Month: January 2023

“We’re coming off a Q4 [2022] that was up 30% to 31% in direct [advertising revenue], which was epic. And I think whatever bug [our competitors] had in Q4 caught up with us in Q1. We’re down right now as much as 20% to 25% in our forecast for Q1,” said an executive from a digital media company who was permitted anonymity in exchange for candor. And according to that exec, they haven’t ever had a down quarter, aside from Q2 2020 during the first three months of the pandemic.

Two other large digital media publishers told Digiday on the condition of anonymity that their businesses were about 75% booked for Q1 as of Jan. 25. For one of the execs, this was well behind the goal for amount of inventory booked that they normally set going into a new quarter. Meanwhile, the other exec said that this was actually pacing about 10% up year over year as much of their business is sold in-quarter typically.

Theoretically, “you want to walk in on day one 80% to goal and if you’re not, then you’re swimming upstream” the rest of the quarter, said the second media exec who’s pacing behind their quarterly goal. “The red line always is by the last month in the quarter. If we’re not fully pivoted to the next quarter, then we need to and whatever that quarter has given you, you deal with it, but you have to turn that corner.”

Meanwhile, a fourth publisher told Digiday on the condition of anonymity that their business was pacing about 10% down from Q1 2022, but the hope and expectation was that they would end the quarter about flat year over year. 

“This quarter has been extremely slow. The first two weeks were crickets and it was silent. It was a little bit unsettling,” said the fourth executive. The week of Jan. 16 “was the first week where we felt this defrosting,” they added, partially thanks to the in-person conversations that the sales team was able to have in Davos. 

The number of call reports from client meetings doubled week over week, and the sales team has only now been able to meet their individual goals of having five meetings with clients per week, the fourth exec said. 

For now, there is a mad dash to keep in-quarter campaigns rolling in, which is a very similar position to the one publishers’ sales teams were in in Q4 of last year. At that time, programmatic and quick-turn campaigns were key as advertisers tried to use up their final budgets for the year and publishers tried to get as much money secured as possible while looking down the barrel at a cold and foggy Q1.

“Given the uncertainty of 2023, everyone was in ‘grab as much money as you can’ mode in Q4 [2022]. And I don’t think the impact has been negative on Q1, [since] it’s the one quarter of the year – Q4 to Q1 – where there’s very little rollover,” said the second media executive.

That being said, the conversations around full-year planning for 2023 came a bit later than normal and the conversations with clients have evolved given the fact that budgets are being expelled later than normal in the first quarter of the year, the second exec added, something that sales teams are currently grappling with. 

In-quarter is in motion 

“Q4 for us ended with a lot of in-quarter, last minute [deals] that came in … more than probably we have historically had, and I think that we’ll continue to see that in Q1 and Q2,” said a fifth media exec who spoke anonymously for this story. Despite the slowness of Q1 2023, they added that their ad business is trending slightly up from where it was this time in 2022. 

Unlike other publishers who spoke to Digiday for this story, this executive’s ad business does not include programmatic or display advertising, so short-form, vertical video and social campaigns have been the quick and easy solutions to execute on advertisers’ shortened timelines.

The second executive profiled in this story said their team will continue to focus on selling light-touch campaigns, like display and pre-roll ads, for in-quarter ad buys as well as programmatic campaigns that have better return-on-investment stats for clients that need to prove their marketing budgets are working.

“Through that lens [we will be prioritizing] a lot more private marketplace and programmatic guaranteed deals. I don’t think you’ll see from anyone in this space, some ginormous, meaty, experiential [campaigns] that would be too top-of-the-funnel [focused], given the uncertainty [of the economy this year],” they said.

The second exec continued by describing the final week of January as “the last gasp of Q1” before abandoning the quarter and turning focus toward Q2 at the beginning of February. The only caveat being the media and entertainment clients who are notorious for submitting RFPs as late as March for in-quarter executions. 

Full-year campaigns are a thing of the past  

Unlike last year, fewer clients are willing to sign full-year deals, or rather, fewer clients are willing to pay for full-year campaigns this early in 2023 — about 30% of their top clientele, according to the fifth media executive.

