Month: February 2023

This is according to a Digiday+ Research survey of over 100 agency professionals.

Digiday’s survey found that most agencies invest in online display ads on behalf of their clients. Eighty-seven percent of agency pros told Digiday their clients spend at least a little of their marketing budgets on online display ads — a number that has remained fairly consistent over the last year.

The highest percentage of agency pros said their clients invest a moderate portion of their budgets in online display ads (30% said this), followed by 22% who said their clients invest a large portion of their budgets in online display and 20% who said their clients put a small portion of their budgets into online display ads.

In other words, on the scale of investing in online display ads as a marketing channel, most agencies’ clients fall somewhere in the middle. And this trend has been consistent through the last year.

Digiday’s survey also found that most agencies are confident that online display ads work for their clients. Almost all agency pros are at least a little confident in online display ads: 89% of respondents to Digiday’s survey said they have some level of confidence the channel drives marketing success for their clients.

The level of confidence agency pros have in online display ads fluctuates, though.

The percentage of those who are slightly confident that online display ads drive marketing success has risen steadily over the last year (from 15% a year ago, to 25% six months ago, to 29% today). At the same time, the percentage of those who are somewhat confident in online display ads saw a jump in the last six months, from 23% in Q3 2022 to 31% in Q1 of this year (although this percentage is still down slightly from a year ago, when 33% of agency pros said they were somewhat confident in online display ads).

Meanwhile, the percentage of agency pros who said they’re confident in online display ads saw a drop-off in the last six months (from 33% in Q3 of last year to 24% in Q1 of this year). This is after remaining steadily at 33% through 2022.

Of those agency pros whose clients invest in online display ads, Digiday’s survey found they are more likely to spend — and spend big — on programmatic display ads over direct-sold display ads.

More than three-quarters of agency pros whose clients invest in online display ads (79%) said their clients spend none, a very small portion or a small portion of their marketing budgets on direct-sold display ads.

By comparison, two-thirds (66%) said their clients put a moderate, large or very large portion of their marketing budgets toward programmatic display ads. And fewer than a quarter (22%) said direct-sold accounts for a moderate, large or very large portion of their clients’ budgets.

When looking at direct-sold display ads, the largest group of respondents to Digiday’s survey were those who said their clients spend a small portion of their overall marketing budgets on direct-sold display, at 31%. On the programmatic side of the coin, the largest group of respondents said their clients spend a moderate portion of their budgets on programmatic display, at 32%.

Breaking out the biggest spenders, 4% of agency pros whose clients invest in online display ads said they spend a large portion of their marketing budgets on direct-sold display ads, compared with 24% who spend a large portion of their budgets on programmatic — a major difference. And only 2% of agency pros said their clients spend a very large portion of their budgets on direct-sold, compared with 10% who spend a very large portion on programmatic.

Even without any new ChatGPT-specific ad products — at least not yet — experts are wondering what the future of advertising on Bing might look like, and whether it’ll be able to win over both users and marketers alike.

Some companies are already seeing ways they might benefit from Bing’s latest iteration. On last week’s earnings call for the Israel-based digital advertising company Perion Network, CEO Doron Gerstel said ChatGPT will “revolutionize Bing search capabilities” while increasing ad spending and therefore boosting Perion’s own search business if more advertisers bid and subsequently spend on Bing ads.

In an interview with Digiday, Gerstel pointed out that Perion — an official Bing search partner — already transfers 20 million monetized searches a day to relevant ads across Bing. He added that quality search results will be key.

“The trend is developing more of a dialogue rather than [showing] results,” Gerstel said. “Even the way you’re asking [ChatGPT] is like you’re talking with a person. It’s making it as user-friendly as possible.”

Still, much of the future is still hypothetical. In a research note late last week, analysts for the credit rating agency Moody’s said Microsoft’s AI integrations create long-term profit potential, but the opportunities for search ads are yet unproven.

“Any share shift in the search ad market is difficult to predict at this time,” Moody’s analysts wrote. “To gain market share, Microsoft will have to convince both consumers as well as advertisers to switch to its digital ad platforms and demonstrate that its technology can deliver search results that have a higher value for both. Consumers’ search habits are hard to change, especially given Google’s long history in the mobile and desktop search markets.”

