Month: February 2022

Super League CEO Ann Hand noted, citing internal figures, that organic and inorganic growth has led the company to reach over 75 million players per month. That has created “unique, valuable inventory and reach specifically in metaverse gaming platforms,” she added.

“Next to the actual publishers who make those games, there aren’t a lot of companies out there that can claim that type of reach.”

Inorganic growth has indeed been a major driver of Super League’s expansion in recent years. Super League Gaming was founded in 2014 as an esports tournament platform, but a string of acquisitions has transformed it into a holding company with interests across the gaming community, including metaverse platforms such as Roblox and Minecraft. Super League’s trajectory underlines the value of mergers and acquisitions in helping esports companies diversify their revenue streams.

In 2018, Super League acquired Minehut, the world’s largest Minecraft server host community; last year, the company purchased Bloxbiz, a metaverse-focused ad tech firm that connects brands to users in over 150 Roblox experiences. Bloxbiz was already working with Venatus before the acquisition, and the companies’ relationship has only deepened in recent months, with Venatus relying on Bloxbiz to provide brand-safe metaverse experiences for a roster of advertisers that includes brands such as Hasbro and Paco Rabanne. “It’s over 150 games, but they’re quality games; we know where we are,” Gay said. “I know that when Hasbro comes to me — and we’ve talked to them about advertising within Roblox — it’s safe.”

Super League’s offerings in Roblox and Minecraft are similar to in-game ads inside other titles; they’re intrinsic, taking the form of objects such as billboards distributed throughout virtual space. But as Roblox embraces its role as a metaverse platform, ads in Super League’s metaverse inventory are also in-metaverse ads that exist alongside and in tandem with users’ virtual experiences, rather than directly inside them. Many observers have drawn connections between the nascent days of the metaverse and the early era of social media; Drozdov believes the same parallels exist in the advertising space. He and Gay anticipate that their metaversal ad offerings will eventually be seen as no different than banner ads on traditional websites. “Brands should really be thinking of Roblox kind of like the early days of Facebook,” Drozdov said. “It’s not a place to just run ads; you can also build a brand presence there.”

Some brands are already building a presence in Roblox by inserting branded assets into pre-existing experiences or building dedicated brand worlds within the platform. Drozdov believes Super League’s ad inventory is a lower lift for brands looking to jump into the metaverse. “We can tell you a strong estimate of how many people you’re going to reach in a certain amount of time.”

As the metaverse takes shape and the user bases of platforms such as Minecraft and Roblox age into advertisers’ coveted 18-to-34 demographic, Super League and its partners are well-positioned to reach these users on their native platform — and brands are already taking notice. The holding company model has served Super League well. “For us, this has become one of the most important strategic drivers of the year,” Hand said. “With this massive amount of reach, finding ways to smartly leverage others to sell out this international inventory has become critical.”

And yet, they’re popping up all over the decentralized internet in order to fund larger companies, raise money for blockchain-based projects, or incorrectly buy a first-edition of a book for millions of dollars with the expectation that it will also acquire the copyright for said book. Needless to say, these organizations have a lot of resources. Here’s what you need to know about DAOs. 

First off, how do you pronounce DAO?

“Dow.”

So, what is a DAO? 

A decentralized autonomous organization is exactly what the name says; a group of people who come together without a central leader or company dictating any of the decisions. They are built on a blockchain using smart contracts (digital one-of-one agreements). Members of DAOs often buy their way in, most of the time purchasing a governance token specifically for the DAO that gives them the ability to vote on decisions that are made around how the pool of money is spent and managed. These groups can be made up of people from around the world, who often communicate on Discord channels.  

A DOA has a “completely flat hierarchy,” according to Jason Yanowitz, co-founder of crypto trade publication Blockworks. “It’s a way to govern people differently around a shared balance sheet.” 

What does a DAO do? 

Each DAO has a different mission, whether it is single-purpose or part of a larger project, and can be associated with any number of industries. 

Some of them are based on personal interests, such as the ConstitutionDAO, which banded together in the hope of buying one of the original copies of the U.S. Constitution from Sotheby’s last year. The group ultimately found out it was not the highest bidder and ended up losing the auction, but members were able to receive a refund of their initial investment. 

Others have grander goals that involve essentially operating or running a business as a group. One example is Mantra DAO, which is a community-governed decentralized finance platform that allows people to stake, lend and borrow their crypto assets. 

When were DAOs first created? 

The first DAO – simply called The DAO – was created by a company called Slock.it, a German-based developer that was built on top of the Ethereum blockchain and is working to connect physical world transactions to the blockchain, thus enabling people to rent, sell or share their property without a middleman. 

In early 2016, Slock.it wanted to find a way to raise money, according to an interview with the company’s founder Christoph Jentzsch from 2018, and in April created a DAO, which was akin to a Kickstarter or GoFundMe. The distinguishing factor: the DAO gave all of the investors/members a vote in the decisions the company makes when spending the raised capital. 

Over time, it expanded into a decentralized version for a venture capital fund and held approximately 14% of the total amount of the Ethereum cryptocurrency that existed at the time, according to The Economist. This made it the largest crowdfunding in history as of 2016, having raised over $150 million worth of Ether from more than 11,000 members between May and June, according to Coindesk. 

But by June of that year, the DAO was hacked and lost about $50 million (about 3.6 million ETH at the time). Surprisingly, Slock.it didn’t dissolve after the hack, but the DAO never regained its original status. 

