Month: February 2023

Condé Nast agreed to 160 exclusive videos for Pinterest produced by Condé Nast’s iconic brands: Vogue and Architectural Digest. The content, which will live on Pinterest, will explore Pinterest’s key seasonal and cultural tentpoles, including fashion month, wedding season, summer and back to school. Some videos will even be shoppable. Pinterest and Condé Nast’s exact financial agreement was not clear.

Pinterest isn’t revealing how big those payments are, but content deals aren’t cheap. For example, Facebook paid The Wall Street Journal $10 million for its content being featured in the news feed.

“Condé Nast’s content deeply leans in on shopping,” said Zylstra.

Pinterest is betting that this content will pay for itself. Good content keeps people engaged on a platform for longer, and the more this happens the more money a platform like Pinterest can make on the back of it.

So far the plan appears to be working. Pinterest’s supply of videos rose 30% quarter on quarter, per its latest earnings update, which didn’t provide exact figures.

Ad dollars have followed. So much so that advertising and shopping from video accounted for more than 30% of Pinterest’s revenue during Q4 last year; the social network totaled $2.8 billion in revenue for 2022, of which $877 million was received in the final quarter of the year.

“We’re not a walled garden that’s trying to monopolize users and hold them on the platform for as long as possible,” said Zylstra. “We have a commitment to support off-platform growth for the partners who are on Pinterest. Our job is to help inspire users to create a life they love. So we have to make it easy for them to find the things that inspire them.” 

It’s hard not to be cynical whenever platforms make these sorts of claims given the capricious relationship between so many of them and publishers. Pinterest firmly believes it has a strong point of differentiation: it doesn’t have the same baggage that other platforms have given how they worked with content creators and media owners in the past.

Pinterest said it wants users, ultimately, to funnel back to Condé Nast’s properties.

“Any purchases that come from Pinterest are being completed on those websites not on ours,” said Zylstra. “And so the value to a partner is in us actually knowing what pinners are looking for and and being that source of inspiration and supporting our pinners with that inspiration, but then driving to the publisher in order to realize that inspiration.”

So it makes sense that Pinterest plans to strike video production deals with more publishers this year just as it plans to do the same with brands and creators.

“Our community is telling us video is important to them,” Zylstra added. “Pinterest is not trying to be a different platform than the one it is. We’re simply honoring what it is that people come to Pinterest for, with the content we invest in.”

Playing nice with Pinterest

While the strategy seems to work for everyone now, these things have a habit of changing as the stakes get higher, especially when a company is burning through cash to improve its overall business model and direction. And Pinterest is definitely doing that.

The social media app’s profit fell a whopping 90% in Q4 2022 due to a number of high expenses, according to Pinterest’s latest earnings report. And publishers are among those costs. But they’re costs the social network’s senior team can swallow, providing publishers produce content to help Pinterest retain loyal users, who keep coming back to the app for inspiration on their next project; whether it be seasonal like fashion or food, or milestones such as birthdays and weddings.

Regardless of the current upside around the latest pivot to video, platforms have been known to balk at the ongoing costs of sustaining them. And the current one looks like those costs are only going one way, All the big platforms are now scrambling for short-form video they can monetize.

Revenue wise, while Pinterest might be having a downslope right now, Kat Duncan, executive director at digital media agency Honeycomb Media, believes its decision to support and spend on publishers is a good one in the long run.

As she explained, most publishers that you see at the top of a Pinterest search have been growing Pinterest, not the other way around. 

“We saw many publishers leave Pinterest because it wasn’t worth the investment (time or monetary) to stay, but we stayed on the platform because Pinterest has always awarded loyalty. If you stick with and ‘play nice’ with Pinterest by feeding it the short-form video, long pins, and other content they are clearly prioritizing, they’ll stick by you, too,” Duncan said.

