Month: April 2023

“We have all the songs in the world in our pocket,” Martin said. “And quite often we just have them on, and we don’t really listen to them. And I think that’s a good thing. That’s okay, I’m not judging that. But sometimes it’s nice to engage, and I think that’s what spatial audio does. It’s this new way of turning something around and looking at the other side.”

The way Martin puts it, spatial audio with a speaker helps to “paint your walls with sound.” However, the challenge is how do you get someone to buy something they haven’t heard yet?

To market the Era 300, Sonos is rolling out one of its largest overall campaigns — but not its largest in terms of ad spending — according to Sonos Vice President of Marketing Communications Pete Pedersen. Ads for the mostly digital effort will run across online video, podcasts, Twitch, YouTube and retail media networks, out-of-home and other platforms. Although Sonos wouldn’t disclose its media budget, data from Kantar-owned media intelligence firm Vivvix reported that Sonos spent $16.07 million in 2021, $16.57 million in 2022 and $1.25 million in January 2023.

Because it’s impossible for people to know what spatial audio sounds like without hearing it, the new marketing campaign aims to convey the concept in a visual way.

“If you look at what other companies do when they try to represent what spatial audio is, it’s always got weird circles and bubbles and looks like a technical drawing,” Pedersen said. “We wanted to convey the emotion of spatial audio.”

Part of the strategy is also to get people to hear the speakers in person. That started with an event with Dolby during SXSW 2023, but Sonos also plans to host a number of listening events, developing “listening pods” for retailers’ shop floors, and also looking for ways to partner with Dolby and Amazon for other events.

Spatial audio is still relatively new, but it’s gaining traction. In January, Apple said more than 80% of global subscribers listened to spatial audio songs in 2022 — the first full year it offered spatial audio music — with monthly spatial audio listeners tripling and total plays increasing more than 1,000%. Apple also has touted spatial audio as part of the marketing strategy for its new classical music app, which launched in the App Store the same day Sonos released its speakers. Sonos is also Apple’s first partner for spatial audio speakers.

Sonos isn’t the first to introduce spatial audio. Bose put spatial audio in its Bose Frames smart sunglasses back in 2019 and in 2021 later added the format to the Smart Soundbar 900. Apple has also added spatial audio to several of its Airpod and Beats models along with the new Apple HomePod. Others include Amazon’s Echo Studio and Google’s new Pixel Buds that debuted at CES 2023.

Although Apple and Amazon also feature spatial audio, Sonos has placed it front-and-center, noted Adam Wright, research manager of smart home and office devices at IDC. That’s opposite to the companies’ approach to smart assistants: Sonos downplayed voice AI but Apple and Amazon heavily promoted Siri and Alexa. He added that the evolution of smart speakers is in some ways similar to advancements in the smart TV market, where new features first go to higher-priced devices before becoming cheaper and more mainstream.

“While smart speakers might be in decline — in part because of the market saturation that has occurred over recent years, and in part due to utilization issues amongst those that have a smart speaker – the overall market for audio speakers will forge ahead and it’s these types of innovations like spatial audio and others that will serve as core market drivers over the long-term,” Wright said.

Some audio technologists say headphones — not speakers — are perhaps the best way to experience spatial audio. However, they also say the new Sonos speaker could help more people become familiar with the format. One key question is whether they’ll experience quality content rather than music and movies that are simply re-mixed.

Rather than just re-mix music for spatial audio, some creators are making content specifically for the format beyond movies and music. Martin Rieger, a 3D spatial audio expert based in Germany, said using sound to tell a story is “where the magic can happen,” which often includes using head-tracking technology through headphones. Rieger — who has worked on audio projects with various brands such as BMW, GE-Health and Samsung — added that spatial audio is also complementary with various metaverse platforms and could also improve virtual meetings on platforms like Microsoft Teams and Zoom.

“How should they know what good sound is when they haven’t experienced it before?” Rieger asked. “Most of the time you can trust your ears and know if it’s good 3D audio or bad 3D audio.”

Gabo Arora, professor of emerging tech and immersive storytelling at Johns Hopkins University, said the adoption of spatial audio could also lead to new ways of interacting with characters and virtual assistants in ways that make them more “believable and interesting.”

The growth of spatial audio across various hardware and content is going to help the format finally “have its day,” agreed Matt Neutra, who spent two decades at Bose developing audio innovation. Neutra, who now is a senior product manager at Brightsign, said both augmented reality and virtual reality will also benefit from the immersive sound made possible by spatial audio. That said, he still thinks headphones will pave the way for a “sleeper killer app.”

“Everybody’s got their knickers in a bunch about augmented reality,” Neutra said. “I’m incredibly bullish about audio augmentation and always have been. A lot of the things we’re seeing now are part and parcel with that.”

But even if lawmakers defied the odds and made the impossible possible, a ban would be more of a political statement than a precursor to reform. And it doesn’t address the systemic problems with data privacy in the U.S. If anything, it would address one symptom of a much larger problem: the lack of comprehensive standards for how data can be aggregated, traded and processed across the U.S.

As it stands, there’s a patchwork of different federal and state laws as well as judicial precedents. Usually, this mishmash of protections are difficult to enforce and keep up given the rapid shifting evolution of new digital-driven threats to personal data. A more unified, federal law would mitigate a lot — albeit not all — of those issues.

