Month: January 2023

Despite these discouraging signs, in-game ad firms’ mobile gaming focus could work in their favor in 2023. Mobile gaming has exploded in the past two years, particularly in markets such as South Asia, where gaming consoles and PCs are prohibitively expensive. Between 2022 and 2023, worldwide downloads of mobile gaming apps grew by 8 percent year over year, according to data.ai’s State of Mobile 2023 report.

As game developers and big tech companies alike realize the revenue-generating power of mobile gaming, they have engaged in a flurry of merger and acquisition activity, with major game industry corporations such as Activision Blizzard and Take-Two Interactive purchasing mobile game developers like King and Zynga in a bid to expand their available mobile inventory. Having secured this inventory, these companies are now turning their acquisition sights toward ad tech firms to help convert it into advertising revenue.

“The best hope for a lot of these companies [in terms of a long-term future] is that they get bought by a big platform to help power their own ecosystem. Any such deal could happen soon, but they’re likely to happen at fire-sale or acqui-hire prices,” said one source with inside knowledge of the finances of the leading in-game advertising players, who declined to be named. 

“You could have the likes of Activision buy one of those outfits to power their own stack, and ask for a minimum $20 million a year,” speculated the source, adding that most in-game ad companies would struggle to meet any such requirement.

Zynga hasn’t been coy about its plans to develop a robust internal in-game ad business. The corporation acquired its first in-game ad company, Chartboost, in May 2021, following it up by purchasing the mobile growth and app store optimization company Storemaven in September 2022. 

“Zynga has always been good at live operations and retaining customers and developing best practices around live ops,” said Zynga Chief Product Officer Scott Koenigsberg. “But we started to realize, with the changes in privacy and to the ad tech landscape, that we wanted to kind of control our own destiny.”

This isn’t the first time the in-game advertising industry has found itself at the cusp of a potential run of M&A activity. The rise of the first crop of in-game ad companies in the mid-aughts culminated in Microsoft’s acquisition of the early in-game ad firm Massive Incorporated in 2006 — only for Microsoft to eventually shutter the company in 2010, ushering in a dark period for in-game advertising. 

“It’s like 2010 all over again,” said Dave Madden, president of in-game advertising company PlayerWON. “We’re kind of unwinding from a window of tremendous exuberance in all things technology and digital and advertising and it sounds like an amazing idea — I just don’t know that there’s room for 10 companies to do it.”

This time around, the situation has changed. Games have gone from a niche hobby to a pillar of mainstream popular culture, and the number of gamers worldwide has ballooned into the billions. The rise of programmatic advertising has made it unnecessary for game developers to hard-code brand integrations directly into their worlds. With Microsoft and Sony reportedly spinning up their own in-game ad departments, game developers across the industry are looking to follow suit.

“If you can come to advertisers and say, ‘I can touch all of the audiences that you want,’ to varying degrees, that’s more powerful than not, separate from the M&A justification,” said Chris Petrovic, Chief Business Officer of mobile game developer FunPlus. “In-game advertising continues to be a rising interest to mobile game developers.”

The goal is to connect sales and marketing across online, offline and metaverse platforms, according to Barbarian CEO Steven Moy, who will oversee Barbarian Commerce along with CTO Lawrence Edmondson. He said Mint and Barbarian have designed Samsung’s website for the past decade and now want to use those same capabilities for other clients across social media, connected TV, virtual and augmented reality and other types of content. (Samsung’s subsidiaries already support the tech giant with content across 70 countries on a weekly and monthly basis.)

“After you create all the experiences and you launch it, you have to run it,” said Moy. “Running an e-commerce website is as critical as building it.”

Agencies’ continued investment into digital commerce capabilities is a “natural extension” to their core business model, said Ant Duffin, senior director analyst in the Gartner Marketing Practice. In some ways, things have come full circle. In recent years, new agencies specializing in digital commerce were created to support the growth of marketplaces like Amazon and Walmart, but now full-service agencies are also making the pivot.

Although “shop now” ads and shoppable content are more mature than other formats like live streaming social shops and in-app purchases on platforms like Roblox, a recent report from Gartner predicts social commerce’s exponential growth could reach $6.2 trillion by 2023.