Ahead of the Big Game this weekend, Digiday+ Research checked in with brands to find out how much they’re planning on spending on TV advertising this year, and how confident they are in TV as a marketing channel, in a survey of 33 brand professionals.

It turns out that, much like with agencies, brands prefer investing in connected TV over traditional TV — if they’re spending on TV at all.

Digiday’s survey found that fewer brands are investing in TV ads this year than you might think: 49% of brand pros said none of their marketing budget is going to TV as of the first quarter of 2023 (meaning 51% of brands are investing at least some of their budget in TV this year).

And the percentage of brands that aren’t spending on TV advertising has gone up incrementally over the last year. In Q1 2022, 43% of brand pros told Digiday they weren’t spending any of their marketing budget on TV. That percentage increased slightly by Q3 2022 to 48%, and again to 49% in Q1 of this year.

Meanwhile, there has been a significant decrease in brands that said they spend a large portion of their marketing budgets on TV over the last six months. In Q3 of last year, 31% of brand pros said they were spending a large portion of their budgets on TV. In Digiday’s most recent survey, that percentage fell to 21%. And it’s worth noting that, when breaking down the data further, not one brand respondent said a very large portion of their marketing budget goes toward TV as of Q1 of this year.

Brands might not be spending on TV ads because they’re not confident that they drive marketing success, Digiday’s survey found.

In fact, the survey revealed a big jump in the percentage of brand pros who said they’re not confident at all in TV’s ability to drive marketing success. In Q1 of this year, a third of respondents (33%) said they’re not confident that TV drives marketing success for their brands compared with 17% six months ago and 20% a year ago.

Meanwhile, the percentage of those who said they’re slightly confident, somewhat confident and confident saw decreases with Digiday’s most recent survey: Just 9% of brand pros said they’re slightly confident in TV as a marketing channel in Q1 of this year, down from 14% in Q3 2022 and down significantly from 28% in Q1 2022. Slightly more than a quarter of respondents (27%) said they’re somewhat confident in TV in Q1, down from more than a third (35%) six months ago. And 18% of brand pros said they’re confident in TV heading into 2023, compared with 28% in Q3.

Interestingly though, the percentage of those who said they’re very confident that TV drives marketing success for their brands increased slightly from 7% in Q3 2022 to 12% in Q1 2023.

Breaking out the data into spend on traditional TV vs. connected TV (which Digiday asked about for the first time this year), it’s clear that the brands that do invest in TV ads favor CTV over traditional.

This piece of data is particularly telling: Of the brands that spend on TV advertising, not one said they spend nothing on CTV. In other words, all brands that invest in TV as a marketing channel spend at least a little on CTV.

And it turns out that investment in CTV is significant for many brands, as opposed to being a small investment: 59% of the brand pros who said they spend on TV advertising put a moderate portion of their budgets toward CTV.

Meanwhile, for traditional TV, brand pros who spend a small portion of their budgets on traditional TV or none of their budget account for the largest groups of respondents. Twenty-nine percent of the brands who spend on TV told Digiday they spend nothing on traditional TV or a small amount on traditional TV.

Buoyant stock price

Gross profit — $247 million for the quarter, and $795 million for the 12-month period — was largely flat with a respective 1% and 2% increase with C-suite executives at Criteo crediting a “challenging economic environment” during the period.

A closer look at the numbers reveals that “marketing solutions revenue decreased 19%” during the quarter while retail media revenue decreased 21%,” claimed the company in a statement.  

Albeit, retail media contribution ex-TAC increased 19%, or 23% at constant currency, largely because of new client integrations and growing network effects of the platform.

Looking forward, the company forecasted revenues for the opening quarter of $210million-to-$216 million, or 5%-to-7% annually, with fiscal guidance for 2023 in the range of “high single-digit to low double-digit growth” in contribution ex-TAC. 

Despite the depressed earnings numbers, Criteo’s stock price remained high compared to 24 hours earlier when a Feb. 7 report from Reuters maintained that it has appointed investment bank Evercore to explore a potential sale.

