Month: April 2023

In fact, according to a Digiday+ Research survey of 112 publisher professionals, publishers make a significant portion of their revenue from programmatic ads, and most of that programmatic revenue comes from the open market.

Overall, Digiday’s survey found that programmatic ads continue to be a big business for publishers — and there is still room for growth in the category. Eighty-five percent of publisher pros said they get at least a very small portion of their revenue from programmatic ads as of Q1 2023, up from 78% six months prior. And 84% said they will put at least some focus on growing their programmatic business in the next six months, up from 76% in Q3 of last year.

Among the publishers who make money from programmatic ads, it’s likely they make a large amount of money from this revenue stream. More than one-third of respondents to Digiday’s survey (38%) said they make a large or very large portion of their revenue from programmatic ads. This percentage is on par with two years ago, when 37% of respondents told Digiday the same, but it is a rebound from 2022, when between 30% and 32% of publisher pros said they got a large or very large portion of revenue from programmatic. Comparatively, around a quarter of publisher pros have said over the last two years that they make a small or very small portion of their revenue from programmatic.

And publishers’ programmatic ads businesses are likely to grow, if anything. Forty-five percent of publisher pros said in Q1 of this year that growing their programmatic business will be a large or very large focus for them in the next six months. This is consistent with the 43% who said the same in Q3 2022, but it is a big jump from the 32% who said so in Q1 of last year. Meanwhile, only 18% of respondents to Digiday’s survey said in Q1 that programmatic would be a small or very small focus for them in the coming months.

Digiday’s survey found that there is a big difference between how dependent large publishers are on programmatic ad revenue, compared with their smaller counterparts. A whopping 93% of large publishers get at least a very small portion of their revenue from programmatic ads. That percentage drops to 72% among small publishers.

And among the publishers making money from programmatic ads, there are some big differences between how much money large and small publishers make from this part of their business, Digiday’s survey found. Twenty-seven percent of publisher pros who work for large publishers said they make a moderate portion of their revenue from programmatic ads, compared with 17% of publisher pros who work for small publishers, and 32% of large publishers said they get a large portion of revenue from programmatic, compared with 22% of small publishers. The differences continue even into the very large category: 17% of large publishers said a very large portion of their revenue comes from programmatic, compared with just 8% of small publishers.

The difference between how large and small publishers make money from programmatic revenue is unlikely to change this year, Digiday’s survey found. While 93% of large publishers said they will put at least a very small focus on growing their programmatic ads business in the next six months, only 75% of small publishers said they will do the same.

Nearly a third of publisher pros who work for large publishers (32%) said growing their programmatic business will be a large focus for them in the coming months, and more than a quarter (27%) said it will be a very large focus. Meanwhile, 19% of publisher pros who work for small publishers said growing their programmatic business will be a large focus, and the same percentage said it would be a very large focus. These are significant differences between these groups.

Of the small publishers who said they would focus on growing their programmatic ads revenue in the next six months, the highest percentage said they would put a moderate focus on this part of their business: 28% of respondents to Digiday’s survey who work for small publishers said this.

Among publishers who get revenue from programmatic ads, Digiday’s survey found that they’re much more likely to make a large amount from open market programmatic ads over direct-sold programmatic ads.

Twenty-seven percent of publishers who get revenue from programmatic ads said in Q1 of this year that they get a large portion of that revenue from open market programmatic ads, compared with 15% who get a large portion from direct-sold programmatic ads. Meanwhile, 26% of publishers get a very large portion of their programmatic revenue from the open market, compared with 9% who get a very large portion from direct-sold programmatic ads.

And the percentage of publishers who told Digiday that a large portion of their programmatic ad revenue comes from the open market saw a big jump in the last six months. Nineteen percent of publisher pros who get revenue from programmatic ads said they made a large portion of that revenue from open market programmatic in Q3 of last year (which remained steady with the 18% who said so in Q1 of last year). That percentage rose to 27% in Q1 of this year.

Meanwhile, the percentage of publisher pros who said they get a large portion of their programmatic revenue from direct-sold programmatic ads fell over the last six months. Fifteen percent of publisher pros told Digiday in Q1 2023 they get a large portion of their programmatic revenue from direct-sold, down from 24% in Q3 2022 and 23% in Q1 2022. At the same time, the percentage of publisher pros who said they get a moderate portion of their programmatic revenue from direct-sold rose from 21% in Q3 2022 to 33% in Q1 2022.

And the social content popped. Over the past month, Fnatic has reaped the rewards of victory, becoming one of the highest most-engaged esports orgs on its partnered content, according to the data platform GEEIQ. In Q1 2023, the team garnered 120,000 new social followers and over 57 million video views, with much of that coming off the back of the VCT LOCK//IN win, according to Fnatic head of marketing Joshua Brill.