“In the content space, many brands are still facing the challenge of operationalizing the digital shelf at scale,” said Duffin. “The digital shelf is a foundational building block of omnichannel digital commerce execution, but the production and ongoing data-driven optimization of content remains a challenge.”

Barbarian Commerce debuts during a time of dissonance across the world of digital commerce. Increased e-commerce options across social platforms, retail media networks and giants like Amazon has led advertising giants like WPP to acquire a number of e-commerce startups to build out new data and marketing capabilities. However, tech giants such as Meta, Shopify and others have recently cited a slowdown in e-commerce growth as part of the reason for recent layoffs.

Despite recently cloudy forecasts, others still expect growth. According to a new report this week from Comscore, online retail consumer spending in 2022 grew 21% in year-over-year, reaching $1 trillion for the first time and with mobile devices accounting for 40% of all digital commerce. Social commerce continues to grow — both for shoppers and marketers — with sponsored content from U.S. retailers and CPG brands grew 153% on Facebook and 175% on Instagram between the third and fourth quarters last year. Although the new report didn’t track ad spending in particular, Ian Essling, Comscore’s senior director of survey insights, said the types of ads and volumes of content made by retailers have also grown over the past few years.

“Retailers are adapting to knowing that consumers are more willing to make those types of purchases and the ad dollars tend to follow to that as well,” Essling said.

Barbarian isn’t the only company looking to integrate various capabilities. When digital marketing agency Blue Wheel merged with e-commerce marketplace agency Retail Bloom last week, Blue Wheel CEO Eitan Reshef said the economic slowdown factored into the decision. According to Reshef, offering various products and services as a merged company will help when clients are deciding to work with one or multiple partners.

“When times are tenser from a macroeconomic perspective and brands have to really consider all of their costs and all their values that are brought into the organization, they’re going to be very scrutinous of who they work with and of what capacity they work with them,” Reshef said.

Companies looking to enter new platforms still see hurdles when exploring new tech. A recent survey by Deloitte found that 45% of brands listed implementing new tech as a key barrier for choosing to not engage yet in the metaverse, while just 10% said the metaverse is “not relevant” to their industry.

For Barbarian Commerce, the goal is to take more of a “platform-agnostic” approach, Moy said, adding that Barbarian works with clients that have their own consumer data platforms along with other partners such as Adobe, Tealium and Lytics.

“More and more, especially CPG clients will create even a new organization just to focus on Amazon,” Moy said. “And when you get to Amazon, it’s a brand new ecosystem just like Facebook and Google. You need to not only understand your own digital ecosystem, but you have to familiarize your partners’ ecosystem. I have no doubt that TikTok will launch their own DSP someday.”

“Conversations need to be about not only how you plan but also how you react [when something goes awry],” said Matt Babazadeh, group strategy director at creative shop Zambezi. “It used to be, What is our message? What do we want to say? How do we what to connect with our audience? Now, we’re asking, Is this something we would say? How it it going to be perceived? It’s a lot of if this, then that scenario planning.” 

Megha Parikh, head of strategy at Wunderman Thompson, echoed that sentiment, adding that marketers have to plan for “what Tucker Carlson and NPR will say.” 

Additionally, consumers have even become increasingly skeptical of what influencers say about the brands they work with; look no further than the mascara incident last week where a beauty influencer, Mikayla Nogueira, posted a TikTok reviewing a L’Oreal mascara, only to have it raise questions about the use of false lashes as well as the tags needed for sponsored content.

One shift in recent years has been agencies asking brand clients for proof points to backup their product claims, said Parikh who noted younger motivated consumers are “internet sleuths” who will spend time figuring out what’s true and what’s not, especially if what a brand says seems in any way inauthentic or false.

And in a worst case scenario, marketers are facing a shift in culture where people are spending time creating actual “conspiracy theories” around advertising, said Kate Carter, group creative director at Mojo Supermarket, who noted marketers need to recognize what that means and how to manage should an issue arise. “We’re always in the worst-case scenario planning as creatives.”

