There’s a funny thing about the world of in-game advertising: The more some marketers ask where all the inventory is located, the less satisfying the answer seems to be. At the moment, the overwhelming majority of the inventory of leading in-game ad firms such as Bidstack, Frameplay and Anzu is located inside free-to-play or mobile games — not the premium titles that account for the bulk of gamers’ attention.
“I think there’s this huge confusion for a lot of brands of what in-game is, because some people will talk about in-game and they’re referring purely to running a display banner inside this, you know, soccer game on mobile,” said Mike Murphy O’Reilly, head of business development for the gaming and esports website Dexerto. “But a client might have in their head that they think this is something much grander, such as a branded experience or map inside a game.”
In-game ad companies know that brands are champing at the bit to place their ads inside console titles. In 2022, the most-streamed games on Twitch were all so-called AAA titles, major releases such as League of Legends, Fortnite and GTA V. For brands looking to reach gamers, placing ads inside these premium games is akin to running television commercials alongside “Sunday Night Football” or “The Bachelor.”
“The moment brands can buy ads in gaming that are on that screen, and not this screen, they’re going to exhaust it,” said Bidstack CRO Jude O’Connor, pointing from a television on the wall to his smartphone. “Today, for any of the in-game advertising companies, obviously everything’s mobile or on PC.”
At the moment, in-game ad companies such as Bidstack do occasionally produce bespoke, hard-coded ads inside console titles — but not the programmatic ads that represent the bulk of their inventory. This may change in the near future: Bidstack and Anzu executives told Digiday that they are slowly but surely working toward console inventory, though they declined to share more details as of yet. As of last year, both Xbox and PlayStation were reportedly spinning up their own internal in-game ad departments as well.
“For sports games, it is already native for consumers to see ads, be it ad boards in FIFA or NBA 2K, just like in traditional sports,” said Brent Koning, an evp and global gaming lead at Dentsu. “For any other genre of video game, advertising becomes ‘non-traditional,’ meaning it takes more for a marketing team to sign off on it, as it may seem ‘new.’”
There’s also a data gap that could prevent brands from enthusiastically signing off on in-game ads. If marketers ask any of the vested players for hardcore data to prove the quality of their inventory, for example, they’re more likely to receive relatively nebulous metrics such as brand lift than hard numbers, though in-game ad measurement standards saw a much-needed overhaul in 2022. Advertisers are desperate to learn more about in-game advertising and the returns they can get from it — but full transparency about in-game ad performance is still years out.
“They don’t expect to have a physical, actual solution for it until potentially Q1 of 2024,” O’Connor said, referring to pre-existing measurement platforms such as Oracle Moat.
All of the aforementioned factors mean that the in-game ad industry’s purported growth spurt might not be in the cards for 2023. That isn’t to say that the industry isn’t still poised for growth this year — O’Connor predicted that industry-wide in-game ad sales would double in 2023, from an estimated $20 million to roughly $40 million — but much education about the space is still necessary if in-game ad firms want brands to fully buy in.
And as they enter 2023, the world’s leading in-game ad companies are well aware of the importance of premium console inventory for their continued success.
“One of the big milestones, almost tipping points, will be with console advertising,” said Anzu CEO Itamar Benedy. “We have spent five years working on our console advertising offering, so there was a huge investment from our side. We didn’t have the short-term revenues, but we were so bullish on the mid-term and long-term opportunities that it made sense for us to focus on it — and Sony is one of our investors.”
Over the past year, sexual wellness company Adam and Eve has tripled its investment in video streaming ads to reach new customers, shifting its media mix to better navigate today’s increasingly expensive and less efficient digital ad landscape.
“If we want to continue to be in front of the consumers that we need to be in front of, we have to go with where the eyeballs are,” said Chad Davis, director of customer acquisition at Adam and Eve.
The brand’s tripled spend is part of a growing, industry-wide trend in which marketers are increasingly spending more in CTV given the fragmented nature of the current digital ad landscape.
“Yes, more brands are leveraging CTV because they can reach the right audience and take a more consumer-centric approach,” Bianca Reed, vp of account management global tracking for Material+, a marketing services company, said in an emailed statement to Digiday.
