Netflix And Microsoft Are The Perfect Match – But The Potential Goes Beyond Ads

Flexibility to innovate is part of the reason Netflix teamed up with Microsoft – but the potential of the match goes beyond ads. With studio costs for original content soaring and subscribers willing to drop subscriptions based on the attractiveness of a content library, a marriage with the owner of Xbox offers scope for diversification far beyond ad dollars, writes Joseph Lospalluto, US country manager of ShowHeroes Group.

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Data Gimmicks Will Eat Us All; Apple Breezes Through The Ads Downturn

Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. Weird First Dates … I Mean Data Nothing beats the holidays for first-party data gimmicks, but summer is putting on a show. On Friday, Cheetos, a Pepsi brand, announced a giveaway for “fannie macs” – as in fanny packs for summer festivals thatContinue reading »

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The downturn ad economy: A tale of two narratives

There are two competing narratives on advertising at the moment. They sit uneasily with each other. But both are correct.

Ad dollars are being spent, but they’re also being cut. Yes, these two things can be true at the same time. No, the latter perspective doesn’t make the former any less valid or vice versa. Really, it’s a matter of perspective. 

The agency perspective is upbeat, considering the downturn that isn’t yet a recession but looks increasingly like one. 

All three agency holding groups that have reported so far during this earnings window — Omnicom, Publicis Groupe and IPG — have upgraded their revenue growth forecasts and cited a positive ad market, with few signs of contractions in ad spend. 

The platform perspective, on the other hand, is a lot more downbeat. 

There were advertising cuts across the largest online media owners over the last quarter — some more severe than others, of course. Meta and Twitter bore the brunt of those cuts, to the point where ad revenue slowed so much that it declined over the period. Even so, all the big online media owners were wary of how pervasive this ad pullback could get. The consensus: Ad cuts are going to get worse before they get better. 

The result is that a two-track ad economy has emerged from the downturn to date. 

On one side of the track, there are the big advertisers — think CPG, telecommunications and pharmaceutical verticals. These companies are so far away from the eye of the economic storm at the moment that the last thing they’re thinking about doing is less advertising — far from it.

From their vantage point, these marketers see a downturn that’s full of contradictions. They’re in a position where they have to pass higher costs for products from Dove, Coca-Cola and other brands to consumers to mitigate inflation, and yet those same consumers seem willing — by and large — to stump up the cash. 

It’s no surprise that the marketers who can afford to advertise now are trying to make the most of it.  They’re spending ad dollars, rather than looking to pull them. Indeed, economic slumps are usually the best chance to buy share of voice cheaply at the same time rivals reduce their own. It’s a cliche for a reason. 

Otherwise, Unilever wouldn’t have splurged £169.73 million ($206.7 million) on advertising in the first half of the year alone. Coca-Cola did something similar, as did McDonald’s. The largest advertisers will try and advertise their way through the downturn — to a point, at least.

Eventually, there will come a time when they will have to pump the breaks on ad spending. There’s only so much shoppers will stomach when it comes to inflated commodity costs before they switch to cheaper alternatives. No amount of marketing is going to change that. Until then, big advertisers continue to spend. Granted, revenue growth in a world with high inflation is not as good as the same revenue growth in a world with lower inflation, but it is still growth by any measure.

“The big multinationals are still spending and that’s helping the agencies,” said Ian Whittaker, an equities research analyst at Liberty Sky Advisors. “Moreover, the US consumer — while polarized — is still generally accepting the price increases being pushed through which is encouraging the brands to spend.”

It goes some way to explaining why agencies are so cheery about the future. Remember, these are businesses that derive a great deal of their revenue from how much larger advertisers spend on advertising.

Not every advertiser is in such a gilded position.

The economic outlook is a lot scarier at the coal face of consumer sentiment — where small and medium-sized enterprises and direct-to-consumer businesses tend to sit. 

These businesses experience shifts in spending a lot faster than their larger counterparts. Look at the rut many food delivery companies and commerce companies are in now, following their pandemic-induced booms. The shaky economics that once turbocharged these businesses are now short-circuiting them.

To survive, companies are cutting costs, including advertising. When these companies advertise, they tend to do so online first and foremost. SMEs and DTCs are nothing but digital-first in many respects. So when these businesses feel the effects of adverse conditions, so do the platforms they advertise on. 

That was clear in the earnings updates from the big online media platforms. Alphabet’s chief financial officer Ruth Porat mentioned that some advertisers in particular pulled back spend, which could refer to a weaker subset. The DTC bubble is popping following pressure from a wobbly economy, and the online media market is along for the ride. SMEs and DTCs are the backbone of those ads businesses — the inverse of the holding groups. 

