Month: May 2022

Standard Media Index (SMI), which analyzes marketplace pricing, analyzed the last two pre-upfront buying seasons, from October (when prior upfront deals begin to take effect) through February (in order to compare with the most up-to-date information from this February). As explained by Rick Bruner, the company’s head of insights and analytics, SMI derived what it calls an “effective CPM” (eCPM) or “delivered CPM” that takes into account the difference between the negotiated cost-per-thousand viewers rate charged by TV networks and the actual CPM buyers paid once the ad ran.

In short, eCPM pricing has gone up, due to the scarcity of inventory in linear TV. While that’s not a huge surprise, it’s causing a bottleneck in linear inventory — one that can’t easily be solved by moving video ad dollars to other non-linear, aka streaming, options, since they’re bought and evaluated differently.

It also means that total ad revenue for the linear networks continues to drop. According to SMI’s analysis (which does NOT include live sports inventory), linear upfront ad spend dropped from $2.6 billion in 2019-20 to $2.1 billion in 2020-21, and then to $1.7 billion in 2021-22. Unit costs during those same time frames dropped from an average $76,000 to $59,000 then a lesser drop to $55,000 in 2021-22. That led the upfront eCPM to rise by 148 percent when indexed over other programming in 2019-20, then by 154 percent in 2020-21 and 168 percent in 2021-22. 

“The eCPM should fairly express what the market is driving towards in the Upfronts, and we see [them] rising, but the actual unit costs for spots in general is declining. And that makes sense because the audience is declining,” said Bruner.    

Nicole McCurnin, director of advertising insights at SMI, noted that linear cable, which represents about 60 percent of market spend in TV, is showing the most pronounced increase in upfront eCPM versus scatter spend. 

“A lot of people look at the scatter to upfront ratio as informative for how negotiations will go in the current upfront,” said Bruner. 

What’s not clear, since the SMI data doesn’t get into it, is the softened first-quarter scatter market in TV. Bruner said March data will be in within the next week or so, to see what effect that softness will have on eCPMs as this upfront gets underway. 

But to others watching the numbers in the marketplace, something needs to change. “As the Upfronts progress, we need to keep an eye on how we’re leveraging the increased stability from these alternative providers,” said Howard Shimmel, head of strategy for predictive analytics provider datafuelX, “There is less linear TV supply now than at any point in my career. The reality is as supply shrinks the need for stability increases because networks don’t have units that they can misuse. Increased precision is only going to grow in importance, especially as outcome based buying advances.”

As Epic Games angles to be one of the primary builders of the metaverse, it has gradually evolved its strategy around Unreal Engine: once a mere game engine, the software is now used for a multitude of tasks throughout the professional world, including modeling automobile prototypes and designing clothes. Despite this impact, detailed knowledge of Unreal Engine remains relatively rare among non-gaming-endemic brands and marketers. 

The key details

• The non-exclusive partnership is an endorsement of the company’s game-rooted vision for the metaverse, but a WPP representative who spoke with Digiday on background said that “there is absolutely a blockchain/Web3 element [to the metaverse] as well.”
• Training will be split into three tracks: one for creatives, one for executives and one for media strategists. Per the WPP rep, the tracks are “tailored to the specific roles that they play on a client’s business,” with creatives learning how to work directly within Unreal Engine and executives learning how to guide and advise clients through the tool’s benefits. 
• Kieley Taylor, GroupM’s global head of partnerships, referred to GroupM’s involvement in the Epic partnership as taking the shape of “three different legs of the stool”: 
  • The SuperAwesome “curated safe space” collaboration is the most “pertinent and the one we have the most longevity with.” Clients are involved, but Taylor wouldn’t identify any due to sensitivities around children’s advertising. 
  • With Fortnite, there are “here-and-now” metaverse opportunities for GroupM brands (that she declined to identify) to develop immersive experiences into the game itself. “When we build something [for a client] in Fortnite, there is awareness of it, and it’s a successful activation for that advertiser in such a prominent title.”
  • With Unreal Engine, GroupM hopes to enable its clients to play with building assets “for purpose,” Taylor said, such as developing the types of ad specs that gaming environments require: avatars, likenesses, etc.  
• Smaller creator studios are becoming an important part of the metaversal ecosystem, inking their own independent deals with companies to create branded experiences inside platforms such as Fortnite and Roblox. However, WPP declined to comment on its future participation in this ecosystem.
• Though gamers are the first denizens of the metaverse — hence, WPP’s investment in in-game advertising specialist Anzu in late 2020, WPP believes that it is “an extremely high priority for a large number of clients spanning many different categories, including packaged goods, automotive, healthcare and entertainment” — not just the clients looking to reach younger audiences in gaming.

A broader push

This is not the first time Epic Games has partnered with an agency (in this case, an entire holding company) to raise awareness about the potential uses of Unreal Engine. In March, Epic announced a collaboration with the digital agency Collective and the United Kingdom’s Institute of Practitioners in Advertising, with the organizations jointly hosting an Unreal Engine workshop at the IPA’s headquarters in June.

The event sold out within a matter of days — evidence that brands and marketers are clamoring for the skill set that WPP and Epic hope to encourage through this partnership. “Whether people use our tools to then deploy somewhere that isn’t run on Unreal Engine, or whether they deploy them and create experiences that are distributed by us on platforms like Fortnite — we don’t mind either way,” said Rachel Stones, an Epic Games business development manager based out of the company’s Innovation Lab in London. “Our play is sort of long-term; we want to be kind of foundational as a software, as opposed to above-water.”