Even though Criteo’s C-suite expressly ruled out the prospect of discussing the latest reports of mergers and acquisitions, executives laid bare its assets that may prove attractive to potential suitors on its subsequent earnings call. 

Who and why?

Although this hasn’t prevented industry observers from pondering the prospect of Criteo as a potential M&A target with both private equity and fellow independent ad tech players among the names thrown in the mix. 

PE players have swooped for ad tech in the past two years with Vista Equity Partners’ $1.4 billion purchase of TripleLift and Bridgepoint’s investment in MiQ. Although given that Criteo’s market capitalization is currently north of $2 billion, any such buyout would be at the upper end of the scale.     

Speaking earlier that week at AdExchanger’s Industry Preview, Arete Research’s Rocco Strauss speculated that the industry’s largest independent demand-side platform The Trade Desk or Shopify may be in the running.

Principally, Criteo’s retail media footprint — ”an integrated self-service platform for all ad formats and demand sources now,” per CEO Megan Clarken — now consists of 175 retailers, and 1,800 brands would be the main attraction. 

Speaking on Criteo’s Feb. 8 call with equities analysts, Clarken added, “Criteo is the commerce media platform for the open internet and the obvious choice to complement Amazon for brands looking to advertise to consumers at the digital point of sale across multiple retail media networks.”

Clarken further went on to note how it has taken its engineering team, a cohort of employees that has been enhanced now Criteo has integrated IPONWEB to accelerate the rollout of its Commerce Max DSP. 

“We have one of the largest concentrations of R&D [research and development] talents in the ad tech industry aside from the walled garden and we’re continuously focused on ensuring proper resource and investment allocation to our priority growth areas,” she added.

For some, it’s Criteo’s retail media footprint, not to mention its engineering capabilities could easily jumpstart any (potential) burgeoning ambition to get into the media business from Shopify. 

Indie ad tech consolidation?

Meanwhile, any ad tech consolidation play would likely be motivated by The Trade Desk’s desire for an end-to-end solution, or mini-walled garden, and potentially insulate the DSP from shortfalls in forecasted CTV spend. 

After all, some predict that even though The Trade Desk has relationships with tier-one TV such as Disney, others believe that CTV outliers may look to emulate Roku which has gone about constructing a walled garden of its own following its purchase of the DataXu DSP in 2019.      

According to some, Criteo’s purchase of IPONWEB — see Digiday’s earlier interview with Criteo CRO Brian Gleason for his views on its “platform-play” — could similarly accelerate any such ambitions. 

The Trade Desk’s strong positioning as a tool for upper-funnel advertisers could also be complemented by Criteo’s legacy as arguably one of the go-to players for lower-funnel, or,  performance campaigns.

As one source told Digiday, “The Trade Desk needs a play in retail [media] and [The Trade Desk CEO] Jeff Green needs another story than CTV.”

“Privacy is a pretty common word that means so many different things, depending on what your businesses are, what you do and how you want to apply it,” said Ashwini Karandikar, evp of media, tech and data at 4A’s. “Globally, the application of policy [varies] by country, by continent, by region, by marketer.”

Meanwhile, Europe’s General Data Protection Regulation (GDPR) continues to crack down on privacy violations. The European Commission will soon require EU nations to share GDPR investigations and actions taken on them every two months to step up enforcement. For example, the board in January pushed Ireland to raise a data processing fine on Meta from $30.4 million to more than $420 million.

Building privacy expertise

For some agencies, it has become necessary to bring on legal and privacy support. At some of the larger holding companies, it might mean additional hiring on the data and privacy teams and dedicating more resources to this area, Karandikar explained.

“There’s also a lot of work being done with external experts seeking external counsel on these topics,” Karandikar said. “Agencies of all sizes now, not just holding companies anymore, are starting to dedicate resources towards this topic, because it is now material [in order to] do business across the board.”

