Month: April 2023

“Recent months have seen AI labs locked in an out-of-control race to develop and deploy ever more powerful digital minds that no one – not even their creators – can understand, predict, or reliably control,” read the letter. “Powerful AI systems should be developed only once we are confident that their effects will be positive and their risks will be manageable.”

Everyone should take note when the brightest human – rather than machine – minds are demanding progress be paused. But has the bot not already bolted? And considering the possible competitive advantages if rivals opt to down AI tools, will the temptation to continue pushing the boundaries of technology beyond their current limits not be too irresistible for business leaders?

Many have wasted little time embracing ChatGPT, a large-scale language model fed 300 billion words by developer OpenAI that is “confidently incorrect,” and DALL-E, a similar tool that generates images rather than words. While interest has surged in the former, potentially the bigger, creepier issues are around the latter, specifically copyright infringements. 

To read the full article over on WorkLife click here.

Last week, tech experts and regulators alike took public aim at the burgeoning AI industry. European Union officials introduced new legislation to regulate AI, the British government rolled out a white paper laying out a “pro-innovation approach” to AI and Italy became the first government to ban OpenAI’s ChatGPT due to data privacy concerns. 

In the U.S., the Center for AI and Digital Policy, an AI think tank, petitioned the Federal Trade Commission to get involved. And in a separate public letter signed by more than 1,000 tech leaders — including Apple Co-Founder Steve Wozniak, Pinterest Co-Founder Evan Sharp and numerous AI experts — urged companies themselves to “pause” further development of AI models for at least six months before training an AI system more powerful than OpenAI’s recently released GPT-4. 

That concerns don’t appear to be stopping companies building AI from forging ahead with their own updates. Amid last week’s calls for a slowdown, Microsoft teased out new ads for its ChatGPT-powered Bing, Adobe touted a new partnership with Prudential Insurance to use AI for “personalized financial experiences,” and Google revealed a new deal with the coding platform Replit to further scale AI software.

The current lack of regulatory clarity around various concerns — such as data ownership and intellectual property rights — poses risks to using ChatGPT, according to Gartner senior analyst Nicole Greene. She said governments and businesses need to collaborate to “help society shape expectations,” but also warned that preemptively regulating the sector might also end up hindering research and advancements.

“[Marketers] urgently need to compile a list of active use cases impacted by generative AI and collaborate with peers to establish policies and practical guidelines to steer its responsible use,” Greene said. “New vendors are appearing every day and organizations need to understand both their primary use cases, but ensure that they have the necessary transparency, trust and security standards to apply these technologies in support of brand efforts.”

According to the 2023 edition of Stanford University’s “AI Index Report” — which tracks AI’s progress, perceptions and impact around the world — incidents of misuse of AI have increased 26x in the past decade. The in-depth report published this week also found that the number of bills passed into law around the world mentioning “artificial intelligence” increased from 1 in 2016 to 37 in 2022. And perhaps somewhat surprisingly, the report also mentions corporate investment in AI decreased last year for the first time, dropping from $276.1 billion in 2021 to $189.6 billion in 2022

Beyond the giants, the founders of some AI-focused marketing-tech startups insist there’s a way to develop AI safely despite ongoing concerns.

Among the optimists is Hikari Senju, CEO and founder of Omneky, an advertising platform using AI to generate social media ads and product images. He called warnings of AI taking over humanity “luddite’s thinking,” adding that he doesn’t think a “singular platform will outsmart the collective wisdom of humanity.” Although he favors regulation that protects people from the potential dangers of AI, Senju doesn’t believe humans are at risk anytime soon. 

“The question really is, how can AI further empower humanity to better communicate with each other and actually make the hundred billion trillion neurons of the human collective brain level up in terms of its bandwidth and its communication?” Senju asked. “That’s really where the potential is in terms of this technology.”