Fnatic’s victory-infused social growth represents more than just a line going up: it’s a business opportunity, pumping the exact metrics that esports orgs often use to sell themselves to potential advertisers.

Winning a Valorant tournament didn’t create new marketing or advertising inventory for Fnatic — but it juiced up the numbers in a way that helps Fnatic’s sales team prove the tangible reach of its pre-existing inventory to prospective sponsors. The org’s boosted metrics have already been relevant in conversations to sign new brand partners, said Brill, who told Digiday that inbound interest in Fnatic brand partnerships had increased since the team’s Valorant win.

“It was good timing,” Brill said. “It’s more that we can report on the metrics that they’re looking to succeed on, the media value from a sponsorship perspective.”

High performance has always been an important facet of the Fnatic brand. After all, the London-based esports org has won championships in popular games such as “League of Legends” and “Counter-Strike.” But as individual influencers take center stage in the gaming and esports community, the value of this branding has come under scrutiny.

“There’s a whole conversation around how fickle esports fans are — do they follow players? Do they follow trophies, or teams?” Brill said. “You could win and not actually have the right infrastructure to capitalize on it, whether it’s with new partners or just growth on your own channels.”

Fnatic’s recent success is a repudiation of this skepticism. In esports, winning still has its clear benefits — but both players and teams need to intentionally build on their wins to develop a more lasting brand. This is how prominent pro Fortnite player Kyle “Bugha” Giersdorf managed to spin his one-off 2019 Fortnite World Cup victory into a years-long streaming career.

“Anybody can go and win a tournament and get the first-week hype or whatever, and then it dies out because they do nothing with it,” Giersdorf said. “But I think it’s always going to drive attention. Winning is still super important in esports — I mean, that’s what esports is about.”

Still, for the competitive spirit to remain a part of esports, even those teams whose branding is not centered around performance must be further incentivized to field strong teams and contend for championships. Lucrative prize pools can help — but Brill believes that teams would care more about victory if esports leagues and their game-developer owners created more lucrative revenue share opportunities for winners, such as the branded skins sold for winning “League of Legends” World Championship squads.

“This topic is the most important topic to all the esports organizations, because we are trying to become more sustainable businesses,” Brill said. “Commercial partnerships, such as they are, are dangerous to rely on, because brands can pull out, and you need to survive. So the digital, in-game aspects of esports organization revenue is so important, and one of the fastest-growing revenue streams.”

As esports orgs grow closer to gaming and esports holding companies, some will lean into competitive success, and others will inevitably strike further into content creation and even metaverse development. For those companies, the term “esports organization” may eventually become a misnomer.

“Ultimately, most teams are just trying to do what’s best for their business, whether that’s winning, or attracting the most fans or whatever their goals might be,” said Alex Gonzalez, head of the esports organization Luminosity Gaming.

OOH ads generated $8.6 billion in revenue in 2022, an increase of 20.7% from 2021. By contrast, DOOH revenues increased 24.2% over 2021, marking the second consecutive year DOOH revenue increased, according to the Out of Home Advertising Association of America.

BodyArmor (which was purchased by Coca-Cola in 2018) hopes to gain the attention of new consumers outside of hard core sports fans with ads that will run through the summer. In all, the brand is spending $10 million on the campaign, said Matt Dzamba, chief marketing officer at BodyArmor Sports Nutrition.

BodyArmor has seen about an 131% increase in digital ad spend year-over-year, with most going to TikTok so far this year, followed by Instagram, then Facebook. In 2022, Instagram had the stronghold followed by Facebook, Twitter, and finally TikTok, according to Sensor Tower.

The brand is also using its own accounts — and Lopez’s — across social platforms to reach new customers. “We’re going big and you will see us everywhere,” said Dzamba.

Lopez has worked with the brand since 2021, when she appeared in BodyArmor’s social and OOH ads. “She speaks to many consumers because she’s been inspiring people from all walks of life through her many accomplishments and lives by the same mamba mentality that we do here,” said Dzamba. The financial agreement between the parties was not disclosed.

“It follows that OOH efforts, where people are out in the world, having new experiences, is where BodyArmor has chosen to focus,” said Marisa Rondinelli, strategy director at VSA Partners.

“That’s the only reason why I’m doing this, to protect my account because it is my business,” said Kling, adding that it took up to two hours for her verification check to appear on her Instagram page. “So that’s truly the only positive that I see. Aside from that, I’m feeling indifferent about it.”

In recent weeks, not only Meta platforms, but Snapchat and Twitter also increased their paid subscription services, the latter two offering users exclusive customization and verification capabilities.

