Month: April 2023

“Clients are making decisions much closer to airdate, and they want to be able to shift a little bit. So we have to allow some form of flexibility or fluidity, ideally with still a firmness to spend,” said one TV network executive.

“Clients are starting to look at budgets as much more fluid. So maximum flexibility will again be something that will help certain partners gain share,” said one agency executive.

OK, so both executives used the terms “fluidity” and “flexibility” interchangeably, which can come across as confusing. But the equivalence kinda hits at the heart of the matter. Yes, advertisers and agencies still would like looser cancelation options for their upfront commitments, but the flexibility conversation has advanced beyond upfront deals’ out clauses.

In this year’s upfront cycle, the focus isn’t so much on advertisers being able to take their money out of an upfront commitment but on how their money can move around within the confines of an upfront deal, from advertisers’ programmatic spending counting toward upfront commitments to networks’ moving advertisers from streaming to linear and vice versa to fulfill viewership guarantees.

“We want to be putting deal terms in place that allow us to transact directly, programmatically, whatever makes the most sense for our clients. All the pipes are connected. It’s not either-or,” said a second agency executive. “As we go into the marketplace, we do need to put more focus on considering that as we set up the framework for these deals.”

A glaring issue for both upfront ad buyers and sellers has been the relative ricketiness of advertisers’ upfront commitments in recent years. This issue came to a head last year when TV networks saw advertisers cut their upfront orders from the initial commitment amounts to a greater degree than usual. Considering the economic downturn, executives at TV networks and agencies believe it may be even harder to get advertisers to commit this year, fueling the expectation among some executives that the amount of money committed in this year’s upfront will be lower than last year’s bounty. And TV network executives acknowledged that it’s something of a fool’s errand to expect advertisers to be able to come up with budgets in the spring and for those budgets to remain relatively unchanged come fall, let alone by next spring.

“More and more, you’re getting these kinds of fake-pledge budgets,” said a second TV network executive.

This is why the upfront model appears on the precipice of actually — finally — changing, if not entirely but still significantly. TV networks are talking about a pay-as-you-go model that would let advertisers’ in-cycle programmatic spending count toward their upfront commitments.

Beyond that, there’s likely to be a leveling between TV networks’ primary inventory sources: linear TV and streaming.

Over the past couple years, TV networks have pushed advertisers to purchase their streaming inventory and even pushed away dollars earmarked for linear. This year the push-pull may be less one-way. As much as ad-supported streaming viewership continues to grow, the likes of Netflix and Disney+ have shown that ad-supported streamers can struggle to satisfy advertisers’ reach demands. And of course, this dynamic remains at play on the linear side, as pay-TV subscribers continue to cut the cord.

“We have to have the flexibility to move from linear to digital or back a little bit throughout the year. It can’t be as rigid,” said the first TV network executive.

That fluidity between linear and streaming raises a bunch of questions, though. For starters, how would this fluidity affect linear and streaming ad prices, especially as ad buyers have railed against streaming services’ rising rates?

“We’re probably going to have to play ball, depending on where it’ll all fall,” said a third TV network executive.

Again, it’s a fluid situation.

What we’ve heard

“I think this year is the first true year that streaming [ad spending] will surpass traditional TV.”

— Agency executive

Numbers to know

11%: Percentage increase in U.S. advertisers’ spending on TikTok in March despite the potential for the U.S. government to ban the app.

$150: How much money a creator with 42,000 Instagram followers was offered for a branded Reel and branded story through Instagram’s Creator Marketplace.

4: Number of months after Disney+’s ad-supported tier debuted that it finally became available on Roku’s connected TV platform.

52%: Percentage of surveyed U.S. adults that subscribe to a pay-TV service, roughly the same percentage as surveyed a year ago.

What we’ve covered

How TikTok agencies work — and why they don’t fear a U.S. ban of the app:

• Despite the threat of TikTok’s U.S. ouster, agencies that have built their businesses around the platform say they are unconcerned.
• Supporting their stance is the fact that advertisers do not seem to have cut their spending on TikTok.

Read more about TikTok here.

Why advertisers are still waiting on the CTV promised land:

• Connected TV ad measurement continues to beguile advertisers.
• Frequency management and targeting issues are also still at play.

Read more about CTV advertising here.

