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On Tuesday, Neutrogena officially ventured into the vitamin supplement space.
At CES, formerly called the Consumer Electronics Show, Neutrogena announced a partnership with Nourished, a 2-year-old vitamin brand that 3D-prints customized gummy supplements. The collaboration centers on Neutrogena’s proprietary Skin360 app, which now allows customers to scan their skin and ultimately purchase customized supplements that will be sent to their door based on results. Nourished supplements, labeled Nutrient Stacks, sell for $49.99 for a 28-day supply. As of now, there are no in-store plans for the partnership, despite Neutrogena’s mass distribution across thousands of doors in the U.S.
In September 2018, Neutrogena began selling a skin analysis tool called Skinscanner, which attached to an iPhone and paired with the Neutrogena Skin360 app. Neutrogena relaunched it in 2020 by ditching the attachment tool in place of just the app, which requests to take images with a phone’s front-facing camera before analyzing them against a database of 10,000 other selfies from a range of age groups and ethnicities. The Skin360 app gives users a score of 1-10 in five areas — dark spots, fine lines, wrinkles, dark circles and smoothness — plus an overall average. Now, before providing a recommendation from Nourished, the app also prompts customers to answer five questions about their skin goals, their skin-care regimen and their existing supplement routine. Nourished and Neutrogena declined to share the terms of the partnership.
“We have to learn and continue to iterate with our consumers and understand the full ecosystem of care,” said Logan McGill, global marketing director at Neutrogena. “We found that 70% of consumers expect brands like ours to take that next step into dietary supplements. Holistic care is part of their consideration if they want to achieve their skin goals.”
Nourished can 3D-print a custom gummy supplement based on customers’ results from the quiz. Melissa Snover, founder and CEO of Rem3dy Health, which operates Nourished, said there are over 60 billion permutations possible based on the 50 vitamins, minerals, and superfoods Nourished offers; each product contains seven nutrients. Prior to the Neutrogena partnership, the 2-year-old company sent out 15,000 subscription boxes a month, she added.
“The idea that we all need the same vitamins and minerals daily is quite flawed,” said Snover. “If people can look forward to taking their vitamins, the chances that they’ll stick with it and do it regularly are higher.”
Neutrogena has undergone an extensive and longer-term modernization strategy based on skin health. In 2021, it announced a new brand positioning called “For People With Skin,” meant to combat inequalities around socioeconomic status, race, ethnicity and access to health care. Elsewhere across the beauty industry, supplements paired with topical products have continued to grow in popularity over the past five years. While brands like Moon Juice and The Beauty Chef are centered on the inner-outer beauty concept, plenty of topical-first brands have added ingestibles to their lineup. Those include Dr. Barbara Sturm, Kora Organics, Vegamour and, most recently, Caliray.
“Drinkable collagen and pills were the first to go out there and create a massive impact in the marketplace [around the notion of inner-outer beauty]. There’s now buzz around many other ingredients that can also support skin goals from different aspects,” said Snover.
Nourished’s customer base is 53% women, and its largest demo are people between the ages of 35-45-years. Nourished maintains an affiliate-based ambassador program that began in Oct. 2022, with 500 people posting about Nourished at least once a month.
Neutrogena and Nourished are relying on paid and unpaid social media posts and existing public relations efforts to promote the partnership beyond the halo of CES. This is not the first time Neutrogena has debuted products at CES. In 2019, it showed off a 3D-printed sheet mask called MaskiD, which went into beta testing in 2021. It is the first time Nourished is debuting at CES.
“The integration of Neutrogena’s Skin360 technology adds another layer to the intensity of the tech-ness around [what we’re doing],” said Snover. “It’s an incredible decision to debut at CES, where you’re focusing on the technology empowering the customer experience and benefit. You could launch it at any beauty or skin [conference], but doing it this way brings that technology and consumer focus to the forefront.”
This article is part of a limited editorial series, called The 2023 Notebook, and is designed to be a guide to marketing and media buying in the new year. Explore the series here.
In the Bible, there’s a parable about the man who built his house upon the sand versus the man who built his house upon the rock. When the rain fell and the floods came, the house on the sand washed away. Meanwhile, the house on the rock stood.
