the last year, and there’s more to come, it’s about identifying those areas of growth, and then getting the very best people in those key areas. 

Do you see the large holding groups, which have been comparatively quiet when it comes to M&A since Covid-19 hit, becoming more proactive?

They have the reverse issue to us, they’re not in high growth areas, they should be focusing on high growth areas but they seem hesitant. I mean, they make moves but they’re very small ones. 

The holding companies consist of analog businesses, which I would compare to a ‘bad bank’ as opposed to digital businesses which I would compare to a ‘good bank’ and they seem unwilling to make significant investments. 

While they did make significant investments in data assets such as Dentsu with Merkle, IPG with Acxiom, and Publicis with Epsilon, but to my mind, these seem like dated data assets. They’re third-party data assets, not first-party data assets which, I suppose, by definition you cannot buy because they are clients’ assets. 

But they’re not attuned to the sort of things that Nick and Tyler are focused on, I think they [holding groups] are 20th-century companies while we’re in the 21st century.   

Finally, S⁴ often uses ‘merger’ as opposed to ‘acquisition’ about deals. Can you explain this choice of wording? 

We don’t do earnout, we’re looking for people that want to build their business. The first question of any discussion is, ‘If you want to sell your business, then go and talk to X, Y, and Z.’

If you want to create a new model and disrupt the old, we’re about executing that. The consideration [for any deal with S⁴] has been half-share, and half-cash as it has been with any one of the transactions that we have done.   

We think it’s quite permissible and respectful for entrepreneurs — who are often basically insecure and they often wonder how they became so successful — to realize half of the capital … and then roll the other half into the company with the objective of building that model. Everyone we’ve merged with has done that.      

In the past, the DTC lingerie brand has relied heavily on linear television advertising for brand awareness. Facebook and other social media platforms have been key driver’s in the brand’s customer acquisition efforts, Roy added. But in light of an increasingly crowded digital advertising marketplace, rising costs and data privacy changes, Adore Me has taken a second look at digital video on YouTube and OTT to balance out the brand’s media mix for both brand awareness and customer acquisition, especially as technology has brought better targeting and measurement capabilities to video advertising. 

In a recent campaign, the women’s underwear brand moved to target men as a demographic specifically for its home try-on service, from a gifting perspective. The video spots ran across lifestyle networks as well as news and sports. They’re also extending the audience beyond the female target to reach male and Hispanic audiences, with custom creative for each, per Adore Me.

“There’s certainly more effort and opportunities around targeting and a better understanding of how your spend is going,” Roy said. “Trying to balance the platform acquisition instincts with that brand building side is something culturally, we’ve definitely gone through as a challenge.”

Adore Me’s recently implemented diversified media mix still includes linear television. But YouTube and OTT, across streaming services such as Hulu, Roku, Tubi, and ESPN, play a bigger role as the brand looks to fire on all cylinders, offering more touch points to meet shoppers where they are, he added.

It’s unclear how those ad dollars are being spent as Roy declined to offer details. Per Kantar, Adore Me spent $6.5 million on media within the first half of 2021. In 2020, the DTC brand spent at least $5 million on media. Those numbers do not include social media as Kantar does not track those figures. 

Adore Me is one of many DTC brands looking toward more expansive marketing strategies, beyond direct response and performance marketing tactics. Over the last year, Vivid Seats, Edible Arrangements and Shutterfly all have looked toward brand awareness channels, including digital video, to diversify their media mixes. 

It’s a trend that will continue across the industry, according to full-service agency Laundry Service’s chief marketing officer Mike Mikho.

“Everyone’s gonna jump to iOS 14 changes and rising CPMs and I think it’s important to note that performance marketing is getting squeezed on all sides,” Mikho said, noting that the digital advertising space is also becoming increasingly saturated with brands. “Competition is higher than ever and marketers can’t just rely on low hanging fruit.”

Looking ahead, Adore Me says it’ll continue brand building and awareness efforts using digital video. “Every brand is going to have to face this, especially as targeting becomes not as granular for privacy efforts,” Roy said.

After spending over $400 million buying up titles last year, Future plc has thumbed through its own copy of that playbook quite a bit recently, to the benefit of its balance sheet.

At the end of its fiscal year 2021, which ended on Sept. 30, Future’s annual revenue grew 79% to $804.5 million (£606.8 million) and operating profit grew to more than $260 million, per its latest earnings report.

A healthy chunk of that growth came from its new acquisitions, including Marie Claire U.S. and 10 of Dennis Publishing’s brands, though organic revenue rose 23% year over year, the company said.

Even after a busy stretch of M&A, media companies enter 2022 as hungry as they’ve ever been to make acquisitions, Future among them. In particular, Future’s proprietary tech stack enables the company “to drive almost instant revenue growth,” said Abi Watson, senior research analyst at Enders Analysis.