Bing has already benefited from ChatGPT. For example, more than 1 million people joined the waitlist to preview the new AI-powered Bing in just 48 hours, according to a tweet from Yusuf Mehdi, Microsoft’s head of consumer marketing.

So far, web traffic has been fairly up and down. The day after Microsoft’s big announcement on Feb. 7, daily traffic jumped from 39.9 million to 43.7 million before falling back to between 37 million and 39 million over the past few days. However, Similarweb’s weekly search keyword breakdown shows a 700% increase for “bing ai” as people looked for more info about what Microsoft’s news could mean for the future of search.

The number of people visiting OpenAI’s website might also be a sign of what’s to come: Web traffic has grown to 672 million from just 18.3 million in December, according to Similarweb, which said ChatGPT drives 92% of OpenAI’s web traffic.

Some search marketers are testing Bing’s new features to see what they mean for existing ad products — and already see some flaws. For example, Gael Breton, founder of Authority Hacker, spotted ads that appeared above organic links. In a tweet about the findings, Breton said he was impressed with Bing’s ability to handle travel queries via ChatGPT, but also noticed all the links to hotels were broken. He also researched campaigns for AdWords, which was “good” at first but still left him looking for more info on YouTube.

The upheaval in search could also benefit others besides Bing. Alessandro Credo, vp of search at BrainLabs, said it could also give startups like ad-free search engine and browser Neeva — which released its own ChatGPT-like feature a few weeks ago — a chance to compete, especially since it also has the added benefit of a privacy-first component. That said, although Bing’s status as first to market gives Microsoft a bit of an edge, old search habits are hard to shake, and many Google users still use Chrome rather than Edge.

“The opportunity is there,” Credo said. “When there is so much of a shift in the industry we have to take into account everyone else…It does give other engines a chance to catch up rather than just being underdogs.”

There are also questions about how ads will be placed and labeled within search results. Will they be clearly marked as ads and will those ads be appealing to users that might instead just click directly to whatever the chat says?

Matthew Quint, director of the Center on Global Brand Leadership at Columbia University, said it’s becoming increasingly tricky on various tech platforms to know what’s advertising and what isn’t. 

“That lack of transparency on what’s being bought and what’s organic search is disappearing, which is terrible for a consumer,” Quint said. “When you’re highly dependent on advertising, the goal of ‘bettering society’ becomes something you need to compromise on for your bottom line in ways.”

This strategy follows a whole marketing budget reset, after the XFL shut down in 2020. During its 2020 season, the XFL only had one approach to social media: to publish highlights from the live games. Similar to the NFL, the XFL’s marketing and content departments are working closely to revamp the brand’s social strategy before its return, with a plan to reach fans wherever they are rather than only distributing content on one social media platform.

“We want it to be unique to the fans that are on those channels and what you’ll see from us is that, yes, there’s marketing and promotion, but what we’re looking to do is create those connections with our fans,” said Duch. The XFL will use Twitter, TikTok and Facebook to engage its fanbase and, especially, younger fans through content that not only showcases its teams and players, but also its coaches and production team, Duch added.

To start, the XFL posted preview Shorts on its YouTube account starting in October to generate interest in its relaunch. The Shorts allowed viewers to see how XFL coaches and players are preparing leading up to the league’s first game. According to Hootsuite data, XFL’s YouTube Shorts accumulated over 87,500 views from October to January.

According to Duch, the social strategy for each team is to maintain their own identities for their fan bases. The goal with this strategy is to come off as authentic as possible to new fans as well as Gen Z viewers, who look for brands that are authentic and transparent.

“When we talk about 2020 to 2023, one of the organizational changes we’ve made is we have a dedicated department to marketing performance and we are really leveraging again where fans are consuming, knowing that we skew younger from a demographic standpoint as most of our media buy is in digital,” said Duch.

Duch explained that different social platforms appear to work differently for different teams. For instance, Facebook resonates more for some teams and TikTok resonates more for others, while Twitter and Instagram resonate equally for the brand’s social conversations.