Not their first rodeo

The partnership represents WPP’s first foray into the metaverse at a company-wide level, but it’s not the first time a WPP agency has worked with Epic Games. Wunderman Thompson, a WPP agency, has been putting resources into its own metaverse knowledge, both through a virtual office in the metaverse platform Odyssey and its own partnership with Epic Games.

“Odyssey started off as a gaming company, then pivoted to events. They’re focused on b2b, so that combination really works for us,” said Wunderman Thompson global director and metaverse expert Emma Chiu. “And now, we’re actually introducing them to a lot of our clients after creating our own version of the metaverse.”

Wunderman Thompson’s use of a smaller platform such as Odyssey for its virtual office is evidence that the metaverse knowledge offered by WPP and Epic can be valuable for brands whether or not they are operating in Epic’s corner of the metaverse. As older internet users and non-gamers start spending more time inside virtual spaces, these skills are likely to become even more crucial with time.

“We’ve always been working on this application of real-time graphics and game engines for industry and brand use cases for a while now,” said Odyssey chief technology officer Maxime Long. “Coming into COVID, what we saw was that there was suddenly this influx of people that were trying to realize what this use of real-time graphics could be, for an office or for a brand-new use case like virtual events.”

When does the Metaverse go big-time? 

The time frame for every new innovation in media seemingly gets a bit more compressed, so how long does Taylor think the metaverse will take to evolved from nascent to mature option?

“In terms of scale, I would say it’s in a three-to-four-year timeframe,” she said. “Some of the factors at play are the fragmentation of entertainment, especially in the U.S. marketplace. And then the fact that the IAB Playfronts occurred is a really useful signal that more people are thinking critically about this place. With that comes things like measurement, third-party verification and ease of accessing inventory.”

Hands Down Agency, a U.K.-based brand design agency, has abandoned the idea of an office altogether, having been remote-first since its founding in 2013. With a core team of six and a community of 150 freelancers, Hands Down Agency has foregone office space and instead meets once a month for team bonding.

Digiday caught up with founder and CEO Emma Sexton to talk about company culture in a fully remote work environment, how trust in employees factors into flexible work and what the future of the office looks like.

This interview has been lightly edited for clarity. 

Hands Down has been remote since it started 10 years ago. What have you learned from that experience?

People want to be met adult to adult, [treated like adults]. That’s what I’m trying to do. I meet my team as an equal. They get 100% trust. They have to erode that trust. I don’t assume they’re shirking [responsibility]. I assume they’ve got the best intent. I don’t need to see them all the time. I look at their output. So the more they pull people back into the office, the more they’re in their comfort zone, and they don’t have to do the work to actually evolve their leadership style.

What does flexible work look like at your agency?

We have some very simple rules. Our clients expect us to be responsive between the hours of 10 a.m. and 5:30 p.m., Monday to Friday. So you have to respond to clients at those times or make the clients feel like their project is under control. You don’t actually have to do the work. The work can be done at any time. When you do remote working, you’ve got to have really good boundaries. But it’s important as a leader that I help my team put in good boundaries. So if they want to do their yoga class at 11:30 a.m. every Tuesday, that has to go in the [agenda] and it has to be non-negotiable, and the rest of the team has to respect that. I don’t want them to ask my permission, because I trust you to do the work and I trust that you’re leaving at 3:30 p.m. But everything’s under control. 

How do you manage team building in a totally remote environment?

The office just needs to have a different purpose. Coming together face-to-face is nice. I don’t think it’s critical for building relationships. We’ve now introduced a monthly meeting with purpose. We meet, we talk about the business, we do a bit of reflection on the past month, we set some goals that we want to achieve as a team for the next month. And then we go out and have a bit of a sociable evening. It’s thinking differently about spaces and how we use them and how we use existing spaces that are out there, like private dining rooms, or hiring different venues or hiring cool Airbnb locations. It doesn’t have to be an office. 

Where does the idea of flexible work intersect with womanhood and the so-called “Shecession”?

[Flexible work] makes a huge difference to people who are parents. Trying to get into an office for 9 a.m.? Kids are unpredictable. You take your kids to playgroup in the morning. Maybe they want to go in, maybe they don’t, maybe they’re having an emotional day. Imagine being a parent and being stressed and then you come into the office half an hour late. You do that three days in a row and then someone’s on your case. It just adds an extra layer of stress that you don’t really need.

Why do you think the industry, and working world as a whole, was hesitant to adopt flexible work pre-pandemic?

We’re brought up to think that people are lazy and don’t want to do work. It’s just not true. People like all different types of work. It’s not that people like work because they’re doing something great. People like to be part of a team. They like to have some purpose. They like to have some autonomy. What I’m seeing is, as a collective in the West,  we are evolving emotionally. The next generation coming through is much more emotionally aware. We understand psychology in a different way. The workplace needs to evolve in line with that. We’ve got old school working rules, which are a hangover from factory days, where we force people to go to work. People are more conscious and more aware of what they want to do. And we haven’t got a leadership style or a working culture as the mainstream that works. And people are opting out.