Month: April 2023

Some influencer marketing shops are already seeing an increase in brand requests for older influencers. “We’ve had this request over the years, yes but there has been an increase in brands that want to leverage older influencers over the last year,” said Vickie Segar, founder of Village Marketing, when asked about recent marketer interest in older influencers. Others say that, while brand requests haven’t increased from their clients, they are seeing a consistent number of requests each year asking for older influencers and they expect that to increase as marketers recognize the potential of this demographic. 

“What we’re seeing now actually is a continuing trend towards authenticity,” said Sally Okine, svp of digital at Publicis Groupe PR shop MSL, when asked about the use of older influencers. “More and more brands are seeing that, in some cases, for specific categories and products, older audiences can be just as impactful as younger audiences.”

Working with older influencers can help brands test whether their messaging and strategy will resonate with an older demographic, without having to create a separate creative campaign for this demographic, explained Rachelle Avila, group communications planning director at creative shop Mischief at NoFixedAddress. “Influencers are a more turnkey way to see if a message, a platform will resonate with an audience,” said Avila. “Does this work or do we need to speak to them differently?”

Working with older influencers doesn’t solely appeal to older demographics, according to influencer marketing execs. Older influencers that have become popular on TikTok, like Lynn Davis (@cookingwithlynja, who has 15 million followers), Lillian Droniak (@grandma_droniak, with 8.9 million followers) and Barbara Costello (@brunchwithbabs, with 3.1 million followers), among others, have built communities of followers not only among people of their age demographic but also among the younger consumers brands are seeking to reach. 

“The creator economy does not discriminate,” said Christina Goswiller, vp of social and creative strategy at Digitas. “We’re seeing creators of all ages come onto the scene and brands should take note. Ultimately, the decision to partner with a specific creator(s) comes down to knowing who your audience will find relatable, credible and authentic.”

Goswiller continued, “There’s also something to be said for being age inclusive with creator selection as a reflection of values. Sure, older demographics may not be your target audience but even a Gen Zer will appreciate seeing the inclusion of a creator in their 50s-60s if the individual has a powerful connection to your brand or product.”

But while older influencers have been growing in popularity in recent years and some mass appeal brands are starting to test out potentially working with them, marketers and agency execs say the majority of brands looking for older influencers are often ones with products meant specifically for that demographic. Brands pitching health care products, particularly menopause products, or financial institutions pitching reverse mortgages are often among those seeking out older influencers, according to Danielle Wiley, founder of influencer marketing shop Sway Group, who noted that older influencers buy more than just those types of products, but brands outside that group don’t often pitch to them.

“When you consider how much a person’s life stage and age inform their interests, it should be no surprise that the content they consume digitally is no exception,” said Okine. “In the next few years as the creator economy grows and evolves, we’ll continue to see more and more creators with varying demographics including age have a seat at the table, actively contributing to brand storytelling in unique ways.”

This shows in the results from Digiday+ Research’s most recent survey of 112 publisher professionals.

Digiday’s survey found that, overall, revenue from subscriptions has remained fairly steady for publishers over the last two years. Sixty percent of publisher pros said in the first quarter of 2021 that they made at least a very small portion of their revenue from subscriptions, 58% said so in Q1 2022 and 62% said so in Q1 2023.

However, the percentage of publishers who get a large amount of revenue from subscriptions has fallen off a bit in the last two years, while the percentage who get a small amount has steadily increased. In Q1 2023, 21% of publisher pros told Digiday they made a large or very large portion of their revenue from subscriptions, down from 27% in Q1 2021. Meanwhile, 29% of publishers said in Q1 of this year that they get a small or very small portion of their revenue from subscriptions, up from 20% two years prior.

And it’s worth noting that, consistently, the publishers who have told Digiday that they get none of their revenue from subscriptions have accounted for the largest percentage. Thirty-eight percent of publishers don’t make any money from subscriptions as of Q1 of this year.

However, publishers do see the potential in their subscriptions businesses, with or without an uncertain economy. While those who get none of their revenue from subscriptions accounted for the largest percentage when breaking down publishers’ current revenue streams, those who said they will put a large or very large focus on building their subscriptions businesses in the coming months have historically accounted for the largest percentage when breaking down publishers’ potential revenue streams — although that percentage has slowly but steadily decreased.

