Month: April 2023

“People may not be aware of this already, but we have adjacency controls in place that are really quite effective,” Musk told the packed mainstage room where hundreds recorded his comments on their cell phone cameras even after it was rumored that electronic recordings of the session somehow would not be permitted. Additionally, Musk took a handful (several overly fawning), questions from the audience after it was expressly said he would do no such thing.

Whether Musk, who charmed the audience and even got applause for his freedom of speech position, holds true to his words remains to be seen. He certainly tried to woo the roomful of marketers with some of his messaging. “Advertising goes all the way from spam to compelling content,” he said. “And I really want to focus on obviously the compelling content, to make it relevant, make it interesting.”

Rishad Tobaccowala, an author, speaker and advisor who for decades was a high-ranking executive with Publicis Groupe, offered his thoughts on Musk’s comments in a video segment below with Digiday immediately following the Twitter owner’s session with Yaccarino.

With all of the optimization the program seemingly has to offer, it has been labeled the blackest black box of all Google ad products, giving the platform more control than advertisers, according to AdExchanger. To learn more about Google’s AI arms race qualifications, pitch to advertisers and what’s next for Performance Max, Digiday caught up with Sean Downey, president of Americas and global partners at Google Inc.

This interview has been lightly edited for clarity. 

What exactly is Google’s Performance Max offering advertisers? 

We’re seeing a lot of retailers start to find ways to work in the marketplace a lot more efficiently and build better relationships with customers by using new age technology. And they’re doing that in response to consumers. We think they’re doing that by addressing consumer behaviors and leveraging AI tools to do that more efficiently. It’s really a single campaign type that’s allowing advertisers to access all the Google ads inventory, not in pre-planned silos based on what you spent last month or last year, but really thinking about the speed of that consumer and where they are in that moment so you can have the most impact from there.

How are you pitching it to advertisers, especially in the AI arms race?

We always start everything with what a customer is looking for, so we listen. Right now, in the retail industry, it’s growth and it’s efficiency. So then we say, this is how these platforms can help you. We like to put solutions together. AI can do a handful of things. It can do analytics for you, it can do predictions for you and then it can create things out of other things, that’s generative. If we focus on analytics and prediction, we can help answer their questions really well.

One of the main features of Performance Max is that it optimizes itself, making it somewhat of a black box with limited to no optimization options for buyers. Any plans to change or give advertisers more control? Why?

We’re always listening to feedback from our advertisers on what they want and how our tools can be utilized. We’re evaluating those asks and those questions from them. Right now, as we’re in the marketplace, we’re letting them leverage either Performance Max or their own enterprise tools to drive activity. We’re just letting them put next to each other to see what drives the best performance for them. As we get deeper into it, we’re certainly listening to the larger customers and retailers, and we may adapt based on what we see from them.

What concerns to advertisers have about Performance Max being a ‘black box’? How does Google respond to those concerns?

We show them the results and we help them get some guidance into where performance was driven, how that works. We’re just not letting them pre-set the conditions. They’re not choosing the formats upfront, but we’re giving them the back end information about what’s working, what’s not working so they have some comfort level. Then we go into really go into, did it meet your goals or not and are you happy with those results? Primarily, when we have that type of discussion, people are quite pleased with where they’re at using these types of tools.

You’re working on more controls for advertisers?

Performance Max is focused on outcome and optimization based on conversion. Allowing an advertiser to put too many constraints around their campaigns can actually hinder that goal. We go through that discussion with them, but we’re always listening to their feedback. We’re always listening to the concerns. At the same time we hear that, we’re actually working on more controls that make sense and allows them to still get the same types of results. But it’s a very fluid conversation and we want them to be successful and have comfort level with whatever technology they’re using. That type of transparency is really important to us too.

What does more control look like?

We’re still working through a lot of the feedback. We’re still in the rollout phase of Performance Max [A/B Experiments]. We’ve got a lot of retailers on it. Other advertisers are starting to onboard their way onto it now. We’ll probably go through a few cycles with them before we start to launch [what’s next]. It’s too soon to say [when changes would take place]. Right now, what’s in the marketplace would be the general tool that we’re going to have. We’ll probably collect feedback throughout the year?

What are the plans to evolve as AI evolves?

Any time we’re thinking about the future of ad tools, we think there’s a huge place for AI to help businesses grow. As we have access to more technology, we’re going to continue to find ways that we can have a creative value to the campaigns or the tools that helps that grow. For our product, we’re trying to think of ways we can leverage that to help optimization, help with creative or help with messaging. As they see things that work at scale, we’ll build them into our tools. But there’s a consistent drumbeat of innovation that we’re playing with. As it becomes something that we think works, we’ll launch it.

This time, it’s publishers seeing more ad dollars trickle out of those auctions, which has reignited speculation that this is it — the beginning of the end of the open marketplace where prices are decided in real-time through an auction.

