Month: May 2022

Demand on the side of the platforms

The key hits:

• Samsung wants advertisers to use its DSP to manage their upfront deals with TV networks.
• The proposal highlights the central role of DSPs to the streaming ad market.
• While managing upfront deals through a platform’s DSP could address advertisers’ reach and frequency frustrations, it also raises questions of potential conflicts.

Of all the battlegrounds in the ad-supported streaming war, the front featuring demand-side platforms may be among the most under-the-radar — and potentially among the most impactful. Given that programmatic will play an increasingly important part in the streaming side of this year’s upfront negotiations, the DSP as advertisers’ programmatic buying tool stands to take on an even more critical role in the streaming ad market. 

Connected TV platform owner Samsung seems to recognize the DSP’s rising central role, as evinced by its NewFront presentation last week. The company proposed advertisers use Samsung’s DSP to manage their traditional TV upfront buys when ads are running on Samsung’s CTV platform. The CTV platform owner was effectively saying to advertisers, “Do your deals with the TV networks, and then let our ad buying tool manage — and, crucially, monitor — the execution of those deals and let you know how they performed.”

The pitch makes sense on paper and underscores the underlying reason for DSPs’ importance in the ad-supported streaming market. Advertisers and their agencies are regularly grousing about the challenge of managing their streaming campaigns’ reach and frequency, and the enlistment of the CTV platform’s DSP would enable advertisers to take into account not only the ads purchased through the DSP but also the ads purchased directly from TV networks as part of advertisers’ and agencies’ upfront deals. 

“If you’re an advertiser that has upfront or committed spend, the ability to manage them in one platform is going to be attractive to your in-house teams or your agency teams, and the ability to manage things like reach and frequency holistically and hopefully to measure things holistically are definitely good benefits,” said Kevin Cahn, associate vp of the video center of excellence at marketing services consultancy Kepler Group.

However, Samsung’s pitch also positions the DSP as a potential Trojan horse. Samsung is not an impartial party. The company sells ads across its free, ad-supported streaming TV service and third-party streaming services on its CTV platform and competes for advertisers’ budgets against TV networks and streaming services. An advertiser opening the scope of its upfront deals to Samsung’s DSP would enable the DSP to judge the efficacy of those upfront deals because the DSP will be able to track reach and frequency and sell advertisers on inventory to target unreached audiences. Theoretically, the DSP would be objective in their tracking and recommendations, but some ad buyers are wary of the potential for DSPs owned by streaming ad sellers to direct ad dollars to the sellers’ own inventory.

To be clear, the latter concern does not only apply to Samsung’s DSP. It applies to any DSP that is owned by a streaming ad seller. That especially includes Amazon’s DSP, which allows advertisers to use Amazon’s shopper data to buy ads on the e-commerce giant’s CTV platform; Google’s Display & Video 360 DSP, which has been the exclusive DSP with access to YouTube’s inventory; and Roku’s OneView DSP, which has exclusive access to Roku’s FAST service The Roku Channel as well as the platform’s proprietary audience data. 

“If Roku is managing all of that and they’re managing the distribution and they’re managing it through their own algorithm, what’s to say they’re going to change it and make it favor themselves?” said Scott Marsden, evp, media & analytics and vp, data & analytics at ad agency Quigley-Simpson, during an on-stage session at the Digiday Programmatic Marketing Summit on May 4.

“They want you to do all the dirty work on their platforms,” said an agency executive of Amazon, Samsung, Roku and Google/YouTube. “They know it’s not just monitoring but management we want. Another thing to consider: Are we going the agnostic route in working with a DSP like The Trade Desk that is not tied to media or go with [Roku’s DSP] OneView or Amazon’s DSP or [Google’s DSP] DV360? And if we go with one of those, then what challenges lie ahead in terms of a one-stop full understanding of frequency and reach?”

As the agency executive alluded, another consideration for advertisers is that, while plugging their upfront deals into CTV platform-specific DSPs can help to manage reach and frequency on those respective platforms, it limits their ability to manage reach and frequency across various CTV platforms.

Conversely, however, there are plenty of reasons for advertisers to be using the platforms’ DSPs, at least in tandem with an independent DSP. The platforms’ DSPs are able to tap into the platforms’ proprietary first-party data, which can include the viewing data collected via automatic content recognition technology built into smart TVs. Additionally, the platforms typically give their own DSPs exclusive access to the platforms’ owned-and-operated inventory. 