Despite Senju’s characterization of them as luddites, AI experts calling for a slowdown aren’t necessarily hiding behind their flip phones. Many are AI pioneers that have spent decades researching and developing models for various applications. However, the letter, published by the Future of Life Insitute — a nonprofit backed by Elon Musk — also faced criticism of its own after observers noticed fake signatures and even some experts that actually signed it later disagreed with the organization’s approach.

Rather than a total pause, others emphasize the need for more education to train more people around the world how to responsibly develop AI, as well as to teach government officials tasked with regulating them. Bharat Krish, the former chief technology officer of Time, said there’s always “going to be good and bad, and hopefully the good wins out over the bad.”

“The genie’s out of the bottle,” said Krish, who is now an advisor for AI startup Fusemachines. “I don’t think you can really stop it. I think something like signing a letter is futile, I don’t know what it accomplishes. Because if it’s not OpenAI, there are a number of others working on it including companies that we haven’t heard about yet.”

Yair Adato, co-founder and CEO of Bria, a generative image and video startup, said the key is to think about limitations from the beginning such as using “responsibly” sourced content. Rather than train Bria’s AI with questionable content, he said feeding AI a healthy diet of knowledge and inputs from the beginning helps solve problems around copyright concerns, data privacy, bias and brand safety.

When he was raising money from investors three years ago, Adato said he had to choose whether to go into the business of generating content or detecting it. By choosing the former, he decided it was important to provide an alternative to open source models, but also added that the business model was better. 

“If you think about it to start with, then you don’t need a guideline,” Adato said. “If you don’t put porn in it, then you don’t need to avoid it since the system doesn’t know what it is and you don’t need a guardrail.”

“I think the the core of the upfront is still rooted in Nielsen and somewhat traditional demographics. I think there’ll be additional experiments or test-and-learns to move towards outcome-based deals or something beyond GRPs, [such as] impressions,” said a second TV network executive.

“This is a transition year. It doesn’t have to be made a part of an upfront deal. It does need to be made a part of the way that the upfront is activated, though,” said a third TV network executive.

So Nielsen will continue to serve as the TV ad industry’s ruler for this year’s upfront. But the industry will continue to inch toward alternatives to Nielsen’s traditional age-and-gender-based measurement.

“We’ve had some pretty good dialogue along those those lines with clients that are willing to forego traditional demo guarantees in exchange for X. And in some cases, the X looks better to both sides,” said the second TV network executive. “But back to the very, very beginning of this conversation: 100 clients have 100 different definitions of what X is, which is pretty challenging, right? Because one wants to do on attention metrics, one wants to use VideoAmp plus EDO….”

The biggest impediment to the TV ad industry transitioning away from Nielsen remains the lack of universal support for non-Nielsen measurement providers. Given that Warner Bros. Discovery just last month announced support for Comscore and VideoAmp but not iSpot.TV, which NBCUniversal has gotten behind, universal support seems like it will remain elusive for some time.

“The biggest challenge that the marketers have is that, if they’re doing alternative currencies, they can’t do different currencies on all their media companies. They can’t look holistically at all their impressions of what they’re doing. This is the big rub,” said the first TV network executive.

“The industry is going to struggle until we get a consensus. Because it is a lot of work and a lot of volatility. So I don’t believe you’re going to see a move this upfront to a massive change in currency. I think that’s at least a year, if not two, away,” said the second TV network executive.

Well, it could be a bit sooner. Sure, when this year’s upfront deals are signed, Nielsen will likely stand as the currency of choice. But that could change after the deals take effect. That happened to an extent last year; one TV network executive said a single-digit percentage of their upfront deals changed to non-Nielsen currencies since taking effect last fall. Then, considering that even Nielsen’s traditional measurement system will go away after the current upfront cycle, there’s some incentive for TV networks and advertisers to start to shift during the deals’ window.

“We can look at volume and then, inside of the year, evaluate opportunities to guarantee things against different currencies inside of the year,” said the third TV network executive. “It’s going to be a very important year, because fall of ’24, that’s when the Nielsen sample goes away and there isn’t going to be [traditional age-and-gender-based metrics like] C-3 and C-7. There’s just going to be these big data currencies. And so everyone has incentive to put their dollars into play in the year against these against [alternative measurements such as] Nielsen One or VideoAmp, Comscore, iSpot.”