With this trend on the rise, many marketers and content creators see it as a way for the platforms to diversify monetization offerings beyond advertising, though many wonder whether social media platforms will remain free to users.

“It will depend on the uptake from consumers to determine how viable this feature is and [users may] feel there will always be something else waiting in the wings if there are new features that consumers don’t love,” said Erica Patrick, svp and head of paid social at Mediahub, adding that all of the social media platforms are trying to find incremental revenue wherever possible and continue to copy one another.

How it works

Meta’s recently announced the launch of Meta Verified, a $15 per month subscription that allows Instagram and Facebook users to get a blue verification badge on their accounts. Buying the service on the web will cost you $11.99 per month and $14.99 per month if purchased on an iOS or Android device. The cost for premium features varies by platform. In contrast to Twitter Blue, which is $8 per month, Instagram and Facebook users who are already verified will not have to pay to maintain their checkmark status with Meta Verified.

In addition, Twitter is now charging businesses $1,000 a month to maintain their gold checkmark verification badges, which it introduced in December and replaced the blue checkmarks used by businesses in the past, as well as an additional $50 monthly for each affiliated sub-account.

Before being approved for a Meta Verified subscription, users will need to complete the verification process and present a government-issued photo ID which will confirm your identity before getting started. It is also mandatory to use two-factor authentication since Meta Verified subscribers will not be able to change their profile name, photo, username or date of birth without re-verifying themselves. Meta, Instagram, and Facebook did not respond to Digiday’s request for comment.

Influencer impact

Some see the paid verification system as a potential boon to influencers who consider it a way to access features previously reserved for those who had been verified — which could help them to be taken more seriously. No longer will creators need a large audience to get that blue check validation, noted Ali Fazal, vice president at the creator management platform Grin.

“Often smaller or niche influencers have more authentic relationships with their followers yet have not been awarded the same recognition or credibility as someone bigger,” said Fazal. “This new verification process is also a great way to help level-up brand and influencer partnerships across the board and instill even more trust.”

Creators are no longer defined by the same principles as they used to be, marketers said. Consumers are looking for more trust in the people they follow on social media, which makes micro and nano influencers, over major influencers, some of the most influential creators on social media.

“As the social networks are looking to do what they can to make money outside of what advertisers are paying them, it’s a good opportunity for the creators to to be treated a little bit more equal and really have experiences catered to them so that they are loyal to those platforms and they don’t move elsewhere,” said Johnny Vance, vp of partnerships and business development at Meltwater.

That said, verification hasn’t been make or break for influencer deals, said Davitha Tiller, executive vice president of social and integration of Red Havas who said the verification accessibility might me it less desirable.

Instead, Tiller said she remains focused on other variables when selecting creators to work with: content quality; authenticity and ethical alignment; their social footprint, both in terms of size and who makes up it, and whether they generate the desired reach, impressions, engagement, view rates or even conversion rates.

Fazal also highlighted creators have become the lifeblood of social media as they produce most of the engaging content on these platforms. “Finding new ways to monetize off creator marketing is smart, if these social media platforms don’t go overboard and turn creators off from wanting to produce content, or consumers to feel like they don’t have the means to access their favorite influencers anymore,” said Fazal.

As a Meta Verified subscriber, content creators gain access to stickers that are unavailable to non-subscribers on Facebook and Instagram Stories. Furthermore, creators who sign up to be Meta Verified will also receive 100 Facebook Stars per month. Facebook Stars are a digital currency that creators can use to monetize their live streams on Facebook.

Lost in the shuffle

This subscription model that may become standard could result in an over-saturation of paid social media platforms as content creators will have to decide which social media platforms they wish to pay for verification. This comes at the same time as streaming TV subscriptions are already competing for dollars.

“I’m worried about the fact that more people can be influencers and everybody can be an influencer and it just dilutes the pool and it makes it harder for content creators to kind of stand out,” said Courtney Bagby, CEO and founder of Little Red Management, a branding and social media partnership agency. Bagby pointed out that due to the constant Instagram algorithm changes, posts from content creators who are not verified could get lost in the shuffle as opposed to influencers and brands who has the verification subscription. Bagby also publishes her content on her Instagram page.

According to marketing experts, platforms test all new features and business models, including paid features and subscriptions. Considering these subscription models, it may have the effect of democratizing offerings and tools, so that anyone can virtually access tools that were once only available to traditional creators.

“It’s far too early to tell,” said Krishna Subramanian, CEO of the influencer marketing platform, Captiv8. “It will be interesting to see how the general public adapts to tools that were previously only available to creators and public figures.”