“The walls are going to be there for some time, specifically as long as each platform’s data and O&O inventory is made exclusive to that specific platform,” Cahn said.

So the question is not whether advertisers will choose between the platforms’ DSPs and independent DSPs. For now, advertisers are continuing to support both in tandem. Instead, the question is what role will DSPs play in this year’s upfront negotiations.

What we’ve heard

“Are we at the point where I believe you can create a breakout [free, ad-supported streaming TV] channel? Not just content that people watch but truly create a destination out of a FAST channel? I don’t know if anyone has tried that yet.”

— Streaming executive

Trend watch: Cord-cutting in Q1 2022

The first quarter of the year is typically high time for people to cancel their pay-TV subscriptions, especially once football season wraps up. Q1 2022 seems to have been no different in that respect. However, after the pace of cord-cutting slowed during the pandemic, it appears to have ramped up again.

In Q1 2021, pay-TV services combined to lose an estimated 1.4 million subscribers, per Variety. In Q1 2022, a sample of six pay-TV services surpassed that amount, and that sample does not include major pay-TV providers DirecTV, Hulu + Live TV and YouTube TV.

• Dish Network: Lost 462,000 subscribers
• Comcast: Lost 512,000 subscribers
• Charter: Lost 123,000 subscribers
• Altice: Lost 74,000 subscribers
• Sling TV: Lost 240,000 subscribers
• FuboTV: Lost 74,000 subscribers

As streaming pay-TV providers, Sling TV’s and FuboTV’s subscriber losses seem particularly notable. Streaming pay-TV services were supposed catch at least some of the traditional pay-TV subscribers cutting the cord, and they have. However, as MoffettNathanson senior analyst Craig Moffett identified, Sling TV’s subscriber base has now shrunk to the size it was in 2017. 

The view of the streaming pay-TV market should be further clarified on Wednesday after Disney reports earnings and shares whether Hulu’s base of 4.3 million streaming pay-TV subscribers, as of Jan. 1, grew or shrunk.

Numbers to know

38%: Percentage share of TV episodes in the 2020-21 season that were directed by women.

9.5 million: Number of streaming subscribers that AMC Networks had at the end of the first quarter of 2022.

-13%: Expected percentage decline in smart TV shipments in 2022 compared to 2021.

>$1 billion: How much money sports streamer DAZN reportedly lost in 2021.

What we’ve covered

The ANA’s cross-media measurement effort is taking too long, say agencies:

• The ANA is nearly a year into its three-year effort to create a cohesive cross-media measurement blueprint.
• Some agency executives are frustrated with the pace of progress, while others are concerned about conflicts of interest.

Read more about the ANA’s cross-media measurement effort here.

As working with creators is normalized, marketers tweak how they approach doing so:

• Most major brands are working with creators in some fashion these days.
• Brands are trying to get away from viewing creators as media channels.

Read more about marketers’ approaches to creators here.

TV networks, streamers concentrate on content categories on NewFronts Day 4:

• On the final day of NewFronts, TV networks, streaming services and digital video publishers pitched new ad-supported programming and streaming properties.
• A pair of measurement providers also took the stage, with one looking to sell more than measurement.

Read more about NewFronts Day 4 here.

Media companies and social platforms tout their connections to diverse communities on NewFronts Day 3:

• Social platforms and Black-owned publishers took the stage to urge ad buyers to spend more money to reach diverse audiences.
• TikTok announced its first ad revenue share program for creators.

Read more about NewFronts Day 3 here.

Why Twitch signaled a recommitment to creators at IAB NewFronts:

• The Amazon-owned platform has struggled to keep some of its high-profile creators as engaged and active as they once were.
• A new Twitch program called “For Twitch, With Twitch” features creator-driven content curated specifically for advertisers.

Read more about Twitch here.

What we’re reading

Netflix eyes Q4 for ad-supported push:

Netflix CEO Reed Hastings may have said the subscription-based streamer is trying to figure out adding an ad-supported tier “over the next year or two,” but the company has told employees it’s looking to launch its ad business in the fourth quarter of this year, according to The New York Times.

Streaming’s financial tipping point:

Netflix’s subscriber growth struggles have thrown into sharp relief the challenging economics of the subscription-based streaming business and raise the question of what other revenue sources — such as selling shows to traditional TV — are these streamers willing to tap, according to the Los Angeles Times.

