Month: July 2022

The original plan was to sell the NFTs, Outback Chief Marketing Officer Danielle Vona. However, the company decided to give them away and add “some value” to reward NFT holders if they visited an Outback location. The offer: A free order of fried onions and two Dr. Peppers on June 27 for “National Onion Day.” (The collection sold out in 20 minutes.)

Outback’s NFTs are part of the brand’s efforts to partner with college athletes across a number of sports following the U.S. Supreme Court’s decision in June 2021 to rule against the NCAA and let students make money off their name, image and likeness. Although the NFTs helped promote new partnerships with baseball and softball players from a number of schools, Outback’s collaborations with college athletes began last fall with football season and expanded to men’s and women’s basketball over the winter.

Some brands have been looking for ways to integrate NFTs into loyalty programs. That’s not the plan for Outback — at least not yet. Instead, they’re part of a strategy to be “more organic, more social, and more local” to reach younger audiences, according to Vona, who said Outback’s customer database has “less of those types of people.” However, the company didn’t share any data about customers’ ages.

“Everyone is dabbling,” Vona said of NFTs. “But this felt like something we could actually do and execute and learn from without the complexity or the big investments that a metaverse program might do.”

Decreased hype of NFTs hasn’t dissuaded Outback yet from moving forward with more NFT projects: Vona said the company is already looking at ways to expand its NFT collections this fall for the 2022 football season. (The chain isn’t the only one eyeing college-focused NFT partnerships: Syracuse recently became the first NCAA school to create NFTs for student-athletes.)

In some ways, restaurants giving away NFTs is an evolution of how they’ve been doing limited menu items and other promotions for decades, said Gartner analyst Brad Jashinsky. He said tactics like Outback’s and others can be helpful with driving in-store traffic especially if the promotion is valuable enough to warrant a visit, adding that he liked how there were thousands of “Bloomin’ Buds” to reach more people rather than making them rare as some brands have done.

One of the challenges to getting younger people in the doors could be that they aren’t dining out as much. A survey conducted by the market research firm NPD last month found that Gen Z ate at restaurants 11% fewer times in a year on average compared with when millennials were their age — between 18 and 24 — and 23% less than GenX did back in 2002.

It’s too soon to know whether Outback’s efforts will help reach more young people longer term over time, but Jashinsky mentioned McDonald’s partnering with the K-pop band BTS and Dunkin’ collaborating with TikTok star Charli D’Amelio as two examples of major chains having success reaching younger people.

Bloomin’ Brands— which also owns Bonefish Grill and Carrabba’s — has recently “increased focus on segmentation and personalization, customer relationship management and digital advertising to be more efficient and relevant,” the company said in financial disclosures. Bloomin’ Brands CFO Chris Meyer told analysts marketing spending was up $8 million in the first quarter of 2022 compared to 2021.

Vona wouldn’t disclose how much Outback has spent on its NFT efforts or with college athletes. However, she said it’s a “natural evolution of our marketing spend“ and that the programs have been “a way for us to get local and relevant in a way we haven’t been able to in the past.”

While some brands have been experimenting with using NFTs as a way to build engagement with customers, Vona said Outback’s priority is content. And although she sees the value for brands to make them more useful, she said there are “moments when it’s OK to just be about the art of it.”

There’s also a question of whether people want them. An October survey of 1,000 adults conducted by Forrester found that only 12% of adults in the U.S. and just 7% of those in the U.K. wanted to see more brands release NFTs.

Outback’s NFT collection hasn’t received a ton of traffic on OpenSea. Of the total 8,151 NFTs that are owned by 3,800 people, the most viewed is a pink slipper-wearing onion with a baseball glove, green hair and glasses that’s been viewed 283 times. In terms of price, the highest price someone has paid for a Bloomin’ Bud has been $761. Total sale volume overall has been 9.6 ETH, or around $11,000.

Vona said they’re “monitoring the positive and the negative” headlines about NFTs while also tracking how the technology is helpful — or not — for the overall business. She added that Outback’s overall program doesn’t require the use of NFTs if it turns out they’re not providing value.

