Month: March 2022

Misfits’ new team comes with new brand partners for the company: gaming peripherals brand HyperX and hair products company Splat. Both sponsors were signed specifically for Misfits’ non-male Valorant team, said Misfits CEO Ben Spoont, who did not share the terms of their agreements.

A partnership with Misfits’ non-male Valorant team lines up with HyperX’s broader commitment to support women in the gaming community, which the company said was a priority last year. “As HyperX continues to activate with teams and organizations that align with inclusivity and diversity leadership activities in the industry, Misfits reached out to HyperX with aligned values in mind,” said HyperX esports sponsorships supervisor Kitty Cao.

Misfits Black will heavily feature its brand partners in its original content; in the team’s announcement video, some of its members can be seen wearing Splat products. “We recognize that our partners are also seeking these types of marketing opportunities, and we’re thrilled that we can create a win-win,” Spoont said.

Misfits is the latest esports org to bring on new partners via its non-male teams. In February, G2 Esports signed a partnership with computer hardware manufacturer Seasonic that was “equal terms,” meaning both the org’s male and female Valorant teams received the same partnership terms and will be equally involved in Seasonic-related activations. “The G2 female Valorant team, known as G2 Gozen, comprises some of the most successful and prominent female esports talent within the industry,” said G2 commercial director Sabrina Ratih. “We wouldn’t accept anything less than an equal terms partnership in this instance.”

Seasonic explicitly signed the partnership because of G2’s presence in female esports. “For a long time, professional esports has been a male-dominated sector. Undoubtedly, there are many females who are gaming at higher levels, yet they remain underrepresented in the competitive arena,” said Seasonic global marketing head Walter Sun. “When we heard that G2 will have an all-female Valorant team, we immediately wanted to be part of this new direction.”

The proliferation of all-female esports teams — and their brand partners — is a relatively recent phenomenon. Part of this growth is due to the rise of Valorant esports; the competitive Valorant scene is markedly more diverse than some other esports communities due to Riot Games’ support of initiatives such as VCT Game Changers. However, some orgs have fielded female teams since long before the 2020 release of Valorant. For example, Dignitas acquired its all-female Counter-Strike team in 2017, though most of the team’s players made the switch to Valorant three years later. “They’ve been one of the few teams that have effectively changed games and remained as competitive,” said Dignitas svp of partnerships John Spiher.

Dignitas’s experience in the female esports space has led it to sign many partnerships with brands looking to reach this specific subset of the gaming community. Spiher flagged the org’s partnership with makeup brand NYX, inked last year, as a recent case. “While makeup absolutely is for everyone, a disproportionate part of their consumer base are women. Cosmetics are such a core part of how our Valorant team looks good, feels good, plays good,” Spiher said.

While Spiher is encouraged by equal-term deals such as the aforementioned G2–Seasonic partnership, he said that such equity has long been the standard for Dignitas’s teams, regardless of gender. “If that’s not the standard, then boy, that seems like a bigger problem for your organization.”

Unlike the traditional sports scene, success in esports has more to do with a player’s strategic mind and reaction time than their physical size or strength. Many experts believe that the significant gender imbalance in the industry has more to do with cultural blockers preventing women from engaging with the scene, such as misogynist harassment, casual sexism and widespread misconceptions about women’s lack of gaming skill, rather than any inherent lack of gaming ability on the part of female players. The marked rise in the number of professional all-female esports teams in the space in recent years supports this notion. As women become increasingly prominent in esports, brands are beginning to take notice of the teams that are successfully capitalizing on this demographic shift.

“Crazy concept: women are important,” Spiher said. “I have no idea how this hasn’t been a higher priority for more organizations.”

Up in the air

The key hits:

• What measurement providers will gain adoption?
• Are business outcome guarantees back on the table?
• Was flexibility just a fad?

This year’s TV advertising upfront market seems set to be unlike any other — which is a description that was applied to each of the past two annual negotiating cycles. And yet it’s true (once again). 

There remain the trends that were top topics during the most recent rounds of advertisers and their agencies haggling with TV network owners and streaming-only sellers, like the erosion of linear TV audiences and rise of streaming viewership. There also continue to be recurring questions, like how much higher can linear TV ad prices rise and when will streaming ad rates drop by comparison or when will programmatic gain preference. And then there’s the measurement makeover, which is what stands to make this upfront a singular cycle (at least until next year).

