Month: March 2023

Needless to say, marketers are still baffled. The hearing left them with a lot of unanswered questions — questions that Digiday can’t necessarily provide concrete answers to, but can rattle through the probabilities, likely outcomes and implications surrounding them all.

First up: a ban is unlikely

Yes, the b-word is being bandied around a lot when it comes to musings on the future of TikTok. But the truth is, an outright ban is rather unlikely.

For starters, a ban would require U.S. lawmakers to prove that the short-form video app is a genuine national security risk. So far, that hasn’t happened. Rep AOC (Alexandria Ocasio-Cortez) of New York said as much in her first-ever TikTok, stating that usually in these situations, Congress receives a classified briefing. “I can tell you that Congress has not received a classified briefing around the allegations of national security risks regarding TikTok,” she said.

Then there are the steep political costs that Commerce Secretary Gina Raimondo said a ban could invoke as a result of cutting people off from an app used practically daily. Chew announced that the app had amassed 150 million American monthly active users, meaning it’s already very enmeshed in U.S. society. Further, Gen Z, which is TikTok’s core demographic, will be a strong factor in the next general election cycle. 

“Upsetting them [Gen Z] in such a massive way would essentially be political suicide, especially for any democratic candidate depending on GenZ votes,” said Molly Lopez, owner-partner of Hite Digital.

And that’s before the technical barriers of making something like this stick are considered. Broadly speaking, a ban like this would be a very clumsy way of solving a very delicate and politically charged issue. So expect other alternatives to be considered before a ban is.

“Isn’t it about time we all knew what the privacy and security risks are so that we can make our own minds up about whether to continue using TikTok?,” said Nigel Jones, co-founder of Privacy Compliance Hub. 

Whatever the outcome for TikTok, the need for a federal privacy law is clear

More marketers seem to subscribe to this view following the hearing. They realize that something needs to be done to address the broken privacy laws that have allowed the situation to escalate as it has done. But they know banning one single platform isn’t the way to go, and won’t actually solve the industry-wide problem. Not when the U.S. is a mesh of federal and state privacy laws, alongside some judicial precedents. 

A ban on TikTok doesn’t change this. And it all but avoids the root of the problem U.S. lawmakers are trying to resolve: personal data being collected and processed without informed consent. A ban on TikTok doesn’t stop this from happening, simply because every other platform would still carry on collecting data as they always have done. So what is needed is some sort of federal law that gives people clearer controls over how their data can be aggregated, traded and processed.

Whisper it, but TikTok has made strides to assuage concerns rooted in Western governments’ practice

For all the similarities TikTok has to its counterparts — cultural cachet, ad measurement snafus, frictions with creators, to name a few — its attempts to allay privacy concerns from lawmakers set it apart.

Few companies (if any) have ever made their code available for inspection, for one. And don’t forget the announcement of an additional two planned data centers in Europe, dubbed Project Clover —  totaling two in Dublin, Ireland and one in the Hamar region of Norway — (which include external oversight) to ease privacy concerns on that side of the Atlantic. How much these efforts matter remains to be seen. After all, the narrative that TikTok could be co-opted by the Chinese government for nefarious means isn’t completely unfounded.

For example, a late 2022 update to its privacy policy confirmed that staff in China had access to certain aspects of TikTok user information, even if such data sharing is based on a “demonstrated need” to enable its staff to “do their job” using “methods that are recognized under GDPR”.

Of course, TikTok has since reiterated that this is simply not true via its Myth vs Fact material it sent to advertisers in the wake of last Thursday’s hearing.

But still, that initial revelation left marketers wary.

“TikTok will tell you that there’s an iron box around their European data, but if you unpick the threads at the edges, then it’s unclear as to how true that is,” added one former senior marketer at a global advertiser that looked over TikTok’s privacy policies, who spoke on the condition of anonymity.

But the same marketer is also pragmatic about the steps TikTok has made to date.

“I think that TikTok, in Europe at least, has worked hard to put in place controls that comply with European data protection law and show that they don’t need to worry about all the stories they hear,” said the marketer. “I think they’ve stolen a march on companies like Facebook by getting out in front and saying, ‘No, we take privacy really seriously’.”

Brand safety, not data privacy, is the issue marketers currently have with TikTok

Marketers’ concerns around TikTok still primarily center on brand safety. Although data protection is increasingly gaining parity. That came through loud and clear in the conversations Digiday had with several marketers over the past week — and those concerns go right back to the earliest days of advertising on the platform.