But here’s the thing: spending on the open programmatic market may be down, but it’s not out — and it probably won’t ever be. There are too many reasons for publishers like The Lad Bible Group, Future and Gumtree to keep it. 

Among them, is the fact that there’s still a lot of money to be made in open marketplaces. Marketers, drawn to the ease and low cost, seemingly can’t get enough of this sort of advertising.

Publishers are happy to oblige. It is a lower cost of sale relative to private deals, which is especially appealing because most publishers don’t have the capacity to handle a multitude of private deals — an issue that has been compounded by mass layoffs across the market. And even if those publishers could make those deals stick, they probably wouldn’t have the demand to match it. 

“We have too much volume. I need to [fill it],” said one publisher who spoke anonymously under the Chatham House Rule during a publisher working group at the Digiday Publishing Summit last month. “I mean, there are certain units I can [be picky with where they are bought] — the ones our direct sales teams are selling, like 7% or something like that.”

Another publisher, whose ad business is almost completely sold directly, said during the DPS working group that even they are weighing at which points they’ll allow ad partners who don’t have direct demand-side platform connections to use resellers to buy ads programmatically. 

“We don’t allow reseller entries for monetization of standard display or standard pre-roll, but if [a client asks for one of] our higher impact units… we make that concession,” the second publisher said. “That can become a very slippery slope [though] the more we say yes and yes and yes.”

“I’m not able to be that picky,” the first publisher retorted. 

“There is a point for open exchange 100%,” said a publisher from a news media outlet who spoke on the condition of anonymity for this story. This attitude comes in spite of the fact that third-party brand safety and suitability firms like IAS and DoubleVerify have significantly impacted the publisher’s ability to scale campaigns. They pointed to last year when the Ukraine-Russia conflict began, the open marketplace brought in more, new advertisers that might not have ever come through direct selling. 

“It supported the business, but we weren’t seeing quality advertising [at that time]. It was like the bottom of the barrel,” the news publisher contended. 

Needless to say, open auctions are still valuable to most publishers, especially those that don’t have enough marketers buying from them directly. Not only can they use the open market as a source of market intelligence to see who is buying their impressions and how, it’s also a less riskier move given how flexible this revenue for publishers can be.  

That assessment, while overly simplistic, is at least directionally correct, and Gumtree’s ads business only augments the observation. 

Six out of every 10 dollars the online classifieds site makes through advertising (or 60%) come from the open market. Gumtree, like so many other publishers, is reliant on those dollars. 

“It [the open market] is still pretty large, but that also includes our app inventory where the open market is a bit more dominant,” said Victoria Trevillion, head of ad tech and operations at Gumtree.

That’s not for want of trying to move money out of those auctions. When marketers express an interest in doing so, Trevillion’s team will encourage marketers into direct deals. But those deals are, as ever, hard to strike. And they’re even more difficult to scale.

As Trevillion explained, “Deals like this are operationally heavy.”

Until this changes, all Gumtree can do is keep trying to show advertisers the benefits of brokering those deals — sharper targeting, better inventory and so on. Don’t expect this to change anytime soon. 

If it wasn’t so tricky for publishers to wean themselves off those ad dollars, more would’ve done it by now. Here are some data points that lay this out bare: the open programmatic market took up more than six in every 10 dollars spent by the programmatic advertisers (64%) last year at media management firm Ebiquity. That’s slightly down from the 69% that was spent the year before. 

“Open auctions will always be important to publishers because there will always be cash there for them — albeit the amount on offer will differ depending on a few factors,” said Nick Flood, global commercial operations director at Future. “That said, the general trend of advertisers and agencies wanting to get closer to premium publishers still rings true.”

And Flood is doing all he can to capitalize on that interest. Indeed, Future’s own in-house ad tech continues to pull ad dollars out of the open market. However, don’t expect Future to follow Bloomberg out of those auctions anytime soon. Like Gumtree, Future is nothing but pragmatic about why marketers continue to opt for those auctions over direct deals. 

“The open auction will continue to be big and the industry will find ways to prove it as a solution because sometimes markets just want to advertise in that space,” said Flood. 

Some of those so-called “ways” are seller-defined audiences and Google’s publisher provided signals — ways of providing cohort or contextual data into the open auction. Whether they do fulfill that promise depends on whether marketers adopt them over time.

So far, the response has been muted to say the least. With that said, it’s still early days and there’s still time for those alternatives to come good. 

“I’m bullish that those opportunities will provide good value for publishers if the buyers accept them,” said Flood.

His outlook speaks to a deeper point: while it may be safer than before, it’s premature to call the open marketplace a safe place for ad dollars. It wasn’t before third-party tracking got clipped and it won’t be once it goes away completely. 

That’s why there’s so much riding on seller-defined audiences and Google’s publisher provided signals. They represent something more fundamental: the depreciation of granular tracking via the industrial complex third-parties have built on the back of cookies, mobile identifiers, IP addresses and so on means the depreciation of addressability in the open market.