“I don’t think NFTs are going to save restaurants, but I think it’s one good tactic,” Gartner’s Jashinsky said. “It’s kind of like is social media going to save your brand? No, but it’s one part of your strategy.”

Adidas announced the launch of the first sustainability-focused product in its outdoor-adventure Terrex line in February. Called the HS1 hoodie, it’s made with regenerative fibers by Finnish material company Spinnova. Materials made from regenerative fibers can be re-used multiple times in a closed-loop system. Regenerative fibers have not yet caught on in sportswear. However, other apparel companies like Calvin Klein and Tommy Hilfiger parent company PVH are seeing its potential. PVH announced a partnership with regenerative company Infinited Fiber Company, which created regenerative fiber Infinna, two months ago. 

For sportswear companies, using regenerative fibers is especially challenging, as maintaining both performance qualities and fast product output is key. In 2021, Adidas announced a three-loop strategy centered on diverting plastic waste from oceans and prioritizing regenerative processes and materials. “Our sustainability mission on the brand level, not only on Terrex level, is to help end plastic waste,” said Marwin Hoffmann, vp of global outdoor marketing at Adidas. Nike, on the other hand, has more so focused on keeping existing products in the loop with a dedicated refurbishment and takeback program. However, there are rumors that Nike will soon be making regenerative sneakers with a negative carbon material.

By the end of 2024, Adidas also wants to eliminate its use of virgin polyester. And the company wants to reduce its carbon footprint by 30% by 2030. According to the brand, its sustainability targets are very ambitious, equating to big challenges it can’t solve alone. So far, since the start of its work with Spinnova six months ago, it’s produced 1,500 of the HS1 jackets. Additional quantities will go on sale on July 15.

“Adidas has a two-tiered strategy, when it comes to the ‘made with nature’ part of its regenerative plan. The first one is to invest heavily in innovation,” said Hoffman. “Secondly, we are aware that we will not be able to do it alone and that we need to partner with the best brands and brains outside — even sometimes with competition, where we are happy to run shoulder-to-shoulder together with them to fight these challenges on sustainability.” In 2020, Adidas partnered with sneaker company Allbirds on a running shoe stamped with the amount of carbon created in its production.

The first 1,500 HS1 hoodies went to the brand’s Adiclub loyalty members who signed up to a waitlist in February and purchased them for $180. Adidas hopes to eventually expand its use of regenerative fibers to its full product range. The hoodie only features 25% Spinnova fibers, to ensure performance qualities are maintained, according to the company. “As we are a sports company, we can’t compromise innovation for quality. On the outerwear side and on the Terrex side, the quality challenges and our ambitions are extremely high,” said Hoffman.

Spinnova fibers can be knitted and woven like cotton, but there is still a learning curve to using them. Janne Poranen, co-founder and CEO at Spinnova, taught Adidas’s supply chain partners how to work with the material. “All the fibers in the hoodie were produced in our pilot program; we are not in commercial production yet,” said Poranen. “Our first commercial pilot will start at the end of this year. The target now is to do 1 million tons in volume in the next 10 years.” Scaling regenerative fibers, which will become easier to work with and have improved quality over time, will be key to Spinnova’s long-term success with big brands like Adidas. 

As new technologies allow for more innovation, mega-brands like Adidas will have to re-think the very definition of performance quality. “We have to challenge ourselves internally and as a business,” said Hoffman. “Are these Adidas quality standards, which might have been there for the last 5-10 years, going to have to be adapted going into the future? Man-made fibers have a very different hand feel and different moisture properties than these natural fibers. Even if you think about natural fibers like those from Spinnova, as the fiber is completely new in the market, there is no benchmarking against it,” said Hoffman.

Anne Nebendahl, senior design director at Adidas, noted that it’s not just the manufacturing processes that need to change, but it’s also the brand’s thinking processes. “We need to design a recyclable product that needs to last but also consider its end of life,” she said. 

Adidas scored the highest out of all sports brands in the Business of Fashion’s 2021 Sustainability Index. Its hope is that brand collaborations, like its sneaker collab with Allbirds, and partnerships with companies like Spinnova and Parlay for the Oceans will put it ahead in what has been termed “positive competition.”

“It’s a head scratcher,” said one agency executive.