A look at the hidden teams behind successful creators:

• Creators’ teams span people in creative and business roles.
• Creators can struggle to know when it’s time to stop going it alone.

Read more about creators here.

What we’re reading

Why Comcast could win the Hulu deal with Disney:
Comcast could still end up selling its stake in Hulu to Disney, which owns majority control of the streaming service, but Hulu is losing money and has lost some of its value as TV network owners like Comcast-owned NBCUniversal pull their programming from it, according to The Information.

Artificial intelligence vs. intellectual property:
Generative AI tools like OpenAI’s ChatGPT and Midjourney pose a threat to intellectual property owners like Hollywood film and TV studios depending on how the legal system interprets the application of copyright law to the AI tools, but they also provide a means of making the production and post-production process more efficient and cost-effective, according to The Wall Street Journal.

TikTok tests creator commerce program:
TikTok has started testing an affiliate shopping program for creators to promote products on the platform and receive a commission when people click to purchase a product through TikTok Shop, according to Insider.

Warner Bros. Discovery gets another look from legislators:
Roughly a year after the WarnerMedia-Discovery merger closed, four members of Congress are demanding that regulators take another look at the deal in the light of its resulting layoffs and content cuts, according to The Hollywood Reporter.

Advertisers’ upfront demands for Netflix:
Heading into this year’s upfront negotiations, ad buyers want Netflix to lower its ad prices, improve its ad tech, expand its ad-supported audience and take over the sales relationship from Microsoft, according to Ad Age.

Disintermediation 2.0?

These moves mirror one another, in that both involve the instigators “leapfrogging” their traditional trading partners.

And while each (publicly) maintains such interventions are complementary to historic market dynamics — The Trade Desk asserts OpenPath is a necessary evolution to maintain functional market dynamics — others deem them disruptive in echoes of the disintermediation debate of yesteryear.

Speaking recently with Digiday on the Marketecture Podcast, ad tech commentator Ari Paparo characterized developments such as OpenPath as a potential cause of disintermediation for traditional SSPs. And this is not necessarily a bad thing, argued Paparo, players in the space need to evolve or fall by the wayside.

After all, the recent shuttering of the Yahoo SSP, along with the EMX Digital flameout, is indicative of the current Darwinistic hue in the sell-side of the ad tech sector.

Other players in this field, such as Index Exchange, Magnite, and PubMatic, are repositioning to avoid a similar fate. In recent times, the latter two have explored making use of their recent acquisitions to enhance their propositions to the buy- and sell-side of the market respectively.

Earlier this month, multiple sources told Digiday that Magnite was exploring the option of bypassing DSPs by forging direct relationships with media agencies.

One source with direct knowledge of the development, who declined to be named, reported that this was due to media agencies overtly expressing a desire to “forge deeper, more dynamic relationships with a much smaller set of strategic partners.”

For some, Magnite is in a unique position to make such a move given its 2021 purchase of CTV ad server company Springserve, as this enables media agencies to connect directly to Magnite via server-side ad insertion.

Matt Barash, svp Americas, and global publishing at Index Exchange, told Digiday that SSPs have had direct relationships with media agencies for years but that his outfit would not try to “play both sides” while it continues its evolution away from the “broker-dealer” model.

“We maintain that it’s critical for us to focus on publishers, and while we create a service for buyers, we [are] going to maintain our focus on the sell-side,” he added.

“We will continue to change with the market as holding companies evolve and look to invest in media across different formats away from the open marketplace and into more controlled environments.”

PubMatic moots ‘Access Membership’ fee for publishers

Meanwhile, sell-side sources told Digiday that PubMatic’s next phase of evolution has involved it floating the idea of an “Access Membership program” for publishers whereby they pay a monthly fee. Some could compare such a development to a SaaS proposition, similar to Sovrn’s recently bundled Ad Management and Exchange proposition.

PubMatic declined Digiday’s request to comment on reports of its mooted Access program but sources indicated that this would involve members receiving enhanced access to buyers’ demand outside of its open exchange.

For example, participating publishers would be included in private marketplaces facilitated by PubMatic, a move that’s in contrast to its traditional revenue-share proposition whereby the SSP takes a percentage of the gross bid and the publisher receives the net fee.