As Stacey Stewart, U.S. chief marketplace officer at UM, previously mentioned to Digiday, consumers are also getting savvier in understanding how they are tracked online with cookies. And with the increase of privacy laws, she said it made sense for UM to add a chief privacy officer in 2020 and a privacy lead member on each of its accounts. Stewart believes more agencies will have to spend more time working closely with legal as the laws evolve.

Arielle Garcia, chief privacy officer at IPG’s UM Worldwide, sits on the business side and said her role is a unique marriage of two fields within privacy and media agencies. She oversees compliance and client support, and increasingly agencies have developed or embedded privacy roles in their product or account teams.

“This has different flavors at different agencies,” Garcia said. “Either way, it takes someone that has both a strong understanding of regulations and is tracking those developments, but also understands adtech and the data flows … so you kind of need a marriage of both skill sets.”

UM has also recently expanded its efforts to create client privacy champions to focus client needs. Eventually, Garcia said the goal is to both have a central team that is tracking privacy, but also build a “foundational competency” across disciplines to support clients.

Consumers come first

Privacy rules center on protecting consumers. With the rules quickly evolving, agencies will have to be ready to adapt and prioritize their commitment to consumer safety — or risk violations that could erode client trust.

It’s no longer enough to just follow a set of privacy rules, said privacy and data expert Mark Ailsworth, vp of partnerships at security analytics company Opaque Systems. Companies have to focus on mitigating data mishandling and “become trustees of consumer privacy, not just abiders of the rules and laws,” Ailsworth explained.

Besides respecting opt-out and consumer consent at every point of communication, Ailsworth advises rehearsing privacy policies with clients. He suggests that some agencies could benefit from a regular quarterly review and a process to determine the responsibilities of each party.

“Assume the responsibility to record, recognize, and respect opt-outs are yours alone — rather than relying on partners to make the necessary changes,” he said.

Garcia mentioned also watching the Federal Trade Commission closely as children’s online protections and personal or sensitive data privacy regulations develop in the administration.

“That is what we’re watching regularly,” Garcia told Digiday. “On the U.S. side, the FTC is vocal, aggressive, ambitious and really has their sights set on what they deemed to be the most harmful practices. They’re taking a super broad view they have the authority to enforce against practices that are unfair and deceptive.”

Different state regulations

A handful of U.S. states will continue to roll out various data protection laws in 2023, from Utah to Virginia. As these take shape, agencies and their clients need to quickly research the regional differences and understand how it impacts their advertising operations in each area. On top of that, firms still have to comply with ongoing GDPR and California Consumer Privacy Act protections.

“We are actively engaged with agencies and not only discussing how they would be dealing with it statewide, but also taking meetings [with lawmakers] … to really understand how the government is expanding,” Karandikar said.

This means it will be important to stay updated with and review regulatory changes and implement regular internal reviews of these policies, Ailsworth added: “Some state privacy rules have wildly different business eligibility thresholds, so it’s important for companies to be sure that as they grow, they’re keeping up with individual state requirements.”

Media agency Good Apple, for instance, works with health and pharmaceutical clients in certain states where they have to remove targeting due to strict regulations. And in some cases outside of the U.S., targeting restrictions can be  even stricter, said Hyun Lee-Miller, vp of media.

“We have to be very privacy-forward,” Lee-Miller said. “[We are taking] that approach and [adapting] with what’s going on in the industry … that has been moving towards a more consumer-first, privacy-first era.”

And for agencies that are prepared with California’s Privacy Rights Act (CPRA) and CCPA compliance, the good news is that rules in other states should not be too much of a heavy lift. Garcia said the majority of client discussions have revolved around CCPA, which was the first data protection law in the country.

“Being ready for one puts you in a good position to be ready for the other state laws,” Garcia added. “I can’t say outright that CPRA is most stringent – it’s too nuanced to make that type of a hardline claim – but certainly it introduced the most kind of new concepts.”