Still, SMEs and DTCs aren’t the sole reason for all that ails online media. Ill-informed ad spending could be another. Weaker economic cycles suck out waste like a vacuum cleaner. Execs from both Google and Meta alluded to this issue in the commentary around their updates. Ad revenue across the platforms brought the issue into sharp focus. 

Google, Microsoft and Amazon — i.e. search and commerce channels with strong commercial intent — weathered the first phases of the downturn better than brand-building ones with weaker measurement of effect on sales. 

“Google Search and Amazon ads have led the pack this quarter, which is an expected flight to safety by advertisers prioritizing short-term return on investment,” said Jamie MacEwan, media analyst at Enders Analysis. “The search and e-commerce havens are also sheltered from the effects of Apple’s privacy changes since they are largely contextual and close to the point of purchase. That resilience contrasts with the weakness shown by Meta, Snap, YouTube and Twitter.”

The two-track ad economy can only continue this way for so long. Sooner or later, those paths will cross. 

Least of all because agencies saw less of a pull-forward effect than the platforms last year, especially in the first half of the year when tech grew incredibly fast. This means agencies have easier year-over-year comparisons reflected in the headline percentage growth. The year-over-year performance gap should moderate going into the second half, said MacEwan. “If you look at absolute growth, what agencies are reporting isn’t inconsistent with the platforms’ results,” he said.

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Atlas Obscura thinks local with creative print campaigns to keep ad revenue flowing amid travel spike

Atlas Obscura CEO Warren Webster is not so worried about the impact of an economic slowdown on his company’s advertising business, given more than half of its clients are in the travel category. But the travel publisher is starting to rethink branded partnerships with its local tourism bureau clients as the recent travel spike has many cities and states hoping to attract visitors. 

“We’ve been keeping an ear to the ground about the second half of this year and going into 2023 as economic news is sort of uncertain. [But] travel has just remained really strong. Advertising in our world has remained really strong, and we don’t see it diminishing,” said Webster.

Distribution of maps, guidebooks and pamphlets used to be the way tourism bureaus — also known as destination management organization (or DMOs) — measured their success. But now, because a lot of those assets live online and are measured with page views and downloads, Atlas Obscura is helping to realize a new purpose for those physical paper products: collectible map posters and 130-page visitor’s guide keepsakes. 

“[The Los Angeles tourism bureau] came to us and basically said, ‘What would it look like if we did this together and tried to make it something that was a little more editorial…something that was really going to have a lot of value,’ because sometimes they end up being kind of throwaway objects,” said Dylan Thuras, co-founder of Atlas Obscura. 

Atlas Obscura is no stranger to creating city guides and itineraries for its own audience, so Thuras said they treated this campaign like an editorial project and created several guides and maps (with the parameter of viewing everything in the guide through a positive lens). The editorial team was not involved, but there was some overlap between the editorial city guide found on Atlas Obscura’s site and the guide produced for the DMO, as the branded partnership team pulled from the company’s own database of L.A. hot spots, restaurants and activities.

This deal ended up costing the L.A. DMO about $1 million, though the bulk of that went to the cost of printing, Thuras said. He did not disclose how much Atlas Obscura kept post-printing costs. It took nine months from ideation to actually printing the maps and guides, which ended up totaling over 200,000 official visitors maps, 65,000 official visitors guides, 4,300 meeting planner guides and about 2,600 L.A. luxury guides, according to the company. All of them are being distributed by the DMO in its visitor centers.

“We’ve really become a marketing shop for DMOs,” Webster said, adding that beyond printing, Atlas Obscura has been creating videos, digital assets and other more traditional media campaigns for this category of advertisers for several years now. 

As a result, DMOs and travel clients represent more than half of Atlas Obscura’s brand partnership revenue, which is expected to bring in $14 million for the company in 2022 — up $4 million from initial predictions of $10 million at the start of the year, Webster said. Total revenue for the company is pacing to be $22 million, almost triple the company’s revenue in 2021.

This isn’t overly surprising, given travel is such a core part of Atlas Obscura’s advertising business, and given that the travel industry is just now recovering from the pandemic’s impacts in 2020 and 2021. According to MediaRadar, the amount spent on advertising in the travel category is up 82% in the first six months of 2022 compared to the same period last year. And within that category, local tourism bureaus in the United States are up 19% in the amount of money spent on advertising in 2022 versus 2021, totaling more than $282 million year-to-date. DMOs in California, specifically, increased their spend by 22% year over year to $35 million. 