But as Future continues to make acquisitions, the efficacy of its integration strategy will be put to the test. Watson said the sheer number of titles in its portfolio — 250 in total — likely “masks variation in growth levels within Future’s portfolio.”

“It is highly likely that, in common with other magazine publishers, its revenues depend on a few key assets, and that there is a long-tail of underperforming businesses,” Watson said.

When Future considers buying something new, executives ask themselves several questions, said Jason Webby, Future’s chief revenue officer for North America: “How can this particular acquisition add value to our current portfolio? Does it either bolster a vertical we’re already strong in or does it give us new capability or reach or editorial expertise in a new category?”

For example, when Future bought several Dennis Publishing titles in October, its Kiplinger and Money Week brands added wealth as a new advertising opportunity.

Likewise, Future’s acquisition of CinemaBlend at the end of 2020, increased its digital audience by 19 million unique users per month but more importantly empowered the company to start signing ad deals with Hollywood studios and streaming vendors.

“That gives us clout in new verticals,” Webby said. 

Making immediate changes

Moving different media brands onto a single CMS makes sense. But Future says the move pays bigger dividends for the brands it acquires because the brands get access to its proprietary e-commerce tech stack, Hawk, which compares prices of products from sellers across the internet in real-time. While affiliate commerce is a growing bright spot for most digital publishers, it has been the linchpin of Future’s business; its commerce revenue increased by 36% from fiscal year 2020 to 2021, accounting for $285.6 million and 35% of total revenue, the company said.

Marie Claire had been doing affiliate e-commerce for a while — it was also a priority under former publishing license owner Hearst, editor-in-chief Sally Holmes said — but Hawk enabled a more user-friendly shopping experience on its website by providing multiple links for where to shop.

Toward gradual transformation

But incorporating new revenue streams takes time, even when the tools are available. For example, CinemaBlend had only started thinking about the role e-commerce could play in diversifying its revenue before joining Future. While it made sense to the team back then, the title did not have the expertise needed to build and maintain a successful affiliate commerce business, said editor-in-chief Mack Rawden.

“Every once in a while, we would make a small minor attempt here or there with little oversight or understanding of what was going on,” said Rawden.

That changed after CinemaBlend came under new ownership. “Suddenly, we’re in the same company as so many other brands that do [affiliate commerce] on a scale that we could never imagine,” he said.

Today, CinemaBlend now incorporates affiliate links whenever it feels like an obvious next step, such as in a round-up of 10 shows to watch on Disney+. During Black Friday and Cyber Monday, CinemaBlend started publishing commerce-first stories including gift guides and news about store sales that were relevant to its audience.

“The transition [to e-commerce] happened much more quickly and with much more authority than it would have happened in other circumstances,” Rawden said.

Commerce is still a minimal part of CinemaBlend’s revenue — the brand made almost $7,000 off this business in 2021, according to the company — but those steps were not the final ones.

Rawden said he and the Future team will work together in 2022 to hammer out a more consistent e-commerce strategy. CinemaBlend was also given a set of revenue targets for this business at the start of this year, but the company declined to share what those were. However, this is exactly the kind of incremental revenue opportunity Future is prioritizing when assessing potential new brands in its m&a strategy in 2022.

The strategy has impressed Ken Harding, senior managing director of the Telecom, Media & Technology industry group at FTI Consulting, who credits European-based publishers for taking big steps to grow business, especially when they buy up American-based publications.

“Europe has always been [more] consumer-led than in the U.S. so they may feel that they have more sophisticated tools for a consumer economy than the U.S.,” said Harding. “They think they can do some things quicker than the U.S. has been doing them.”

Crossed-up measurement

The key hits:

• TV networks, agencies and trade organizations all have efforts underway to arrange new measurement systems.
• These various efforts seem conflicting but are designed to be complementary.
• The Media Rating Council may be ultimately responsible for streamlining the measurement situation.

Honestly, though, how is TV’s measurement situation going to shake out? By that, I mean: how are all these different measurement initiatives that are sprouting up not going to step on each other’s toes to the point of tripping up the industry as it attempts to move forward?

In the wake of Nielsen’s Media Rating Council accreditation being stripped last September, companies and organizations across the TV advertising industry are attempting to develop the new measurement landscape. TV networks groups like NBCUniversal, ViacomCBS and WarnerMedia are assessing measurement providers and arranging new options for advertisers. Agency groups like Dentsu and Omnicom Media Group are doing the same. And then there are intermediaries like trade bodies the Association of National Advertisers (which represents advertisers) and the VAB (which represents TV networks) that have formed their own measurement initiatives/task forces/things. 

It’s all very confusing. So again the question: How can get everyone get on the same page when so many seem to be drafting their own playbooks? The answer, based on recent conversations with industry executives, seems to be that the various outfits may be drafting their own playbooks but they will all be bound together by the ANA in a cross-media measurement anthology.