For some, this is a natural evolution of the market, as PMPs require significantly more servicing than open exchanges. Separate sources interpreted a potential launch of a membership program as the realization of PubMatic’s purchase of Martin. This 2022 deal, reportedly worth $45 million, was in response to the SSP’s buy-side customers requiring further SPO capabilities.

PubMatic CEO Rajeev Goel said in a press release about the deal that the purchase would “solidify our position as the platform of choice for buyers, and in turn, bring greater advertising revenue to our global publisher base.”

‘The opposite of commoditization’

Ratko Vidakovic, founder of consultancy service AdProfs, told Digiday that most of the industry’s leading independent SSPs are positioning themselves in a manner that achieves “stickiness,” not necessarily differentiation.

“That appears to be the name of the game in the SSP market, as it’s the opposite of commoditization,” he added. “They’re trying to make attractive offerings to the buy-side, specifically agencies, as it insulates them from disintermediation to some extent.”

Lulu Phongmany, an ad tech consultant with extensive sell-side experience, told Digiday such developments are important as SSPs need to move beyond their traditional role of supplying unique inventory.

“The curation piece is easy, you should be able to do that with your platforms,” she said, adding that it’s crucial for platforms (be they a “legacy DSP” or “legacy SSP”) to help curate inventory with first-party data, a task such players have historically struggled with.

“If you don’t have that, then are you really bringing anything to the table?” she added. “If you’re curating inventory, then you’re just an SSP, you have to be curating audiences if you want to be doing anything for big brands.”

“The numbers are historic; this is the first true blockbuster of 2023,” said Fandango managing editor Erik Davis. “Becoming the biggest debut for an animated film ever worldwide is pretty striking, and maybe a little unexpected.”

As Mario double-jumped his way up the box office charts, his games also experienced a boost on Twitch. In the week before the film’s release, livestream viewers watched 252,000 hours of Mario game content on the platform; after its release last week, that number spiked to 477,000 — an 89 percent increase, according to data shared by the gaming performance marketing platform Gamesight.

The massive uptick in interest experienced by Mario titles parallels the lifting effect of other recent popular video game adaptations, such as HBO’s “The Last of Us” series. According to Gamesight’s data, Twitch viewer hours of the original game increased by 117 percent during the week of the show’s release — from 364,000 to 791,000 hours watched.

“Combine that with the streamer data, and we can put together our own broad estimate for Mario’s sales jump, which we would expect to increase by 82 percent over baseline,“ said Gamesight CEO Adam Lieb.

And developing a “Super Mario Bros.” cinematic universe offers Nintendo access to a slew of new revenue opportunities and yet further opportunities to introduce potential fans to classic Nintendo properties — from Super Nintendo World at Universal Studios Hollywood to a local activation with the popular New York City restaurant Shake Shack.

“We worked collaboratively with Universal, Nintendo and Illumination to bring the experience to life,” said Shake Shack vp of brand marketing Mike McGarry. “It was really fun to see everyone’s unique marketing lens impact the end result.”

And, of course, film and television adaptations open up ample merchandise opportunities for Nintendo and other game developers.

“My kids never asked me for a Lego set of Mario, but here we are,” said YouTube global head of TV & movie AVOD partnerships Fede Goldenberg. “So that’s definitely the flywheel that Nintendo will keep on exercising, just like any other franchise.”

As video game film and TV adaptations rise in quality and frequency, owners of popular IPs like “Super Mario” are likely to continue taking advantage of their content marketing potential. Video game adaptations have been a thing for a while now — but suddenly, they’re actually good, and arguably becoming great. (Subjectively, anyway: on Rotten Tomatoes, critics labeled “Mario” a stinker, but audiences gave it a 96 percent score.)

As game-based films and shows such as “The Last of Us,” “Mario” and “Dungeons and Dragons” receive a warm response from moviegoers, IP owners are feeling less nervous about opening their properties up for adaptation, particularly given the potential content marketing benefits. When the 1993 live-action “Super Mario Bros.” film bombed, the failure kept Nintendo away from film adaptation for decades. Now, that feels like less of a danger.

“From a business standpoint, I feel like there’s less risk now for the franchises,” said Chris Erb, founder and managing partner at Tripleclix, a marketing agency that specializes in gaming. “If you don’t like the movie, that’s fine. The game I love is still the game I love.”