Google and Comcast had reportedly been the frontrunners to win Netflix’s business given the respective maturity of their streaming ad tech stacks and the scale of their streaming ad sales. By contrast, Microsoft was once an ad tech behemoth that seemed to be exiting that business up until its acquisition of AT&T’s ad tech arm Xandr, which had failed to live up to its promise under the telecom company’s umbrella.

Despite the surprise, there are cases to be made to support why Netflix chose Microsoft — as well as cases for why to question Netflix’s choice. Here’s a sample based on conversations with industry executives following Netflix’s announcement.

For: A comprehensive offering, free from conflicts of interest 

You don’t have to delve too deeply into the annals of digital media’s history books to find out how Xandr became the product of AT&T’s 2018 purchase of AppNexus, the poster child of independent ad tech. 

At the core of its Xandr’s messaging was that it only offered ad tech, unlike the reputed tethering of Google’s owned and operated media to its ad stack. It’s likely that a reprise of this messaging helped Microsoft win out over the reported early frontrunners to Netflix’s foray into carrying ads — YouTube-owner Google and Peacock-owner Comcast. “The two big names that everybody was putting their money on had very big conflicted businesses in YouTube and all of the Comcast streaming platforms,” said Mark Giblin, CEO of LightBox.

The global scope of Microsoft’s business and operations could have also helped it edge out Google and Comcast, considering that 147 million of Netflix’s 222 million subscribers reside outside of the U.S. and Canada. “Microsoft gives Netflix a global partner that can both serve their tech and monetize in every market around the world, not just the top ones,” said Dave Morgan, CEO of TV ad targeting firm Simulmedia.

Obviously, Google could similarly support Netflix at a global scale, but there’s the competitive concern that likely would have canceled out that checkmark. And Comcast does operate internationally, for example with its Sky business, “but not as much as Microsoft,” said an agency executive.

Meanwhile, pure-play ad tech players Magnite (a historic supply-side platform that also operates the SpringServe ad server) and The Trade Desk (the largest demand-side platform in the market outside of Google’s DV360) had also been brought up as potential Netflix partners by some. 

However, Microsoft’s more comprehensive offering — Xandr also has an ad exchange and ad server in addition to its DSP — would likely have proven an advantage over these potential suitors. 

“Magnite would probably be disappointed because what Netflix needs is an ad server, a sales team plus some kind of connection sales tech, like an SSP, and they were in a position to provide all of that,” said Giblin. “The Trade Desk is a great source of demand but they wouldn’t have had the tech you need, as you need to start from the ad server-up,” he added. “Just a DSP plug-in is not going to power the whole lot but that’s not to say they won’t plug-in as a demand partner.”

Against: This deal runs the risk of Netflix trying to do too much too soon

Clearly, this deal has a lot going for it: Netflix has access to tech and talent now that would’ve taken longer to build and been more expensive to recruit on its own. That said, it could also complicate what should be a straightforward sales proposition: Advertisers come to Netflix to buy ads in the shows that best represent their consumers. However, Microsoft is anything but a straightforward advertising play.

Yes, the Xandr ad server Microsoft now owns could facilitate direct deals. But Xandr also has a programmatic bidder and an exchange, as well as some smaller tech it acquired along the way — not to mention other standalone ads businesses in LinkedIn and Bing that could effectively license to Netflix. In short, it’s complicated, which a direct ads sales business isn’t.

“Why build an innovative ad tech that is predicated on complicated and privacy sensitive data dependencies?” questioned Gartner’s Schmitt. “Surely, Netflix could just sell to the biggest advertisers around the world on velvet rope deals — that’s what Hulu did when it was starting out.”

It’s a pertinent point that sheds some light on why Netflix hasn’t made a call (at least publicly) on whether it will start off selling direct ad sales (non-programmatic).

“Honestly the only conversations we have had with [Netflix about the ad-supported tier] don’t even get into that level of detail,” said a second agency executive when asked whether Netflix has indicated any preference between selling ads programmatically or directly. “It seems that they are just in initial discussions around where there is interest and how much interest there might be, separate from the way they would actually sell it and serve the inventory.”

Programmatic is a messy business that’s contorting its way through a lot of existential headwinds right now. It would be wise for Netflix to let things settle before venturing in, said Schimitt.

