Month: February 2023

It turns out this downturn is different to most.

“While ad spend correlates with economic growth, as we’ve seen since the pandemic that this isn’t a linear correlation,” IAB Europe’s chief economist Daniel Knapp said earlier this month on his quarterly forecast call. “Plus advertising has other motivations and drivers than just looking at overall economic growth.”

Advertising isn’t as coupled to the economy as perceptions would have it.

To be clear, there are cuts to advertising. The collapse of the crypto market, the ongoing challenges of the automotive industry and market consolidation are all proof of that. But there are also many other marketers who are maintaining their ad spend and, in some cases, increasing it.

Here’s a rundown of how some of the largest advertisers outlined their plans in their latest financial updates:

• Coca-Cola didn’t provide any actual figures on its ad spending for the year ahead, but the company did describe its ad spend as rising.
• Kraft Heinz, which is no stranger to making cuts in a pinch, is doing the complete opposite this time around and said it would grow ad spending in 2023.
• Unilever said advertising investments “will grow again in 2023” after the company increased its spend by €500 million last year.
• Procter & Gamble cut media spending as a share of sales in the last quarter, but is pouring more money into advertising overall.
• Elsewhere, Colgate grew ad spending by 3% in the quarter, reducing the share of revenue used toward advertising marginally.

As strange as it sounds, these businesses can’t afford to cut ad dollars — especially not now that so many of them are committed to accepting lower profits for higher revenues. They’ve decided that it’s probably unsustainable to slash costs to protect margins in the way they would have done during previous downturns. Instead, they’re passing on the significant rises in commodity prices they’ve had to swallow to shoppers in the belief those same people will pay the higher retail prices.

Advertising makes this easier to do. Even more so in a market that hasn’t properly slipped into a recession yet. Here’s why: Inflation looks like it’s set to peak in several big markets for advertisers, which will be a small, albeit welcome, boost to demand. Despite this inflation, which varies between supply- and demand-led depending on the market, employment remains resilient. Yes, there have been job cuts across the industry that suggest this isn’t so, but most of those cuts are arguably more a result of correcting overhiring during the pandemic than actual economic stress. Not to mention the overall outlook for the ad industry is improving.

“We’re going into this year confident in our guidance,” WPP CEO Mark Read said during the holding group’s latest earnings update. “It is a little bit softer than 2022, but I think that’s what one would expect. And it’s significantly ahead of analyst expectations, certainly at the end of last year.”

Granted, Read would say this. As Brian Wieser, media analyst and the former global president of business intelligence at GroupM, explained in his newsletter Madison and Wall, “High levels of inflation in a world that doesn’t experience a recession means more revenue for marketers, which in turn means more spending on advertising and more spending on agencies.”

Nevertheless, Read’s outlook doesn’t mean the ad industry is going to get through this year unscathed. Marketers still have to grapple with the big three challenges of media inflation, a turbulent economy and the heightened importance of advertising responsibly.

That’s enough to make even the most liberal ad spenders think twice.

It goes some way to explaining why there’s a lot more wariness behind the optimistic growth forecasts. Not least of all because not all growth is equal. A significant proportion of ad growth will be driven by media price inflation. Here’s an example: The IAB believes digital ad spending in Europe this year will grow at 2.1% in nominal terms, which means that when that number is adjusted for inflation, which is going down, then the digital ad market could face a moderate contraction.

Arguably, the contraction has already started. The signs were there as early as the second quarter last year, and they’ve multiplied since then. Look at the last quarter, for example. Search advertising is down. Spending on social media is in a tailspin. Even video advertising has taken a hit. Clearly, there are some marketers who are pumping the breaks on digital advertising. That’s creating further disparity between the traditional duopoly of online media (Google and Meta) with the potential new one (Apple and Amazon).

“When a user goes to Amazon, their likelihood of purchase is far greater, therefore supplying advertisers with the most updated intent signals possible,” said Will Jennings, head of paid media at ROAST. “This closed-loop environment gives Amazon the edge, essentially creating supply and demand within their own platform.”

How a media agency answers that question leads some in the industry to worry that standardization of attention terminology and practices will prove elusive, and thereby become an impediment to further adoption and understanding. 

“There will be some conflict in some holding companies to use attention to leverage better CPMs with platforms and publishers,” said Max Kalehoff, vp of marketing and growth at RealEyes, an attention metrics provider. “However, the real prize is in better outcomes for advertisers and better experiences for consumers (not lower-cost CPMs). Attention is a highly powerful signal, though unlikely to become a hard currency.” 