So, with preliminary discussions between buyers and sellers already starting up in recent weeks, here are a few questions on the minds of both sides heading into this year’s negotiations.

What measurement providers will gain adoption?

Measurement is the major question heading into this year’s upfront negotiations and by a wide margin. “Measurement is the biggest one,” said one agency executive. 

“I spent the bulk of the past two weeks talking about alternate campaign measurement. That is the topic of this upfront,” said a second agency executive.

The main measurement question surrounds which are the measurement providers that advertisers and TV network owners will adopt as alternative currencies to Nielsen. Both buyers and sellers still expect Nielsen to be the primary currency, but they will be setting the non-Nielsen providers as “shadow currencies” in order to put in place baselines for future upfront commitments. 

However, some advertisers may opt to adopt the alternative currencies as primary currencies because they are new or newer to the upfront market and may view them as a way to somewhat future-proof their upfront prices by setting rates on these alternative currencies at a time when the value of an impression, for example, is still being calculated and may only appreciate in the years to come.

“If you’re a cryptocurrency or a DTC [brand] and never worked in TV, it’s a good opportunity to bring those clients to the forefront and establish their bases on a new currency,” said a third agency executive.

Are business outcome guarantees back on the table?

Prior to the pandemic, advertisers and TV networks had begun including components in their upfront agreements that guaranteed campaigns would generate specific business outcomes, like a certain percentage lift in sales. Then the pandemic happened, and no one was trying to make any kind of assurance.

Now business outcome guarantees are being put back on the negotiating table. Sort of. Agency executives plan to seek out business outcome guarantees for some clients, and TV network executives said they plan to acquiesce to those requests. But that’s kind of the extent of it at this point.

“We’re more than open [to business outcome guarantees],” said one TV network executive. However, with the pandemic putting a giant asterisk on the historical business numbers that would be used to calculate those guarantees, “the benchmarks are getting tricky. Whether it’s web traffic or foot traffic or some other metric, I don’t know what to compare to.”

Was flexibility just a fad?

Two years ago, the big buzzword surrounding the upfront negotiations was flexibility. Advertisers were dealing with the pandemic’s impacts on their businesses and seeking options to make their annual commitments more fungible. Two years later, flexibility seems poised to be much less of a focal point. 

While some advertisers have needed to postpone or cancel portions of their current upfront commitments in the wake of the omicron variant, “I haven’t seen [the number of advertisers exercising their cancelation] options go through the roof this year. It’s been pretty stable,” said the TV network executive. 

What we’ve heard

“I find Shorts to be a real distraction to the YouTube experience. It seems so out of place on desktop or [connected TV]…. They haven’t figured out how to optimize it on a per-platform basis.”

— Digital video executive

Is long-form vertical video financially viable?

Instagram’s initial attempt to make long-form video monetizable has officially failed, the Meta-owned platform announced on Feb. 28. On the same day, TikTok said it is extending videos’ maximum lengths to 10 minutes.

These moves raise the question of whether video makers have any hope of ever seeing long-form vertical video become financially viable.

Publishers’ underwhelming experiences with Instagram’s in-stream video ad program would suggest the answer is no. However, publishers’ and producers’ experiences with Snapchat signal there is hope.

“The numbers are there and the revenue is there. We’ve had months where we’ve hit $40,000 a month in profit on Snapchat just off one show,” said Jade Watson, founder of SickBird Productions, which has produced Snapchat Discover shows with publishers including Doing Things Media and The Shade Room.

That’s good money. In my wealthiest dreams, $40,000 will always be a good amount of money. But what’s worth noting, as Watson explained, is a big reason that SickBird is able to have months when it pulls $40,000 in profit from Snapchat is because it can keep its production costs pretty minimal by maintaining a lean team of one to two editors and shooting shows on an iPhone.

So what has Snapchat done that Instagram did not and TikTok may need to? Well, through Discover it seems to have established a destination for people to intentionally seek out these long-form videos where they would be willing to sit through ads to watch them all the way through. What a novel idea.

Unfortunately for long-form vertical video makers, Snapchat may remain the outlier when it comes to generating revenue directly from these videos. TikTok has not said if, when or how it will open up a revenue-sharing program. Meanwhile, Instagram said that later this year it will add a revenue-sharing program for Reels — which likely ape Facebook’s test of putting display ads atop Reels — but didn’t say anything about updating its monetization approach to long-form videos.