“Netflix doesn’t need to come out the gate with a complicated advertising proposition,” said Schmitt. “If Netflix tries to do too much too fast and makes the ad proposition appealing to so many different types of advertisers then that could take them closer to the data deptication and privacy issues that are affecting so many other players in the market.”

For: Microsoft’s ad tech ties to traditional TV

Perhaps surprisingly given its digital pedigree, Microsoft provides an inroad for Netflix to court traditional TV advertisers.

Before AT&T offloaded Xandr, the telecom company acquired Clypd, a supply-side platform that TV networks including Disney, Discovery and Fox used to sell targeted ads on their linear TV networks. Within Xandr, Clypd plugged into the ad tech organization’s DSP Invest TV, providing TV ad buyers and sellers the tools to programmatically manage direct deals. And TV ad buyers have continued to use Xandr’s technology to programmatically buy targeted TV ads since the Microsoft acquisition.

“We’re using the platform to plan it, activate it, report on it, and they have inventory partnerships as a DSP with all the TV networks,” said the first agency executive.

The traction that Xandr has on the traditional TV side could help Netflix to quickly set up those traditional TV advertisers to buy the streamer’s inventory. While Xandr doesn’t have as much traction among streaming and digital video advertisers — more on that below — that could work in Netflix’s favor initially.

“You would think they would just want to limit the number of advertisers. Digital platforms have thousands of more advertisers; does Netflix even have room for those advertisers to be inserting into their content and commercial time?” said the first agency executive.

Furthermore, Xandr can likely assuage Netflix’s concerns about how its data will be handled. Netflix is notorious for keeping its data close to the vest, not even sharing viewership stats with show makers. But Xandr has a track record of guarding sellers’ information.

While corporate sibling WarnerMedia became Clypd’s tentpole sell-side customer, the SSP still supported other TV networks and built firewalls to protect the networks’ respective sales data from being shared with one another as well as from being shared within AT&T. “We spent quite a bit of time making sure we’re not only protecting sensitive sales data but making sure there’s no way sensitive sales data is shared beyond the Xandr tech teams,” a Xandr employee told Digiday last year.

Against: Microsoft is unproven in streaming

While Xandr has developed a business in traditional TV, its streaming ad business is still a work in progress. 

“Their underlying ad serving, analytics and programmatic are as strong as anyone’s. For sure, pure streaming ad serving is still on a development curve for them,” Morgan said.

When AT&T acquired AppNexus in June 2018, AppNexus’s digital video advertising business was fairly small, and its efforts to develop streaming ad tech capabilities were only getting started. Then, after AT&T folded AppNexus into Xandr later that year, the telecom company’s ad tech arm was primarily charged with building up AT&T’s addressable TV advertising business, which included efforts like enabling WarnerMedia’s TV networks to use Xandr’s tech to sell ads targeted based on AT&T’s customer data.

To be clear, Xandr has developed streaming capabilities. Clypd’s ad tech supports connected TV ad deals, for example. However, multiple agency executives said they were unsure how developed those capabilities are at this point. 

“They were pouring a lot of resources into extending beyond linear, but no one knows how far they’ve gotten,” said the first agency executive.

“Microsoft isn’t really a huge player in the premium video space even with Xandr,” said a third agency executive. “We’re a huge buyer of premium video, and I don’t even know who my Xandr sales rep is.”

For: Microsoft knows a thing or two about advertising

An agnostic partner with strong tech would pique the curiosity of any exec looking to snare ad dollars. But a partner with all that plus links to those ad execs who sell and buy media will get their attention.

Remember, Netflix is trying to set up an ads business at warp speed. Working with a company that’s part big advertiser, part influential media owner is a no brainer. In fact, it could make all the difference in the early days of setting up an ads business that needs to hit the ground running.

“It’s the people factor,” said Gartner research director Eric Schmitt. “Netflix could get access to talent across both the sales and advertising sides of Microsoft via the partnership. That’s key when you think about how Netflix could leverage the expertise and relationships those teams have with the rest of the industry.”