“It seems like there are two distinct factions – the first comprised of agencies who started using attention for research and planning. They’ve been more active at Cannes and CES and thus seen as having a leadership position in the space,” said Marc Guldimann, CEO of Adelaide, one of several firms providing attention metric tools to agencies, media companies and marketers. 

“The second faction has been more focused on using attention to drive efficiency via measurement and activation. While they’ve been quieter, it’s notable that these agencies have measured and optimized hundreds of campaigns and one has already started offering attention-based guarantees.”

Here is how each holding company has approached the incorporation of attention into the flow of work for clients:

Dentsu

Five years ago, Dentsu launched a research practice around attention, studying it carefully before starting to apply it — and just last week the media agency network conducted internal and external training to help spread the gospel of attention. 

Much like Omnicom, its attention efforts flow predominantly through its centralized data platform, M1, and partners include Lumen Research and Amplified Intelligence. Joanne Leong, senior vp of global partnerships there, explained that following “in the wild” tests of thousands of panelists working with Lumen, Dentsu has generated two sets of outputs: a database of norms and benchmarks that helps to find CPM efficiencies through gains in attention uplift and a predictive model that gets applied to impression-level data to determine better recall. Dentsu is also doing some testing around guarantees around attention.

As that becomes a bigger part of the planning process, Leong believes standardization is key. “In order for attention to be this bigger thing in the industry, I think that there needs to be standards in place, because then you can have the buy side and the sell side talking the same language,” she said. 

Havas Media

The French owned holding company has put multiple efforts around attention into play, some in North America and some on a global scale out of Europe, but focused more on leveraging attention as a KPI than a currency. Working predominantly with Lumen in Europe and Adelaide here in the U.S., Havas is molding attention into its broader “meaningful media” MX planning process — coming up with a meaningful attention unit, said Mike Bregman, chief data officer at Havas Media Group North America. 

“For us, it’s content and connections, which was the original premise of the meaningful experience,” he said, adding that Havas is bringing this to clients before they ask about it. “We’re now trying to figure out how to create quantitative measures around that, and attention is the starting block of how we get there as an agency.”

IPG

While IPG hasn’t taken a holding-company-wide approach, MediaHub (which was just folded into Mediabrands) has actively engaged attention metrics for clients including the NBA. Ed McElvain, evp of P3 at Mediahub, overseeing digital and data-driven buying, previously told Digiday the shop is also working to incorporate attention into the programmatic buying process. “It allows the traders to focus on other attributes of the campaign that we want to look at, like contextual alignment, supply path and bid pricing,” he said.

Omnicom 

As IPG did with Mediahub, Omnicom Media Group is letting its OMD media agency lead the charge on operationalizing and scaling attention, led by OMD CEO Chrissy Hanson (who most recently was chief strategy officer). All attention work flows through Omni, the holding company’s marketing orchestration platform, as Dentsu does with M1. But that’s where the similarities end. Hanson noted that OMD has put attention to use in 11 markets, across 13 categories and 25 brands. “That’s how we operationalize the work,” she said. “Because what we have shown is that optimizing to attention lifts KPIs, it improves performance, and it reduces waste. It is a planning metric that does deliver value consistently.”

Britt Cushing, OMD’s managing director and head of communications planning, added that the agency’s attention requirement calculator, leveraged through Omni, takes into consideration elements such as brand maturity, newness of the creative message and clutter in the ad’s environment to pick the best possible outcome. “We do need to take that extra step within Omni to have the attention requirement calculator [understand] that nuance specific to the brand’s campaign,” said Cushing.

Publicis

Although Publicis didn’t make an executive available to talk about its efforts on attention, several sources reached for this story said Publicis will “likely will surprise with thoroughness when they do” declare their efforts in the area. A Publicis Media rep would only say, “In a world that’s so laser focused on driving business outcomes, we’re actively evolving to metrics that are less media centric (counting things) to more consumer action centric (selling things).”

WPP

Attention is primarily being put to use through media agency network GroupM’s EssenceMediacom and Xaxis platform, said a source within GroupM who declined to speak for attribution, who noted the company has focused less on getting press attention and more on getting attention to work successfully in the buy-sell process. Xaxis Switzerland has been using Adelaide’s attention data to create a customized attention algorithm that enabled media purchases to be optimized for attention — but much of the learnings are being shared across global teams within GroupM. The focus, said the source, is to get closer to activation based on attention-based values.  