As the season progresses, the XFL will also leverage YouTube football influencers for co-marketing efforts, according to Duch, to widen the brand’s reach to Gen Z football fans — who are also looking for an alternative to the NFL’s slower-paced football.

“The XFL is implementing co-creation in its marketing strategy, which is a tactic that is fueling the future of marketing,” said Nicole Penn, president of marketing agency The EGC Group. “It will play a big part in humanizing the brand and generating meaningful interactions with fans and social media has evolved over the past few years and brands must stay in touch with their followings if they want to stay relevant.”

TBWA New York Group chairman Rob Schwartz said he believes the XFL has a chance in the American football market because of its fan-first approach, even with the saturation that exists beyond the NFL, with College, USFL and Canadian Football leagues.

“I believe their real opportunity is to experiment with the content and the more they can bring the fans inside the game, the better — in the locker-room, on the sidelines and in the huddle,” said Schwartz.

This time around, XFL games will air on ESPN, ESPN2, ABC and FX and stream on ESPN+. Duch said the brand’s advertising budget was split evenly across all its social platforms, digital OOH ads and streaming ads, with an eye on the 18-to-24-year-old demographic. According to Pathmatics data, the XFL has spent a little over $120,000 so far in 2023 on advertising efforts, with $48,000 going toward digital displays, $16,000 going toward mobile displays and $48,000 going toward Meta platforms Facebook and Instagram.

The XFL is also taking advantage of its eight teams’ locations with digital OOH ads, local radio spots and linear television ads to drum up awareness for the league’s return. Additionally, the XFL is leveraging QR codes to offer special promotions and discounts for the upcoming season.

Rob’s popcorn and Pedigree aren’t alone in their tech-driven marketing efforts. Last year, as travel picked up post-pandemic, the city of New Orleans started experimentation with virtual reality marketing via an immersive experience on Youtube. UrbanStems flower delivery company is leveraging ChatGPT AI-generated content to help customers with delivery notes on Valentine’s Day, and the list of tech-forward marketing campaigns goes on. 

“As adoption rates go up and as consumers are using AR and VR, it’s going to be a natural place for marketers to shift their thinking and their dollars,” said Matt Mills, evp of creative at Fuel content studio. “The technology is becoming more democratized. And therefore the veil has been lifted from what it takes to do that.”

At Fuel, clients are weaving tech-driven experimentation into social or production budgets associated with campaigns or big media spend moments, per Mills. He added that as elements of Web3 become more normalized, integrated to social media platforms and native to the social media users experiment, layering tech into marketing strategy is “low-hanging fruit,” especially on social media. “If you already have a social media presence, layering augmented reality into that is not a tall order,” he said.

Over at Z3, Zeno Group’s Web3 and technology consultancy, anywhere from 5-30% of client ad budget is dedicated to experimenting and innovating in spaces like AR/VR, according to Robert Stone, head of Z3. Some are making budget available separate from their core marketing budgets for said experimentation while others are still trying to determine if the tech is worth investing, he said.

Per Stone, consumer lifestyle brands seem most interested, experimenting with emerging and trending tech. But more niche brands, like those in healthcare, are more hesitant to figure out what exactly their role in these spaces.

“We’re advising clients in lots of different ways. Some are quite keen to get involved in a scrappy test and learn way,” he said. “They’re learning as they go but they’re doing it in a sandbox that allows them to experiment a little bit while being true to their original brand.” (He did not offer specific figures regarding client ad spend).

Technologies like AR/VR and AI aren’t new, but they are becoming increasingly more important as Web3 comes into focus, and accessible via in-app created social media filters. More than 97 million people are expected to be augmented reality users by the end of this year, up from 89 million in 2022, according to eMarketer. And as adoption rates go up, marketers are following suit to get in early on the growth and stand out in a saturated digital marketplace.

Mobile augmented reality advertising is set to take off in line with mobile ad spending hitting $195 million and mobile AR users hovering around 97 million in 2023, according to eMarketer predictions.