Atlas Obscura hopes to get its other DMO clients to buy similar campaigns to the first-of-its-kind one executed with Los Angeles.

According to Kelli Hashimoto, a media buyer at Media Two Interactive who works with Charlottesville, Virginia’s DMO, creative campaigns are seen as a necessity as Visit Charlottesville looks for ways to convince tourists to book their vacations during weekdays and in the off-seasons of fall and winter, since peak summer weekends have reached capacity at local hotels.

A lot of those creative campaigns will be budget-dependent, however, since Visit Charlottesville primarily produces its print materials in-house, and Hashimoto said her client’s budget is based on the previous year. Therefore, many of these more involved campaigns will be part of their 2023 budget, which is expected to be higher if this year’s no-vacancies trend is any indication of success.

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Digiday Dealbook: Shaky Q2 earnings, the Twitter deal drags on, publishers shrink staff and more

Welcome to Digiday’s DealBook. Our focus is to create a quick and easy rundown of the deals, acquisitions and hires that took place last week. The goal is to inform and update you on the latest happenings in the industry at the top of your inbox each Monday.  — Carly Weihe

  • As Q2 earnings rolled out last week, it was clear that some major platforms struggled to perform amid growing economic uncertainty. Snap, Twitter and Meta fared worse than Google, which maintained its quarterly projections. 
  • Twitter has announced it will have a shareholder’s meeting to approve Elon Musk’s acquisition of the company, despite the ongoing lawsuit between the two parties. The meeting of the shareholders will be live streamed on Sept. 13, a month before the official lawsuit is scheduled to begin in Delaware in October. While Musk has agreed to the Twitter lawsuit beginning on Oct. 17, earlier than expected, some are skeptical that he will try to delay the lawsuit further.
  • Shopify and Vox Media both announced they will be laying off a portion of their staff following Q2 earnings and economic uncertainty. Shopify will lay off 10% of its workforce, while Vox will lay off 2%. 
  • Ad-tech company Tremor International acquired Amobee for $239 million. The deal includes Amobee’s omnichannel DSP platform and will help Tremor expand globally. 
  • MTV announced a new “Best Metaverse Performance” category for its 2022 Video Music Award. The move marks the continued shift of pop culture into the metaverse. 
  • Trailer Park Group, an entertainment and marketing company, announced the launch of Mutiny, a new gaming agency. The new agency will further the company’s growth in the gaming and esports space. 

Additionally, below is a list of industry leader hires

  • Sinclair broadcast group hired Stephen Clare as vp of finance
    • He was previously the vp of finance at Audacy
  • Vistar Media hired Welby Chen as chief operating officer
    • He was previously a venture partner at Hypothesis
  • Remio hired Tom DuBois as chief product officer
    • He was formerly the svp of product management at ikeGPS
  • Team One hired Kathy Hepinstall Parks as executive creative officer
    • She was previously consulting for a variety of agencies 

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Editor’s Letter: Why Digiday is experimenting with NFTs

This article is part of a 10-piece Digiday series that explores the value of NFTs and blockchain technology. Explore the full series here.

Dear readers,

Last week, Digiday launched a special editorial report called Token to Play, which included 10 stories exploring the challenges and opportunities associated with NFTs in media, marketing and gaming & esports. As a part of that package, we also created a collection of 10 NFTs, which served as the art for the stories, and today at noon EST, those NFTs will be available for purchase on our OpenSea storefront.

We did not set out to launch this project with the goal of financial gain or building an NFT business. Instead, this package aims to give us a first-hand experience of what goes into creating an NFT collection to inform future reporting. It will also help us determine how interested our readers are in learning about the use cases for NFTs through the editorial package accompanying our NFT collection.

All of the proceeds earned from the sales of these NFTs will be donated to a charity that Digiday has worked closely with for years: Sandy Hook Promise. The non-profit organization is focused on preventing gun violence in homes, schools and communities.

The editorial package includes a number of primers to help define Web3-related terms as well as explainers that explore the opportunities and assesses the downsides of unique NFT strategies certain players are taking to create new value for these digital assets, such as selling virtual real estate or integrating NFTs into events.

The inspiration for Token to Play comes from an ’80’s arcade, which influenced how our chief creative officer Ivy Liu and her creative team designed each original robot character. And with each NFT being a one-of-a-kind edition, they are exclusive assets to collect. Thank you to Ivy and her team for their hard work on this project.

