Month: September 2022

In a word, ad pricing in the video marketplace is quite soft, for a few reasons. For one, some clients, according to buyers, are canceling the “holds” on some of their upfront orders — meaning time they booked to purchase they are now giving back to sellers. For another, there’s simply too much ad inventory available in the marketplace, with more becoming available in the next few months between Netflix’s ad-supported tier launch on Nov. 1 and Disney+’s ad-supported tier coming online in December.

“Most of the hit right now is in fourth quarter,” said one major media buyer. 

Meanwhile, buyers said clients are still relying on somewhat outdated models that guide them toward spending more ad dollars in linear TV (broadcast and cable networks), which has the least amount of inventory available.

“We’ve got all of this connected TV and streaming supply, and that’s coupled with a loss of linear supply,” said one major buyer. “But clients aren’t moving fast enough away from the linear supply, as they should. We keep beating on our clients to do that and to follow the consumer. We continue to spend a disproportionate amount of linear cable than we should be just because of market mix models say that cable works. So it’s a little bit messed up right now.”

The buyer said the streaming services are looking to cut ad-volume deals, and offer better pricing to secure the volume. Most of the deals are “hovering around flat, maybe a percent or two down [from upfront pricing levels],” the buyer added.

Another buyer noted that the hybrid players, which have both linear and streaming assets in which to sell advertising, are in a better position than digital-only streamers because there’s a give-and-take on how to use one platform to offset the other. Whereas digital-only players have less wiggle room for negotiating.

“If you’re a digital-first company, and you only have basically digital products to offer, you’re having a tougher time getting the volume right now. And the only way to get that volume is to offer price incentives,” said the buyer. “A company like YouTube, for instance — they’ve been used to 30 and 40% growth every single year. Well, that’s not happening.”

(YouTube did experience a dramatic slowing of its growth in Q2 of this year, a relatively anemic 4.8%, which fell short of analysts’ expectations. At the time, parent Alphabet CFO Ruth Porat said the streaming giant was experiencing a “pullback in spend by some advertisers.”)

So this is the market that Netflix, a digital-only player, is entering. And Netflix, whose initial approach by ad-sales partner Microsoft/Xandr to the media-buying community has been perceived as disorderly, has made its own challenges even worse by offering a paucity of detail about what content it will make available on the ad-supported tier. 

“They’re just a mess,” explained one buyer. “They did have some sexy words to give us about how they were going to have [a] second-by-second categorization of the content. I asked when are they going to send us the category list? Because since it’s Netflix, I’m anticipating a list explaining the presence of guns, presence of drugs, presence of nudity, foul language… the biggest hits are the most violent — Ozark and Peaky Blinders. They’re basically just offering us [the] top 10 and genre targeting. But they can’t even do age and gender, or any demo targeting.”

All that said, the demand to buy Netflix and Disney+ will be there, given the appeal of their content — and the reality that audiences now spend more time watching streaming than linear cable. Buyers just say they need to lay out the positives and negatives for clients, and let them decide. 

Which, at an asked-for $65 CPM in this soft market, will surely drop in this soft market. News of the cost generated a slew of memes poking fun at Netflix. 

“What we’re doing is we’re creating, for lack of a better term, a comparison placemat so that we are presenting the facts,” said one buyer, “and then if the clients want to engage, they can and we will negotiate the best possible price.”

Color by numbers

Concerns over a coming recession have not slowed down ad spending on Meta-owned Instagram. In H1 2022, MediaRadar reported combined spending of more than $4.7 billion across both small advertisers and larger companies.

• 87% of small advertisers spent less than $50,000, adding up to a combined total of more than $114 million.
• Large advertisers spending more than $500,000 on the platform spent $4.3 billion.
• The media and entertainment category is the largest spender, accounting for 24% of total H1 ad spend, or about $1.1 billion invested on the social app in that time frame. Retail and apparel ranked second and third, amassing $983 million and $483 million respectively. — Antoinette Siu

Takeoff & landing

• Multiple reports said Dentsu International global CEO Wendy Clark will step down from her post sometime in the near future, as the parent company restructures to form a single leadership unit rather than Clark’s remit, which did not include Dentsu’s Japan-based operations. 
• WPP last week acquired 15-year-old e-commerce consultancy Newcraft, which is based in the Netherlands. The 150-person team will be integrated into WPP’s Wunderman Thompson unit. 
• Personnel moves: TV measurement firm iSpot hired research veteran Will Waldron as vp of research, charged with overseeing the MRC accreditation process and statistical standards. He most recently was a lead scientist with the U.S. Census Bureau … Search intelligence platform Captify promoted Amelia Waddington from vp of product to senior vp, where she is leading the charge on a cookieless targeting solution.