That parable may have become more relevant across the digital advertising landscape after the advent of Apple’s iOS 14 data privacy measures made performance marketers’ jobs more difficult.
Those that built their businesses upon Meta and or Google Analytics reporting faltered. Meanwhile those that diversified both client ad spend and reporting metrics weathered the proverbial storm that was 2022, with many already making plans for 2023.
“So much of what technology has been trying to do for the last 25 years is democratizing expertise and saying if the pixel is so good, then everybody can be a digital marketer,” said Gogi Gupta, founder and CEO of Gupta Media. “Agencies that built their businesses on tools that democratized expertise are going to suffer because tools are getting worse and worse.”
There are problems everywhere.
The golden age of digital advertising, when Meta was considered the so-called holy grail of e-commerce, isn’t what it used to be. There’s still no standard resolve for Apple’s data privacy measures, rendering targeting and attribution on social media unreliable, Twitter’s turbulent takeover has spooked its biggest advertisers and at least one digital marketer said they were “burning money” with CPMs on Meta ads fluctuating from $22 one day to $41 the next.
While the pandemic did devastate many, those in the digital advertising space stood to see major dividends as online shopping took off for the last two years. E-commerce sales increased by $244.2 billion (43%) in 2020, increasing from $571.2 billion in 2019 to $815.4 billion in 2020, according to the Census Bureau’s Annual Retail Trade Survey (ARTS). But 2023 ushered in a quasi-post Covid era with changing consumer habits layered by economic uncertainty and inflation, in which there was more scrutiny for how ad dollars were spent. There was also ATT, dulling the promise of digital advertising, in which everything is trackable. And admittedly, marketers say, the industry as a whole failed to reckon with what the new normal would be.
“Most of the industry is still trying to do the same strategy and implementation that they did last year and the year before,” said Harry Kargman, founder and CEO at Kargo, a mobile brand advertising firm, in an email to Digiday, referring to media buying agencies relying on purchase and audience data to precisely target the right audience. “We used to always ask ‘is this the year of mobile?’ We should be now asking, ‘is this the year the cookie actually dies and we need to rewrite the targeting and measurement rules,’” he added.
It’s not to say marketers didn’t see ATT coming. But the pace to adapt to the changes was more of a leisurely stroll than a sprint, with many still heavily invested in Meta for its targeting capabilities. This year, eMarketer forecasted that U.S. advertisers would shell out $58.11 billion on Facebook ads, up 15% YoY in spite of iOS changes.
“Often the things that performance media channels have historically been very good at is being able to show a linkage to a sale,” said Ed McElvain, evp and director of P3, Mediahub’s media buying arm. “That sale was maybe not necessarily totally driven by that media.”
The industry’s dirty secret is that although performance marketing is good at directly tying a click or impression to a sale, correlation doesn’t always equate to causation, he added. Meaning, there’s no sure way to know if the sale would have happened with or without the impression.
Companies using last-touch attribution may wrongly attribute the success of a sale to a Google or Meta ad because that was the last click, but that person may be more influenced by other more immeasurable ads. Seemingly iOS 14 exacerbated already present issues, forcing advertisers to diversify, marketers said.
Gupta added a similar sentiment, noting that Meta’s perfect pixels “lulled a generation of marketers into making something that felt like simplistic ROI decisions.” Apple’s changes were a valid excuse for frustration through the better half of last year, he continued. But at this point, agencies need to have worked out the kinks for their clients.
It’s a revelation some marketers, including Gupta, came to last year, opting to divest from Meta, invest in TikTok, build up internal first-party data reserves and expand the rules of measurement. (More on that here.) For some, that looked like a bigger bet on TikTok ads. Albeit a small bet as TikTok’s direct response capabilities don’t compare to Meta just yet. Per Digiday+ Research, about 51% of agencies reported only dedicating a small portion of their clients’ marketing budgets to TikTok. And 25% reported not spending any of their clients’ budgets on the platform. For others, efforts drove back up the funnel, increasing investments in things digital tv for brand awareness.
By the first quarter of this year, agencies were in growth mode, still riding the online shopping wave of 2020. By Q2, things started to slow down as the impacts of data privacy changes became saddled with pandemic and economic uncertainty. In the third quarter, marketers were just looking to maintain, calling Q4 a wash and hoping for a better 2023.