Ultimately, whether or not TV networks and advertisers transition off Nielsen’s traditional measurement system in this year’s upfront cycle, both sides are guaranteed to have to do so in next year’s upfront. It’s a matter of when, not if.

“It’s just like [the previous transition to] C-3, C-7. Everybody was bitching and moaning. And finally, we just had to rip the Band-Aid off, and we had to all jump in the pool at some point,” said the first TV network executive. “At some point we’re all going to have to jump in.”

What we’ve heard

“There is an expectation for clients that they’re going to see some cost-efficiencies in the streaming space, or pricing to right-size itself. As we see more competition, the expectation is prices will go down. Last year we saw some adjustment in that space to account for more competition.”

— Agency executive on streaming price expectations in this year’s upfront market

Numbers to know

200: Number of employees that Roku plans to lay off, roughly 6% of its total employee base.

7,000: Number of employees that Disney plans to lay off, roughly 3% of its employee base.

1,000: Number of hours of commissioned programming that BBC plans to cut in its 2023-24 budget.

42.5%: Percentage share of cast members in streaming films in 2022 who were people of color, compared to 36.1% for theatrical films.

What we’ve covered

How Twitch lost its grip on, and way with, the streaming community:

• Twitch has invested more resources into its ad offerings and fewer into community-building.
• The Amazon-owned livestreaming platform has created an opening for rivals like YouTube to gain market share.

Read more about Twitch here.

TikTok’s uncertain future: the issues marketers should (and shouldn’t) fret over:

• A TikTok ban is unlikely.
• Brand safety, not data privacy, is the issue marketers currently have with TikTok.

Read more about TikTok here.

Why real estate company Windermere is adding influencers to its marketing mix and spending half of its ad budget on them:

• The brand is moving away from traditional TV and into streaming and digital video.
• Windermere will tap a new influencer each quarter to feature on Instagram, YouTube and home-focused publication Domino’s website.

Read more about Windermere’s influencer marketing strategy here.

How BuzzFeed’s Creator score is grading the impact of its creator network:

• BuzzFeed will score how branded content campaigns from creators in its network may perform for marketers.
• The scoring tool is designed to help the publisher land deals with advertisers.

Read more about BuzzFeed’s creator program here.

Of all the concerns marketers may (or may not) have about TikTok right now, the pixel isn’t one of them:

• Advertisers are not concerned about how TikTok may use its tracking pixel to collect data on individuals.
• Some brands have continued to add and use TikTok’s pixel on their sites, though others have opted against.

Read more about TikTok’s tracking pixel here.

What we’re reading

Netflix ramps up its promotional push:
After historically centering its marketing focus on the Netflix brand, the streaming service has stepped up efforts to market individual shows and movies under CMO Marian Lee, according to The New York Times.

Hollywood’s COVID protocols are set to expire:
After May 11, film and TV productions will no longer need to adhere to the industry’s pandemic-era health and safety guidelines, according to The Wrap.

U.S. audiences aren’t sold on live shopping:
Platforms like Amazon and TikTok continue to try to get people in the U.S. to tune into shopping livestreams, but they have yet to prove audiences are interested in shopping while they watch, according to Wired.

Snapchat suggests creators post a lot:
The platform recommends creators in its revenue-sharing program post 20 to 50 stories per day, use captions and post to its Snap Map location feature, according to Insider.

It’s been an easy decision for many marketers: they weren’t seeing the returns on investment that they expected. Granted, this was always going to be tricky. Sponsorships have never been about driving direct sales, and esports execs have regularly struggled to explain why organizations are among the best paths to brand exposure.

“I would say for 99% of our normal sponsorship deals with big teams, you won’t have any return on investment. It’s more about pure exposure,” said a markterer at a leading PC company, who chose to remain anonymous so they could speak openly. 