But to keep those clients happy, they said that they signed off on their sales team “honoring some efficiencies and some of the unlocks that they would get as a full year partner that we probably historically wouldn’t have done,” like access to deeper campaign insights, first looks at new innovative campaign offerings or experiential campaign add-ons.

“Even the [clients] that are renewing for full-year partnerships are still asking for greater value because they’re then having to prove things out more than they probably ever had to before,” said the fifth executive. 

The fourth media executive said their team is allowing full-year advertisers to pay quarter by quarter — something not typically offered — this year, which has been especially popular for healthcare and telecommunications clients.

One healthcare client “got approval for the full-year budget, but they were only sending IOs each quarter,” said the fourth executive. “They’re protecting themselves, but we’ve done a deal with them based on their total spend [and] we gave discounts and we gave certain add-ons in the spirit of partnership. [We’d lose out] if they were to cut it, but those are the types of things we just have to do right now.”

RFPs are coming in hot, but not on time 

Many of the publishers who spoke with Digiday for this story said that their RFP volume was on par with 2022 or up year over year, in some cases by 300%. But their timing is off, especially in categories like finance and tech.   

“Finance was so slow, and the RFPs that we usually get in November, we just got last week,” said the fourth publisher. “That means they might not hit in the first quarter, but we’re just glad that we’re seeing them.” 

What’s more, despite seeing these clients go through layoffs and other cost-cutting measures, the budgets on the RFPs were not cut — a pleasant surprise, according to the fourth exec. 

On the tech side, the fourth exec said that their team had been dreading the conversation with their top advertising clients Salesforce, Google and Amazon, but despite the layoffs and the headwinds facing tech, they all told the publisher this week that they were committed to spending in the second quarter. 

The second publisher said that their team is receiving a high volume of programmatic guaranteed RFPs this quarter, versus RFPs that are asking for things like branded content.

Overall, publishers are optimistic about ending this year on a strong note and possibly even up year over year in total revenue, but making up for the lost ground from delayed budgets means “you have to hustle in January,” said second exec added.

“It’s still very early and I don’t know if it’s going to end up [being] as bad [as it is] right now. We have two months left to change it, or maybe [advertisers] are not going to release dollars, and it’s going to be the end of March and we’re going to be talking about this again in Q2,” said the first media executive.  

It is perhaps necessary for Snap to pivot to AR, much like Facebook and Instagram parent Meta eventually needed to diversify its slowing social media business. Plus, there have been challenges both for the company and across the industry. Last year, Snap lost key advertising leadership who were poached by Netflix to lead the streamer’s ad business, while the company laid off 20% of employees as part of a major restructuring.

Experts believe that there are growing use cases for AR to engage people, which could form a path back to growth for Snap. Some marketers have been testing AR as an easy way to experiment with the metaverse, which can attract younger audiences. They also point out that Snap’s ability to quickly roll out and update these types of features makes the app more appealing over others.

“In a social arena plagued by chaos, Snap has been a steady, reliable partner,” said Ben James, Chief Innovation Officer at data-driven media agency GALE. “While the industry doesn’t always appreciate steady versus the shiny new thing, it’s Snap’s focus [in AR] that has differentiated them from their competitors.”

Advertising growth potential

Even as the giants of social media experienced their first revenue slowdowns due to uncertainty in the economy and softness in the advertising sector, Snap outperformed some of its competitors and showed steady growth to its ad portal. For instance, Snap last quarter began to attract more traffic to its ad portal in October as Twitter’s traffic decreased.

Specifically, traffic to Twitter’s ad portal, which is different from activity on the platform, declined 19% year over year last October, while traffic to Snap’s ad portal increased 47% year over year, according to intelligence platform Similarweb. Traffic to Snap’s subdomain for ad buying activity was also up 163% last October, as Tesla boss Elon Musk continued his takeover of Twitter.

With regulators still pursuing bans on TikTok, Meta apps stagnating in user growth and Twitter’s future uncertain after Musk’s acquisition, Snap may stand to benefit from its rivals’ challenges. Based on its Q3 2022 earnings, Snap revenues increased a relatively meager 5.7% year over year to total $1.13 billion, with daily active users up 19% year over year reaching 363 million. But even as Snap differentiates itself as a leader in AR, it is likely years away from seeing a return on those investments. Snap is expected to report its Q4 2022 earnings on Jan. 31.