At this point, in a semi-post pandemic society, performance-driven tactics don’t offer the return on investment they once did to justify costs, McElvain said. “The industry has evolved to the point where some of the attribution reasons for doing that are no longer there.”
That said, digital advertisers say they’re leaving 2022 on a higher note than it started, with a better understanding of the landscape, navigating scrutiny within big tech, scrambled targeting, new measurement systems and of course, economic uncertainty.
“Out of this chaos, there will be new winners and losers,” said Kargman.
Ad tech’s upbeat CEOs can spot the thinnest of silver linings on clouds covering all light.
Where others point out that ad spending is slowing, they agree but contend it’s still growing.
These CEOs are adamant that they will be able to spend their way to growth through the slowdown.
Even the structural shifts the industry is currently going through don’t perturb them (too much), according to five execs Digiday spoke to for this story. They believe they’ve made the necessary adjustments to come out on top.
Of course, some of those expectations are more animal than rational. That said, these execs are doing their utmost to make a compelling case for their sunnier disposition.
“We’re fortunate in that CTV is well placed to grow through this downturn,” said Mark Giblin, CEO and co-founder of Lightbox TV, a campaign management platform.
And he may have a point. Not only can this form of advertising be turned off and on with relative ease compared to linear TV, he continued, it’s also well placed to grow as ad dollars are shifted over to channels, platforms, and media owners that can guarantee more bang for the buck.
But none of this is guaranteed. CTV is a very fragmented market, after all. But any company that is solving for that i.e. making it very easy for advertisers to buy a lot of impressions across multiple platforms stands to be in with at least a shout of coming through this downturn relatively unscathed. Giblin’s confidence starts to make sense.
“The opportunity we’re going after is about how we’re offering marketers a way to buy TV from one unified plan,” said Giblin. “Media buyers from different backgrounds are being thrust together into these hybrid teams that’s reliant on TV planning experience as well as digital knowledge and activation know-how. There really isn’t really a tool that sits across all these areas of expertise that all those execs can use and build a media plan.”
But just because execs like Giblin say they have the tools to solve the biggest issues for advertisers, it doesn’t mean they will watch the dollars roll in.
Make no mistake, the scale of the task that entrepreneurs like Giblin have set themselves is vast. Whether it’s reconciling the opportunities and challenges of CTV or finding a way to pull more ad dollars into retail media, the execs behind these solutions will need to sound convinced if they are able to win over anybody else. And they will need to convince private sector investors, and marketers that spending will be worthwhile if recovery is to succeed. It is a challenge of narrative as well as action.
“This is an exciting time for advertising despite the current turmoil,“ said Daniel Knapp, IAB Europe’s chief economist. “Yes, there are new digital ad behemoths emerging but we’re moving into a period where the industry will be dominated by multiple companies, not one or two as has always been the way for the last decade or so.”
It’s hard to say who comes out on top in a pivot like this. Even so, few would have pegged ad tech. Not when so many of these businesses ply their trade at the tip of the online advertising spear where dollars can be ephemeral. Look at the number of ad tech bosses worried over the flow of ad dollars into their businesses drying up.
Still, Mark Walker, CEO of Direct Digital Holdings, is adamant there are also reasons to be optimistic about ad tech’s chances.
His rationale being that as much as ad dollars are going to contract, a lot will also go toward more quality inventory. After all, advertising doesn’t stop in a downturn. It just tends to get more canny. Publishers want to work with ad tech companies that can aggregate the best inventory available. Marketers want tools to control how they source that inventory. Direct Digital Holdings does both. Turns out, the best way to make money in ad tech these days is many ways.
“Because we’re more of a performance-based solution that operates in the middle market we’ve seen a clear interest from marketers who are intent on maintaining sales to generate revenue,” said Walker. “On the flipside, there are many publishers who know they’re better off leveraging as many programmatic partners like ourselves as possible in order to drive up their prices.”
To be fair, what else is an exec like Walker going to say? Beyond a certain point, cynicism is worth less than an optimistic temperament. That’s certainly true for those ad tech CEOs with a longer term thesis on how online advertising is going to shake out. Panic too much and they undermine that view.