It was only a matter of time before more marketers wised up to those shortcomings. When asked whether brands’ appetite for esports sponsorship is greater or smaller than it was a few years ago, Malph Minns, managing director at commercial and marketing agency Strive Sponsorship, said: “Unequivocally less, and not just esports teams, but esports more broadly.”

Perhaps esports, despite industry hubris, was never in a position to truly scale sponsorship revenues from competitive gaming. Indeed, when a team and brand form a partnership with the goal of driving a return on investment beyond brand exposure, it is seldom a success. 

“We’ve spoken to some of the more digital brands, and ultimately they go, ‘we’ll give you this money — across all of our other marketing metrics, like paid social, we get a new customer for every £15 spent — we need to track you in line with that’,” said Jordan Bedford, partnerships manager at esports organization Excel Esports. “We say we just can’t do that. You will never see a code-Excel-at-checkout partnership because they don’t work. They don’t work.”

Loosely tracked conversions are a problem, but the bigger obstacle for sponsors in recent years has been the rising cost of sponsorship, caused chiefly by sky-high player salaries.

According to the PC company marketer, from around 2019-2020, player salaries dragged the price of esports team sponsorship beyond what many suitors were willing to pay. 

They said: “There’s a disconnect between how teams grew, and how our industry evolved. Those [esports] structures have a pure commercial logic: they grow, they have a lot of salary to pay, they buy new teams, like a real sports team, and they seek sponsors and their sponsors are meant to grow their profits [so they can] make new investments and sign new players.”

It’s a slippery slope. As player salaries increased, the cost of team sponsorship outgrew what the executive’s company was willing to pay.

This seemed to be the case at BMW. The car brand stopped sponsoring esports organizations altogether in December after spending years striking deals with some of the most recognized esports organizations like Fnatic, G2 and Cloud9. 

The same goes for HP. 

According to data platform GEEIQ, which tracks brand activity in gaming and esports, Omen, HP’s gaming brand, sponsored several tier-one esports teams from 2016 — such as Team Vitality, 100 Thieves, NAVI, and Cloud9. Fast forward to now, and most of those deals are no more. Omen’s deals with NAVI and Cloud9 ended in 2020; its Vitality deal, 2018; and its 100 Thieves deal last year. The only remaining deal with a tier-one org is T1 in South Korea. Omen did not respond to a request for comment. 

This isn’t how sponsorship strategies play out — not if they’re working. They’re about establishing and then nurturing a link to an organization, event or sport over time. Expensive as this is to do, it’s been proven to work time and again. So when it doesn’t work, marketers tend to cut their losses.

Omen appears to have done just that, to focus on a more cost-effective type of sponsorship: creators. Since the start of 2019, Omen has partnered with 145 individual creators, according to GEEIQ. Before then they didn’t even factor into its plans; nowadays, those creators appear crucial to its success. Not that this should come as a surprise. More marketers are favoring deals with individual creators which may offer them better bang for their buck than sponsoring an esports team for a year.

Overpriced brand deals were perhaps the first domino to fall in the financial profligacy of esports teams. It led to overspending elsewhere. Teams began to use bloated fees from sponsors and venture capitalists to pay players too much, and build businesses that could not sustain on their own.

“I think for the longest time esports orgs have [been] overvalued, and the ‘ask’ that they are looking for is way out of line with what most brands can actually afford,” said one former partnerships manager at a tier-one esports org in North America, who also worked on commercial deals for a leading PC company.

Even the brands that are still bullish on esports have had to adopt a more pragmatic stance on sponsorship. Take Mercedes-Benz, for instance. It sponsors far more competitions and events than teams. 

According to GEEIQ, the brand sponsors two teams — Germany’s SK Gaming and Italy’s Mkers — and has sponsored four in total. On the other hand it has partnered with dozens of esports events, including the League of Legends World Championship in 2020 and 2021. It just extended its partnership with the League of Legends ecosystem through 2025. 