Back then, marketers were put off by the lack of brand safety controls that meant they weren’t sure what content their ads were going to appear around.

“TikTok has always been the wild wild west of trying it and seeing if it’s gonna work or not,” said Amy Gilbert vp of social innovation at The Social Element. “There’s not really consistency into what is or isn’t banned or shared on that platform. It’s hard to see that being regulated.”

The checks and balances on the app have improved in the years since. In fact, it even hosted a brand safety summit for advertisers earlier this year to show how safe a space it is for ads these days. And yet, there are still many marketers who need convincing otherwise.

And they may have a point. TikTok’s recommendation algorithm pushes self harm and eating disorder content to teenagers within minutes of them expressing interest in the topics. That’s according to research that was published in December.

That said, TikTok has recently updated its algorithm, enabling users to reset their For You page, so the app doesn’t continually feed them the same types of content.

Coincidental that the update was revealed about a week before Chew’s congressional hearing? We can’t be sure. But while a reset option is not a definite solution to either problem, it does demonstrate that TikTok is, at the very least, listening.

Even if a ban were to happen, the short form format is here to stay

Marketers are generally enthralled by TikTok. So much so that a number of them have since gone all in by building TikTok studios, rebranding to become TikTok-first, and so on. Understandably those businesses might be questioning if their latest investments, driven by their hunch on how well it will pan out long-term, have a lifespan.

But the fact is, TikTok or no TikTok, what the app has done is put short-form video on the map, bigger than it ever had been before. And that format isn’t going anywhere. So chances are, if TikTok is banned, sure it’s a short-term upheaval with regards to maybe another rebrand to move away from the TikTok-first idea, or moving those experimental budgets back into alternative platforms. But it’s not half as much of a hassle as it would be if, say, Meta or Google got banned tomorrow.

“Given the rise of Reels and Shorts, the cross-platform relevance of TikTok-style content is higher than ever, making the concern over the ban less intense than it would have been before Meta and YouTube introduced those content formats,” said Keith Bendes, vp of strategy at Linqia.

This is especially true as the digital ad marketplace has become increasingly saturated with advertisers, creeping CPMs and data privacy crackdowns. Many are pivoting to brand awareness tactics, and rethinking their advertising on Facebook and Instagram. DOOH advertising offers flexibility in media buying and creative, in addition to targeting, measurement and programmatic marketing tools thanks to technological advances.

“Things have come a long way from buying billboards and transit shelters. We’re seeing a lot more interactive units, unique units in different places,” Askew added. “The industry is spending its time digitizing.”

In light of this, brands like oral care company Cocofloss, Hero Cosmetics and Joah Beauty have recently launched DOOH efforts with Sos, a nationwide network of smart vending machines in the bathrooms of high-traffic public access locations like Rockefeller Center in New York and Fenway Park in Boston. 

“We are very focused currently this year on increasing our brand awareness,” said Haejin Chang, brand director at Joah Beauty. “That’s why digital out-of-[home] is very important for us. The beauty space is very cluttered. How can we tap into new consumers? [DOOH] is one way.” (Chang did not disclose specific DOOH ad spend details.)

Drink brand Lemon Perfect and floral company Venus et Fleur have invested in similar efforts. They’re pushing to diversify their media spend beyond performance marketing to include more brand awareness and leveraging DOOH via kiosks and other digital screens. 

It’s a first-time investment for Lemon Perfect, which is testing the media channel to get in front of shoppers as the shift beyond the pandemic continues. For Lemon Perfect, DOOH offers flexibility to pivot budget and creative, similar to online media channels like search or social media advertising. Cost efficiency, flexibility on campaign run times and the ability to rotate creative were major selling points for the brand. (The brand did not respond to a request for specific DOOH spend figures.)

“As long as they continue to shop in-person and visit lifestyle points of interest (shopping malls, golf courses, etc.), DOOH will continue to be part of our marketing strategy,” Richa Anand, director of brand marketing at Lemon Perfect, said in an emailed statement to Digiday.

Meanwhile, Hero Cosmetics increased its DOOH investment this year, accounting for about 5% of the brand’s awareness media budget, according to Amy Calhoun, vp of marketing at Hero Cosmetics. This is the brand’s third year leveraging DOOH, which has seen a steady increase in spend year-over-year, per Calhoun. Hero Cosmetics’ efforts started in the summer of 2021 with digital taxi toppers. 