“We need to make sure that we’re being thoughtful about how we allocate our time, energy, resources and budget,” said Harrison Fugman, co-founder and CEO of Rob’s Backstage Popcorn and The Naked Market. “But being at the forefront of technologies that can have an amazing impact on our consumer is very important to scaling our rapidly growing brand.” 

To experts, marketing’s continued push into new tech stems from more accessibility, but also from a saturated digital marketplace in which advertisers are looking to differentiate themselves from one another. Shoppers too, at least 43% of them, are looking for innovative brand experiences, including virtual and metaverse engagements, instead of traditional advertising, according to research from Reach3 Insights research consultancy and The Keller Advisory Group.

And seemingly, it’s a trend that’s expected as platforms shift to meet changes in the marketplace. In recent years, Snap has honed in on its AR efforts, restructuring in hopes to make it as an AR company. Last spring, TikTok launched its own AR development platform via its Effect House. Virtual reality and AI, however, may take longer to reach mass adoption as advertisers continue to look for everyday marketing use cases outside of the metaverse and content generation, experts say.

“Brands that can think about it as content first and advertising second are going to have real opportunities to arm their followers with something to do, something useful or something entertaining,” said Mills at Fuel. 

At the very least, it’s an interactive way to story tell, he said. Brand awareness has become a priority for many marketers as direct response marketing has become increasingly expensive and saturated with competitors. Adding an interactive element to digital campaigns can help marketers grab people’s attention, stopping them mid-scroll, he said.

As economic uncertainty continues to loom above the industry, Noah Mallin, chief strategy officer to IMGN Media, said he expects to see some brands to be hesitant to experiment with AR/VR and AI, given the return on investment isn’t as immediate as a traditional direct-response, click-thru ad. However, there’s promise in the future of tech to expedite content creation and engage users, if leveraged correctly, he added. 

“Often, when you’ve got a downturn like this, it’s an opportunity for new things to emerge,” Mallin said. “For the brands that embrace that, it’s going to take them a slingshot past other brands that are not early adopters.”

(WPP, Havas Group, Stagwell and S4 Capital have yet to announce their 2022 financial results.) 

“Generally, agencies have been pretty healthy, to the extent that large brands continued to spend money on various forms of marketing throughout the pandemic, and 2022 was no different,” said independent analyst Brian Wieser, who until recently was global president of business intelligence at GroupM. “Something worth pointing out is that inflation generally adds to advertising, it doesn’t take away from it. Unless you go to an actual economic downturn, which we haven’t actually experienced.”

Wieser has consistently said that worries of a downturn were largely unfounded because people were making assumptions based on outdated models. 

Take a look at each holding company’s results, starting with the most recent: 

Dentsu 

The Japanese-based holding company reports its financials in Yen. Organic growth for full year 2022 stood at 4.1% (within its regions, 6.1% in the Americas, 9.7% in EMEA excluding Russia), while operating profit grew 13.5% and profit margin grew 18.4%, thanks to the company’s simplified structure. Net revenue grew 14.4% to just under $8.6 billion (converting Yen to dollars at 130 yen to the dollar).  

IPG

Organic growth reached 7%, on $9.5 billion in net revenue (which is 3.7% over 2021)  and $938 million in net income. Profit margin stood at 16.6%. IPG offered some guidance on what 2023 is shaping up to be — and it’s conservative for sure — organic net revenue growth is forecast to be a meager 2-4%.

Philippe Krakowski, IPG’s CEO, addressed it in his comments announcing 2022 earnings. “The macroeconomic situation remains uncertain. Marketers are approaching 2023 with conviction in the need to stay invested and be in the marketplace, as well as a degree of caution,” he wrote. 

Omnicom 

The holdco generated a healthy 9.4% of organic growth on $14.29 billion in revenue, but that revenue figure was flat from 2021. Net income actually dropped $100 million from 2021 to $1.3 billion, as did profit margin from 15.4% to 14.6%. While CEO John Wren didn’t offer actual numbers looking forward to 2023, his comments alluded to an uncertain road ahead.

“We enter 2023 in a very strong position, building on last year’s significant new business wins and bringing together creativity, digital technology, and data to create marketing solutions that are responsive to the business transformation needs of our clients,” wrote Wren. “At the same time, we are closely tracking the macroeconomic outlook and are fully prepared to respond appropriately.”