So are all DAOs branched off from the original DAO?

No, the term DAO has since been adopted by other companies, blockchains and crypto enthusiasts and has become more of a descriptive acronym than an actual name. 

What will DAOs mean for the media and marketing industries? 

Remember, DAOs have a lot of money, crypto or otherwise, that they’re willing to spend if the majority of the group has been persuaded. The majority rules are set within each DAO.

Some publishers, like Blockworks, have already begun pitching DAOs on advertising opportunities, such as event sponsorships, seeing lucrative potential. 

“DAOs are becoming the new institutions. There are DAOs with more than $10 billion in their treasury [and] media companies have not recognized this,” said Yanowitz. He’s in the process of having Blockworks’ sales team learn how to sell to a DAO Discord channel. 

Another added value of a DAO and web3 is the ability to build community, said Amanda Cassatt, CEO and co-founder of web3-based marketing agency Serotonin. DAOs represent “a powerful alignment engine to collapse the categories of user or buyer, company or team, and investor into a single group that’s aligned and part of a community that cares about a certain artifact or a certain experience. And [they’re] all participating together,” she said. 

Though neither party would disclose the financial terms, the partnership gives Omnicom a first crack at Affinity’s purchase transactions and purchase-based media scoring ability, the latter of which Affinity Solutions CEO Jonathan Silver likened to “a FICA score for media,” specifically cross-channel media inventory. Essentially, Omnicom clients will be able to evaluate and optimize their marketing investments based on actual buyers and their level of spend across a range of ad categories. “This means being able to use deterministic data that’s very fresh — literally yesterday — to give advertisers the opportunity to make better decisions,” said Silver.

Until this deal, Omni was able to determine consumers’ propensity to purchase but didn’t have purchase data that spans all major areas, said Clarissa Season, Annalect’s global chief experience officer. “We knew that somebody might have bought Hidden Valley Ranch for our Clorox client, but we didn’t necessarily know where they bought it — Target, Costco, Albertsons or Gristede’s?” said Season. “So this data set for us really helps to fill in the picture of consumer purchases.”

It’s a step forward in media agencies’ efforts to uncover deterministic outcomes for their clients, said Season. “The reason for this partnership for us is really about better outcomes that are core to how we think about the Omni platform, which we built to provide better outcomes for our clients.” She added that can include better and more relevant ad experiences, which can lead to more purchases as well as finding better efficiencies.

Asked how this partnership stacks up against IPG’s ownership and use of Acxiom’s massive consumer database, Season pointed to a few differences. “Acxiom doesn’t have the same level of granularity as it relates to credit card data… Acxiom [has] more credit bureau data. So it doesn’t really get into the brands [consumers] are buying at the frequency of purchase,” she said.

Silver, who said he didn’t want to disparage another data competitor, pointed out that “most of Acxiom’s data is proxy data. We can bypass the proxy and go right to whether the people who are buying the product are in-market for your products and services.” He was quick to add, though, that Affinity’s data-set is fully anonymized and aggregated so as to protect consumer privacy.

Why choose to work exclusively with Omnicom instead of sharing the data solutions with all the holding companies that might want access to Panorama? “It was the right decision for vision, for ease of integration and a desire to collaborate together and move quickly and in multiple ways,” said Silver. “There’s a lot that we’re doing with Omnicom to really differentiate the offering even ultimately when it becomes more available to [rest of] the industry.”

All of this has been buoyed by brands doubling down on their digital media spending, outstanding success stories — just look at how The Trade Desk’s market capitalization (about $40 billion) is more than double that of PG, Publicis Group, and WPP — not to mention special purpose acquisition companies (SPACs).

However, everything is cyclical and not everyone should be in a rush to jump on the gravy train, according to Michael Barrett, CEO of publicly-traded SPP Magnite. He imparted his opinion when participating in a panel session at Industry Preview, a conference hosted by AdExchanger earlier this week.

Quizzed on what advice he would give fellow CEOs eager to list publicly, he said, “If you don’t absolutely need the money, wait… too many [ad tech companies] went out last year, and that’s not a pejorative statement, they can all be wonderful companies.”

Panel moderator Terence Kawaja, CEO of LUMA Partners, noted how there is speculation that up to eight companies in the sector are mulling a debut on the public market in the coming months. This prompted Barrett to further clarify his position, “Just from a dynamic standpoint, the amount of money a Fidelity can invest in ad tech… they don’t need another eight choices, so my advice would be if you don’t need the capital right now, wait.”

Fellow panelist Mark Zagorski, CEO of DoubleVerify, a content verification outfit that debuted on the NYSE in April 2021, similarly advised caution. “If you’re shooting for a window, that’s not what you should be shooting for,” he said. “You should be shooting for getting behind your company, and just getting it into the right place to go public, period, because good companies can get out at any time.”

Also participating in the discussion was Lisa Utzschneider, CEO of Integral Ad Science, a measurement company that was listed on the Nasdaq in June 2021, who similarly advised clarity of purpose over speed to market. She added, “Having a clear, defined vision, and solid plan [is needed] and again, don’t rush.”

On Feb. 23, Magnite reported revenues of $161 million for the fourth quarter of 2021, representing an increase of 97% year-on-year, an uptick driven by the company’s pursuit of the fast-emerging CTV market which now contributes to more than 40% of its revenue.

Meanwhile, Integral Ad Science and DoubleVerify are scheduled to announce their earnings for the same period on March 3 and March 8, respectively.