Over the last year, there’s been an estimated 20% increase in DOOH client requests at Quan Media Group, according to CEO Brian Rappaport. In January, one brand ran a campaign that was solely DOOH, leveraging bulletins, kiosks and digital boats with QR codes attached to understand effectiveness, he added. 

“The ability to utilize creative flexibility, not incur production costs, shorten deliverable timelines and most of all — play off of [in real life] events — while tapping into [user generated content] has become so appealing to early stage growth brands,” Rappaport wrote in an emailed statement to Digiday. 

OOH ad revenue increased 20.7% in 2022 from the year prior, accounting for $8.6 billion, according to the Out of Home Advertising Association of America. Meanwhile, the DOOH segment jumped 24.2% compared to 2021, per the OAAA, making it the second consecutive year DOOH grew by over 20%. 

The flexibility of DOOH is a major selling point for many advertisers, according to agency executives. And even with the economic downturn putting media budgets under a significant amount of scrutiny, DOOH spend is expected to continue because of that. 

“We’ve got the data to prove that digital out of home is showing strong lifts in awareness and consideration,” Askew said, adding that DOOH is driving performance when it runs alongside other media, namely social advertising. “That increase in spend year-over-year has given us the proof. So I frankly expect to see it continue to 2023 for that reason.” 

“We’re used to these hype cycles in tech,” said Henry Cowling, chief innovation officer at Media.Monks. “We have a more sober outlook on the metaverse now than we have had previously on NFTs [non-fungible tokens], for example. But I don’t think there’s any reason to doubt the meta trends, [such as] with young people… spending more and more time online.”

At Media.Monks, transitioning from Web2 to Web3 has been about “making Web3 less sexy,” said Cowling. Thinking about Web3 that way helps people see past the sensation and make it more accessible, he elaborated.

In March, Media.Monks partnered with Salesforce Web3 to simplify the NFT process and Web3 data management. The platform allows agencies to help brands mint and manage NFT collections and connect that data back to their ecosystem. The application integration also lets brands create and connect omnichannel content across Web2 and Web3 with a view of the customer interactions with NFTs.

Media.Monks, along with Vayner3, Deloitte Digital and Accenture, have been a part of the group of launch partners using these blockchain and digital wallet functions. Many client conversations have recently focused on driving value with Web3, whether it is through token-gated commerce, content or loyalty programs, said Nich Seo, director of go-to-market at Media.Monks.

“A lot of brands are kind of just starting from ground zero in a way,” Seo told Digiday. “We have those that are just kind of dipping their toes into the first place. We usually start with the use case as to what they are trying to drive in terms of value for consumers.”

Cowling agreed that they have been thinking about these Web3 developments as “innovating on the future of loyalty” and what that means for brands. The agency has guided clients on testing these features, whether it is loyalty programs, avatars in the metaverse or social media and in-game content and experiences.

“How do you go from what has been a Web2 mindset of just kind of collecting points within a single monolithic platform,” Cowling added, “to something that’s more decentralized — that’s more of an emotional reward mechanism with your consumers?”

The Salesforce integrations make this Web3 process invisible on the customer experience side, while providing an easy way to build experiences for the marketer, Cowling explained.

Part of Salesforce’s NFT management also gives brands a simple way to create their collections directly on Salesforce, added with real-time customer insights, blockchain activity monitoring and automated processes. Brands from Mattel to clothing company Scotch & Soda, have used Salesforce Web3 to manage their NFTs, with some reporting adding new customers.

Scotch & Soda said a process that would otherwise take months to create its Club Soda 3.0 NFT pilot program was completed in “less than two weeks.” With the platform’s data integration, the brand was able to view real-time insights on the 30% net new customers through the program, said Claire Boots, global CRM manager at Scotch & Soda.

Ryan Detert, CEO of Influential, believes these kinds of immersive entertainment and experiences will continue to shape its work with Web3 and influencers. His influencer marketing agency in the last month partnered with decentralized virtual world The Sandbox to support client activations in the metaverse. The VR platform reported having more than 360,000 players spending 80 minutes a day on average during their Alpha Season 3.

“There’s a bit of a hype cycle where people just want to get in there and get a headline and want to figure out ways to stay ahead of the curve,” Detert said. “Those that have longevity, those that go through the process of learning what is actually going to drive value for consumers and for brands are the people that are going to be here in the next few years.”