In Q1 of this year, 39% of publisher pros said they would put a large or very large focus on building their subscriptions businesses in the next six months. That’s down slightly from the 43% who said the same in Q3 of last year, which was down slightly from the 44% who said so in Q1 of last year, which was down slightly from the 47% who said so in Q1 of 2021 — you see the pattern here.

And breaking down the data a bit further, it’s worth noting that the percentage of publisher pros who said building their subscription businesses would be a very large focus fell from 33% in Q1 2021 to 23% in Q1 2023.

At the same time, the percentage of publishers who said they will put a moderate focus on building their subscriptions businesses in the next six months has grown steadily in the last two years. Nine percent of publisher pros told Digiday in 2021 that growing subscriptions revenue would be a moderate focus, which rose to 12% in 2022, and then rose again to 17% in 2023.

Looking specifically at large publishers (or those who made more than $50 million in revenue last year), subscriptions are an important piece of the revenue puzzle — and that importance has grown significantly in the last year.

In Q1 2022, two-thirds of publisher pros who work for large publishers told Digiday that they made at least a very small portion of their revenue from subscriptions. In Q1 2023, that percentage shot up past three-quarters to 78%.

The increase in the number of publishers who make money from subscriptions was fairly evenly spread across the varying degrees to which they make money from subscriptions, though. In other words, there weren’t really any notable jumps in one particular category when breaking down exactly how much large publishers make from subscriptions.

The biggest jumps were among the large publishers who said they make a very small portion of their revenue from subscriptions and those who said they make a moderate portion. Both categories increased from 15% in Q1 2022 to 20% in Q1 2023. Meanwhile, the percentage of large publishers who told Digiday they make a very large portion of their revenue from subscriptions dropped slightly from 15% in Q1 2022 to 10% in Q1 2023.

Large publishers’ focus on building their subscriptions businesses in the coming months turned out to be a bit of a mirror image, Digiday’s survey found. The percentage of publisher pros who work for large publishers who said they’ll put at least a very small focus on building their subscriptions businesses in the next six months was unchanged in the last year: 77% in Q1 2022 and 78% in Q1 2023. But the extent to which large publishers will focus on growing subscriptions saw several notable changes over the same period.

For instance, the percentage of large publishers who said that building their subscriptions businesses will be a large focus fell significantly from 21% in Q1 2022 to just 10% in Q1 2023. But the percentage of those who said that growing subscriptions will be a very large focus grew significantly from 25% in Q1 2022 to 37% in Q1 2023.

Similarly, the percentage of large publishers who told Digiday that building their subscriptions businesses would be a very small focus fell from 15% in Q1 of last year to 5% in Q1 of this year. And the percentage who said subscriptions will be a small focus shot up from 10% in Q1 2022 to 20% in Q1 2023.

It turns out small publishers (or those who made less than $10 million in revenue last year) are relying less on subscriptions for revenue than they were a year ago, Digiday’s survey found.

In Q1 2022, 45% of publisher pros who work for small publishers said they got at least a very small portion of their revenue from subscriptions. In Q1 2023, that percentage fell to 39%. Considering that more than three-quarters of large publishers (78%) said this year that they get at least some money from subscriptions, that 39% (or hardly more than one-third) seems like a small number (that is potentially trending smaller).

Among the small publishers who are making money from subscriptions, the percentage who said they make a small portion of revenue from that part of their business did see a meaningful jump in the last year. In Q1 2022, only 4% of small publishers told Digiday they made a small portion of their revenue from subscriptions, which rose to 11% in Q1 of this year.

On the other end of the scale, the percentages of small publishers who said they get a large or very large portion of their revenue from subscriptions saw slight dips in the last year. Eight percent of publisher pros who work for small publishers said in Q1 2023 that they get a large portion of their revenue from subscriptions, down from 12% the year prior. And just 3% said they make a very large amount from subscriptions as of the beginning of this year, down from 8% at the beginning of last year.

While small publishers’ reliance on subscriptions as a revenue stream has fallen in the last year, the percentage who said they’ll focus on building their subscriptions businesses remained steady. To be exact, 69% of publisher pros who work for small publishers told Digiday in Q1 of this year that they’ll put at least a very small focus on building subscriptions in the next six months, compared with 67% who said so last year — a very slight change but still a very significant portion of small publishers.

Notably, the percentage of small publishers who said they will put a large focus on building their subscriptions businesses saw a small jump, from 12% in Q1 2022 to 17% in Q1 2023. But the percentage of those who said they would put a very large focus on growing subscriptions fell from 26% in Q1 of last year to 19% in Q1 of this year.