On this basis, the current crop of ad tech companies on a hiring spree stacks up. Remember, recessions are never just about firing — of which there have been a few. They’re also about hiring in pursuit of a lasting advantage. Events over the last quarter make this abundantly clear.
The Trade Desk has around 275 open roles currently posted, for example. Adform has around 60 vacancies, while Smart Ad Server has nearly 40.
Add Ogury to this list of companies doing more hiring than firing.
“Even if the overall growth of the ad industry is set to be flat or slightly down this year, the digital part of that mix continues to grow between 5 and 10%,” said Ogury’s chief operating officer Geoffroy Martin. “We’re a very small part of that at around 500 employees globally so there’s a lot of opportunity for us to grow.”
Like many of his peers, Martin’s more positive outlook boils down to something like this: “Ogury is a great company with short-term uncertainty and long-term potential.”
Translation: The short term uncertainty is pretty obvious by now. As for Martin’s optimism, that’s primarily down to two things: the company has expanded into several new markets that should provide a much needed boost to the company’s revenue line; moreover, Ogury markets itself as a targeting company not reliant on personal information at a time when online advertising is moving from precision to prediction.
To be clear, these businesses all have their problems — stellar profitability for one. For now, though, they’re still able to consistently pull ad dollars into their platforms, mostly through tight ties with media agencies and publishers. More importantly, these businesses are able to consistently take a cut from those ad dollar flows and in turn get clients to believe in whatever value they’re purportedly able to add, from targeted reach to frequency management.
This article is part of a limited editorial series, called The 2023 Notebook, and is designed to be a guide to marketing and media buying in the new year. Explore the series here.
Back in September last year, marketers had high hopes for the fourth quarter despite the ongoing economic uncertainty and recession concerns. Marketers at the time weren’t nearly as far along in planning as they usually would be, citing the lack of clarity as a main driver in the need to shorten planning windows and create more flexibility as they would take things month-by-month, hoping for good news.
But ultimately Q4 didn’t deliver on the kinds of sales marketers were hoping for with major retailers like Target expecting slowed growth and brands and tech giants Facebook, Twitter, HP, Netflix, Robinhood, Glossier and more cutting jobs.
And history seems to be repeating itself with Q1 planning happening several weeks later than usual and the push for flexibility continuing. While that’s not the case for everyone — some marketers said planning is pacing like usual — there’s a sense overall from marketers and agency execs that early 2023 will be all about caution, with many pulling back on experimental budgets to stick to media channels that are more tried and true.
“Q1 planning is definitely happening later than usual for the majority of accounts, with clients wanting to support their campaigns, but balance that with flexibility,” said Stacey Stewart, U.S. chief marketplace officer at UM, in mid-December. “Campaigns with early January starts are being finalized but it was a bit more of a rush than normal. Some clients are only booking a few weeks at a time to manage for flexibility. Anything with a later start in Q1 is largely still being planned.”
It’s been difficult for marketers get a good sense of what’s to come as the current downturn hasn’t followed the same path as the previous downturns just yet. At the same time, while ad spending figures appear down it may be more a case of dollars moving to incremental rather than being cut altogether.
Mo Said, founder and CCO of Mojo Supermarket, acknowledged that Q1 planning is happening later than usual. “People are trying to hedge bets and see what’s happening with the economy, which is going to be really hard for them to see right now. [They’re] not going to have an exact answer.”
That marketers would continue to exercise caution heading into Q1 of 2023 isn’t surprising. Over the last few years of the pandemic, marketers have become accustomed to pivoting plans to deal with various changes in consumer sentiment and many expect marketers and agency execs to operate in a similar manner in early 2023.
The lack of clarity into what this year will truly bring — a true recession or the continuity of economic uncertainty — will likely have marketers rethinking strategies, plans and spending which will push them to ask for the flexibility that the pandemic has pushed them to establish in other deals.
Dealing with uncertainty has been the “common descriptor” over the last three years, said Mark Weinfeld, svp and managing director for Innocean, so why is Q1 planning different this year?
“With the world economy continuing to slow and much of Europe already in recession, many companies are worried how this will impact their business not just in Q1 but throughout 2023,” said Weinfeld, adding that the U.S. just went through an important mid-term election, “that had many social and financial implications. So that led to the delay for many.”