“The ANA is distinctly driving cross-media measurement,” said ANA group evp Bill Tucker, who oversees the trade organization’s measurement efforts, including its own Cross-Media Measurement program. “Our mission is to create a measurement solution that provides a complete measure of all ad exposures: cross-media reach and frequency metrics that incorporate content quality into that. That’s it.”

That’s a lot. But from talking with executives at TV networks, agencies and measurement providers, the aim seems somewhat simple. Here is how things are supposed to play out, from my understanding.

TV networks will evaluate dozens of measurement providers and determine which they will support for which types of measurement, ex. Nielsen and TVSquared for reach and frequency and Comscore and VideoAmp for multi-touch attribution. So too will advertisers and agencies. Everyone will have their rosters of approved measurement providers and play individual match games when negotiating ad buys.

Then trade organizations will be tasked with reconciling the different measurement providers, especially when it comes to measuring how many people may have seen an ad and how often they may have seen it. The VAB will be working with OpenAP — the tech platform co-owned by TV networks Fox, NBCUniversal, ViacomCBS and soon Discovery — to devise the technical means of reconciling the TV and streaming data that will be plugged into the ANA’s cross-media measurement system, according to Tucker.

“The long and short of it is the VAB and the ANA will be the beneficiaries. Those task forces will be the beneficiaries of the actual work done [by ad buyers and sellers assessing and agreeing upon which measurement providers to support],” said Kelly Metz, managing director for advanced TV activation at Omnicom Media Group.

Let’s be clear, though. Straightforward as all that may sound, the actual undertaking will likely be much more complicated. There remain issues like needing to square the different definitions of a household that companies use to base their reach-and-frequency measurements (stay tuned for more on that in an upcoming Future of TV Briefing edition). “We need some definitions around what counts for an impression,” said Mike Law, U.S. CEO of Dentsu’s Carat.

Enter the outfit that played a big part in igniting the present measurement situation: the MRC. If the VAB and ANA are to be the stewards of standardization, the MRC is seen by industry executives as the ultimate arbiter, with its accreditation ensuring that all the pages in the new measurement playbook are written in the same language.

“It’s worth pointing out that the MRC accreditation issue is what kicked this whirlwind off. And to be fair to Nielsen, they’re the only TV measurement that has ever been accredited,” said Brian Hughes, evp and managing director of audience intelligence and strategy at Magna.

What we’ve heard

“One-quarter of sports fans — 26 percent — watch esports, and it’s continuing to grow.”

— Asaf Davidov, vp of measurement and insights for Disney Advertising Sales

Connected TV platforms’ latest counts

Roku’s platform chief Scott Rosenberg is departing at a time when the connected TV platform war is approaching a new pitch. Roku’s platform may have dominated U.S. smart TV for much of last year, but Amazon and Google have put out new numbers about their respective footprints.

• More smart TVs featuring Roku’s CTV platform were sold in the U.S. last year than those featuring any other CTV platform, according to Roku, citing data from retail tracking service NPD Group. The big caveat is that the data only covered Jan. 3 through Dec. 4, and therefore doesn’t include most of the final month of 2021.
• More than 150 million streaming devices carrying Amazon’s Fire TV platform have been sold to date.
• Each month, more than 110 million streaming devices actively use Google’s Android TV or Google TV platforms.

Let’s be clear that these are squishy numbers that do not lend themselves to apple-to-apple comparisons.

• The Roku stat leaves out almost the entire month of December and is limited to the U.S.
• Amazon’s device count spans any Fire TV-powered device ever sold, which means it can include devices that are no longer active.
• Google’s figure, meanwhile, seems to be the clearest signal of the lot, but it’s not as telling as saying how many households or active accounts the company’s CTV platforms have.

No matter. The company-provided numbers may not paint a clear picture of the CTV platform “Game of Thrones” at the moment, but the cherry-picked counts may provide some indication of where the companies feel their strengths — and weaknesses — are. For example, a year ago Amazon was touting its monthly active user count for Fire TV.

Numbers to know

73.8 million: Number of global subscribers that HBO and HBO Max had at the end of 2021.

1.1 million: Number of streaming pay-TV subscribers that FuboTV had at the end of 2021.

-637,000: Number of subscribers that U.S. pay-TV services lost in the third quarter of 2021.

$1.5 billion: How much money creators using Patreon’s subscription products earned from December 2020 through December 2021.

$27.5 million: How much money TikTok stars Charli and Dixie D’Amelio made in 2021.

What we’ve covered

Why CES panelists believe the blockchain will benefit the creator economy:

• Entertainment companies are using NFTs to give audiences a sense of show ownership.
• Digital animated series “Stoner Cats” was only available to viewers who purchased the corresponding NFT.