Publicis

2022 financial results impressed analysts, showing 20% net revenue growth to 12,572 million Euros (which converts to today’s dollar to about $13.4 billion) for the holding company, and 10% organic growth. Profit margins stood at 18%.

Publicis chairman Arthur Sadoun pointed to Epsilon and Sapient as the main drivers of organic growth in his comments. He also offered some guidance for 2023, predicting sober organic growth of 3-5% and margins to stay around 17-18%.  

One wrench that needs to be thrown into the investor relations machines of the holding companies: Some analysts just don’t place as much stock in organic growth. For example, independent analyst Tom Triscari said organic growth is a number that can be manipulated to look as good as possible. Agencies use it to measures an overall average of growth, but it can easily hide shrinkage of business from some clients while resting on the growth of others that hiked their spend significantly.  

“The way organic growth is presented seems to have more to do with measuring how well an agency is staying alive in what has become a highly commoditized service offering, rather than demonstrating increasing probabilities of value creation,” Triscari wrote in a December edition of his newsletter Quo Vadis. 

Triscari otherwise agreed with Wieser that growth among the holdcos was healthier than some had expected, and he cited their newer approach to heavy up on IT and consultative services as being a factor in their success. “For every dollar of media spend, [media agencies] want to sell in $3 of services,” he said. 

“They are managing costs well, and they’re putting out consistent margins and issuing their dividends,” he added. 

The key hits: 

• Podcast publishers are using YouTube Shorts as a marketing vehicle for their video podcasts. 
• Shorts contribute upwards of 40% of views to full-length episodes of Betches Media’s “U Up?” podcast on YouTube.
• Given the early signals that Shorts can generate new audiences to podcasts, some publishers are considering creating promotional Shorts content for their shows before fully transitioning full-length podcasts into video. 

YouTube Shorts has served as an audience acquisition funnel to creators’ long form videos on the platform for some time, but podcast publishers are finding that the 60-second-and-shorter videos are becoming a marketing vehicle to get new eyeballs on the full-length, often video-based podcasts episodes posted on their YouTube channels.

Shorts currently drives about 40% of the views to the YouTube channel for Betches Media’s “U Up?” podcast which at the time of publication only has about 6,800 subscribers on YouTube, compared to a monthly average of over 1 million downloads, per Betches, across all podcasting platforms, including Apple Podcasts and Spotify. And as each YouTube video receives a couple thousand views on average, per channel data, the number of total views coming in from Shorts is really only a few hundred to a thousand per episode. But 90% of those Shorts viewers are new viewers to the ‘U Up?’ channel — aka viewers who haven’t visited the page in the last 90 days, according to David Spiegel, chief revenue officer of Betches Media.

“While [YouTube Shorts] is still an experiment, that type of exposure, you’ve got to assume, is worth something,” Spiegel said. And because of that belief, he added that his team “shift[ed] a lot of our strategy around podcast promotion towards short-form, vertical video,” not just on YouTube Shorts, but also on TikTok, Instagram and other social platforms. 

As of now, there isn’t any data Betches Media can access to see whether those viewers are ultimately converting to podcast subscribers on other audio platforms, but Spiegel said that the general brand awareness opportunity has made this marketing strategy a focus this year for the company. 

“If you just look at that pure, new viewership … I do think that it’s a necessary [marketing] vehicle,” Spiegel said. “I do see us [launching] short-form [videos] across more shows before we would launch a standalone YouTube channel [for other podcasts in their portfolio],” he added, optimistic that interested viewers would find the shows on podcast apps on their own. 

One industry source, who spoke on the condition of anonymity, said that right before their conversation with Digiday, they were on the phone with two clients of their who host podcasts, advising them that if they’re not currently using Shorts as a promotional tool for their shows, they need to start doing so. 

“We are seeing a lot of success in terms of [clients’ audience] numbers going up on their podcast [channels] and I think a part of that is [they’re] utilizing Shorts,” said the source, who declined to share exact audience growth figures for the clients they represent. 