Weinfeld continued: “Add in the fact that there are still labor and raw material shortages has had a lot of business leaders being more conservative in their forecasts. So budgets are not only late, but also more conservative. These delays will have a significant impact on marketing activity in Q1.”
It’s no wonder, then, that marketers would take their time to set Q1 plans in stone as the outlook has been unclear or dark. That’s not to say all marketers have delayed nailing down plans but that there’s certainly been an effect on how marketers will operate next quarter.
“For clients dependent on product releases, especially technology, there is a bit more caution,” said Carrie Philpott, chief client officer, Wunderman Thompson North America, adding that the shop has seen typical timelines for planning this quarter but more caution. “We have seen more of a conservative approach to overall spend.”
Some marketers aren’t just taking a more conservative approach to budgets or looking for areas to cut in the New Year but asking agencies how to spend their budgets in ways that will help their brands stand out more than ever next year. “I saw this when Covid happened too,” said Mojo Supermarket’s Said. “In a year like we’re about to have, people want to outsmart instead of outspend.”
Said added that when brands don’t have the ad dollars they require they may turn to finding other means to stand out — making their ads more unique or rolling out rebrands, whatever it may be to “stay relevant in a year where we might not know how much money we have for media,” explained Said.
Marketers expect there to be more “scrutiny and rigor,” noted Stewart, when it comes to where ad dollars are spent in the first quarter. Others echoed Said’s analogy of early Covid, when chief financial officers held the purse strings more tightly. Given the economic climate, many expect a similar need to prove out the importance and worth of advertising in early 2023.
“It’s going to be make or break,” said Said. “You’re either going to do something amazing or what you’ve always done and you know works and you’ll die.”
This week’s Future of TV Briefing looks at some of the top questions facing the TV, streaming and digital video industry in 2023.
The key hits:
Nice as it can be to see the start of the year as a reset, industry trends don’t really adhere to calendar schedules. The trends affecting the TV, streaming and digital video industry toward the end of 2022 weren’t exactly cheery, nor did they likely take off for the holidays and resolve to enter 2023 anew.
Sorry, that’s a dour note to open the new year. The economic downturn and expectation that it will turn down further — combined with the stormy January start in typically sunny Southern California — has put me in a pall. But 2023 doesn’t have to suck. There are a lot of factors that may lead it to suck, sure, but circumstances could play out in a way that 2023 serves as something of a positive watershed year.
In short, how happy the new year will be is a big question. It could be happy; it could be horrendous. So under the ethos of “prepare for the worst, hope for the best,” here are some of the top questions facing the TV, streaming and digital video industry in 2023.
What are the costs of TV’s and streaming’s austerity era?
Cost-cutting was among the biggest industry trends in 2022, especially in the second half. That trend will likely continue in 2023 if the economy worsens, which seems to be widely expected. But what are the costs of this cost-cutting?
TV and streaming show buyers have been unwilling to pay as much for shows or to buy as many shows as they have in the past. In many respects, this is a correction. There have been so many shows being churned out, and many likely underdeliver on advertising and/or subscription revenue proxied by viewership. Also, the costs to produce shows have been increasing. So something seemingly had to give.
But if Warner Bros. Discovery decides to stop paying for NBA rights or Netflix concentrates its programming output on cheap reality TV shows and broad-appeal Ryan Reynolds movies, at what point do audiences tune out? Or does this correction create new opportunities for producers to come up with new creative concepts given the financial constraints? Or does it create an opening for newer forms of entertainment to take hold?
Similar to how the pandemic gave us, yes, too many Zoom-shot shows but also specials like Bo Burnham’s “Inside” for Netflix and an influx of short-form vertical video creators on TikTok, the fiscal concerns could make distributors more open to alternative sources of programming. They could order shows from digital video creators — like Warner Bros. Discovery’s HBO Max did for the recently released documentary from Channel 5 News — or license their YouTube libraries. Production budgets have largely served as the dividing line between “TV” and “video,” but that line is not only blurring but evaporating.
Will the streaming audience shift settle down?