Direct quote

“[Agency holding companies] will always be competitors. But there’s an aspect of this where, without shared knowledge, we’re not going to get to the common goal that we want to get to. The common goal that we want to get to is reduction — ideally, net zero carbon emissions. And if we turn this into a deeply competitive thing, it’s going to be a lot harder to get there.”

— Alison Pepper, executive vp of government & sustainability, 4A’s, on the prospect of agencies working together to decarbonize the buying and selling of advertising.

Speed reading

• Digiday senior ad tech reporter Marty Swant went behind the headlines of Snap’s loss of two major ad sales executives and layoffs of 20% of its workforce to find out where the digital platform is headed. 
• Media agency reporter Antoinette Siu looked into the latest steps the ANA is taking to combat online hate speech, this time launching an educational program and website with the Better Business Bureau.   
• Gaming and esports reporter Alexander Lee tackled the task of putting together an oral history of the world of esports, dating back as far as 1972.

Warner Media, now part of Warner Bros. Discovery, put over 450,000 square feet of office space at 30 Hudson Yards in Midtown Manhattan on the market for sublease last quarter, said Marisha Clinton, senior director of Northeast regional research at real estate company Savills.

Meanwhile, Dotdash Meredith put over 300,000 square-feet of office space in the Financial District on the market in the first quarter, according to a Savills report on the Manhattan subleasing market that was shared with Digiday. A Dotdash Meredith spokesperson said the space has been on the market for sublease since 2020, but the company has not yet secured a subtenant and was re-listed as a result of a merger last year.

Warner Bros. Discovery did not respond to a request for comment by publishing time.

BuzzFeed was paying for two New York City headquarters after buying Complex Networks in December, until the company subleased its 18th Street headquarters in Manhattan to work management software company Monday.com last month (Savills represented Monday.com in that deal). BuzzFeed moved its headquarters to Complex’s offices on 43rd Street, effectively halving the company’s New York office space. Its 18th Street location had 110,000 square feet, compared to about 107,000 square feet in the Midtown location. 

Vox Media is looking at reorganizing its office space in the next few months. The company — which has three offices in New York City, two in Los Angeles, and one each in Washington, D.C., and San Francisco — began subleasing the 11th floor of its D.C. office in January. 

“We expect to have a better understanding of our space demands this fall and plan to reprogram underused spaces,” a spokesperson said. The spokesperson declined to share more information on what that plan will entail. 

Why some media companies are shrinking their real estate footprint

Rental agreements can account for an average of up to 5% of a large company’s total operating budget, such as in the case of Fortune 500 companies, Clinton said.

“It’s a line-item expense that a company can work to mitigate,” said Nicholas Farmakis, executive managing director at Savills North America. He said he believes many companies’ hybrid workforces could be an excuse for a suffering business to offload real estate space and cut costs.

Hybrid work “provides for a little bit of cover around [protecting] against their reputation, but saying, ‘Hey look at us. We’re employee-friendly, and we’re novel too.’ It’s the best sort of PR that a company could have,” Farmakis said.

Real estate was one of the most likely business areas to face budget cuts in the next 12 months as of July, according to a study by research firm Gartner. And 59% of workplace leaders said they plan to reduce their current office space by half or more in 2023, according to a report published last month by workspace software provider Robin. Forty-six percent of companies are currently utilizing half of their available office space or less, the report found.

Office availability in Manhattan has hovered around 17% this year, according to reports by real estate firm Colliers. However, leasing deals closed in Manhattan in August increased by 7.8% since July and 39.5% year over year — marking the area’s strongest monthly leasing total since January 2020, Colliers’ August report found.