Read more about blockchain here.

NBCUniversal’s first-party data platform keeps pace:

• NBCUnified will launch in the second quarter of 2022.
• The conglomerate’s NBCU ID spans 150 million individual consumer IDs and 50 million household IDs.

Read more about NBCUniversal here.

How do esports organizations generate revenue?:

• Esports orgs prioritize three primary revenue sources: esports, entertainment and apparel.
• How the three revenue sources break down varies by esports org.

Read more about esports organizations here.

What we’re reading

The making of a YouTube child star:
Ryan Kaji is among YouTube’s biggest stars and brightest successes, according to The New York Times. He has expanded into merchandising with Walmart and Target and broken into traditional TV with Nickelodeon, and he generated more than $250 million in revenue last year. He’s also 10 years old.

Omicron puts a crimp in Hollywood productions:
For the second year in a row, a surge in COVID-19 cases over Christmas and New Year’s has pushed TV and movie productions to pause or postpone filming this month, according to Los Angeles Times.

What’s a traditional TV network worth today?:
The CW’s role as linear distribution outlet isn’t as important to WarnerMedia and ViacomCBS as they prioritize their respective streaming services, which is why they’re looking to sell the network they co-own, according to The Wall Street Journal.

“Yellowstone” is a traditional TV hit and streaming miss for ViacomCBS:
It’s been a while since traditional TV has had a zeitgeist-seizing hit on the level of “Game of Thrones” or “This Is Us.” “Yellowstone” seems to be just that, which is good for show owner ViacomCBS but potentially even better for streaming rival NBCUniversal — which is reportedly paying ViacomCBS $1.5 million per episode to stream previous seasons of “Yellowstone” on Peacock, according to Puck.

This conversation has been edited for clarity and space.

How is OOH pulling off this resurgence from out of the pandemic?

I’m coming from the IAB and digital, where obviously growth has been massive, but we were starting to see some problems on the horizon. I think the growth parameters [for OOH] were there before the pandemic. Then the pandemic hit, and that first looked like a disaster for the industry, right? No one’s out of their home, and how are you going to sell it? The pandemic may actually have served us well in the end, because it forced the reset and helped drive the development of programmatic. Programmatic is really where most of the deals came from, at least for the national buys. Advertisers and verticals that may not have been as engaged in the past are now coming in. With everything else that’s going on in the world around issues with privacy, brand safety, fraud, cookies going away etc. — I don’t think it’s going to change advertising super drastically, but I do think it’s playing into the hands of out of home.

In the push to omnichannel marketing and measurement, how much does OOH remain an outlier? 

It depends on the advertiser, right? There are advertisers fully embracing out of home and are deep in and treating it as part of a broader multi-channel strategy. Then there’s a lot of advertisers that see us as a medium for building brand, launching a product, creating a spectacle, whatever it might be. I think the connection between social and out of home is huge. We’ve seen that recently with music launches, such as Adele’s launch of her 30 album or the Drake album that just launched. They’re buying some really well-thought-through billboards or other types of out-of-home inventory to drive awareness, and then that transports into social media. Especially when you’re working through celebrities, you get their followers as well. It’s the kind of glue that can tie all your creative together and create a lot of efficiencies in your media buy as well.

What’s the biggest challenge OOH needs to overcome? What are the potholes ahead? 

As we are building for the future and changing our medium, the way it’s being transacted and the way it’s being presented, we need to try and avoid some of the problems that exist within digital. They easily can get there when you start transacting more programmatically, or when your CPMs go up. All of a sudden [there’s] an interest in our industry that could hurt us. It’s being protective of what we have, protect[ing] the value while growing, and making sure that we’re not falling into some of the same pitfalls that “traditional” digital [went through]. We want to keep the value chain reasonably clear, and not add a lot of vendors that increase the cost and confuse [the marketplace]. 

What do you expect from the agency community? 

Smart advertisers should have out of home as part of their strategy. And therefore agencies need to lean in more on understanding how out of home fits within a broader media buy —what it can do, what it can’t do. These specialist agencies within the holding companies, and some of the smaller out-of-home [shops], they know the medium well, they understand the strengths and can cater to it. I think it’s more about leaning in with us as we’re creating the standards, letting us know how they want to buy and sell. I’m very encouraged by [the fact that] some of the leaders of the out-of-home specialist groups are getting more immersed in the broader holding company structure. I think that can be really good for our media.

What are your predictions for 2022? 

I’m a big believer in commerce. That big ad for a musical artist or a fashion brand or something on the [Las Vegas] Strip or in Times Square gets seen by someone who posts it, then gets shared by millions. Now with social listening, you could see where people are listening to this message. Through programmatic, you can then push that message back out into local markets to reinforce the ad and even add commerce opportunities through QR codes or other ways of engaging with consumers.