Month: July 2022

ID check

The key hits:

• The CTV ad industry continues to rely on the IP address for household-level targeting and measurement.
• But industry executives acknowledge the risk of this reliance.
• Recent moves by privacy regulators may make the IP address less of a viable identity option.

Good news, bad news. Good news: The connected TV ad industry seems to be becoming increasingly aware that it cannot rely on the IP address as the channel’s de facto identifier. Bad news: Much of the industry continues to rely on the IP address.

An agency executive I spoke to recently was talking up an ad tech firm that enables advertisers to target CTV ads to individual households. This executive asked to keep the name of the firm anonymous, but said “they have a wildly sophisticated, second-to-none approach on using [latitude and longitude] with IP to get really targeted to the household level.” However, here’s the rub: “The second IP goes away, that entire thing is going to break,” said the agency executive.

Meanwhile, an executive at another ad tech firm who I spoke to was talking up their company’s automated content recognition technology, which allows advertisers to track what shows and ads people watch on a CTV screen for targeting and measurement purposes. What identifier is this company using to tie viewership behaviors to individual households? “We’re utilizing the IP address,” said the ad tech executive.

And yet, many industry executives agree that the IP address is unlikely to remain an option for much longer.

“We should assume that it’s going to go away,” said a second ad tech executive.

“We don’t believe that in the long run that’s likely to be a viable identifier,” said a third ad tech executive.

To be clear, the IP address has already become personally identifiable information. California’s privacy law defines it as such. And the recently introduced American Data Privacy and Protection Act — the latest Congressional effort to create a federal privacy law in the U.S. — similarly categorizes the IP address as a unique identifier, making it among the data types covered by the privacy bill.

“The regulators want to tighten the noose essentially around easy ways to create identifiable streams of information,” said Ted Claypoole of the law firm Womble Bond Dickinson.

This noose-tightening isn’t necessarily new. Again, the CCPA has sought to rein in the use of the IP address since the law took effect in January 2020. However, privacy regulation seems to be ramping up recently with new provisions governing how companies would need to handle consent in order to use data like the IP address. 

The recently introduced ADPPA, for example, would require companies to provide an opt-out option that would preclude the transfer of covered data, ex. an IP address. California appears set to go a step further. The California Privacy Protection Agency — which is charged with enforcing California’s privacy law — released a draft of its planned regulations in late May that would require companies to get people’s consent before they can collect, use or share their personal information, such as their IP address, “for any purpose that is unrelated or incompatible with the purpose(s) for which the personal information collected or processed.”

“What regulators want to do is force marketers to get permission — meaningful permission — for what they want to do and take away the easy, simple way to identify somebody,” said Claypoole.

In other words, CTV platforms and streaming services will likely need to start presenting viewers with CTV’s version of the web’s cookie banners if the CTV ad industry hopes to continue to use the IP address for ad targeting purposes. Or the industry needs to wean itself off the IP address once and for all.

“I see [the IP address] as the next third-party cookie and something that will become [personally identifiable information] and make it really difficult for a lot of people to survive the [20]20s of advertising,” said a second agency executive.

What we’ve heard

“If you’re on YouTube at four o’clock in the afternoon on your desktop, looking for something to kill a half-hour before your last meeting, they know they can serve you longer content. If you’re on your phone at 8:30 while you’re on the bus, you might just want three- or four-minute-long videos. They’ve gotten very deep and heavy on the contextualization of recommendations.”

— Digital video executive

TikTok vs. Instagram Reels vs. YouTube Shorts

Nearly two years after Instagram and YouTube first introduced their respective TikTok clones — Reels and Shorts, respectively — the three short-form vertical video platforms remain pretty identical. But I spoke to several short-form video creators who were able to parse the platforms’ differences and point out the pros of their similarities. For more, watch the video above.

Numbers to know

$2 billion: How much money companies are expected to offer to secure the U.S. TV rights to the UEFA Champions League for six years.

36%: Percentage share of YouTube watch time that takes place on a connected TV screen.

>100 billion: Number of video views in April of YouTube Shorts that were cut from regular YouTube videos.

-60%: Percentage decline year over year in funding raised by creator economy companies in the second quarter of 2022.

>5 million: How many people subscribe to YouTube’s pay-TV service YouTube TV.

38%: Percentage share of Latinx households that subscribe to streaming services but not traditional pay-TV services.

What we’ve covered

How recession-proof is the esports industry:

• A shrinking global video games market is a bellwether for esports businesses.
• The economic headwinds will likely trigger more consolidation among esports organizations.

Read more about esports here.

House of Highlights’ creator-led content triples revenue:

• Creator-led content accounts for 35% of the Bleacher Report-owned property’s overall revenue.
• That share has grown by 25% in the past year.

Read more about House of Highlights here.

What we’re reading

Netflix looks for an ads boss:
Netflix is eyeing Comcast’s Pooja Midha and Snap’s Peter Naylor as candidates to oversee the streamer’s impending advertising business, according to The Wall Street Journal.