Bleacher Report’s sibling brand House of Highlights has used YouTube Shorts as a core part of its social media content arms for about a year, according to Drew Muller, general manager of House of Highlights and the B/R Lifestyle Portfolio. And while the strategy for the main House of Highlights channel is to create original Shorts and not necessarily refer those viewers to the original long form channel, Shorts is used as a mechanism for referring first-time listeners to the video version of the House of Highlight’s podcast, ‘Through the Wire,’ he said.

“Shorts have been a huge part of [‘Through the Wire’s’] growth strategy and have basically doubled their audience over the last six months by bringing people into their long form episodes,” Muller said. 

The House of Highlights brand holistically added 3.7 million subscribers to its YouTube channel in 2022, with 93% of them coming through YouTube Shorts, according to a company spokesperson.

iHeartMedia is investing in its video podcasts, with the goal being to distribute its shows on whichever platform its audience wants to consume them, said Will Pearson, president of iHeartPodcasts. However, “I don’t think you’ll see a point in the near future where every single podcast that we do, we’re rushing to do a video version,” he added.

“What we’re seeing more than anything at this point is people discovering podcasts, via any form of a video as we’re testing it, but then converting and becoming more regular listeners where they have traditionally listened to podcasts,” said Pearson. He added that his team is able to track this through listener surveys, asking them directly where and how they found the podcast, but also through some attribution data that they’re able to get from certain social media platforms — adding not all are equally created when it comes to discerning this data, though he declined to say how YouTube performs in this regard.

It appears as though YouTube is trying to get more serious in its role as a podcast distributor. In August, the platform launched a podcast explore page, to help users find new shows.

What we’ve heard

“We’re shifting from display first advertising, because we’ve seen that the effectiveness of that form has really dropped. Readers and audiences are focused more on the content that they desire. The focus here is commerce-first, not display ad-first.”

— Melody Brown, Blavity Inc’s new associate vp of consumer media on the latest episode of the Digiday Podcast

Does ChatGPT save journalists time?

With all the talk about ChatGPT, it’s no surprise that curious journalists are testing out the generative artificial intelligence chatbot to see what it’s capable of. In conversations with three journalists, most agreed that ChatGPT can act as an assistant or research tool.

But there is less consensus on whether ChatGPT actually saves time during the reporting process.

Taylor Nakagawa, digital editor at Crain’s New York Business, said ChatGPT has assisted him with more mundane tasks such as suggesting additional potential sources, providing helpful data and summarizing stories.

“I do feel like that it shows a lot of potential for speeding up the reporting process,” especially when starting to report a new story, Nakagawa said. “I was impressed by how thorough it was in pulling data on local cities, which you don’t usually find too much of unless you’re an expert.”

Alesandra Dubin, a freelance writer and editor, said ChatGPT provided a small “shortcut” for conducting research and used it like a search engine. She admitted, however, “I don’t know if it’s saving a huge amount of time right now. But maybe it eventually will.” 

Jill Schildhouse, a freelance writer and editor, has found that using ChatGPT just adds another step to her reporting process. Because of past issues with ChatGPT providing incorrect information (and the fact that it is limited to providing information from data up through 2021), Schildhouse said she needs to use Google to fact-check information from the chatbot.

“It’s costing me time right now, just because I have to fact check everything so carefully,” said Schildhouse.

This Digiday journalist found herself doing a lot of roundabout work when testing out ChatGPT. I asked the chatbot, “Which publishers are using ChatGPT?” It responded: The Washington Post and the Guardian. When I asked ChatGPT to share sources to back up that claim, all the page links it provided were broken.

Asked if they were using ChatGPT, The Post and the Guardian confirmed they are not. — Sara Guaglione

Numbers to know

20%: The percentage of employees Yahoo is laying off, with the cuts impacting more than 50% of its ad tech employees.

$477.6 million: The amount of revenue Dotdash Meredith generated in Q4 2022, representing a 26% decrease year-over-year in pro forma revenue due to a 14% drop in digital revenue and 36% drop in print revenue.

5%: The amount of employees that News Corp is expected to cut from its overall headcount this year, due to declines in quarterly revenue.