At Adam and Eve, the brand is currently running spots on streaming platforms “wherever we can get cleared,” according to Catherine Korostensky, media planner at Media Horizons marketing agency, Adam and Eve’s media buying agency.
The bulk of the brand’s CTV strategy, per Davis, is built on running ads across streaming platforms to build audience and then re-targeting said audience through digital display ads.
For the last decade, Adam and Eve was primarily focused on display advertising. But as ad rates increase, data privacy initiatives muddy measurement and media networks continually change their content policies, the sexual wellness brand has had to reconsider its media mix to make up for the channels and data that became unavailable.
“Slowly, we shifted away from those things that we lost. Some of them were just cut off. They were gone. See you later,” Davis said, referring to channels like linear television and audio advertising. “But we started to bring back our ad impressions with CTV coupled with digital display.”
From 2021 to 2022, Adam and Eve increased its CTV spend threefold with plans to spend even more based on the media channels’ return on investment. (Davis did not provide further details regarding the brand’s CTV spend.)
Adam and Eve spent more than $2 million on advertising from January through September in 2022, according to Kantar. That figure is slightly higher than the same time frame in 2021, during which the brand spent at least $2.4 million on advertising. Meanwhile, Pathmatics reports Adam and Eve spent more than $570,000 last year, slightly less than the $626,000 spent in 2021. (Kantar figures do not include social media spend as Pathmatics’ do.)
Adam and Eve isn’t alone in increasing its digital video investment. As cord-cutting continues and digital ads become increasingly more expensive and less effective, brands like Merrell footwear, Quility insurance and and Dr Teal’s self-care have spent the last year giving digital video a bigger piece of the advertising budget pie.
Ahead of a potential recession and amidst an economic downturn, ad spend is expected to be tighter and under more scrutiny this year. CTV, however, is expected to be a bright spot in ad spend, having grown by double digits in the U.S. each year since 2017, according to eMarketer. By 2026, U.S. CTV spend is expected to hit $26.92 billion.
For a niche brand like Adam and Eve, CTV and streaming television ads can be an effective part of the media mix because of the targeting capabilities in such channels.
“It’s an incredible amount of sensitivity for brands that need to reach specific audiences, while avoiding others, something especially important to niche brands,” Reed said.
In the future, Davis expects Adam and Eve’s CTV investment to grow even further for as long as the channel proves to be efficient.
“If we find a media that works and it’s acquiring customers in a very efficient way, we’ll spend money on that until the cows come home,” he said. “If it works, we’ll keep spending on it and look to always grow.”
New year, same problems for Reddit: in the eyes of advertisers, it’s still an outlier.
To be clear, the social news site has definitely made strides to curry favor with advertisers since the last time Digiday checked in a year ago. A clearer understanding of what it is and isn’t among marketers is a testament to that.
Even so, it’s arguable that Reddit must do more to turn that sentiment into ad dollars. No mean feat for a platform that’s still trying to find a permanent space for itself on media plans.
“Reddit straddles an awkward space between social media, blog, forum and community interest site,” said Elliott Millard, head of planning at Wavemaker U.K. “While user numbers are pretty good, it’s always lacked the scale of Facebook, the media cachet of TikTok or the singular focus of something like Pinterest. The breadth is an issue because clients can’t put it in a neat box.”
Take the U.K., for example. While Reddit has certainly evolved since its U.K. expansion back in 2020, and marketers appear to be happy with the moves it’s making, there’s still a lot of work to be done.
Pitching to marketers
According to Steve Riad, vp, global mid-market & smb sales at Reddit, the platform has some strong relationships, and in most instances, official partnerships with all the major holding companies, globally.
“In 2022, we announced a global enterprise partnership with IPG, and our global commerce advertising advisory partnership with WPP, the latter being led specifically out of London,” he explained. “Additionally, our internal deal labs team is responsible for structuring our annual partnership agreements with our agencies, or we can do that with client direct programs through our Reddit Partnership Program (RPP), which continues to expand in the U.K. with the likes of Samsung U.K., and Huel.”
While these partnerships seem impressive, what exactly do they mean?
In certain circumstances, Reddit has offered some of Dentsu’s clients introductory ad credits for new brands keen to ease their way into advertising on the platform.