FAST focus:

The streaming subscriber growth slowdown has opened a window for free, ad-supported streaming TV services to seize audiences’ attention, and they seem to be trying to seize the opportunity, according to Vulture.

Hollywood’s masks come off:

Film and TV studios and unions have agreed to update the COVID protocols for productions and allow cast and crew members to work without masks, according to Variety.

The company cornering the kids’ market:

Moonbug Entertainment — the company behind kids’ programming phenom “CoComelon” — takes a very analytics-driven, “Moneybag”-esque approach to the programs it produces, according to The New York Times.

Trade orgs appraise measurement currencies:

The Association of National Advertisers, the American Association of Advertising Agencies and the Coalition for Innovative Media Measurement are teaming up to assess the measurement providers seeking to serve as the currency on which TV ad deals are based, according to Broadcasting & Cable.

“In previous years, there was some apprehension around in-game advertising; as a gamer, if I go out and purchase a $60 game, and then I end up getting served pre-roll, mid-roll or intrusive ad experiences, I will probably not be very happy,” said Mascali during Digiday’s Gaming Advertising Forum on April 20. “So publishers have been really protective of that.”

Times change, however. These days, publishers, like many other media owners, don’t want to be reliant on a singular income stream. Not if they want to create games that are regularly enjoyed by hundreds of millions of people, across devices at lower entry price points. And there are few better ways to offset the capital risk of development and the ballooning costs of user acquisition than advertising.

Yes, it may sound strange, but it’s not necessarily a surprise. Diverse business models and tiered price points are one of the main reasons the gaming industry has swelled into a far bigger economic juggernaut than Hollywood and the music industry. Advertising is just another recurrent revenue stream to game publishers — one that means they’re not having to constantly be reliant on asking gamers to spend a bit more money on their brands.

Not that any of this is necessarily new. For years, games developers have dabbled in in-game advertising, but it was always the exception, not the rule. In part, because the demand just wasn’t there from advertisers for games developers to believe advertising was worthwhile. Sure, there were marketers queuing up to get their brands in the latest versions of FIFA and Madden, but the interest in the sector wasn’t as widespread as it is now — especially once it became clear that gamers weren’t as averse to being advertised to while playing or watching games as previously thought.

“Creating a three-hour brand experience, where people are leaned in and completely engaged — that’s totally different than a 15-second TV commercial,” said Stephanie Perdue, vp of brand marketing at Chipotle, during her talk at the Gaming Advertising Forum. That paved the way for a nascent but fast-growing investment in gaming that included immersive in-game experiences, she continued, such as a massively popular Roblox experience, in addition to more targeted partnerships with streamers and influencers like Karl Jacobs.

“Once you think of it as a media channel, a way to create bespoke, unique content, I think you can go even further with unique brand experiences, depending on what the platform is,” said Perdue.

Going further isn’t straightforward. Games are unlike any other medium marketers advertise in. Measurement is uniquely difficult due to the placement of ads inside ever-changing three-dimensional virtual environments, though the Interactive Advertising Bureau and Media Rating Council are on the cusp of releasing updated measurement standards. The market is increasingly fragmented, with intrinsic in-game ads, more fleshed-out metaverse experiences and influencer partnerships representing only a few of the many different ways brands can reach the gaming community. And while gamers are more accepting of brand involvement than many marketers assume, there is still a fine line between a palatable in-game ad and an ad that warps the gameplay experience.

“There’s a hell of a difference when you put it in a game like Forza, where it’s native to the experience and arguably enhances realism,” said Jason Chung, an assistant professor of sport management and executive director of esports at the University of New Haven. “Versus, am I playing Red Dead Redemption 2, and then Smith and Wesson is going to put in a mid-roll ad?”

Still, companies are emerging to help marketers connect the dots. Ad exchanges such as Frameplay, Bidstack and Anzu have developed a significant inventory within free-to-play games, taking steps to educate brands about the opportunity and create new tools and metrics to measure their offerings. Agencies are jumping in, bringing their gaming and esports knowledge in-house to better help connect game developers and their inventory with brands that fit their vibe. While the largest agencies are still learning how to navigate the gaming advertising landscape, those that are able to firm up these relationships through direct integrations and curated marketplaces will have more control over the distribution of impressions, and thus an easier time delivering more incremental revenue to their clients.

As big game developers compete to establish themselves as media owners, the smaller and mid-sized independent publishers might suffer most from this shift in the landscape. 