Earlier this week, The New York Times reported Google is planning major changes to its search engine including more personalization, more AI, more ads and more ways to make financial transactions via search. Reportedly codenamed “Magi,” the project could be part of Google’s strategy to stay ahead of Microsoft’s Bing in what SEO experts say is the most exciting era of search in quite a while.

Google’s plans for overhauling search by adding more AI are still in the realm of hypotheticals. However, marketing and AI experts see the opportunity as a chance for Google to take what has become a “cluttered,” “disjointed,” and “confusing” product and make it into something significantly more simplified.

“There’s a joke in the industry,” said David Shapiro, svp of earned media at NP Digital. “Where’s the best place to hide a body? On page two of Google Search.”

When asked for comment about Google’s AI efforts or any other plans to overhaul its search business, a spokesperson wouldn’t provide any specifics but said Google has been adding AI to Search for years to improve results and introduce new features such as Lens and multi-search.

“We’ve done so in a responsible and helpful way that maintains the high bar we set for delivering quality information,” the spokesperson told Digiday in an emailed statement. “Not every brainstorm deck or product idea leads to a launch, but as we’ve said before, we’re excited about bringing new AI-powered features to Search, and will share more details soon.”

Despite being seen as playing catch-up with Bing on the AI front, Google still dominates the search advertising market. According to WARC, Google has 50.4% of the search market in 2023 while Bing has just 5.2%. However, WARC’s recent survey of marketers found that just 53% plan to increase spending with Google — down from 59% last year — while 11% plan to increase spending with Bing.

Depending on what Google does, it could lead marketers to rethink SEO strategies by making brand-building more of a focus after years of prioritizing performance marketing. Max Gomez, chief marketing officer at the white-label SEO agency The Hoth, said advertisers don’t currently like long-tail keywords since they don’t pay off soon enough. However, a chat-based search platform could change that.

“Right now we see people making tons of questions to Google and sometimes what they get isn’t what they want,” Gomez said. “It’ll make it easier to match user needs with the brands.”

Despite the potential, there are also still plenty of challenges. For example, Gomez said, some clients are worried about having their content plagiarized by AI. There are also still plenty of questions about how Google plans to monetize it, whether adding too many ads in chat-based answers might overly clutter conversations, as well as how Google will fix its problems around misinformation.

Analysts and other experts have pointed out a number of concerns about Google and its AI ambitions. For example, Bard has been found to still generate a high percentage of false information when generating responses to users. In a recent research report from Gartner, consumers said they expect AI to generate misinformation, but they still expect companies to disclose whether AI was used in generating branded content. There’s also a risk that brands might appear in AI-generated search results that consumers don’t trust, noted Gartner, which found 85% of its survey respondents had either “no trust” or just “some trust” in AI-generated search results.

“AI should be viewed as an augment, not a supplement, for search,” said Nicole Green, a senior direct analyst at Gartner. “Tools such as ChatGPT, Bing, etc., still lack veracity and citations and, therefore, truth and trust. The user behavior of engaging with AI chat is still different from search behaviors. AI chat features lack context and destination.”

The stakes are high for Google to get it right. Samsung has reportedly been considering switching out Google for Bing as the tech giant’s native search engine. Meanwhile, analysts estimate Google’s three-year contract with Apple is expected to expire sometime this year, which could give Bing an opening to potentially snag that business.

Along with building trust and value into users’ perception of its AI features, Google might also want to consider adding in more payment functionality, said James McDonald, director of data, Intelligence & Forecasting at WARC. That’s especially important now that WARC estimates that retail media now makes up one-fourth of the search ad market.

“Google has the means of reaching a consumer close to a point of purchase; converting that sale (as Amazon does so efficiently) will put them back in the driving seat as the sector evolves further over the next decade,” McDonald said.

Of course, Google and Microsoft aren’t the only two companies building new generative AI tools. Earlier this month, GoDaddy released new AI tools for small businesses to generate content, and just last week Mailchimp released a new feature for AI-generated content for email marketing.

The AI battle between Google and Microsoft could also ultimately benefit a number of other generative AI companies such as Jasper AI, which recently announced its own API. According to Jasper President Shane Orlick, the ongoing AI hype provides added exposure and competitors could push Jasper AI to improve. “The better the tech from other companies get, the better Jasper gets,” Orlick said.