Similarly, Paul Kasamias, managing partner (performance) at Starcom noted that Reddit provides the agency’s highest spending clients on the platform first refusal for new ad formats.
“They’re definitely proactive in bringing the alphas and betas to clients, which is a nice sell because clients love being at the forefront of innovation,” he added.
Reddit has also helped Starcom through its creative services arm called Karma Lab.
“Reddit runs workshops, provides insights and trends, as well as access to measurement studies, for us and our clients about how best to use creative and ad formats on the platform, to ensure they are specifically fit for Reddit and that user base,” Kasamias added. “It’s definitely incentivizing clients in the right way, not just discounting ad spend but actually giving clients a deeper, more meaningful, experience of using the platform, which is smart.”
What do marketers want from Reddit?
When Reddit launched in the U.K., the consensus among advertisers at the time was that it was more a test and learn platform, according to Reddit’s Riad. Since then, Reddit has shifted the narrative and become a key part of media plans for marketers, he continued.
Granted, those gains tend to be among a specific sub set of advertisers — namely those keen on Reddit’s strong, yet niche verticals such as consumer, gaming and tech. For other advertisers there are still some lingering issues they need Reddit to address.
Catherine Chappell, head of biddable media at Mediahub believes some of the platform’s creative capabilities have been slower than other platforms and need to catch up with the market. An example being, Reddit was one of the last to launch video. “That only came into fruition about 18 months ago, where it was static previously,” she said.
Similarly, Nick Weaver, paid social partner at Dentsu, highlighted that Reddit should focus on innovation if it wants to solidify its market share of dollars.
“A drawback of Reddit is the visual feel of the platform,” he said. “For example, there’s certain verticals where Reddit won’t appeal, such as fashion, because there are far more visual platforms such as Instagram, Pinterest and Snapchat. Reddit would do well to lean on its strengths rather than trying to appeal to the masses.”
Additionally, Chappell noted that as far as commercial opportunities are concerned, Mediahub hasn’t seen much from Reddit. That said, she is hopeful that will kickstart this year and a healthy relationship with the platform can ensue.
Bigger picture
Reddit’s attempts to grow its ads business come at a time when marketers are understandably scrutinizing which platforms to use and how many dollars to spend.
From Facebook to Snapchat, Google to Twitter, the big media platforms that dominate online advertising are dealing with a cacophony of forces, some structural, others economical, that are threatening that dominance. Which is to say that advertisers are weighing up where they push and pull money across these platforms. Now is as good a time as any for any platform with designs on being an alternative to these stalwarts to make a move — a thought not lost on the ad execs at Reddit it seems.
While other platforms each have their own problems to contend with, Chappell pointed out that Reddit’s offering, which marketers are seemingly impressed by, continues to fly under the radar.
Reddit is very eager to help compared to other media owners, in terms of providing insights and responses to briefs that are actually detailed and workable, she explained. “That helps in positioning it with both planners and brands, because there’s homework behind the rationale.”
Given the platform’s willingness to have a two-way dialogue to support its advertiser clients, perhaps this isn’t something to overlook, and might be the USP that sets Reddit apart from the pack.
This week’s Future of TV Briefing looks at how Roku’s push into the smart TV manufacturing business reflects the changing state of the connected TV market.
Big-screen battle
Why TV advertising’s upfront model won’t fade away
WTF is the U.S. Joint Industry Committee?
Netflix’s TV chief, the TV-to-streaming-to-short-form turning point, Roku’s misinformation problem, Nielsen’s new measurement service and more
Big-screen battle
Roku’s decision to start making its own smart TVs now seems to reflect two shifts happening in the connected TV hardware market: Smart TVs are usurping CTV devices (dongles, sticks, pucks, etc.) as the popular means of connecting a TV to streaming services, and smart TV makers are becoming more powerful players in the overall CTV platform market.
“Roku is probably thinking ‘we’d better be making TVs as well to at the very least hedge ourselves and maybe protect ourselves from whatever further competition might evolve,’” said Tim Nollen, senior media tech analyst at investment bank Macquarie.