Influencer marketing upturn amid economic downturn?:
Some brands say they’re spending more money on influencer marketing in light of the gloomy economic outlook because it can be a more efficient channel than other options like running ads on Facebook or retailers’ sites, according to Marketing Brew. The situation may not be quite so rosy, though. Insider recently reported that the influencer marketing industry is already feeling the adverse effects of the economic downturn.

Some creators eschew Hollywood for digital platforms:
Not all creators from YouTube and TikTok want to make it into movies and TV shows; some see a lack of creative freedom and control in the traditional entertainment industry and are fine sticking to the digital video platforms (for now), according to The Hollywood Reporter.

The pluses and minuses of streaming’s data black box:
Streaming services like Netflix are notorious for not sharing with producers how many people watched a given show, and this data gap puts producers on the back foot when negotiating renewals, though some show makers don’t see such data as really helping their positions, according to Vulture.

NFL preps streaming kickoff for fall:
The NFL plans to move its Sunday Ticket games package to a streaming service in time for this year’s regular season, and the league also plans to launch its own streamer this fall (which will, of course, be called NFL+), according to CNBC.

Facebook and Instagram were neck-and-neck among agency pros who said they purchased ads on those platforms for their clients — 81% of agencies buying social ads invested in Facebook and Instagram. It is likely that this is the case partially due to the fact that both platforms share a parent company — Meta — which eases the purchasing process. And even as Meta faces privacy shifts, performance issues and other headwinds, marketers still find it’s an effective channel for driving sales.

The Meta-owned platforms were followed by YouTube, where 71% of agency pros had paid for ad content on behalf of their clients. One additional finding of note from the survey is that TikTok beat out Twitter — 54% of agency pros said they purchased ads on TikTok for clients compared with 48% who said they purchased ads on Twitter.

Digiday’s survey also revealed that agencies prefer buying ads on Snapchat and TikTok over posting on the platforms on behalf of their clients: 44% of agency pros said they bought ads on Snapchat compared with 33% who said they had simply posted content on Snapchat. On TikTok, where marketers are investing more time and money, 54% of respondents said they bought ads on TikTok on behalf of clients, while 48% said they had posted content there. But the opposite is true when it comes to Twitter: 48% of agency pros said they paid for ads on Twitter compared with 62% who said they posted on the platform for their clients.

Facebook and Instagram are clearly the dominant social platforms for agencies buying ads on behalf of clients, even as marketers pivot their strategies away from sales to focus on brand awareness. But younger platforms like Snapchat and TikTok continue to gain ground — although it seems as if agencies are treating Snapchat and TikTok more like ad channels than social platforms.

Snowman soon became frustrated at the lack of available data on attribution — as well as the cost of acquiring the software and data sets that could answer some of those questions. Timing was on Snowman’s side, she explained, as the cost of cloud computing and SaaS products proliferated and became more affordable over the last few years, enabling Mediastruction to build its own solutions around media mix modeling, but with a fortuitous pivot. It has since grown to about 50 staffers, with a heavy emphasis on data scientists.

“Our focus has been on how to build media mix models, and adjust them so they’re in near-real-time. That accommodates a lot of data that we have access to from digital media,” said Snowman. “So what we position as a multi-touch attribution solution is not built around identity resolution — it’s built around making sense, primarily investment sense, of the walled gardens.”

It’s solving the attribution conundrum that has driven Snowman to find better answers for her clients. She said Mediastruction built a model that defines attribution according to the client’s KPI or other dependent variable, and is looked at through the lens of each major walled garden. Then Mediastruction powers up an optimizer that recommends the next budget allocation by whatever cadence the client wants. “With that, we’re not dependent on this identity resolution or duplication,” she said, “and we’re just allowing the walled gardens to do their own thing [and] optimizing within them.”

Joy Baer, who is an advisor to media and entertainment companies, including Mediastruction, said what makes this independent shop stand out is the follow through. “They’re using tech to drive real operational efficiencies and insights for their clients that go beyond just the pitch — and I say that about the pitch because it’s very common for agencies to use technology to help them position for and win new business. It’s incumbent on the agency to really metabolize that tech and make good use of it. And some do a better job than others.”

Baer noted that the buying optimizer Mediastruction developed “is making media buying much more efficient and effective for their clients and themselves.  … I’ve seen the output of this by optimizer compared to a manual buying process and it saves hours and hours of time and literally millions and millions of computations to achieve” the client’s goals.

A marketing executive with Idexx, which targets veterinarians with advertising promoting its animal diagnostics offerings across the globe, explained that it’s that attribution extra effort that has delivered for the company, which recruited Mediastruction in late 2021. 

“They challenge us to think about the audience [veterinarians] and what their state of mind is depending on the country and how they’re approaching diagnostics, and not finely cut our marketing budget too much to where it’s ineffective,” said the executive, who declined to speak on the record because they didn’t have permission to speak to the press. “Combining products, looking at how you can combine different countries if you’re able to because of language. And really thinking more holistically about the strategy vs. focusing country by country.”

Baer cited Snowman’s leadership in an area — tech — that continues to be dominated by men. “She represents a a unique intersection of curiosity and just great female leadership, at a time when our our world needs it,” said Baer, “along with this passion for technology as well.”