Yet, as agency executives explained, AR has the potential to help Snap attract younger users and let brands try out other forms of social ads on the platform. “Snap’s potential to produce experiences like this, combined with commerce enablement, would give them different ways to add value to young audiences,” said James Townsend, Global Chief Executive of Stagwell Brand Performance Network.

Additionally, some AR content may have advantages over other forms of advertising, said James Addlestone, Chief Strategy Officer at performance marketing agency Journey Further.

“AR executions typically involve the brand, or distinctive assets of that brand, to be ever-present throughout the experience, providing significant advantages for well-executed AR over, say, a static social ad or digital display, where attention is particularly low and subsequent brand recall is poor,” Addlestone added.

Snap did not respond to a request for comment. However, the company said in December 2022 its users overall engaged with AR experiences an average of 6 billion times per day.

AR’s potential beyond entertainment

While much of the function of AR currently is for entertainment purposes — for things like changing appearances and trying new fashions — experts say there is room for more business use cases. Ben Ducker, executive creative director at Journey Further, mentioned that Snap’s AR features also empower the platform to focus on social commerce, for example.

“We’ve all had a piece of furniture or clothing arrive and it looks nothing like that static image on the website,” Ducker said. “The future power of AR in this space is vast and exciting and will allow for fresh product advertising techniques. Gone are the days of catalog photography.”

Addlestone added that while Snap isn’t currently part of the “standard” marketing mix, like Meta’s properties and Google are, Snap may eventually attract a larger share of budgets.

“Snap and AR in general is seen as being stunt-based, top-of-the-funnel awareness but we see this shifting towards product and bottom-of-the-funnel activity more going forwards,” Addlestone said.

What gives Snap the edge here is that the user behavior of interacting with AR is already “happening at scale on Snap,” Addlestone added. “We can expect more brands to adopt AR as part of their broader marketing plans, beyond just social. This will be Snap’s keys to success in this coming year,” Addlestone said.

Snap said last year it had more than 300,000 creators and developer teams globally that created some 3 million AR Lenses, the name for the platform’s AR experiences that include games, shopping and other interactive content. Snap is also experimenting with a small group of creators and developers to build Lenses with digital goods, AR items and tools that will be rolling out in select markets in the future.

First: explain what a cookie is?
A cookie is a tiny bit of code that  a website drops in a user’s browser. Sites use cookies to store user data such as login details, shopping carts, or user preferences. Various advertising companies also use “tracking” cookies to collect data and keep tabs on people’s browsing history, which they use to serve targeted ads. It’s also used by publishers to tell retailers user when users click one of their affiliate marketing links

Affiliate marketing?
There’s a lot of jargon here. Affiliate marketing is a process through which one business pays another for either bringing in clicks or, for retailers, sales on their sites. So if publisher X sends some visitors to Amazon to buy toothpaste, publisher X gets a small percentage of those sales, usually pennies on the dollar.

So WTF is cookie stuffing?
With cookie stuffing, while publisher X sends visitors to Amazon, a separate publisher actually gets credit — and hence money — for the sale. They do this by dropping multiple cookies after someone views a page or clicks on a single link. The hope is that dropping multiple cookies increases the chance that the person will go on to visit and buy from one of the commerce sites in question.

“Cookie stuffing creates wrongful attribution,” said Forensiq CEO David Sendroff. “It’s essentially stealing the credit for someone else’s attribution.” He said surreptitiously dropped cookies often replace those from legitimate publishers.

Where do these fake cookies come from?
The fake cookies come from a variety of sources — including pop-ups, scripts, toolbars and images embedded in message boards. Cookie stuffing is also common on online coupon sites, which fraudsters uses to drop handfuls affiliate cookies.

Why does it matter?
It matters because many more publishers are getting into affiliate linking. Gawker, for example, compiles a long list of affiliate link each days via its Kinja Deals series, and takes a cut whenever readers make a purchase. More affiliate linking fraud means less revenue for legitimate publishers.

It seems like a small problem.
It isn’t. Marketer Shawn Hogan helped scam eBay out of $28 million in online marketing fees from eBay before the company worked with the FBI to catch him in a sting operation. Hogan got sentenced to 5 months in prison, three years probation, and a $25,000 fine.