Roku has risen to have a dominant share of the U.S. CTV market. In the third quarter of 2022, its devices accounted for 40% of the CTV devices installed in the U.S., according to market research and consulting firm Parks Associates. And in the second quarter of 2022, 33% of the time people in North America spent streaming video on any device — TV, phone, computer, etc. — occurred on a Roku-powered TV, more than any other platform including Amazon’s Fire TV, Samsung’s smart TV and Apple’s iOS, according to video measurement and analytics firm Conviva.
However, outside the U.S., Roku’s position isn’t so dominant. In Africa, Asia, Europe, Latin America and Oceania, Roku didn’t even crack the top five of devices by watch time in Conviva’s report.
To be clear, Roku has only announced plans to sell its smart TVs in the U.S. So getting into the smart TV hardware business won’t necessarily help the company internationally anytime soon. But it could help to protect the company’s business domestically.
Smart TVs in general have overtaken CTV devices in popularity, accounting for 35.3% of streaming video viewing time in Q2 2022 versus 34.6% for CTV devices, per Conviva. And the smart TV’s preeminence seems to have spurred CTV device makers to get into the business of making their own internet-connected televisions. In September 2021, Amazon unveiled its own line of smart TVs. Comcast followed suit in October 2021 and then formed a joint venture with fellow pay-TV provider Charter called Xumo that plans to roll out a line of smart TVs this year.
Not only is the smart TV market is getting more crowded, but it’s featuring more companies that own both the TV screen and the CTV platform powering it. That could lead the U.S. CTV market to more closely resemble the international CTV market where smart TV makers Samsung and LG enjoy larger shares than they do in the U.S.
As evidence of how the global CTV platform picture differs from the U.S. one, here’s a graphic from S&P Global Market Intelligence’s media research group Kagan breaking down the U.S. market:
And here’s one breaking down the global market:
As the graphics show, the global CTV platform landscape looks notably different from the U.S., with smart TV makers Samsung and LG enjoying more market share internationally than they do in the U.S., which is dominated by Roku and Amazon that primarily sell their own CTV devices and license their CTV platforms to third-party TV makers.
“LG and Samsung are global brands and dominate most markets. They’re both in pretty much every country in the world,” said Wolk.
Roku peddling its own smart TVs could be a move to protect its CTV platform from getting squeezed by smart TV makers’ own CTV platforms. It’s also likely an effort to bolster its CTV advertising business and guard that business from the effects of the rising smart TV competition.
There are advantages to owning the actual smart TV hardware versus simply providing the CTV platform powering a TV. For starters, Roku has more control over how it can insert ads on its platform when it owns the smart TV vs. when it’s powering a smart TV made by another company, Roku U.S. brand sales head Kristina Shepard told AdExchanger. Roku is also likely able to collect more data about what people watch on a smart TV owned by the company — such as programming piped in through a traditional TV set-top box — vs. what it has access to via its CTV devices, and that expanded data set could help the company when selling ads on its platform.
“It’s beneficial when working with advertisers to be able to give this unified view that, in a dongle world, you may not have the direct data to make that happen,” said Seth Shafer, senior research analyst at Kagan.
Additionally, Roku could use its own smart TVs to inform the development of the platform it licenses to third-party TV manufacturers in order to help it compete against the likes of Amazon and Google seeking to secure their own licensing deals.
“Roku-branded TVs are going to accelerate the company’s pace of innovation. They are basically test beds for Roku to develop more compelling features and then make those available for the full Roku TV [platform licensing] program. So in that way, Roku TVs would be complementary to their TV licensing program. It allows them to roll out innovations faster to their licensees,” said Nikhil Lai, senior analyst at Forrester.
Nonetheless, the potentially bigger big-screen battle that is brewing is the international one. LG and Samsung already lead the market outside the U.S., and Roku’s primary CTV platform rivals — Amazon and Google — are making inroads internationally, while Roku’s business has concentrated on North America and parts of Europe.
“Amazon and Google are the ones making deals with various [TV manufacturers] in Europe to deploy either Fire TV or Android TV onto those people’s TVs to make new smart TVs,” said Wolk.
Google seems to have gained share of the CTV platform market, in large part, by expanding its international footprint. “I understand from having traveled to Singapore and Australia a few months ago, talking with clients there, that Android [TV] practically dominates the market there,” said Nollen. Last week, Google announced that its two CTV platforms, Android TV and Google TV — yes, Google has two different CTV platforms for some reason — have a combined monthly active device base of 150 million devices.