Riot might be one of the better-prepared esports companies to help correct the course of the industry. Its marquee titles, “League of Legends” and “Valorant,” regularly draw millions of viewers and drive ample sales of in-game items, making Riot’s involvement in esports into a lucrative endeavor. Now, the company is looking to share some of the spoils with the esports teams in its ecosystem in a bid to help keep the industry afloat.

To learn more about the vision and strategy behind Riot’s blog post, Digiday spoke with Needham for an annotated Q&A.

This conversation has been edited and condensed for length and clarity.

On the timing of the blog post

John Needham: 

We have a lot of teams who are out in the marketplace; they’re trying to source new sponsors and new investors, and they’re struggling, frankly. A lot of it has to do with uncertainty about general economic conditions, but another part of it is just the narrative that’s out there around esports. And a lot of that is how other publishers have run their esports — which isn’t Riot’s way. No, as in most things, Riot is just very player-focused and team-focused as a company, and we take it seriously, our business relationship with teams. So it was trying to dispel some of the narrative around how other publishers have approached esports.

Digiday: 

Needham didn’t mention any other game developers by name, but it’s not hard to read between the lines in this answer. At the moment, Activision Blizzard is at odds with the esports teams in its Overwatch League, with the majority of teams hiring a law firm to start a collective bargaining process against Activision Blizzard in January. By promising to create more opportunities for esports teams to share in the profits, Riot might be looking to avoid a similar blow-up on its end.

On Riot’s strategy for selling broadcast rights in esports

John Needham: 

I can tell you we are not focused on that right now for two reasons. One, we don’t think that doing exclusive broadcast deals is something that’s player- or fan-friendly; we have a philosophy around being everywhere that our players are, and doing exclusive broadcast deals runs counter to that. 

For the platforms that do pay for premium content, like we produce around esports, we just don’t think it’s a good audience fit at all. So we want to be where our audience is, and we want to be on the platforms where we can serve our audience best — and that’s the streaming audience right now. 

Digiday:

Given esports leagues’ struggles to secure broadcast rights deals in the past, it’s fair for Riot to focus on alternative revenue streams in the near future. But when you look at the fact that over 60 percent of traditional sports teams’ revenues come from media deals, it still feels like billions of dollars are being left on the table as long as esports competitions are streamed free-of-charge. To be fair, Needham’s blog post explicitly avoids comparisons to the traditional sports industry, stating that “the esports business is going to be more like the games business.”

On Riot’s fighting game project ‘Project L’ and the future role of fighting games in Riot’s esports ecosystem

John Needham:

We haven’t architected how we’re going to run esports for “Project L,” but we are very excited about it, and we do have a strategy around how we approach new esports. We very much look to the community and their needs, and we try to design around that. So for “Project L,” specifically, we know that events like EVO are a very important part of that community, and we’ve already talked to PlayStation about how we can be part of that event. We’ll see how that evolves over the next few years.

But I think “Project L” as an esport is going to be very different from “Valorant,” “League of Legends” or what we do with “Teamfight Tactics,” just because that scene, and that community, has different expectations for what they want to see. So we are very excited about it — we will make a major esports play supporting “Project L.”

Digiday:

Fighting games are particularly strong drivers of esports fandom, so entering the fighting game community is just good business sense for Riot Games. Popular fighting games such as “Super Smash Bros.” have traditionally been neglected by their developers, and many members of the Smash scene are desperate to compete in an esport with actual developer support. Once “Project L” comes out, it will almost certainly have a vibrant competitive scene from day one.

On the inflated player salaries plaguing the esports industry

John Needham:

One of the difficult parts is being an international sport, because there are just different laws and regulations in different regions around the world. So, have we looked at things like salary caps and luxury tax systems and mechanisms like that to help teams? Yes, but we have not found anything yet that we could roll out on an international level. 

I think one of the things we’re going to see with some of the teams struggling is, unfortunately, that player salaries will probably be going down over the next few years, as teams try to survive through this bad situation we’re in. But we do not currently have any plans to impose any sort of salary caps or anything like that.

Digiday:

It’s no secret that the esports salary market is headed for a correction, but Riot is confident that the invisible hand will guide these changes without any need for explicit regulation. But while player salaries are undeniably inflated in esports, the players themselves have grown accustomed to their relatively high pay, and reduced salaries will likely cause friction between esports teams and their talent. Cutting down on salaries is probably necessary to ensure the future of esports, but it isn’t going to come easily.