Take media agencies, for example. Microsoft sells media to the largest media buyers around — relationships Netflix could undoubtedly lean on. Or, maybe the streaming giant decides to strike out on its own, but not before learning a thing or two from how Microsoft pitches to agency execs. It’s never as straightforward as it sounds.

Sure, pulling together a deck on the power of a consolidated scale might be easy enough, but there are levels to consider. Microsoft is up there. Few media owners around know what it takes to get advertisers to cough up large wads of cash better than Microsoft.

Against: Ads blowing up on Netflix isn’t a dead cert

A deal with Microsoft can’t really solve a wider, more existential issue for all ad-funded businesses: advertising could become a regressive tax; the more the consumer can pay, the more they can avoid ads.

“Advertisers may feel that they’re targeting people who are not necessarily those they thought they’d be able to reach once Netflix started selling ads,” said Schmitt. Should this happen then marketers are likely to look at advertising on Netflix differently. Insights from a recent Gartner bring this into sharper focus. It found that the majority of viewers who are open to trying Disney+ and Netflix ad-supported plans already use both ad-supported and ad-free services today.

Meanwhile, most ad-free-only viewers, who unsurprisingly skew to above-average incomes, will continue to pay to avoid advertising. Marketers will want to keep this dynamic in mind as it suggests advertising on Netflix as buying more efficiently — not a vehicle for incremental reach. “The reality is ad-supported tiers tend to skew toward lower-income households because the people who have higher disposable incomes pay not to see them,” said Schmitt.

In conjunction with this campaign, Lipton hosted a contest in which fans could enter the Lipton Fam Fest Hosted by T-Pain contest until August 28, by scanning the code in participating stores. They were asked to share how they contribute to the building of a better community to enter to win a $10,000 grant and tickets to the festival.

Overall, Lipton has a “more millennial focus” with its marketing currently, per Chauncey Hamlett, vp and CMO at PepsiCo Beverages of North America, adding that the brand is continuing to work with T-Pain as “he’s relevant for millennials and also Gen Z. He’s someone who has a broader reach.”

In the new campaign, titled “Have Some Tea with Cousin T,” T-Pain reprises the role of the titular character from last year’s marketing blitz. “You’ll see this campaign come to life across multiple retail outlets and stores with signage and imagery around T-Pain and the program as well,” said Hamlett as the digital spots will be on social channels such as Instagram, TikTok, Twitter, and YouTube and the OOH component will be display boards across retailers.

Taking into account this aspect of the topic, Lipton will be looking at how they can reach a larger audience to engage more effectively. In addition to the award, winners will receive a gift box with a Lipton Iced Tea tasting kit and restaurant gift cards as a tribute to their community impact. “You’ll see this campaign come to life across multiple retail outlets and stores with signage and imagery around T-Pain and the program as well,” said Hamlett.

It is unclear how much of its advertising budget is allocated to marketing initiatives as Hamlett would not share overall budget specifics. According to Kantar, Lipton’s parent company PepsiCo spent close to $674 million on advertising in 2021 and close to $162 million so far for 2022 on marketing efforts through digital and OOH displays. Hamlett noted that the spend was more attributed to influencer marketing and digital ads across social media than on OOH displays. The company also added that this year and in the future “experiential moments will continue to play a part in the strategy this year and beyond.”

In today’s world, block parties are as much a part of the culture of community celebration as they are a part of the music industry, making Lipton’s campaign the ideal platform for bringing T-Pain’s “Cousin T” to life for his fans. Ryan Detert, CEO of the AI social data and conversion technology company Influential chimed in, “Pepsi continues to innovate and find ways for customers to engage with their products and promotions. Contesting and celebrity performances are a tactic, but the content is what needs to resonate and they have seen great success with the “Cousin T” episodic miniseries.”

Lipton is not the only beverage brand that used music artists for campaigns; recently, Sprite and Dr. Pepper also combined the flavors of music and their brand to reach millennials and Gen Z to bring people together.

“It is impressive to see brands working to inspire genuine opportunities for community outreach and togetherness,” said Amanda Thurston, partner at Prophet, a growth strategy consulting firm. “Adding the component of the grant helps to incorporate not only the end consumer but also the businesses and traditional trade vendors who are critical members of the PepsiCo value chain.”