While newsletter ads make up nearly 70% of Front Office Sports’ revenue, White expects Front Office Sports’ other revenue lines – digital, social video, online education courses – to grow from about 30% of the business to 50% by the end of this year. He said that he also has plans to sell more social and digital ads and sponsorships. Front Office Sports will also launch virtual event franchises at the back half of this year, White added.

“Newsletters at this point is the – I wouldn’t say the easiest way in, because I don’t think any way is easy – but it’s the most direct way to build an audience and build a habit with that audience. And then from there I just don’t think you will see really pure newsletter businesses anymore in the future,” White said.

Front Office Sports started monetizing its short form videos on social media about eight months ago and in that time has attracted sponsors like New Balance and SlingTV. Social-first revenue went from “very minimal” last year to “well into the seven figures” now, White said. He declined to share specifc dollar figures.

Newsletter publishers are increasingly offering advertisers an array of products that reach different audiences to draw in larger budgets in order to diversify and grow their businesses, said Dan Oshinsky, who helps publishers and brands with their email strategy through his consultancy Inbox Collective.

Oshinsky said that publishers can reach a cap on how much money they can sell a newsletter ad for as their audiences grow, so it bodes well for them to branch out into other products and channels. 

The cost per open for a newsletter ad ranges from about $20 to $60, for every thousand readers who open the newsletters, according to Oshinsky. “Is a brand that spends $1,000 or $5,000 or even $10,000 on an ad – would they say, ‘Hey, your newsletter’s grown from 100,000 to a million readers, we’d be happy to now spend $50,000 on a single ad in newsletters?’ The answer is probably not,” Oshinsky said. “As those brands scale up, you start to see them expanding what they do.”

White said expanding into channels beyond email is a way to attract bigger ad deals. “Newsletters [aren’t] really a budget for most [advertisers]. Few brands have newsletters as a true line item,” White said. “People realize, ‘Hey, I’m not going to get a million dollar newsletter-only deal. I’ll get a million dollar deal, but that [deal] includes newsletters, social, digital, OTT.”

However, White noted that margins are lower as a result, “because you have more to do.” He declined to elaborate by how much deal margins have decreased. 

A media director at an ad agency who traded anonymity for candor said their team very rarely buys ads “one channel at a time.”

“We’re almost always considering multiple platforms from a publisher,” they said. “It’s less about the individual channel with newsletters and more about reaching the audience in the best channel we can or the best channel mix that we can.”

Newsletter publisher Puck is looking to expand its events and podcasts businesses this year, according to Liz Gough, Puck co-founder and COO. The company kicked off the first quarter with four events, including an executive and tastemaker dinner at the Sundance Film Festival, screening events in New York and Los Angeles for National Geographic’s Oscar-nominated documentary “Fire of Love,” and networking events in New York for members who pay for Puck’s $250 premium subscription tier.

She declined to share more details about the total number of events the company plans to host in 2023, or how many total podcasts it plans to launch, but said her team is also looking at newsletters as “just one of the channels and levers that we have to connect directly with our consumers.” 

Gough declined to share a revenue breakdown, but previously told Digiday that Q1 2023 revenue is up over 200% compared to the same period last year. Puck also sells display ad products, podcast ads and event sponsorships. 

“As we get into the spring and summer, I think we’ll absolutely be starting to do more” events with opportunities for subscribers and advertisers, Gough said. “But I don’t have a set number in mind.”

The Ankler is planning to grow revenue from events and podcasts this year as well, said Janice Min, The Ankler’s CEO and editor-in-chief.  The Ankler sells pre-roll and mid-roll podcasts ads, in addition to its newsletter ads, Min said, but declined to share a breakdown of how much revenue is generated from each. 

The Ankler held its first summit in March, in partnership with Advertising Week, called “NXSTREAM Global.” Min declined to share how much revenue the event generated but added that “we intend to stand up a few more” events this year.

B2B newsletter publisher Industry Dive, which was acquired by Informa last September, is looking into growing its custom content revenue, said Sean Griffey, co-founder and CEO. About 40% of Industry Dive’s revenue comes from its content studio, called studioID. Griffey said he “absolutely” expects that percentage to grow this year, but declined to share by how much.

“We’re newsletter-driven, but we’re a digital media [and] marketing services company,” Griffey said.