“Quite frankly, a lot of the publishers that are not Microsoft and Sony will not be happy with it, because you’re cutting directly into their revenue stream,” Chung said. “If I play a game of NBA 2K, I’m pretty sure [2K developer] Take-Two has put enough advertising in there to make Madison Avenue blush, so good luck to them.”

Game developers might not have a choice. Microsoft’s in-game ad business has reportedly been in the works for years, but cultural and economic shifts during the COVID-19 pandemic have since transformed gaming into a pillar of popular culture. As developers race to adapt to this change, gamers could be in for an explosion of in-game advertising before the hype subsides.

“If you add in too many layers, you’re going to end up like the early days of TV, where entire programs were sponsored by a tobacco company or a laundry soap company,” Chung said. “People revolted against that and said, ‘we don’t want to be exploited this way,’ which is why we moved to the advertising system that we have now.”

“We really have had to be scrappy and utilize digital as our first point of contact and way of connecting with consumers,” said Alia Kemet, svp of global creative and digital transformation at McCormick. “Sometimes having to use really organic means of doing so.”

As part of its strategy, Kemet said Zatarain’s looks at what’s trending on a weekly basis to determine content and a posting schedule. The brand works with Petermayer marketing agency for creative. Petermayer creates all organic content with assistance from McCormick for recipe photography, per a spokesperson for the brand.  

Last year, Zatarain’s spent nearly $630,000 on media, significantly down from the $2.3 million spent in 2020, according to Kantar. In 2019, the brand spent $67,600. Those figures do not include social media spend as Kantar does not track those numbers.

According to Pathmatics, Zatarain’s spent an estimated $823,000 on Facebook and Instagram in 2021. That number is significantly higher than the $353,000 spent in 2020. In 2019, the brand spent just $39,000 on Facebook and Instagram, per Pathmatics. Per Kemet, Zatarain’s often puts paid ad spend behind organic content that does well on those platforms.

As a regional brand, Kemet said Zatarain’s marketing budget to boost brand awareness and get in front of its target audience of busy moms is limited. Meaning the marketing team opts to save ad dollars for major cultural events, including Mardi Gras. In time for Mardi Gras this past February, Zatarain’s partnered with singer Tank for its Bold Like That campaign, which ran ads on Facebook, according to Facebook ads manager. 

“It’s not that we don’t use paid [social media ads] — we don’t rely on it,” Kemet said, adding that the brand opts to boost content that performs well.  

Recently, the brand has made more effort to pursue media channels such as public relations and earned media. Zatarain’s has also been experimenting with live formats, like Facebook and Instagram “when you want to do something that’s engaging but don’t want to spend your entire budget,” Kemet said. She did not disclose any Zatarain’s ad spend figures. 

Per Kemet, Zatarain’s organic social strategy allows the brand to facilitate two-way conversations with account followers and be more nimble when it comes to adjusting strategy to play into timely social media trends.

While social media has become a pay-to-play space over the years, there is still value in an organic social strategy, according to Brandon Biancalani, head of paid media at Modifly social agency. 

TikTok and Instagram Reels have reignited the conversation around organic strategy as brands have looked to go viral to boost brand awareness and sales. Still, Biancalani says for organic to be a winning strategy, brands need to ensure there’s community-based value in the content.

“It has to be value-centric. If brands ignore that, that’s how they’re going to not be successful with these strategies,” Biancalani said. “They still have to make sure the user gets something out of it.”

Going forward, Zatarin’s plans to continue its predominantly organic social strategy, tapping into memes and cultural moments across the internet to connect with its audience inexpensively. 

“When you’re not relying on paid media, and you’re really relying on the storytelling and the truth of the brand coming through, that’s really important,” Kemet said.

By the end of this year, social shopping, meaning transitions made on or through platforms like Instagram, Facebook and TikTok, will become a $45.7 billion market, according to eMarketer. And for that, we have influencers and content creators to thank, in part, for their promotions, posts and reviews of products that have been known to sell out items after going viral.

Content creators are true arbiters of virality and if a brand is conversion-minded in its social marketing campaigns, working with influencers could be a good idea. But how truly impactful are creators and influencers on the individual level in driving transactions and how much money are they able to earn on average?

Shopping on social media is a growing trend

Purchases made through social media posts are expected to more than double between 2021 and 2025, according to eMarketer’s report from May 2021.