The agency will work with The Sandbox, a subsidiary of Animoca Brands, to help brands increase their presence in Web3 by leveraging influencers and creating immersive content. The partnership also entails a training program for Influential’s content creators, covering topics like strategy, transitions into Web3 and community engagement.

Detert said the agency is taking this step because consumers want a way to connect that goes beyond “regular screens on their phones.” He believes that is where the opportunity for more immersive content comes in, and there is room to bring more influencers into the business.

“I think that the kind of fervent attempt at throwing anything against the wall to hope that it would drive value, that’s done,” Detert said. “What we’re trying to do is bridge the gap, for those that are both able to drive traffic there, but also be builders inside these worlds, or celebrities that can exist in these worlds.”

Some 400 partners have joined The Sandbox, including Warner Music Group, Ubisoft, Gucci and Adidas. The gaming platform has been supporting brands aiming to create new entertainment culture, from gaming to digital ownership. Mathieu Cervety, ecosystem partnerships director of The Sandbox, said the immersive content lends itself to more engagement than passive scrolling on social media.

“Beyond that, these virtual spaces are an extension of existing campaigns, providing a virtual component to integrated marketing campaigns that stretch across all digital channels — and even in real life,” Cervety said. “These immersive experiences are a sticky way to drive interest in new and interesting ways, with brands learning in real-time what works best for their core customers.”

As Detert put it, creating these new experiences and content is a part of the current Web2.5 world. Agencies and brands are still in this transition until Web3 becomes “an integrated version together,” Detert added.

“Immersive entertainment is going to become more and more immersive as we figure out different ways for the senses or goggles… to become more the standard. Then not only will it be here to stay, it’ll actually evolve with something that potentially will be almost unrecognizable in the next 10 years.”

Digiday+ Research surveyed over 100 agency professionals, and found that agency clients’ approach to the channels categorized as “other social platforms” has been somewhat erratic over the last year.

Over time, agency clients have spent fairly consistently on the social platforms categorized as “other,” Digiday’s survey found. All in all, 86% of agency pros said their clients spend at least a very small portion of their marketing budgets on social platforms outside of Facebook, Instagram, YouTube and TikTok — a very small change from the 83% who said so a year ago.

Agency clients who spend a small or moderate portion on these other social platforms accounted for the largest groups of respondents as of Q1 of this year at 27% each, followed by those who spend a very small portion of their budgets on other social platforms at 24%. Only 5% of agency pros told Digiday their clients spend a large portion of their budgets outside of the mainstream social platforms, and an even smaller 4% said their clients spend a very large portion of their budgets there.

Interestingly, the percentage of agency clients who spend a moderate amount on these other social platforms has risen steadily over the last year. In Q1 2022, 18% of agency pros told Digiday their clients spend a moderate amount on social platforms outside of TikTok, Meta and YouTube, which rose to 23% in Q3 2022, and then rose again to 27% in Q1 2023.

Meanwhile, agency clients who spend a large portion of their marketing budgets on other social platforms fell significantly in the last six months after seeing a bump. In Q1 of this year, 5% of agency pros told Digiday their clients spend a large portion on these other social platforms, down from 13% in Q3 of last year. In Q1 of last year, 9% of agency pros said this.

Overall, agencies are confident that these other social platforms drive marketing success for their clients — which backs up their rate of spending on these channels. And their confidence has seen a jump in the last year. In Q1 2022, 79% of agency pros said they were at least slightly confident that Snapchat, Pinterest, Twitter and other social platforms drove marketing success for their clients. That percentage rose to 87% in Q3 2022, and remained steady at 86% in Q1 of this year.

And agencies are more than just a little confident in these other social platforms. More than a third of agency pros (37%) told Digiday this quarter that they’re somewhat confident in their ability to drive marketing success (as opposed to slightly confident). This group accounted for the largest percentage of respondents, followed by those who said they’re only slightly confident in other social channels (29% of agency pros said this).

Meanwhile, 15% of agency pros told Digiday in Q1 of this year that they’re confident that Snapchat, Pinterest, Twitter and other non-Meta, non-YouTube social platforms drive marketing success for their clients, and just 5% said they’re very confident.

However, it is worth noting that agency pros’ confidence in these other social platforms has been erratic over the last year and a half — which perhaps makes sense, considering how dynamic the category of “other social platforms” tends to be. As marketers know very well, these channels can change from week to week, let alone from one six-month period to another. And this has been reflected in Digiday’s survey data over the last 18 months.