“if brands choose to involve themselves in that conversation, they better be able to back up that stand and not back track on it,” said Lynsey Fox, director of brand strategy at Pereira O’Dell.

As for the profile of their purpose marketing in the murky waters of the internet today band exec need finding stories and creative that are tightly in sync with the core brand position. 

“Many brands are misguidedly chasing purpose in the abstract where they lack authenticity,” said Lachlan Badenoch, chief strategy officer at Carmichael Lynch. “This leaves them vulnerable. Brands need to keep asking these questions: Meaningful purpose starts with who are you and what do you do? Where is your brand relevance to participate in culture, through what you do or who you are? If it’s big, bold but coming from left-field, it’s probably a bad idea.”

3 Questions with Shalanna Clark, head of marketing at Code3, a performance marketing agency

With all of the changes in performance marketing, how has your job as head of marketing been impacted?

It was very unpredictable. But in this position, anyone who’s been doing it for any amount of time, understands that flexibility is key. We started the year with a certain set of priorities and then life happened, the economy happened, the market happened, and we had to make a lot of adjustments on the fly. But our core priorities didn’t change. We’re still focused on creating premium content and experiences for our target market, which happens to be other CMOs. Even though we had to get smarter and more creative about how we were doing it, that did not change. 

How do those changes impact client work?

It caused clients to come to us and really ask us to do what we have been doing for a long time, and that’s proving that the dollars they’re giving to us are returning dollars back to them. As a performance marketing agency, we’ve always had to do that. So it wasn’t a big lift for us because we’re used to tying back to ROI, and having insights [and providing] those insights on the regular. 

What’s the predictions for performance marketing in light of economic uncertainty? 

I’ve been doing research into uncertain economic situations, and the most efficient ways to tap into your audience during those times. We’re all feeling that uncertainty, and trying to get even smarter and more efficient with the resources that are being handed to us. We’re really focused on how we can tap into our audience better and help relate to the problems they have, and how we help solve them. — Kimeko McCoy

By the Numbers

Between economic uncertainty and an increasingly fragmented media landscape, the industry and brand marketers are feeling a lot of unrest. A new report from the CMO Council reveals given the current market, some feel uncertain about their current marketing plans and want to find ways to be more confident as they recognize its importance. Find more details from the report below:

• 80% of marketers say media marketing and advertising is either extremely (37%) or very (43%) important in winning customers
• 52% of marketers say media marketing and advertising is either extremely (16%) or very (36%) important in retaining customers
• 83% of marketers say optimizing media and audience for in-flight campaigns is either extremely (40%) or very (43%) important — Kimeko McCoy

Quote of the Week

“It’s just a more formalized marketing channel for brands now. It’s been a slow roll, but as we entered the 2023 fiscal for brands, we started to see this shift more predominantly.”

— said Vickie Segar, founder of influencer marketing agency Village Marketing, on maturation of influencer marketing with brands seeking more long-term relationships with influencers as well as agencies.

What We’ve Covered

• Marketers weigh cons of working with Google Ad Manager amid Justice Department’s new lawsuit
• The open programmatic market is in a tough spot
• Can Snap make it as an AR company?

That’s according to a Digiday+ Research survey of 79 agency professionals.

To be exact, nearly two-thirds of agency pros (64%) told Digiday that they agree that online ad spending will grow in 2023. But this is in stark contrast to offline ad spending: Slightly more than a quarter of agency pros (27%) said they agree that offline ad spending will grow this year. Meanwhile, nearly half (49%) said they disagree that offline ad spend will grow in 2023. Only 20% of respondents to Digiday’s survey said they disagree that online ad spend will grow this year.

Cutting into the data further reveals that agencies’ confidence in online ad spend isn’t quite as sturdy as it seems straight off, though.

Specifically, the percentage of agency pros who told Digiday they strongly agree that online ad spend will grow this year saw a big drop-off compared with last year. In 2022, more than a third of respondents (38%) said they strongly agreed that online ad spend would grow. That percentage fell to 17% this year.

Meanwhile, the percentage of agency pros who said they disagree somewhat that online ad spend will grow saw a significant increase: from 2% last year to 17% this year.