During the three years spanning 2019 to 2021, total retail social commerce sales increased on average by 33%, amounting to a total of $36.6 billion in 2021. While the annual rate of change is expected to fall to 24.9% in 2022, and to below 20% as of 2024, this market is expected to hit almost $80 billion by 2025.

Digging further into this, eMarketer reported that about 36% of all internet users in the U.S. bought something on a social media platform in 2021, while an even higher portion — about half — of all social media users aged 18 to 34 made at least one purchase via social media. Facebook was the most popular social platform last year with 56.1 million people transacting on its website.

And yet, social commerce accounted for just 4% of the U.S.’s retail e-commerce market in 2021.

Platforms also boosted their livestream shopping offerings last year chasing consumers who were kept at home during the pandemic. China alone had been forecasted to bring in $131.5 billion dollars in livestreaming social commerce sales, according to eMarketer.

Influencers carry an impact at all levels

Influencers range in number of followers, but the tide is turning in terms of how brands view working with influencers with smaller followings.

Furthermore, nano and micro-influencers might carry better engagement rates with their users because they have a higher capacity to engage with those followers via direct messages or comments on posts, which helps them to create communities and increase their audiences’ level of trust in them.

On Instagram, about one-quarter of influencers who fall in the “nano” range of followers make money from their accounts, while closer to half of all influencers in the “micro” range earn some amount of money from the platform, according to a survey of 1,865 influencers conducted by HypeAuditor in 2021.

The macro tier is the most profitable group with over two-thirds of all influencers in HypeAuditor’s study making money from the platform.

According to HypeAuditor, the average influencer earned $2,970 per month through Instagram at the time of the study. Micro influencers earned approximately $1,420 per month on average, while mega influencers with over 1 million followers earned an average of $15,356 per month.

However, the number of sales they drove through affiliate marketing links and commerce deals can widely vary based on product category and price point.

In 2019, one Forbes Agency Council member Maddie Raedts, the founder and CCO at IMA and the global head of social for fashion and luxury at MediaMonks, wrote in a post that one of her travel clients saw conversion rates of 3% to 5.8% on an Instagram influencer campaign thanks to swipe-up links offering discounts. And back in 2016, one influencer marketing agency Grapevine reported that the industry average conversion rate of consumers making a purchase through influencer content was 2.5%.

Don’t overlook micro influencers

This year, Influencer Marking Hub anticipates that micro-influencers will play a bigger role in contributing to the number of sales made through their content because while they may have fewer followers, their audiences tend to be more engaged.

Lindsay Hittman, president and co-founder of affiliate marketing and content monetization platform BrandCycle, said “the thing that we see work really effectively for some [micro-influencers] is [high posting] volume. Some of the micro-influencers we work with are posting to their [Facebook groups and on Instagram] 20 to 30 times a day and that allows them to test a lot of products, test a lot of price points and test a lot of different brands.”

Micro-influencers could also have a better understanding of what will get someone to stop mid-scroll. Whereas a larger influencer or celebrity may post more about limited releases or new launches from “cutting edge brands” that align with their inspirational and elusive allure, micro-influencers are going to focus on relatability and post about sales or discounts, Hittman said.

“With some of the larger influencers, you see some more of the cutting edge newer brands that have fewer skews that they’re promoting, where the micro-influencer may promote more of the traditional big box stores because the amount of things they can post day after day is so much greater,” said Hittman.  

Because of this, macro-influencers tend to post fewer products on a daily basis, limiting the chances of conversion.

“From a brand perspective, it all depends on what their goal is. Is it a branding play or is it a conversion play? We find that micro-influencers can convert at a much higher rate [so] if it’s a conversion play, you go to the micro, if it’s a branding play, you go to the macro,” said Hittman.  

True, this downturn is in line with the wider stock market, but now some question the fortunes of the current crop of public ad tech companies — a cohort whose number increased exponentially during 2021 — as valuations have cooled from their early heady heights.

Earlier this week, The Trade Desk, easily the poster child of the sector, posted Q1 revenues of $315 million, representing a 43% increase. The demand-side platform was also eager to highlight the increasing prominence of high-growth sectors, such as CTV, in its media mix, citing it as its “fastest-growing channel” during the period.

Albeit, market conditions have seen The Trade Desk’s market capitalization halve from the lofty heights of its peak $40-plus billion valuation in recent weeks. And, similar to Alphabet, the DSP’s stock price slipped after it issued Q2 guidance of $364 million, just short of analysts’ expectations, in its latest disclosure.