I’d also like to include a special thanks to our content distribution manager Matt Quick, who originated the idea for this project after noting how well this content has performed for Digiday Media over the past year. And thank you to Digiday’s gaming and esports reporter Alexander Lee, for his contribution to this project.

We hope this package is as informative to read as it was for us to write and execute.

— Kayleigh Barber, media editor, Digiday

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Experts weigh in on the challenges of marketing TV shows in the crowded streaming space

In the crowded world of streaming, the announcement of a new season of an established series can spell a loss for other less-established shows in the market. Sometimes the launch of a new show can be overshadowed, leaving viewers in the dark about new content entirely — which poses a major challenge to marketing new shows on streaming platforms.

Connected TV advertising is on the rise, indicating that TV viewership is seeing a major shift toward connected TV. Connected TV ad spend grew by 57% in 2021 to reach $15.2 billion, a figure that will increase again to $21.2 billion this year, according to the Interactive Advertising Bureau’s 2021 Video Ad Spend and 2022 Outlook report. In the next two years, connected TV ad spend is expected to grow 118%.

However, the ad industry is still a ways off from knowing where exactly the majority of viewers are investing most of their attention. For instance, there are a lot of shows from streaming platforms and broadcast services that don’t get enough attention and get overlooked by critics and audiences alike, according to Mónica Marie Zorrilla, an entertainment reporter for Inverse.com and a regular contributor to Variety.

“I do think that television series marketing ON television is weak on TV for streaming shows. Five years ago this used to make sense, but now that every media network has its own streaming platform,” Zorrilla said.

“I believe many networks are battling with having massive inventory without a massive enough budget to pour equally into all of their titles,” said Detavio Samuels, CEO of REVOLT.

On the other hand, BEN Group chief product placement officer Erin Schmidt said she believes that TV show marketing has been optimized rather than erased.

“Netflix has the algorithm to rely on these heavy hitters of programming to entice audiences and allow the technology to do the work for them to see what resonates with audiences and what doesn’t,” Schmidt said. Marketing used to be one of the biggest budgets for networks, but it’s different in the world of streaming.

“There is no question that in the current era of streaming, the content space is all about volume. We have seen this trend in streaming leaders such as Netflix, Hulu and Amazon Prime, which have steadily added new original programs that have carried over to premium networks such as Disney+ and HBO Max,” Samuels said. “While all of the programming may be premium and content viewers love, there may not be budgets big enough to aggressively market them and get the eyeballs they deserve.”

It is also important to consider whether the content on streaming platforms is oversaturated to the extent that it prohibits some marketing strategies from effectively promoting shows. “Consequently, the digital landscape is oversaturated, which has created a more competitive industry in terms of cutting through the clutter,” said Schmidt.

For example, as a newer player in the streaming space, Disney+ will need to test and learn from its programming algorithms to find the best ways to bring in new subscribers and keep current subscribers engaged. Viewership of the platform’s Ms. Marvel series was reportedly lower than other Marvel Cinematic Universe series on Disney+. The show aired on the same day as Obi-Wan Kenobi, which outpaced Ms. Marvel in viewership.

“I think there’s too much amazing television to watch, and too much amazing television that isn’t getting nearly as much marketing attention as tried-and-true titles. I think that’s honestly the main issue here,” Zorrilla said, adding she has a list of 30 must-watch shows that she has yet to view herself.

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After organic success on TikTok, more DTC brands are diversifying their budgets

It’s been removed from Instagram three times for cannabis-related content, but the THC-infused beverage Cann has been posting TikToks this year with what cofounder Luke Anderson describes as “interesting, funny, and sharable” content that doesn’t violate cannabis-related marketing regulations.

Instead of just using traditional social media influencers, the California-based company has relied on a handful of its three dozen celebrity investors. (Celebrities featured in Cann’s TikToks include former Olympic skier Gus Kenworthy, actress Sara Michelle Gellar and drag queen Kornbread Jete while investors Gwyneth Paltrow and Rebel Wilson have shared Cann content on various platforms.) With barely more than 5,000 followers, the two dozen TikToks have racked up millions of views and led to tens of thousands of user-created videos inspired by Cann’s recent pride-theme campaign.

At Imperia Caviar, marketing manager Daniel Lee still spends more money on Facebook and Google. However, TikTok is now one of the top three traffic drivers to the Caviar brand’s website. Some videos—including one featuring the caviar “bump” trend—have been seen millions of times despite the company’s account on the platform having fewer than 14,000 followers

“We’re due for a digital marketing evolution because there’s so much spray and pray,” Anderson said. “And if you look into what’s happening, none of these are ROI positive.”