Another big trend in 2022 was the subscriber growth slowdown among streaming services. I mean, Netflix lost nearly 1 million subscribers in a three-month period, and that was considered better than expected. Meanwhile, on the ad-supported side, audiences fragmented across the likes of NBCUniversal’s Peacock and Paramount’s Paramount+ and Samsung’s TV Plus and Roku’s The Roku Channel — and that was before Netflix and Disney’s Disney+ entered the fray.
If the economy worsens significantly — the question belying all questions — to what extent will streaming audiences continue to shift? Household budgets are under pressure. Streaming services continue to raise their prices with the upcoming combination of HBO Max and Discovery+ seemingly next on deck. And streaming service owners, including Disney and Paramount, continue to seek the solace of the bundle to secure subscribers.
Could that lead people to consolidate their streaming subscriptions? Or will it push them to downgrade to ad-supported tiers, and could that counter any consolidation? And will the filled-out roster of lower-priced ad-supported streamers — plus options for streaming-only audiences to access some live sports like Major League Soccer through Apple and the NFL through YouTube — spur a heightened rate of people to cut the pay-TV cord?
Will streaming steal the upfront?
Over the past few years, streaming has been eating into traditional TV’s share of ad budgets committed in the annual upfront marketplace. For the past two years, 40% of the upfront ad dollars secured by Disney have been earmarked for streaming and digital. That’s getting close to the seemingly inevitable inflection point when streaming overtakes traditional TV for share of upfront advertisers’ wallets.
Could that rubicon be crossed in 2023? Eh — maybe. Major live sports that are able to attract a large, concurrent audience, particularly the NFL, remain largely the domain of traditional TV, reinforcing the upfront as an arena dominated by traditional TV ad sellers. Besides, traditional TV is considered by brand advertisers — the upfront’s primary customer base — to be more cost-effective than streaming.
But streaming could still usurp the upfront. For starters, the traditional TV ad sellers continue to accumulate more streaming ad inventory. Disney+’s ad-supported tier, for example, may accumulate enough audience by summer to push Disney’s streaming upfront share closer to the 50% mark. Meanwhile, Netflix will enter the upfront market this year and may have shaken off its slow start by then. And YouTube will likely use its NFL Sunday Ticket acquisition to polish its upfront pitch. Then there’s the potential for the flexibility of streaming ad buys as well as streaming’s targeting capabilities to lure advertisers to lessen their fixed annual upfront commitments overall.
Will TV’s measurement currency change over?
A year ago, 2022 was looking to be the year that advertisers, agencies and TV networks tested out measurement alternatives to Nielsen, setting baselines for comparing counts and setting up for 2023 to be the year when they could shift to non-Nielsen measurements to serve as the basis for their upfront transactions. Then the testing happened, and TV ad buyers and sellers learned how much more work is needed.
Nonetheless, the TV ad measurement currency changeover will happen. In 2024, Nielsen will complete the transition to its new Nielsen One measurement system, effectively wiping the slate clean across the board. So if not this year, then absolutely next year.
But still, this year could be, if not the year, then more than another setup year. NBCUniversal convinced some undisclosed number of ad buyers to adopt iSpot.tv as a currency in their upfront deals last year while persuading 40% to move away from traditional age-and-gender-based metrics, and the media conglomerate will likely look to further accelerate those shifts this year. Meanwhile, Warner Bros. Discovery opened 2023 by announcing it will support VideoAmp as a currency option. Then there’s the wild card that ad buyers and/or sellers may see some incentive to adopt alternative currencies, either in order to create competition for Nielsen as their individual deals with the dominant measurement provider come up for renewal or in exchange for deal concessions like pricing agreements.
How much money will YouTube and TikTok pay out to short-form video creators?
The big story in 2022 for the short-form video market was the pair of announcements from TikTok and then YouTube that they would introduce revenue-sharing programs for their respective short-form vertical video platforms. The big story in 2023 will be how those respective programs perform.
TikTok’s Pulse program technically launched last year but was largely in testing mode, while the YouTube Shorts revenue-sharing program has been slated to start in February. It’s hard to know how quickly either program will generate meaningful revenue for eligible creators and publishers, especially if the advertising market is further impacted by the economic downturn. Expect a lot of “early days” utterances from TikTok and YouTube executives.