Through the first half of 2022, media companies have closed deals to lease more than 410,000 square feet of office space, compared to more than 130,000 square feet in the first half of 2021, Clinton said.

Employees welcome reducing office space as a method of cost-cutting

In the before-times, being asked to change your commute from Union Square to Midtown would make some New Yorkers groan. But BuzzFeed remains a hybrid workplace, meaning employees aren’t required to work from the New York office. One BuzzFeed editor, who asked to remain anonymous, said BuzzFeed’s HQ move “doesn’t really impact my feelings on coming into the office [because] I’m still planning to keep mostly working remotely either way.”

The editor is glad that the move will allow BuzzFeed to make money from its old offices. Monday.com will pay BuzzFeed $757,000 in monthly rent. However, the company declined to answer questions on how this money will help reduce costs and how it plans to reinvest the money.

“If losing the old office means being more financially stable, I’m all for it,” the editor said.

Vox Media is also still a hybrid workplace. Employees who self-selected to work from the office have an assigned desk at a specific location based on the teams they work with, while other employees can work at “hotel desks” from any Vox Media office, the company spokesperson said.

When asked what they think about Vox Media’s plans to evaluate its unused office space, a Vox Media journalist, who spoke on the condition of anonymity, said they “wouldn’t be surprised” if the company is looking to shed some more office space. “If a lot fewer people are going to be in the office on any given day I can’t imagine they’d want to keep spending money on a huge office space,” the journalist said.

Savills’ Clinton and Farmakis said they believe the health of the media real estate landscape will become more clear after the Labor Day holiday, when more companies start to move into the next phase of their return-to-office plans. For instance, management at The New York Times reportedly told staff in July that they are expected to return to the office on Sept. 12. 

“A lot of those policies will drive much of the real estate decisions,” Clinton said.

Last April, Deveraux joined Dentsu Creative as the agency’s first diversity lead, reporting directly to Dentsu Creative CEO Jon Dupuis and Dentsu Americas chief equity officer Christena Pyle. In her new role, Deveraux said she’s pushing for a new narrative around DE&I within the ad industry — one that looks to leverage both qualitative and quantitative information. For example, just one month after joining, Deveraux helped launch Dentsu’s creative review council, which aims to add a facet of quality control to the agency’s work, ensuring that it’s culturally relevant, accurate and authentic.

Digiday caught up with Deveraux to talk about her work at Dentsu Creative, what qualitative measurement looks like and why conversations about diversity need more nuance.

This interview has been lightly edited for clarity.

When you say agency DE&I statistics don’t tell the full story, what do you mean by that?

When we talk about representation, we’re oftentimes ignoring the fact that not everybody wants to self-identify, wants to candidly out themselves. Whether it be because they identify as having a disability, within a particular racial or ethnic community or want to identify their LGBTQ community identity. A lot of the time, the numbers we are able to share within organizations aren’t necessarily accurate, indicative of whether or not someone actually wants to talk about who they are.

So there’s a lack of nuance in reporting? Why do you think that is?

Because it is so complex. The reality is DE&I is not the catch-all for friendliness in the workplace. DE&I has a lot to do with our behaviors, personal experiences, trauma and how we perceive personal experiences. It’s so complex that it requires a lot of thought, studying [and] patience. I don’t think a lot of people make time, have time or emotional capacity to sit with the heaviness of what all of this means. That translates to what’s the easiest headline, and the headline is everybody was mad in 2020 about numbers. So, we’re only going to report about DE&I  numbers.

What are some of the things you’ve done at Dentsu Creative to help change the narrative around DE&I?

One of the first things that we started doing internally was we launched our internal creative review counsel. It’s our way of quality, culturally controlling the work before it goes out to the clients. We call it cultural fluency, internally. That’s our way of making sure that we’re speaking to what we are producing in a way that makes sense to our audience, but also can can can be heard by our marketers. [With the] FTX Super Bowl spot, we were able to partner the creative review council, creative team, production and media teams and impact the work — going as far as to add feedback about what other innovators that weren’t men and weren’t white. We were able to partner with the creative team to add in a scene with Katherine Johnson, [one of the first African-American women to work as a NASA scientist].