“With the changes that are taking place, I don’t really see a large role for the open programmatic market, especially in Europe,” said Christer Ljones, head of data at Schibsted Marketing Services, the Scandinavian media group’s advertising arm. “However, alternative models are not easy to find, they will either require larger scale, which again points to consolidation or partnerships, or other revenue streams such as sponsorships, premium branded content, change in content strategy or even subscription.”

Building these models takes time, and whether enough is invested to succeed remains to be seen.

What is clear, though, is that the open programmatic market’s share of ad dollars won’t grow — at least not in its current form. 

Neither the CTV or retail media being made available to programmatic advertisers will help on that front. Both are areas where inventory is concentrated into a handful of platforms, most of which are also the largest spenders on content that want to recoup that investment.

The last thing those companies are going to do is sell any notable amount of ads in an open auction.

This month, Stagwell continued developing its live AR platform, ARound, by adding new sports teams to its app, which provides content like contests around specific games. Stagwell considers ARound “a new connected marketing medium” that can drive consumer engagement at scale, said ARound CEO Josh Beatty.

“Brands can leverage AR to create interactive experiences that engage fans and offer more touch points throughout a game or event,” said Beatty. Engagement for Kansas City Royals on its app was more than 25 minutes per fan during the game, according to Beatty. This year, ARound will be adding more automation and integration for sports data feeds as it aims to draw in the sports enthusiasts that like stats and real-time information. And Beatty noted AR content works particularly well in engaging the younger audiences and casual sports fans.

Media.Monks partnered with Meta and the NBA on its VR efforts beginning in 2020 with an immersive 180-degree court-side VR experience. In 2021, Media.Monks also worked with artist Post Malone on producing an immersive concert experience. Financial details of the partnerships were not made available.

This year, 52 NBA games were made viewable through Meta’s Oculus headset, and it featured five immersive broadcasts with live commentary from NBA stars and special guests. Eventually, storytelling could go beyond “a single flat surface” with mixed reality content, said Lewis Smithingham, svp of Innovation at Media.Monks, who noted that eventually geospatial technology could serve consumers looking at the same billboard different versions of an AR ad based on their data. “The future is wide open,” Smithingham said.

AR and VR content will also push agencies to move beyond impression metrics, because people will interact with the elements differently than a static page or video. Previously marketers might aim for millions of impressions, Smithingham added, but mixed reality presents a better chance at converting when people can be a part of the content and interact with it. Smithingham did not provide results from the NBA partnership, but the company said its production team observed in conversations with fans over the last couple of seasons that these broadcasts are attracting a wider audience beyond the dedicated basketball fans.

“I think now we’re getting to a place where marketing dollars need to go further,” Smithingham said. “When you have your hands on a controller, you’re interacting when you’re in VR, you’re engaged, you’re present, you’re part of that story. I think that’s going to be what’s really most valuable to brands.”

As more content migrates across different surfaces, Smithingham believes the focus is now on looking at engagement differently — and making people remember the content. People are doing different things even when they are watching TV or playing a video game, Smithingham added, so they are not necessarily paying attention.

“I have a very firm belief that if it’s in this day and age, if it’s not interactive, it’s broken,” he told Digiday. “The opportunity for AR and VR for brands is to get an engagement that’s much more meaningful, that’s memory forming. We have the opportunity when we look at brands, and we work in VR experiences where we can tell a brand based on head tracking.”

Razorfish, the interactive agency in Publicis Groupe, also increased its Web3 offerings to include immersive metaverse experiences and products. Cristina Lawrence, evp of consumer and content experience at Razorfish, pointed out that mixed realities can link physical spaces and live events to “new digital spatial layers” — so it can change people’s experiences whether at a live concert or retail shop.

“AR is one of the technologies that deepens these emotional connections,” Lawrence said. “At a live concert, AR can reveal hidden components to the live show experience that effectively transcend the physical experience. Another AR example is in retail, where a consumer would be able to see a product in action and learn more about its benefits and features than they would be able to through the typical in-store experience.”

Successful AR campaigns ultimately can “unlock creative storylines” beyond the traditional campaigns, Lawrence added. With Coca-Cola, Razorfish created 12 immersive experiences at the World of Coca-Cola. With this interactive experience, The Vault, people could experience the story of the soda company’s secret formula, and it used face detection and virtual gaming throughout the exhibit. Further insights were not shared, but the company noted The Vault being among the popular attractions for the space drawing 1.2 million visitors annually.

As more opportunities develop, Lawrence mentioned language learning models in other new mixed reality experiences may play a bigger role in AR and VR content. For instance, it may even leverage AI in some consumer engagement and support scenarios.

“It’s exciting to think about how AI will power real-time bot personas or characters that can enhance the overall experience through storytelling, live interaction, and real-time assistance,” Lawrence said.