OpenPath strides ahead

A big part of The Trade Desk’s narrative since the beginning of 2022 has been the DSP’s effort to cut down on inefficiencies in the programmatic ecosystem, a.k.a supply path optimization, a key way for it to drive value for advertisers, and investors.

Last week, The Trade Desk announced a further five media owners to its earlier SPO initiative OpenPath — BuzzFeed, Forbes, Los Angeles Times, MediaVine, and Red Ventures — taking the total number of publishers involved to more than a dozen.

When it first unveiled OpenPath in February this year, The Trade Desk proposed direct integration with publishers with media owners including Condé Nast, Gannett, Hearst, and Tribune among the initial cohort of participants.

The Trade Desk has claimed that “more than 100 publishers have expressed an interest” in the scheme which has also seen the DSP switch off Google’s Open Bidding, a further indication of the pair’s rivalry.

In a series of supporting statements from the publishers recently inducted to OpenPath, the scheme was described as “progressive” and one that will “help improve transparency and performance” of programmatically traded media.

SMB publishers line up

Eric Hochberger, CEO and cofounder of Mediavine, added that his company’s server-side integration with The Trade Desk represented a first for the industry. “OpenPath helps ensure monetization opportunities for independent publishers across the web, including the more than 8,700 currently working with Mediavine,” he added.

Similarly, Lulu Phongmany, a consultant that helps publishers such as Digital Trends integrate ad tech to maximize revenues, described OpenPath as “a gift from the ad tech gods,” particularly small-to-medium-sized players.

“While large publishers have bigger budgets to spend on advertising technology and staff, medium-sized publishers aren’t as lucky [as the bulk of their budgets are invested in content production,” she said in an emailed statement. 

“OpenPath would allow them to tap into premium programmatic dollars without as heavy a lift with regards to supply chain optimization. The publisher can focus on bringing a quality audience to the table and The Trade Desk can focus on bringing quality advertisers,” Phongmany said.

Global placement ID tests

However, the development of OpenPath is not without its critics with some interpreting it as a power move from The Trade Desk as demand- and supply-side players form (seemingly) divergent alliances.

“OpenPath aims to remove the inefficiencies often present in the programmatic supply chain for digital advertising, including opaque and harmful privileges of the walled gardens,” reads a press release promoting the latest round of inductees to the program.

Although, some point out that it would appear duplicative/competitive of some of the key relationships the industry’s agency holding groups are simultaneously forming with SSPs — a tier of the industry that stands to be disintermediated by DSPs integrating directly with publishers.

Since late 2021, The Trade Desk has been implementing an SPO policy known as “global placement ID”, or GPID for short, according to separate sources who requested anonymity due to client sensitivities, to assess the most efficient path to premium publishers’ inventory.

“Then, every month, The Trade Desk picks five high-efficiency paths to that publisher,” said one source, who noted how the cadence of The Trade Desk’s supply path reviews is becoming more rapid. “It works in a number of ways such as reducing the overhead costs of listening to the full bid stream but strategically, it also reminds the exchanges who’s in charge as it asserts their power in the supply chain,” added the source, noting that it can irk media agencies that have brokered preferential deals with SSPs.

Speaking with Digiday earlier in the year, Will Doherty, vp of inventory development at The Trade Desk, acknowledged the ad tech company’s GPID efforts were a “logical” means of performance comparison and that other DSPs were likely to emulate it.

Meanwhile, a separate source who requested to speak on background, further told Digiday how GPID has generated “probably more palace intrigue than it warrants” when explaining how the SPO method functions. Per the source, GPID “is still in its early days” and uses an identifier, which is not attached to an individual user, to enable The Trade Desk to assess the “object permanence”, a.k.a just how unique an SSP’s inventory is. “And then once you can compare like-for-like inventory, you can actually see which path level is the most performant for advertisers,” added the source.

Potential conflict?

Meanwhile, multiple holding group sources (all of whom requested anonymity) spoke of the umbrage some on Madison Avenue felt at how The Trade Desk’s SPO efforts were communicated to the market. Indeed, some SSPs noted that such an approach could potentially shortchange publishers.

It’s understood that the DSP has been meeting with clients in recent weeks to articulate the benefits of OpenPath. Meanwhile, SSP sources further highlighted how they help publishers maximize and yield for their inventory by optimizing their first-party data in a manner that provides balance to the ecosystem.