Numbers to know

22 million: Number of subscribers that Discovery has across its direct-to-consumer streaming portfolio, which includes Discovery+.

-70,000: Number of streaming pay-TV subscribers that Sling lost during the fourth quarter of 2021.

13.6 million: Number of streaming pay-TV subscriptions that were active in the U.S. in 2021.

38%: Percentage share of Magnite’s revenue that came from connected TV in the fourth quarter of 2021.

What we’ve covered

Condé Nast inks deal with TikTok to monetize exclusive content:

• Vogue and GQ will make content exclusively for TikTok.
• Condé Nast’s and TikTok’s sales teams will work together to secure deals with advertisers for that content.

Read more about Condé Nast’s TikTok deal here.

A Q&A with Leonard Edwards, Evil Geniuses’ new head of global partnerships:

• The esports organization hired the veteran sports executive in February.
• While working for the Philadelphia 76ers, Edwards worked on partnerships for the team’s esports org Dignitas.

Read more about Leonard Edwards here.

How Abercrombie & Fitch is using TikTok to reintroduce the brand and ‘reflect back who our consumer is today’:

• The 130-year-old brand is using TikTok to reintroduce itself to millennial and Gen Z audiences.
• Abercrombie & Fitch is hiring TikTok creators for sponsored posts and running ads on the platform.

Read more about Abercrombie & Fitch’s TikTok strategy here.

What we’re reading

Warner Bros. Discovery’s streaming tiers:
After Discovery and WarnerMedia merge, the combined company plans to operate a single streaming service that will feature three tiers: a paid, ad-free one; a paid, ad-supported one; and a free, ad-supported one, according to Bloomberg. In other words, a Discovery+-HBO Max hybrid that mirrors Peacock’s business model.

Nielsen’s MRC accreditation:
Nielsen thinks it will be able to regain Media Rating Council accreditation by the middle of the year, according to Variety. That timeline may or may not mean Nielsen will be accredited before this year’s upfront negotiations wrap up, though that may not matter since none of the other currency contenders are currently accredited.

NFL Sunday Ticket’s streaming suitors:
Amazon and Apple are the leading candidates to secure the rights to the NFL’s Sunday Ticket package of out-of-market games, according to Sports Business Journal. Disney remains in the running, but Amazon and Apple are reportedly willing to dig deeper into their respective pockets.

Netflix’s India issue:
Netflix only has an estimated 5.5 million subscribers in India despite the streamer setting out years ago to convert 100 million people in the country into subscribers, according to Financial Times. What seems to be setting back is Netflix is not taking an India-specific approach but instead applying a generic international strategy to the country.

The crisis in Ukraine is also unfolding with a new lens on brand safety that advertisers have put on during the pandemic.

The impact on publisher revenue

After dealing with multiple instances of heightened brand-safety awareness around news content over the last two years (the COVID outbreak, the Stop the Steal movement, the murder of George Floyd and the Jan. 6 storming of the Capitol), media agencies are generally trying to navigate their clients more carefully through news content rather than just shutting them down altogether. 

Joshua Lowcock, global chief media officer at IPG’s UM Worldwide, said his counsel to clients who ask (UM’s clients include Behr paints, Grubhub, Enterprise Holdings and retailer H&M) is to “stay on quality, legitimate news” content. “We continue to encourage clients to support journalism and news. No one is hitting pause on spending given [that] the invasion hasn’t resulted in domestic stay-at-home orders, close of retail trade, to name a few.”

But as with other holding company brand safety specialists, that’s not a blanket decision given the specific nuances of each client. For example, Lowcock said he has asked CNN not to run chyron overlays or picture-in-picture content with ads featuring IPG clients “out of respect for the gravity of the invasion.”

The impact on publisher revenue

Publishers are already feeling the impact. One source in ad ops at a current affairs title told Digiday content discussing the conflict saw CPM rates down by approximately 20% compared to average. They did not provide exact figures.

Other advertisers are examining their exposure to Russian businesses and some are seeking assurances that Kremlin-backed actors don’t use the sprawling automated ad tech ecosystem as a conduit to infiltrate their websites with malware or spread misinformation.