That being said, the fact that both platforms will be in the market with revenue-sharing programs should mean there’s a race for each to outperform the other in order to woo creators away from the other. So also expect creators’ Discord servers to light up as they assess what the platforms are paying and which they should be prioritizing. Of all the questions facing the TV, streaming and digital video industry at the start of 2023 — and having spent the past decade writing about creators wishing for a revenue-sharing rival to YouTube — this is the one I’m most excited to get some answers to.
“We’ve done series that were fully funded by a brand, and the [TV] network doesn’t care because they didn’t have to pay for it. But then the client asks, ‘Why is [the show airing] on Saturday at 3?’ Because [the network] just took it as ad dollars.”
— Production executive
2%: Expected percentage increase year over year in TV networks’ and streaming services’ content spending in 2023.
$2 billion: How much money per year YouTube will pay to distribute the NFL’s Sunday Ticket Package.
50%: Percentage decline year over year in the amount of money venture capital investors invested in creator economy companies in 2022.
1.31 million: Average number of viewers that a traditional TV show gains in the seven-day window following its original airing.
33%: Percentage share of Gen Z viewers who don’t watch any sports.
Why streaming wars between Netflix, Paramount+, others are heading to video games:
Read more about the streaming war’s gaming front here.
All creators want for Christmas is… the ultimate platform:
Read more about creators’ platform wishes here.
Does Paramount’s move away from Upfront Week signal a real trend away from traditional advance selling and buying?:
Read more about the TV upfront here.
A bill to ban TikTok is gaining traction in Congress, and with some marketers:
Read more about TikTok’s potential ban here.
A Q&A with Netflix’s Jeremi Gorman on her New Year’s resolutions for 2023:
Read more about Gorman’s resolutions here.
YouTube’s NFL deal:
YouTube’s desire to grow its connected TV viewership and increase subscription revenue were two of the primary factors for its decision to buy the NFL’s Sunday Ticket package, according to The Verge.
Amazon’s sports streamer:
Amazon has looked into rolling out a standalone app for people to stream sports, according to The Information.
Talent agents’ ad revenue ambitions:
UTA CEO Jeremy Zimmer believes producers should get a cut of the ad revenue from programming placed on streaming services’ ad-supported tiers, according to the Financial Times.
Late-night TV’s overhaul:
Late-night TV viewership has been on the wane, and combined with traditional TV’s financial ongoing challenges, the programming daypart may be due for a shakeup in 2023, according to Deadline.
This article is part of a limited editorial series, called The 2023 Notebook, and is designed to be a guide to marketing and media buying in the new year. Explore the series here.
It’s not often a new revenue opportunity comes along for media agencies, as their traditional sources of income (commissions on planning and buying) dry up in the age of procurement.
That’s in large part why both holding companies and independent agencies have rushed to grow their commerce media units — it’s a new vein of revenue that happens to coincide with and take advantage of the rush of new retail media networks and e-commerce companies formed over the last two years.
IPG’s UM shop recently expanded the scope of its long-time UM Shopper offering to the broader UM Commerce, a tacit realization of the broader commerce media potential. Likewise, Omnicom earlier in 2022 tapped a commerce czar in Frank Kochenash. On the indie side, Court Avenue expanded its e-commerce offerings while Icon Commerce rebranded to reflect its focus in the area.
There are numerous facets to commerce media, with a long-term enterprise value McKinsey pegged at $1.3 trillion by 2026 (of which agencies can expect to generate $5 billion in revenue).
For one, there are the growing number of retail media networks (RMNs), most of them based in the U.S., which together could haul in something like $100 billion by 2026, according to McKinsey’s report. Seemingly, there’s a new one announced almost weekly, the most recent being Fyllo, a cannabis-themed RMN, as well as a new retail ad network from ad-tech firm Quotient, which introduced an aggregator of sorts to other RMNs just before the holidays.
“At present, retail media only accounts for about one-tenth of a brand’s total ad spending on average, but we’re hearing from our clients and partners that more and more conventional media dollars are going to be reallocated to retail media,” said Lisa Hurst, evp of marketing and strategy at full service creative shop Upshot Agency. “Especially as these networks become more sophisticated and better partners in executing omni-commerce campaigns. We expect to see more retailers launching their own media platforms.”