What we’ve covered

Why content on Snapchat has become less profitable for some news publishers:

• For one publisher, Snapchat revenue increased by 88% year-over-year during the summer months of 2022, leading the team to try and launch more channels. But Snapchat allegedly declined the pitches due to having pivoted away from prioritizing this type of publisher programming. 
• This publisher isn’t alone in their rollercoaster experience with Snapchat.

Learn more about publishers’ content strategies on Snapchat here. 

Why podcast ad buyers are hesitant to spend through demand-side platforms:

• Despite improvements in podcast advertising that have made it easier to buy ads through programmatic channels, buyers are slow to adopt true programmatic podcast buying through a demand-side platform, according to buyers who spoke with Digiday. 
• “Programmatic is still relatively in its infancy in the audio space compared to other channels in media,” said Robyn Meyers, vp of programmatic for AdsWizz.

Read more about the state of the podcast programmatic ad market here. 

Digiday+ Research: Publishers streamline revenue sources, with direct-sold ads top money driver: 

• Digiday’s survey found that, overall, the number of revenue sources publishers rely on has fallen very slightly since the first quarter of last year. 
• To be exact, publishers are currently relying on 6.41 revenue sources on average, compared with 6.60 revenue sources last year.

Read more about publishers’ dwindling amount of revenue streams here. 

Publisher editorial teams experiment with ChatGPT, but few use AI tech in their work:

• A few publishers made headlines recently over their adoption of ChatGPT or similar AI technology to produce content for their websites, including BuzzFeed, CNET and Sports Illustrated. 
• But so far, those publishers seem to be the outliers.

Read more about how publishers are experimenting with AI here. 

What we’re reading

Bing’s chatbot could pose a threat to publishers:

Microsoft’s new chatbot interface on its Bing search browser is able to slip past publishers’ paywalls, according to Wired. After searching for “best dog beds,” the bot replied with content that is typically accessed only through a metered paywall on Wirecutter.

Time teams up with Taboola to launch a new commerce site:

Next quarter, Time and Taboola will co-launch a new commerce website, according to Axios. A team of editors and writers from Taboola will be tasked with creating the content for the site, which will live on Time’s main website. 

The tumultuous history of Spotify’s investment in podcasting: 

After spending hundreds of millions of dollars on podcast production companies, signing big name audio creators and deciding to keep its shows exclusive to its platform, Spotify is questioning the amount of faith it had in the business of podcasts, reported Semafor.

As bills stack up, Vice Media secures $30 million to finance debt: 

Vice Media is still pursuing potential buyers, but in the meantime, it’s trying to settle some of the millions of dollars worth of debts it owes to vendors and advisors, some of whom haven’t been paid for over six months, reported The Wall Street Journal. 

In the last month or so alone this pivot has been on full display. 

Havas struck a deal with SSP Freewheel to help it buy CTV in smarter, more transparent ways. Then Horizon plugged its identifier solution into OpenX’s SSP platform. 

Oh, and there’s also the RFP doing the rounds among SSPs at the moment. It’s from a large media agency network that’s reviewing the marketplace solution it put in place several years ago, said one ad exec with knowledge of the brief. In its place, the agency wants to work with SSPs that can reduce redundant, suboptimal and low-quality supply paths. To do this, the agency is asking for SSPs to help it do several things such as reduce hidden fees, give media buyers greater control over how impressions are curated, and offer more auction transparency. 

A few years back a deal like this would’ve essentially been a “preferred partnership” — a contractual arrangement to incentivize advertisers to spend more money with SSP in exchange for lower fees, better transparency on those rates and improved reporting. 

These economics are still vital to these deals, of course. But so are things like sustainability, curation and data these days.

For example, the Horizon deal with OpenX is more about how the former can do more data targeting on the supply-side of the marketplace. It is built on the back of a direct integration between both companies, with the SSP able to give media buyers greater control over inventory quality, audience targeting and overall campaign performance against their metrics.