Cory Schnurr, head of marketplace innovation at The Media Trust, a company that helps publishers filter such attacks, said concerns have spiked since the beginning of the week. “Over the weekend we saw Facebook and Twitter trying to shut that down, but with the open programmatic ecosystem that’s a lot more difficult because things [like bids from unknown actors and reselling] are coming from so many different angles,” added Schnurr.

Craig Hughes, vp of corporate development and strategic partnerships at Outbrain, an ad tech company that works with publishers such as CNN, said advertisers are starting to think about media responsibility in the same way they do corporate responsibility.

“We need to think about a few things such as how to handle decisioning around where and how to place ads,” he said. “What constitutes brand safety is easy enough but brand appropriateness, more challenging.”

To this end, Outbrain is poised to launch a tool, dubbed Quality Rating, that will attempt to remedy this quandary using an “algorithmic solution to balance the need for revenue of the publisher with quality and relevance [for advertisers],” according to Hughes.     

Should advertisers fund the news?

It’s one of the main questions advertisers are grappling with right now. Is supporting publishers more important than prioritizing brand standards around the suitability of the content their ads appear against. Do those advertisers have a moral obligation to support news publishers through advertising?  

Both Lowcock and Ryan Eusanio, his counterpart at Omnicom Media Group, said they strongly believe in supporting newsgathering, so long as it’s legitimate.

“I’ve told my teams as they’re talking to clients, there are journalists literally risking their lives right now in Ukraine to report objectively to the rest of the world what is going on,” said Eusanio, managing director of digital activation with Omnicom Media Group. “And when we just completely pull back from news, we turn our backs in a lot of ways to the companies that are promoting serious quality journalism. But this isn’t for every client.”

In other words, it depends on how much specific advertisers care about certain publishers and don’t want to see them go bankrupt. Steven Brill, co-CEO of NewsGuard, which evaluates 4,200 news sites for evidence of misinformation and whose co-CEO is former Wall Street Journal publisher Gordon Crovitz, said most agencies he’s dealing with understand it’s better to work with an inclusion list, which tells them which sites are brand-safe.

To Brill’s point, the more sites that are deemed brand-safe help to drive CPMs down for those advertisers still willing to spend, while supporting quality journalism. Brill said he has struck partnerships with IPG, Omnicom and Publicis to use NewsGuard’s BrandGuard service, which offers both inclusion lists and exclusion lists.

The case for brand safety controls

It should be uncontroversial to say advertisers have every right to avoid negative or anxiety-inducing content. After all, advertising is fundamentally about creating psychological associations — a point brought into sharp focus last week when a light-hearted ad for restaurant chain Applebee’s ran during CNN’s coverage of the invasion.

The quandary also raises over content-verification companies, many of which have achieved multi-billion dollar valuations. Sources regularly cite dissatisfaction among media buyers over solutions currently on offer. The frustration, goes the thinking, is that platforms have been reactive, not proactive, to the point where they’ve allowed legacy open web tools to determine how safe that UGC content is for ads, which has led to limited campaign insights and blunt targeting.

“We’re talking about this now, and I’m glad we are,” said Mike Richter, vp global revenue opportunities of CTV digital at Trusted Media Brands, suggesting that agencies and publishers could both appoint teams to oversee such decisions. “We need to come up with solutions for what’s happening now in the immediate, but I’m hoping this question is asked to everybody: ‘does the conversation stop when this time in history stops’?”

“We’re consistently hearing from our partners in the agency holdco’s that they’re not satisfied with the solutions from the vendors and that goes beyond independent ad tech,” said Hughes. “There’s a lot of frustration with the major platforms [like YouTube] they invest in, that always peaks around times like now.”

Has a line been crossed with misinformation?

PG’s Lowcock certainly believes so. And he squarely blames the ad tech community. “The ad tech ecosystem continues to both monetize and amplify Russian disinformation outlets,” he said. “In the past, it took U.S. Treasury sanctions to get them to take action. It’s a moral failure by ad tech not to demonetize Russian platforms and sit idly by as they weaponize the media ecosystem. Regulatory action is making an impact, including recent EU statements and last week, outreach by Sen. Mark Warner demanding tech CEOs take action.”

Lowcock also took aim at the social platforms for what he sees as token concern on their part: “They have not been as proactive with outreach as they should outside of platitudes about the human tragedy. Platforms have been forced into action given regulators have now stepped in demanding it.”