Agencies with multi-national reach could end up benefiting, as RMNs are expected to grow quickly in other parts of the world as well, noted Carolyn Murphy, vp of Americas with WARC/Ascential.
Then there’s the broader e-commerce world, which includes the granddaddy of them all, Amazon — a company that seems to grow but under the strains of a competitive pinch from companies like Walmart. E-commerce also includes livestream shopping, which hasn’t quite materialized as its proponents would hope — although not for lack of trying.
Possibly the main challenge within both the agency and client worlds — when progress is being made — is getting one side of the business to talk to the other. Shopper marketing budgets aren’t the same as media budgets, and they’re usually under different P&L lines in both agencies and brands.
Likewise, much of lower-funnel, performance-driven media work relies on wholly different stats, KPIs and measurement tools than upper-funnel brand-driven efforts. For commerce media to deliver better results, those gaps need to be filled by other insights. That doesn’t always happen.
“The distinction at the client level between retail media performance media, or commerce media, is not a clear distinction,” Jay Pattisall, vp and senior agency analyst at Forrester, told Digiday in September.
There’s another potential challenge some brands will have to overcome in this growing space, noted Michael Shields in a recent Next in Marketing blog post. He wrote that brands that don’t already have shelf space with a retailer that offers an RMN can end up paying higher prices.
But on the positive side, there’s a good chance that media agencies will be able to figure out with their clients how to harness the right insights to start getting non-endemic categories (from autos to travel to entertainment) to spend their marketing dollars in commerce media. And why not? Just because you bought more detergent on Kroger’s website doesn’t mean you might not also be interested in a deal on a new car, right?
Stagwell, already trying to differentiate itself from other agency holding companies by building out offerings to clients that are in-housing, will announce at the Consumer Electronics Show today that it’s launching a new unit within its Stagwell Marketing Cloud (SMC) division that houses new tech options.
Stagwell’s new Specialty Media business unit essentially introduces three more new offerings to SMC it hopes will become monetizable:
On the surface, the three new elements added to SMC seem incongruous fits, given they don’t have seemingly much to do with each other — and given that SMC also offers various SaaS and DaaS products, even research as a service (RaaS?), all of which delve into even broader media terrain. But Elspeth Rollert, SMC’s CMO and evp, said the whole idea is to add fresh arrows to the unit’s quiver.
“How do we build proprietary and premium owned media channels and create these new ways for brands to tell their story?” said Rollert. “They might seem disparate and niche in some ways, but if you start to package those together, you can start to make those accessible for folks and start to connect that on the back end. You really start to create a more holistic view for the media buyer to lean into.”
Abe Geiger, chief product officer for Stagwell, explained that SMC is also in the process of building out a media mix modeling offering which will be ready later in 2023. But the expanding quiver intentionally aims to address some of the complexities of newer, more cutting-edge media opportunities available to marketers today.
“Some of the challenges when you get into like really premium but sometimes more niche things like ARound — anything that’s a really targeted but very premium experience, which is going to be somewhat different than your mainstream media — it gets a little bit fragmented and harder to activate at scale against those things,” said Geiger. “That’s where we want to help.”
Analysts do see some crossover potential within the new offerings in SMC’s Specialty Media unit.
“There are some synergies between AR and QR codes. For one thing, QR codes can launch AR experiences on billboards, screens, or in stores,” said Yory Wurmser, principal analyst at Insider Intelligence (formerly eMarketer). “Secondly, they’re both ways to integrate digital assets into a physical environment. So the pairing could work … It makes sense since you can use first-party data to personalize 3D experiences, and both QR codes and AR experiences can generate first-party data.”
ARound, which has made the most progress in signing up teams and stadiums, plans to expand into augmenting the live experience for concert-goers, both in person and at home, said Josh Beatty, ARound’s founder and CEO. But it’s also a matter of elevating the AR experience for advertisers into something more than a novelty.
“Synergy brings scale — it connects us to Stagwell’s ability to bring the largest brands and media buyers to the table and really make a market,” said Beatty. “In terms of creating this category, it is looking for players and finding out how we can fit into existing media budgets, which again are specialty at this moment … That’s really what’s needed to start from scratch and really scale.”