The company told Digiday: “Many companies have discovered the potential that we saw some years ago and added this segment to their sponsorship portfolio. We are convinced that our early involvement in this sport was good and important for Mercedes-Benz and we are convinced that Esports will continue to grow in popularity in the coming years.”

Other brands appear to be learning too, and are focusing resources on regional, easily measurable partnerships. Kiattikhoun Limmany, EU GNP Marketing Manager at PC company MSI, explained to Digiday why its previous deal with French team Karmine Corp was so appealing: it was the perfect way to reach the French audience. Given K Corp’s huge, passionate French following (K Corp is owned by popular creator Kameto), the deal allowed MSI to push local offers to French consumers, and easily measure the response. 

Not every big esports sponsor is averse to teams. 

Logitech still sponsors 40 teams, and that number fluctuates between 40 and 50 year to year, according to Brent Barry, head of esports at Logitech G, the company’s gaming brand. Then again, Logitech is a market-leading company. Its relationship with pro teams is central to the development of its gaming products. Turning away from esports could do more harm than good. 

The problem, however, is that there may not be enough marketers who share that sentiment. 

The hype around esports is dying — that much seems clear. Brands are getting smarter, and teams have less free rein. Long term, this might be a good thing. The esports industry, if a deal is executed sensibly, unlocks millions of young, engaged, digitally native fans with disposable income. But a painful correction is necessary for esports to get back on track, and to be seen once again as an exciting growth industry. An enormous part of this equation is giving sponsors the value they can reasonably expect. 

The first quarter ended up being pretty on par with expectations, and didn’t end up being “catastrophic by any stretch of the imagination,” according to Sean Griffey, CEO and co-founder of Industry Dive, though he declined to disclose hard revenue numbers or what his initial prediction was. He did say, however, that it was during the last couple weeks of the quarter that several “material” deals ended up being finalized, though he wouldn’t define this term from a dollar standpoint. 

Griffey wasn’t alone in experiencing a significant thaw in March. Insider’s head of global sales, Orlando Reece, entered a video interview with Digiday on March 30 saying that for whatever reason, that week had an explosion of deals coming in and he’d been bouncing from meeting to meeting with different advertisers.

“We saw a flattening-out in March, which was a very welcome sign because the last nine months have been brutal, comparing on a year-on-year basis,” said one publisher who participated in a town hall session at the Digiday Publishing Summit at the end of last month, which was held under Chatham House rules, granting participants anonymity.

Last-minute deals

The in-quarter selling strategy that publishers used to try and level out the fourth quarter of 2022 didn’t seem to have the same make-up effect in Q1, however.

Deals that come in this late stage in the quarter can’t be earmarked as Q1 revenue, but instead are considered revenue for the second or third quarters when the campaigns can actually be executed, Griffey explained. Rather than dealing with advertisers running out remaining advertising budgets in quick-hit campaigns like they did during the fourth quarter, advertisers seemed to be waiting on budget approval for weeks, if not months, into the first quarter, leaving RFPs and contracts hanging in suspense.

Griffey likened it to hosting an open house and having a lot of nosey neighbors coming in for a look around, but those inquiries never materializing into sales. 

“I have never seen such a weird quarter as in lumpiness. You’d be up like, ‘Oh, we got this great deal in, let’s start working on it.’ And then everything got pushed, pushed, pushed, and now it’s in the second quarter,” Reece added.

The push and pull of programmatic 

It wasn’t just direct-sold, custom campaigns that publishers were having trouble selling for most of the quarter. 

In fact, Insider’s direct-side was up in Q1 year over year, according to Reece, “but our programmatic took a big dive in the first quarter. A lot of big programmatic sellers were not ready to go [at the start of the year, but] they are now.” 

Over the past three years, starting with the onset of the pandemic, but then exaggerated once again during the current economic downturn, a fourth publishing executive who spoke anonymously for this story said that there’s been a “huge shift” from direct-bought advertising to programmatic. 