Looking more closely at agencies’ expectations for offline ad spend this year, the biggest shift from last year occurred in the “somewhat” categories — somewhat agree and somewhat disagree. Last year, more than a third of respondents to Digiday’s survey (36%) said they somewhat agreed that offline ad spending would grow in 2022. This year, that percentage fell to fewer than a quarter (22%).

Meanwhile, a similar shift happened among those agency pros who somewhat disagree offline ad spending will grow this year — but the inverse from the somewhat agree category. Slightly more than a quarter of respondent’s to last year’s survey (27%) said they somewhat disagreed that offline ad spending would grow in 2022. This year, that percentage jumped to over a third (39%).

It is also worth noting that just 2% of agency pros said last year that they strongly disagreed offline ad spending would grow in the coming year. That percentage is up to 10% among agencies this year.

“Influencer [agencies] are now being given a seat at the table,” said Danielle Wiley, CEO of influencer marketing shop Sway Group. “We’re participating in more inner agency meetings, monthly meetings where all the agencies are coming together.”

Defining the relationship

As marketers look to work more directly with influencer agencies — previously, other agencies like media, PR or digital shops that brands work with would tap influencer agencies — the relationship is getting more formalized and those influencer agencies are part of more overall strategy meetings. 

“We have probably 10 AOR RFPs that are in the door right now in the U.S. and then we have some others globally,” said Sadie Schabdach, EVP Influencer Marketing at Dentsu Creative, adding that the shift has happened as influencer marketing has become table stakes for brands. “It’s been an uptick consistently for the first two-and-a-half years. We’ve seen a steady influx.”

Some influencer marketing agency execs see this move for AOR relationships, longer-term contracts as a natural shift as influencer marketing has grown and brands tend to work on an annual basis. 

“It’s just a more formalized marketing channel for brands now,” said Vickie Segar, founder of influencer marketing agency Village Marketing, adding that the shop is getting more AOR requests as more money is spent on influencer marketing from major marketers. “It’s been a slow roll, but as we entered the 2023 fiscal for brands, we started to see this shift more predominantly.”

In 2022, influencer marketing accounted for $16.4 billion in ad spending, up from $13.8 billion in 2021, according to Influencer MarketingHub data. The continued increase in influencer marketing spending comes at a time when marketers are scrutinizing budgets more closely given the current economic environment. Some see the shift to long-term relationships with influencer agencies as well as influencers as part of a push by CFOs and procurement to consolidate and centralize the process.

“Now the challenge is how do we centralize things to ensure that we haven’t got different agencies paying the same influencers and sort of competing with each other,” said Nick Cooke, co-founder of influencer shop The Goat, adding that “there’s basically been this disjointed way of working.” At the same time, as influencer marketing budgets are growing, CFOs and procurement teams are taking note. “There’s now suddenly scrutiny on it saying, ‘Oh wow, this has gone from 2% of our budget to 15% in an 18 month period,’” said Cooke.

‘Trends come in a cycle’

Aside from the push for AOR relationships with influencer agencies, execs say that the ask for longer-term partnerships with influencers has also increased.

“Influencers have been pushing this for a while,” said Segar. “And brands are slowly increasing the amount of long-term partnerships as budgets are moving to our space and as more competitors are entering. They have influencers that want to lock down category exclusivity — which they do so by consistent buys (this only works for some product types).” 

Agency execs expect this shift to continue this year as influencer marketing continues to mature and marketers seek more long-term formalized relationships. With bigger budgets come more scrutiny as CFOs seek to understand where dollars are going, what the metrics of success will be and what the overall plan is, according to agency execs. 

Even as marketers push for this, some aren’t certain it will stay this way.

“We see this cycle every few years,” said Jonathan Chanti, president of Viral Nation Talent and chief growth officer of Viral Nation Group. “Traditionally, brand ambassador space, long-term, was the only way to go. Then the creator economy changed that. There were more short-term relationships. Then it got back to long-term. Then micro-influencers and nano-influencer exploded and became more short-term. Now back to longer partnerships. Trends come in a cycle.”