“Agencies like Horizon have invested significantly in developing proprietary audience and identity solutions,” said Brian Chisholm, svp of strategic partnerships at OpenX. “The issue is that these solutions can be siloed which limits the benefit to their brands. By integrating with a supply-side platform Horizon can amplify their existing data and tech investments and reach and report on audiences at scale.”

Deals like this are becoming increasingly important to the survival of SSPs. Without them agencies are more inclined to take their dollars elsewhere. The closures of SSPs from Yahoo and EMX last week as well as a recent round of layoffs at Triplelift make that all too clear. 

And yet working with agencies brings with it a whole host of other challenges since the SSPs that do it are now having to juggle the interests of two opposing forces.

On the one hand, SSPs have to mollify publishers, as ever, with better fill rates and higher prices, ultimately driving toward more revenue. At the same time, SSPs have to make it as efficient as possible for media buyers to buy impressions, lest those same marketers optimize them out of plans. If this happens then it diminishes the core pitch to publishers. Nevertheless, it’s a challenge commercial execs at SSPs are working through. 

“The direction these deals are headed is toward helping media agencies activate their products on the supply side, whether that’s through data, analytics or even curation,” said Kyle Dozeman, chief revenue officer of ad tech vendor PubMatic’s Americas business. “The agency execs want these deals to help them continue to have a vibrant business.”

There are a few reasons for this that can be whittled down to two key points: 

First, agencies seem to feel that SSPs are better placed than other ad tech vendors to enhance their margin-making ability in programmatic advertising because they’re closer to publishers and have insight into ad inventory that few others have. Second, it’s easier to get these deals done. After all, an SSP is more likely to be more attentive to an agency that controls a lot of ad dollars, whereas a demand-side platform doesn’t have to. Often, at least when it comes to the larger programmatic advertisers, DSPs will have a contractual arrangement directly with that business and so isn’t as reliant on the agency’s preference when it comes to securing ad spending through its ad tech, 

This is consolidation driven by agencies — and it benefits the larger SSPs. 

“It’s no secret that agencies and SSPs are getting closer as a result of the former wanting to consolidate their ad dollars and access better quality supply,” said Matt Barash, svp, Americas & global publishing, Index Exchange. 

He would know. His role is a direct consequence of this shift. As he explained: “SSPs are having to think more carefully about how to design around marketplaces so that they can pave the way for this next generation of transactions from the holding companies. They want to use those marketplaces to be able to curate and define access to the publishers that matter to them, whether that’s on a one-to-one or one-to-many basis, in a way that’s simple and operationally efficient.”

All these efforts boil down to the likes of Index Exchange and OpenX giving media agencies the tech they need to shape all the traffic being sold by that SSP down to quality sellers for individual advertisers. Or to put it another way, the big media agencies are using SSPs to sustain their own programmatic supply chains. And the more money that flows through those chains, the more control the agencies have. 

“For a while agencies have been uneasy about their ability to differentiate their businesses in programmatic and subsequently extract revenue,” said an ad tech executive who has worked with agency execs to do just that. “If you were on the investment team at WPP 30 years ago you had differentiation around buying power and that’s ultimately all they needed. So everything they’re doing with SSPs is about making investments in programmatic that matters to their businesses. The SSPs that can help the agencies do that will be fine.”

These aren’t new moves per se. Agencies and SSPs have been cosying up to each for several years now. 

But therein is the point. 

Doing what was once diametrically opposed to their raison d’etre is increasingly a matter of course for SSPs. 

Gone are the days when they could get by on exclusive publisher relationships as differentiators. The rise of header bidding made sure of that. It essentially ensured these ad tech vendors had roughly the same demand, which rendered the exclusivity they dined out on somewhat meaningless. 

So SSPs — or rather the ones that could afford to — tried something different. They started helping advertisers and agencies buy more quality impressions at lower fees. This has come in all sorts of guises over the years, from private programmatic marketplaces to supply path optimization to sell-side targeting and even product development. 

It’s not all upside with these arrangements. They tend to leave a lot to the imagination as they’re ultimately about agencies doing deals in exchange for preferential treatment. Cynics argue there are shades of gray to that commitment. They wonder whether those deals are a way for agencies to receive additional rebates as an additional incentive to work with one SSP over another.