Beyond cannabis and caviar, an array of marketers are seeing more success on TikTok. Although Facebook and Instagram have long been mainstays for DTC commerce, brands and agencies say rising ad prices, declining organic reach and shifting formats have made them increasingly open to testing new platforms and diversifying their ad budgets.

In recent months, Meta has faced what some have described as an existential crisis as it navigates weakened data-targeting from Apple’s iOS changes alongside increased competition from TikTok. It’s also angered some Facebook and Instagram users by increasingly prioritizing algorithmically recommended videos with Reels, a TikTok clone. Along with reporting its first-ever decline in quarterly results, Meta faced more scrutiny last week after Kylie Jenner and Kim Kardashian shared a meme asking to “Make Instagram Instagram again.” (The meme was created by photographer-influencer Tati Bruening, whose petition on Change.org now has nearly 300,000 signatures.)

Despite the pushback, Meta insists it’s already seeing momentum with the new formats. The time people spent using Reels increased 30% across Facebook and Instagram in the second quarter and accounted for 20% of the total time users spent on Instagram. On the company’s second-quarter earnings call last week, CEO Mark Zuckerberg said ads within Reels are “actually making faster progress than we’d expected” and that the format reached a $1 billion annual revenue run rate faster than ads within Stories did they first launched.

“In theory, we could mitigate the short-term headwind by pushing less hard on growing Reels,” Zuckerberg said. “But that would be worse for our products and business longer term since we’re confident that Reels will grow engagement overall and quality and will eventually monetize closer to Feed.”

Meta is still the “blue elephant in the room,” said Cody Faldyn, director of social media at Dentsu Media, but rapid shifts in the attention economy have led about a third of the agency’s clients to start further diversifying the share of ad spend across platforms.

“Given the advances that we’ve seen with social commerce coming on board,” Faldyn said. “It’s opening the door to so many different opportunities for advertisers to take advantage of.”

In the battle for budgets, some marketers are seeing the benefits of both. The personal care brand Dr. Squatch spent nothing on TikTok just a year ago, but now chief marketing officer Josh Friedman said it’s spending between 15% and 25% of its overall budget on the platform at any given time. However, he said Facebook and Instagram still make up more than 50% of the company’s marketing budget and that relatively small-scale tests with Reels have made him “really optimistic.”

Stevie Clements, chief brand architect at CAVU Venture Partners, said Apple’s privacy changes within iOS have made it increasingly difficult to find new customers, leading the venture firm’s portfolio of brands to experiment elsewhere. For example, the prebiotic soda Poppi and the vegan body care brand Osea Malibu have shifted their focus from Facebook to TikTok after seeing “huge success.” But it’s also not always either-or. Clements said some companies are using influencers on Facebook in a “true 360 way” but then leaning more on “authentic” content on TikTok and that the platforms’ distinctions require marketers to “win on both.”

Clements noted another point: “There’s not a lot of dollars that need to go into the organic or paid side of TikTok. So I think it’s working out for a lot of these brands who are approaching their media mix in a diverse way.”

After spending a decade at Facebook, Pinterest and most recently Snap, Gazmend Alushi — now president of measurement and analysts at the influencer agency Whalar — has seen plenty of changes in each platform as they copy and compete with each other. Recalling when Instagram first introduced Stories in March 2017, he said the “harsh reality” is nobody cares about who creates a format first, just who does it best. However, he’s not seeing the usual signs that Instagram users are open to the current changes.

“At the end of the day, they (Meta) are nothing without a passionate consumer base,” Alushi said. “And people are passionate users of the Instagram app.”

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Infographic: How to Win Gen Z and Millennial Shoppers’ Loyalty

Amid decades-high inflation, all that matters is price, right? Well, not to millennials and Gen Z. Operations management software platform parcelLab surveyed more than 1,000 younger consumers in June and found that their focus on values and sustainability is still very much a factor when it comes to winning (and losing) brand loyalty. Overwhelmingly, these…

Broad City’s Abbi Jacobson Swings for the Fences in Her Return to TV

When Abbi Jacobson was developing Prime Video’s reboot of A League of Their Own, it would have been easy for her to simply re-create the classic moments from the beloved 1992 film about the 1940s All-American Girls Professional Baseball League. But the actor, writer and comedian had loftier ambitions than a simple nostalgia trip: Her…