So why hasn’t cookie stuffing been stamped out?
The problem is that people like Hogan are the exception: Affiliate linking scammers are pretty hard to catch. For advertisers, hallmarks of cookie stuffing can include abnormally high or low conversation rates, depending on the techniques scammers use.

“With cookie stuffing, you’re committing a crime against another affiliate or the advertisers who is paying commissions on sales that would have happened anyway,” Sendroff said. “It’s not as eye-opening and it’s harder to catch because the advertiser has still made money.”

Photo: Rajiv Patel/Flickr

Moebius is the founder and CEO of a company called SmartMedia Technologies, a five-year-old firm with about 100 employees that plays in exactly the Web3 space, fusing ad tech with blockchain-based tech. He’s been around since the early days of the Internet, having been part of the launch team at aQuantive (remember that name?), one of the first agencies to pursue putting advertising on the web. Along the way, he also founded tech-based Adconion (which became Amobee).

The following conversation has been edited for space and clarity. 

Where are you at in the process of building NFTs, and who are some of your clients?

We’ve spent the last five years building an enterprise Web3 platform that’s purpose built for agencies, brands, and creators, with the intention of making Web3 easy. Not only for brands and agencies to be able to leverage Web3, but we’re really making it easy for the end user. 

We provide a two-tap custodial wallet, so that anybody with a smartphone can have their first Web3 wallet, be able to acquire their first NFT, and then be able to actually start to use that in terms of either digital coupons, or a loyalty token that you picked up by visiting a retail store. We have a partnership with Accenture, we have partnership with Unilever. We just did an activation for Vodafone across Europe, where they acquired 250,000 wallets. And we’re over 6 million wallets on the platform at this point.

How difficult is it to get brands to engage in this form of marketing? Is there a lot of education you still need to conduct? 

Marketers have spent the last two decades gaining consent from consumers to be able to send an email to their inbox. Now they’re seeing this as a new CRM channel. They’re seeing Web3 as a new channel where they need to be focused on gaining the consent from users to be able to send promotional digital tokens and coupons or benefits or loyalty coins to that user’s wallet. It’s addressable wallets in the same way that they think about addressable emails in their email database. It’s not taking as much convincing now,They’re less focused just around one application, which happens to be NFT drops done in the 1.0 way, they’re now seeing a much broader technology and capability.

How do you see brands using this in other ways? 

There’s a lot of different use cases around that you could imagine. If you fly Delta or United, you get lifetime status. Imagine that lifetime status becomes an NFT that I can actually hand down to my son or my daughter. Being able to have real provenance and ownership around the benefits of of a membership or a loyalty club. 

The second area that I think is really going to sort of crack open web3 is around NFT ticketing. In the future, you’ll pull out your phone, the NFT will have a QR code inside that will be scanned going into a Rolling Stones concert. Upon scanning and redeeming the NFT, it will immediately turn into a digital twin of that ticket, so I’ll have that souvenir forever. 

But not only that, it will change states and become a digital merchandise, or a coupon for $2 off Coke at the concession stand. And then when Mick Jagger’s onstage, he’ll sing this song and say ‘This song’s for you.’ At that moment, we will be able to mint that moment and that song will be embedded in all 38,000 NFT tickets. Only the 38,000 people who attended that night will have a copy of that song that they can hold and cherish forever. The Stones will know it’s an authentic song because it was an NFT. And the Stones will be able to allow for the secondary sales of those — and a percentage of that will go to their favorite charity.

What other Web3 elements do you work in? 

A big part of our of our product roadmap for the platform this year is really focused on the metaverse element, creating spatial web experiences. We believe that the future of metaverse environments is really to help augment retail in the buying experience for brands. And brands aren’t necessarily going to need to rely on the user base of a Decentraland or Roblox to be able to bring those audiences. They can use paid media and their own social channels. They can fill the metaverse like with their own brand experience. W’re focused on being able to create those custom environments. And the key element to that is around creating the interoperability of a wallet to where I can take the virtual tokens in from the physical world that I picked up at a Walmart, and actually bring that into a metaverse environment and be able to redeem it. That bridge between the physical and the virtual world is where we’re also focused on.