Getting specific about the “other” social platforms that agency clients are investing in, Digiday’s survey found that the highest percentage of respondents said their clients invest in Pinterest and Twitter, as of Q1 of this year. To be exact, 69% of agency pros said their clients spend at least a very small portion of their marketing budgets on Pinterest, and 65% spend at least a very small portion on Twitter.

It’s very important to note, though, that before Q1 of this year, Twitter was the most invested-in other social platform among agency clients. A year ago, 75% of agency pros said their clients spent at least a very small amount on the platform, and that percentage actually rose to 81% six months ago — before falling to 65% as of the beginning of this year. I’m sure we can all guess what likely brought about this change.

Twitter has also seen some drop-offs in other spending categories over the last six months. In Q3 of last year 29% of agency pros said their clients spent a small portion of their marketing budgets on the platform. That percentage fell to 20% in Q1 of this year (although this percentage is on par with Q1 of last year, as well). And those who said their clients spend a moderate portion on Twitter saw a similar pattern: 6% said this in Q1 2022, which jumped to 14% in Q3 2022, before falling again to 7% in Q1 2023.

Interestingly, Snapchat has seen a big bump in investment among agency clients compared with a year ago. In Q1 2022, fewer than half of agency pros (49%) told Digiday that their clients spend at least a very small portion of their marketing budgets on the platform. That percentage rose very significantly to nearly two-thirds (63%) in Q3 2022, and remained there at 62% in Q1 2023.

Meanwhile, Reddit is still the least invested-in among the social platforms categorized as “other,” but it turns out that’s significantly less so now than six months ago — meaning that there are indications that more agency clients are testing the advertising waters on the platform. In Q3 2022, just 38% of agency pros said their clients invested at least a very small portion of their marketing budgets in the platform (which was consistent with the 35% who had said so in Q1 2022). In Q1 of this year, 48% said their clients put at least a little bit of money into Reddit. And the percentage of agency pros who said their clients spend a very small amount on the platform grew from 18% in Q1 2022 to 29% in Q3 2022, remaining steady at 28% in Q1 2023.

And one final note: Zero respondents said in Q1 of this year that their clients invest a very large portion of their marketing budgets in any of these social platforms in the “other” category.

“We are not a brand that’s about us as a capital B brand like your Selling Sunsets and Million Dollar Listings,” said Dey, adding that Windermere is looking to create a connection with consumers via influencers rather than tout itself.  “Real estate is all about getting a customer into a home. Home has deep, deep emotional meaning and value. For most people it’s not a simple transaction. We’re putting a human face on it from the influencer POV to talk about what home means to them.” 

To do so, Windermere is working with Seattle-based agency PB& as well as the home-focused publication Domino to partner with influencers like designer Max Humphrey. Content will appear on Instagram Reels, YouTube and on Domino’s website. The company will tap a new influencer each quarter who will be featured on those channels.

“We’re working with a handful of influencers,” said Dey of the effort for this year. “It’s kind of us dipping our toe into the water to see how this is working for us. If it goes off as we hope it does then potentially next year it is a much larger percent of our marketing budget.” 

The company is spending roughly half of its ad budget on influencers this year — the first it is spending ad dollars on influencer marketing, according to the company. Throughout 2022, Windermere spent $1.14 million on advertising per Vivvix, a Kantar Company, which also found that the company has spent $76,578 on advertising so far this year. 

Focusing on influencer marketing and streaming makes sense to Danielle Wiley, founder influencer marketing shop Sway Group. “They can do a much better job of showing ROI and make sure the money they are putting in is hitting the right people and places,” said Wiley, of the strategy to move from local linear TV to streaming and influencer marketing. 

However, Wiley noted that the company’s approach of working with a design influencer so far may not feel as attainable for average consumers. “Usually posts feel more authentic and attainable,” said Wiley. “To me, when looking for a real estate company you want to see someone like you. You want posts to feel more authentic and relatable, but I could certainly see a market for more aspirational content.” 

Aside from moving ad budgets to streaming and influencers, Windermere is also reducing its ad spending this year given the current economy. “We’re not quite spending as much as we did last year,” said Dey. It’s not by a huge margin. But it’s something we have to keep our eye on. The way our marketing dollars are funded it’s purely based on how many homes are being purchased and sold. When those numbers are down our budgets are down.”