In other words, Roku has some catching up to do. “I think their brand recognition is low [outside the U.S.] and their actual market presence is low,” said Nollen. He added, “So probably the biggest opportunity for growth is there. But they’re kind of behind the curve, whereas they in many ways led the change in this country.”
What we’ve heard
“We’ve seen shifts in the TV market with high-level filmmakers that were pushed to do limited series, and right now the limited-series form is probably too expensive. That’s what we hear. High-level, international directors are being pushed to do local-language, non-expensive ‘drama in a room’ or ‘comedy in a room’[shows]. That’s a shift.”
— International production executive
Why TV advertising’s upfront model won’t fade away
TV advertising’s 60-year-old upfront model may be all but inextinguishable.
Despite the financial confines of the upfront’s year-long commitments, TV ad buyers and sellers continue to seek economic comfort in the upfront model’s revenue guarantees and pricing assurance, as I break down in this video essay.
Numbers to know
9.6 million: Average number of people that tuned into each of Amazon’s “Thursday Night Football” streams.
-8.1%: Percentage year-over-year decline in U.S. national TV ad spending in 2022.
-$500 million: National TV ad spending shortfall in the fourth quarter of 2022 compared to Q4 2021.
14.6%: Percentage share of TV ad impressions that aired on CBS in 2022.
94: Number of the top-100 most-watched TV programs in 2022 that were sporting events.
$74.99: New monthly starting price for a subscription to FuboTV’s streaming pay-TV service.
Called the U.S. Joint Industry Committee, the group seems to be fashioning itself as the stateside version of the Joint Industry Currencies (same acronym, different name) that exist internationally and serve to consolidate measurement currencies in their markets. For example, in the U.K., a JIC called BARB provides the measurement data that TV ad buyers and sellers use as the basis for transactions.
“Anytime you’re talking to somebody who says this program in the U.K. has this many viewers, that’s based on the BARB data standard. Advertisers, agencies, broadcaster stations all use it, so there’s no challenge on it,” said a U.K.-based agency executive.
The challenge for the U.S. JIC will be determining how broadly to expand its participation beyond the initial group, not only among the buy side but within the sell side. Anyway, I made a YouTube Short about it that you can watch below.
What we’ve covered
The overhaul of TV advertising’s upfront model is underway:
Measurement changes, streaming shifts, flexibility demands and economic instability are creating the conditions for a seismic, if slow, shift to the year-long commitment model.
Agency executives expect advertisers to commit less money in the upfront in 2023 compared to 2022.
Omnicom Media Group and Albertsons Media Collective partner on targeting and measuring CTV via The Trade Desk:
The agency holding company will be able to use the grocery retailer’s first-party data to target CTV ads bought through the demand-side platform.
Advertisers will also be available to evaluate campaigns’ performance against Albertsons’ customer base.
Read more about Omnicom’s and Albertsons’ deal here.
What we’re reading
Netflix’s TV chief: The New Yorker has published a long profile of Netflix’s global head of television Bela Bajaria as she tries to thread the needle to put out programming with international appeal and that is “premium and commercial at the same time.”
The TV-to-streaming-to-short-form turning point: Streaming seems unlikely to fully replace the economics of traditional TV, especially as production costs increase, but virtual production could help to lower production costs, though the short-form video surge could undermine the traditional perception of production quality, according to former WarnerMedia executive Doug Shapiro.
Roku’s misinformation problem: Connected TV platforms are not insulated from being used to distribute misinformation, as evinced by Roku carrying a streaming service that trades in QAnon content, according to Media Matters.
Traditional TV shows top streaming viewership: Traditional TV shows like CBS’s “NCIS” and NBC’s “The Blacklist” rank among the most-watched shows on streaming services, likely because of their large episode libraries, according to The New York Times.
Nielsen’s new measurement service: Nielsen will roll out the updated version of its TV-streaming-video ad measurement service — Nielsen One Ads — on Jan. 11, but the updated measurements aren’t yet being used as currencies for ad deals, according to Ad Age.
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The Dentsu unit will be responsible for all traditional “above-the-line” media planning and buying in Zalando’s 25 markets, including: Germany, UK, France, Sweden, Italy, Poland and Spain.
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