Speaking separately, Jeffrey Hirsch, chief commercial officer at PubMatic, noted that SPO demonstrates that buyers want choice and control over the way they buy digital media. “While there is benefit in providing buyers with alternative paths to supply, it is important that they ultimately remain in control,” he noted in an emailed statement. “We’ve partnered with many global agencies and advertisers to implement highly-integrated SPO deals designed to give buyers the level of control they want and drive better ROI for their campaigns.”

Romain Job, chief strategy officer, Smart AdServer, further added, “Publishers are increasingly prioritizing the activation of their own first-party and third-party data. They tell us this is the key reason they will stick with the SSPs that operate transparently and add value to the programmatic transaction.”

The industry’s second-largest DSP

In a recent note to investors, Tom Triscari, a programmatic economist at Lemonade Projects, concluded that The Trade Desk’s take rate, the fee it takes for every dollar spent with it, was in the region of 19%, after it reported net revenues of $1.2 billion, on gross spend of $6.2 billion last year.

He further noted how many in the industry used it as an alternative to Google, which owns the largest DSP in the industry in terms of spend, and that its relationships with media agencies helped generate “a good chunk” of its $1.2 billion in spend. “Another explanation is an ability to take on managed service work from overloaded and understaffed agencies,” wrote Triscari. “The money has to go somewhere.”

Trevor Hubbard, Butchershop’s founder and CEO, explained the approach is designed to determine “clarity” of mission when determining the path a client should take. “It’s a very simple formula: the more clarity you have in an organization, the better the culture. The more clarity you have in a brand, the better the brand. The more clarity you have in your product roadmap, the better the product,” said Hubbard, whose agency has grown from $8 million in fee revenue in 2020 to $12 million in 2021, and is on track to hit $30 million this year. 

The following conversation has been edited for clarity and space.

How did you settle on “Beat failure” as your mission? It’s a bit contrarian. 

If you focus on success, you’re not focusing on the possibilities of things that could go wrong. We figured out a few ways to pull some of those failure points, some of those things that could go wrong, and through that figure out ways to then actually solve the things that will be preventing you from getting to success. To me it’s a much more refreshing, holistic, prescriptive way to look at the journey of evolving something, growing something, launching something or creating something new.

We kind of push the RFP to the side as an objective point of orientation, and we push a CMO’s or a CEO’s success metrics or KPIs to the side. We say, ‘What will make this fail?’ It’s a billion dollar question, because if we solve for some of those failure points, maybe they don’t spend that money, maybe they don’t go down that rabbit hole — maybe, just maybe, it positions them to get closer to the valuation they’re trying to get to.

How much do you have to convince potential clients to go along with this approach?

We’ve designed all of our products to move away from services. So when we see a particular failure point, which could be ‘We don’t understand our audience,’ or ‘We don’t know exactly who our customers are,’ we have an entire product suite that illuminates that. Audience segmentation, research and social listening, historical sales data, customer profiles, where the market is going and the competitive landscape. Let’s look at all these things in our discovery in our audience products to make sure that we make those unknowns known. 

Everything is a one-sheeter: the features the benefits, the deliverables, the ROI. We’ve really tried to make the system where what happens in growth and transformation are a bunch of failure points in that journey. We’ve organized our agency — our acquisitions, our products, all of our expertise — around solving the 10, 20, 30 major failure points that we see in high performing brands that are at serious inflection points.

How did you apply this approach to your own agency? 

It set the trajectory of rapid growth of this agency, and completely transformed who we are. By us adopting this and using it in making it core to what Butchershop is, it’s brought all the innovations that we see today. It shows us what our org chart needs to be. It shows us where we need to spend money. It shows us how we navigate through the pandemic. It shows us what our M&A strategy needs to be. It shows us what services we need to add or take away.

How does this translate to the way you see brands? 

When you focus on brand, everyone thinks it’s the way things look, — it’s the logo, and brand is nothing more than perception. Right? The fallacy is, is that companies don’t create brand perception, your customers or your audience does. So it’s up to you to get as close as you can to that desired perception. 

If American Express came to us and said, ‘We have a diamond triple encrusted platinum card and we need to market this card for the holidays to the baby boomers,’ we would say ‘No, that’s not what we do. Go to another agency for that.’ If they came to us and said, ‘Hey, we’re losing Gen Z. They don’t want credit cards. Boomers are aging out. We don’t have a product or offering that can bring them into the American Express world. Can you help us figure out what that needs to look like?’ we would be over the moon.