Since 2020, DE&I executives went from reporting to the human resource department to reporting directly to the CEO, including you. What has that meant for your role?

It completely shifts the priorities, access and people who are able to hear your voice. My own personal critique before transitioning into DE&I full time was that DE&I felt very surface level. It was primarily focused on setting up business resource groups. The primary partnership was between HR lead and diversity leader. That’s only one facet of the business. It’s now HR, finance, client, talent, all of these things, not just laddering into one one source of accountability. It also allows for more transparent conversations about what you need, gets you directly to the source. 

So what’s the resolve? How else can we measure changes in diversity without relying on numbers?

From my perspective, there are tons of other ways to determine where the opportunities are for more inclusion in a workplace that don’t necessarily have to be tied to our EEOC [Equal Employment Opportunity Commission], self-counted or self-identification numbers. For me, what is more indicative of whether or not an agency is doing well has to do a lot with how the people are feeling, how they are engaging. Your inclusion within your workplace is not indicative of how many people you have. People will still tell you they’re not seeing themselves in the meetings and they’re 100% right because it’s more than just a [key performance indicator]. It’s literally the qualitative experience. 

My pushback continues to be, the numbers can be helpful. The numbers are going to inform us about what we need to be paying attention [to]. The numbers aren’t going to tell us whether or not people are feeling like they’re being treated fairly on a team, if people feel like their voices are heard when they’re advocating for more equitable practices in the work. Those, to me, are the pieces that make the day-to-day job more bearable. And those are not the things that we’ve been paying attention to. The last two years were just knowing how many people you’ve got. 

Founded in 2017, Sweatcoin targets active people who enjoy the outdoors, particularly millennials and Gen Z. By rewarding people for taking steps with its currency, Sweatcoin aims to make people more active. Once earned, the currency can be redeemed via Sweatcoin’s marketplace, which includes using it to buy items in the marketplace or donate to charity. Sweatcoin currently has over 100 million users per Butcher.

Working with OKCupid is part of an overall partnership strategy to reach new audiences and boost brand awareness. Sweatcoin has already worked with a number of brands such as Headspace, Audible, Tidal and wants to continue bringing new brands to its roster. The terms of its agreement with OKCupid were not made available.

“Our business model from day one has been to select and work with a number of brands across the globe who we think will be appealing to our users, who are obviously fairly young, tech-savvy, interested in their health or improving their health and interested in offers and deals,” said Butcher.

After the OKCupid partnership launched this past June, all premium membership offers were claimed within a couple of hours and over two-thirds of them were redeemed within a week of its launch. However, Butcher declined to comment on how much offers were claimed.Those OkCupid users who redeemed Sweatcoin’s premium offering are able to walk around parks like Central Park, Zion National Park, Griffith Park to receive Sweatcoins. “The value Sweatcoin brings to marketers is its growing ” community” of like-minded health-conscious consumers,” said Allen Adamson, co-founder of Metaforce. “Markets get to target products/services/offers to a growing engaged community.”

The partnership was marketed in-app for users and was an organic rather than paid advertising effort. “We have a very engaged and active audience,” said Butcher, adding that the users often check the app to track their steps or compete with friends. “All we have to do is put that offer live within the app to have it exposed to millions of daily and weekly users that check in. So there is no above-the-line advertising investment or indeed digital advertising investment required.”

It is unclear how much Sweatcoin spends on advertising as Butcher would not share overall budget specifics and noted the organic approach to the partnership. There is no ad spend data available on Sweatcoin found on either Kantar or Pathmatics.

Health and wellness are important to Gen Z and millennial OkCupid users so encouraging walking dates via the partnership makes sense to industry analysts, including Ryan Detert, CEO of the A.I. social data and conversion platform.

“Sweatcoin has understood that a big portion of their audience, and the health/fitness audience in general, are also active within dating apps,” agreed Dan Peden, strategy director at the performance marketing agency Journey Further echoed that sentiment. “Insights like these seem obvious after they have been discovered but getting to those insights is a real skill that requires investment in customer research and understanding.”