Beyond the traditional holdcos, other agency groups are actively working with firms like Lumen or Amplified Intelligence, and the ARF may end up getting involved in helping the attention industry hammer out standardization.

But ultimately what attention work within holding companies might end up accomplishing is the further breaking down of media and creative silos. Because attention doesn’t work if it doesn’t work closely with the creative process.

As one of the sources for this story told Digiday, a Carl’s Jr. burger ad featuring women in bikinis may generate a lot of attention — but it won’t necessarily sell burgers.

Color by numbers

Mobile app marketing platform Liftoff contends in a new mobile ad report that longer video ads do better than shorter ones. The company analyzed some 1 trillion impressions across 240 million installs in the last year across five verticals – gaming, e-commerce, finance, entertainment and dating/social. Turns out there is a sweet spot for how long the video ad should run, in order to optimize mobile user acquisition and engagement. — Antoinette Siu

More stats:

• On average, brands saw up to 50% higher conversions using longer videos compared to shorter ones.
• Videos between 31 to 60 seconds long saw performance increases, such as generating app installs. Mobile user acquisition managers are adding longer videos of up to 60 seconds to their creative.
• With an average CPI of $1.31, playable ads were by far the most cost-effective option to drive gaming app installs, the report found. Videos work well for showing the user experience.
• For entertainment, especially on Android devices, native ads were the most cost-effective. Banner and video ads cost the same per install on iOS, but banner ads are a better deal on Android ($2.04 versus $10.13 on iOS). Streaming apps, in contrast, might do better with interstitial ads. 

Takeoff & landing

• WPP reported 2022 earnings last week that looked solid and largely in line with other holding companies. Like-for-like net revenue grew 6.9% over 2021 to 11.8 billion pounds (within that GroupM grew 9.1%) , while operating profit grew 10.5% to 1.36 billion pounds. Profit margin inched up from 14.4% to 14.8%. The holding company predicts 3-5% revenue growth in 2023 and for margins to reach 15%. 
• In account wins, Dentsu’s Carat landed Del Taco as a new client, adding to its work with parent Jack in the Box; and IPG’s Mediabrands won Geico after that client spent 29 years at Horizon Media.
• Gary Vaynerchuk launched his own conference, VeeCon, a three-day conference that will touch on business, technology and pop culture, featuring the likes of Busta Rhymes and Deepak Chopra (presumably not together). The three-day event will be held May 18-20 in Indianapolis.

Direct quote

“There are many relatively new large businesses rooted in the technology industry who are likely continuing to scale up their spending on external services as they mature. Agencies’ newer offerings related to data and business transformation are also undoubtedly driving revenue growth, as these are critical areas of focus for agencies’ primary clients. As time progresses, these activities offer the potential for agencies to more meaningfully broaden their client bases to include individuals not presently overseen by chief marketing officers. Finally, expanding principal-based trading solutions and other managed services offered by agencies are also becoming increasingly important across the industry, as marketers – now better versed in the pros and cons of such products – seem increasingly willing to embrace them.”

— Independent analyst Brian Wieser explaining in his newsletter the factors that could influence future growth among agency holding companies.

Speed reading

• I wrote about Stagwell’s move to fold its engineering-focused YML agency into its expanding Code and Theory network, as tech and creativity overlap more and more for clients. 
• Digiday media agency reporter Antoinette Siu looked into the ways live shopping is expanding and how agencies are preparing new levels of expertise to harness it for clients. 
• Digiday’s original research, spearheaded by deputy managing editor Julia Tabisz, recently found that agencies and brands are losing confidence in Facebook, even though they continue to spend on the social platform. 

“You no longer have to explain to the brands the value of being in the women’s sports space,” said Scott McGowan, senior media creative at the IPG agency Mediahub, with clients including the NBA and Fox Sports. “There’s less need to explain [this value], so we are starting [conversations] from a much more even playing field,” McGowan said.

“We have pitched women’s sports ideas to literally every brand that we have had an opportunity to do so,” he added.

Advertiser support growing

Two ad agency execs told Digiday more advertisers are inquiring about women’s sports coverage in the past year or so. And as broadcast companies air more women’s sports games, more inventory becomes available, they said.

They pointed to the multi-million, multi-year deal between Ally and Disney announced last week. (A spokesperson declined to share the financial terms of that deal.) The deal “is not a surprise,” McGowan said. “There’s an appetite for this, and it will only continue to grow.”