Keeping those programmatic budgets coming directly in through the publisher’s sales team has been the primary goal, versus allowing it to flow through the open marketplace and hopefully end up back on their balance sheet, the exec said. To do this, the exec said their company is pitching media buyers and marketers on an incentive that unlocks added value offerings, like custom content or influencer-led ads, based on how much they spend on programmatic direct campaigns. 

It makes sense that publishers are prioritizing programmatic guaranteed (PG) and private marketplace (PMP) programmatic selling, because those CPM rates are substantially higher. During the week of March 26, the average PG CPM was $8.23 compared to $2.98 in PMPs and $1.57 in the open marketplace, according to Operative’s STAQ Benchmarking Data. 

“We found that that’s been a really strategic way for us to be able to continue to capture dollars, and to be able to do that through programmatic,” said the executive, who added that during this quarter, “99% of the time [advertisers] need to be focused on performance[-driven campaigns], but that doesn’t mean there aren’t pockets for innovation.” 

Despite the icy ad market that persisted in the first quarter, publishers remain cautious optimistic that by summer, once-frozen advertising budgets will be accessible again.

“We’re still going up, but it’s more effort to do so,” said a second publisher during the Digiday Publishing Summit Town Hall. “Overall it’s going to be a rough three or four quarters. It’s so variable. Things seem OK, and then there’s the bank collapse. It’s so many of these macroeconomic things that just keep knocking you off. It doesn’t feel existential, but it certainly feels hard. And it certainly feels that we’re tight.”

The app gives users interactive features during the game, such as contests, loyalty programs and other brand sponsorships for the Royals. The financial and data agreement between the two was not made available. They did not say how many users have downloaded the app.

Tony Snethen, vp of brand innovation at Kansas City Royals, sees the technology as an opportunity to “engage the next generation of baseball fans,” he said in a provided statement.

This marks the third professional sports team partnering with Stagwell on its ARound platform, after the agency reported growing engagement times after launching with the Los Angeles Rams and Minnesota Twins in late 2022.

Stagwell said there is no data yet for the Kansas City Royals given it launched last week. With the Minnesota Twins, engagement time was more than 25 minutes per fan during the game, which exceeded the action time on the field — typically an average of 18 minutes for Major League Baseball, according to the agency. The action time refers to the total playtime, excluding the downtime spent on replays, reaction shots, analysis and other breaks. Data was not provided for the Rams nor did Stagwell say how many users overall had downloaded the app.

Crown Vision AR will add additional immersive and interactive elements to the app as the platform expands to other leagues and sports.

The feature is a way for Stagwell to expand AR experiences to other types of live events, from live concerts to other sports. The agency sees the integration as a way to make AR experiences more scalable for future partnerships, said Josh Beatty, founder and CEO of ARound, Stagwell’s unit overseeing AR development for clients.

“It’s really kind of starting to provide a great base for not only new entertainment, but also new integration,” Beatty told Digiday. “One thing that we’re really focused on this year is integrating into sports data feeds, pulling out real time information. So it is hyper relevant, it’s automated, but it’s also easily scalable.”

Using AR for sports engagement has been a part of the holding company’s strategy in testing the metaverse and Web3 technologies.

Other agencies have launched metaverse campuses, recruitment and collaboration spaces to test retail apps and other client activations. David Matathia, head of strategy at Fitzco, believes people are going back to appreciating in-person experiences — but there is a delicate balance to creating a complementary AR experience.

“The tension is that AR experiences in these settings can isolate or remove us from the very thing we’re craving in [live, in-person, shared experiences]. So the need is to ensure AR is additive and limited to moments in the overall event,” Matathia said.

Currently, ARound said the AR content is capturing the attention of younger audiences and casual fans at games. But the goal is to draw in sports enthusiasts next, given that they value stats and real-time feeds. Some of the features include real-time integration, such as different effects as players hit or other effects after home runs. Beatty did not provide a more specific breakdown of its user base.

“We want to bring in the enthusiasts this year… and really think about how we can almost create curated channels based on their needs and their experiences,” Beatty said. “All that can then be folded over into concerts and other live events.”