The Ally-Disney deal will also help to bring in more women’s sports advertisers, said Adam Schwartz, svp and director of sports media at Horizon Media. “I hope it gets to a point where [a deal like that] is not a big deal. We’re not quite there yet, but that would be the goal.”

Schwartz said Capital One, one of Horizon’s clients, has “owned everything” across the women’s NCAA tournament for years, and recently they’ve had to “fight… to keep those assets because other advertisers are coming in.”

While the budgets going to women’s sports coverage is not “close to equal” as the money going to men’s sports, “there’s room to grow [and that] is exactly the place and space that brands want to be. In this industry, growth opportunity is an advantage,” McGowan said.

Both McGowan and Schwartz said advertisers are investing in both linear and digital, usually in the form of cross-channel deals. “A decade ago, I couldn’t tell you there was a women’s digital option,” Schwartz said.

On the publisher side, Jennifer Dill — who was promoted to vp of women’s sports strategy in March 2022 to oversee women’s strategy across Warner Bros. Discovery (WBD) – said the company’s sales team does not pitch women’s and men’s sports coverage differently. WBD’s sales team is “holistically speaking about both of them. There might be some nuances in the packaging and the customization. But overall, we’re talking about a total U.S. soccer package,” for example, she said.

This approach “makes sense,” Schwartz said. “Women’s sports should not be in a silo.”

WBD Sports’ content has attracted notable advertisers across properties, including Nike and AT&T for digital, social and linear campaigns as well as digital campaigns from advertisers including Zelle, Gatorade and Ruffles. The company has several multi-million deals for WNBA content across three of its properties, but a WBD Sports spokesperson declined to share terms of those deals.

WNBA digital content at WBD Sports has seen a 150% increase in revenue year-over-year. HighlightHER has grown revenue nearly 40% year-over-year, and new categories have partnered with the female sports vertical in the past year, including insurance, food, tech and QSR. Exact figures were not provided.

While there’s a hard line between editorial and ad sales at the Los Angeles Times, Iliana Limón Romero — who was promoted to assistant managing editor for sports at the LA Times last May — said the sales side is having more conversations with her team about upcoming editorial initiatives and projects in women’s sports to then bring to advertisers.

ESPN did not provide advertising revenue figures before publishing time.

Audience numbers up, with more content being served

Audiences’ interest in women’s sports is continuing to grow at ESPN and WBD Sports (which oversees digital brands like Bleacher Report and HighlightHER, as well as sports broadcasts on TBS and TNT, among others).

ESPN has beefed up its coverage of women’s gymnastics, softball and the FIBA World Cup, said Nicole Pelaez-Dandrea, vp of audience engagement at ESPN. The company hired Alexa Philippou as its women’s basketball reporter last February.

NCAA Softball content generated 2.5 million uniques across ESPN.com and the ESPN app in June, up 10% year-over-year, after launching a full play-by-play of the tournament that month, Pelaez-Dandrea said. Monthly women visitors to ESPN Digital was up 11% year-over-year in 2022, and up 40% in the ESPN app. 

Content around the WNBA increased more than 400% last year, across ESPN’s site, game pages, apps and connected TV, Pelaez-Dandrea. (The WNBA’s 2022 regular season was its most-watched regular season in 14 years, where TV viewership was up 16% compared to the 2021 season.)

ESPN+, ESPN’s subscription video streaming service, held live coverage of over 11,000 women’s sports events last year, up 25.8% year-over-year.

WBD Sports has 164 million women fans across its portfolio, Dill said. TNT and HBO Max aired the women’s soccer tournament SheBelieves Cup over the past week, with accompanying coverage from both Bleacher Report and HighlightHER.

At the Los Angeles Times, there will be more staff covering the FIFA Women’s World Cup this summer than the men’s tournament a few months ago — two journalists are going to Australia and New Zealand, as opposed to the one reporter on the ground in Qatar, said Limón Romero. 

Economic conditions slowing down rate of progress?

Despite the optimism from both the publisher and agency side, the current economic climate means that while there is increased interest from new advertisers in the women’s sports space, brands aren’t necessarily bringing in bigger return budgets, McGowan said.

“Budgets everywhere are being more scrutinized. You can’t measure anything in a vacuum,” he said. 

While Schwartz said he saw bigger and new budgets coming into the women’s sports space in the past year, the economy could slow down deals around the Women’s World Cup in the next few months before picking back up later in the year, he said.

“I’m fairly certain it will be a big one this summer,” Schwartz said.