“Americans need privacy protections and informed consent over which data they share — and this needs to be true no matter which country the particular tech platform hails from, whether it’s China, the United States or any other nation,” said Tom Chavez, CEO of data privacy firm Ketch.

Addressing that larger problem would require something like a federal privacy law that safeguards privacy as a human right, privacy specialists like Chavez have said. Until this happens, companies will continue to put consumers — and their data — at risk.

“We need federal legislation with some teeth — and enforcement mechanisms,” said Daniel Barber, CEO of privacy control center DataGrail. “Robust penalties and enforcement measures are crucial in holding companies accountable.”

Policies like this, however, need an enormous amount of political will to realize. The paperwork, the Influential tech lobbyists, not to mention the challenge creating a policy broad enough to cover how data is and could be traded — it’s a lot to wrangle.

It took four years of preparation and debate for Europe’s wide-reaching data protection law to be finally approved by the European Union Parliament in April 2016. In lieu of time, U.S. lawmakers may want to strike TikTok while the iron’s hot. 

But as powerful as a haymaker blow like a ban is, it’s also hard to land. Remember what happened the last time U.S. lawmakers tried to ban TikTok? There was a legal challenge, and it was ultimately revoked. 

“My biggest concern is that in the rush to do something about this issue, the outcome that gets arrived at is ineffectual or else actually detrimental,” said Erik Weinick, a partner at the law firm Otterbourg and co-founder of its privacy & cybersecurity practice.

The most likely outcome for TikTok is that it’s forced to divest a majority stake to a U.S. company, which would solve the fact that Chinese ownership of TikTok is clearly untenable now.

“Right now, we are one of the only developed nations in the world to lack federal protections, so it’s a bit laughable that Congress is trying to be tough on TikTok when it’s consistently evaded its responsibilities, instead forcing individual states to come up with their own laws,” said Barber. 

Marketers share the sentiment it seems. 

“Consumers are in the midst of a privacy awakening, and marketers are in the early stages of their own,” said Chavez. “Now that they understand the extent to which customers’ data can be misappropriated and misused, they can run — but they can’t hide — from its implications, the Federal Trade Commission, or the newly awakened consumer.”

TikTok’s uncertain future — and the ensuing debate — only reinforces this view. Something needs to be done given Congress’ criticisms of TikTok are validated, to some extent, by the fact that TikTok owner Bytedance can be compelled to share data with the Chinese government. But those data privacy risks don’t go away with TikTok. There are other popular Chinese apps used by Americans, as Axios reported, for instance. And that’s on top of the fact that the same data privacy concerns leveled at TikTok could be applied to other American-owned companies like Facebook, YouTube, Twitter, Instagram and many others. 

“This isn’t a TikTok problem,” said Avi Ben-Zvi, vp, paid social at Tinuiti. “We’re addressing questions that are important for all platforms, with regards to data security and privacy. And maybe given the heat that TikTok’s been given, they’re actually doing the most in relation to this.”

It says everything that most of the marketers Digiday has spoken to in the week following TikTok’s congressional hearing were against a ban. And no it wasn’t just because a ban would take away a valuable piece of real estate to park their ad dollars. They too — like privacy experts — are concerned about whether a ban would have any real fundamental impact on how personal data is protected.

“Precedent matters — we have zero precedent for a nation-wide ban of such a popular technology and entertainment platform,” said Kevin Goodwin, vp of performance marketing at New Engen. “Since we’ve never seen it happen before, all marketers are skeptical TikTok will be the first to pay the price. On a smaller scale, while Meta and Google consistently face legislative pressure for specific products and ways of working, these pressures have never materially impacted their ability to provide products to users and advertisers.”

Some agencies have been using AI in their client and creative work but finding that the visual and generative AI content are still experimental in public and consumer-facing applications. Eric Dahan, founder of creator performance agency MightyJoy, said his teams already use AI across creator messaging, designs, copywriting and proposals to cut down on hundreds of hours on these processes.

“It is definitely a powerful enablement tool for internal teams,” Dahan said. “The future is that all or most of a creator’s content is either generated by AI or guided by it. At that point, their main value proposition is really their community and the strength of the relationships within it.”

Natalie Comins, group creative director at IPG agency Huge, similarly sees generative AI as a tool that could help content creators — especially as a way to generate “content at scale.”

“Generative AI is like having a helpful assistant at the ready,” Comins said. “In the future, we predict that content creators will make use of that help… To maximize efficiency long-term, operating generative AI tools will require creators to learn each system’s unique language. The more experience creators can gain in working with these tools, the higher quality the outputs will be.”

Huge has helped clients understand the implications of AI by hosting workshops and writing white papers on the topic. Recently the agency used AI to develop visuals with its client Pantone in a 2023 Color of the Year project. Comins said plans are to involve AI in more upcoming client projects.

“We leveraged generative AI by inputting messages and feelings generally associated with the color, such as bravery, optimism, fearlessness, and nature, to prompt images that adequately conveyed those ideas in an unorthodox way,” she added.

Generative AI has also been widespread on social media, where profiles and videos feature AI-generated art and books, virtual influencers and video scripts. Becky Owen, CMO of influencer agency Billion Dollar Boy, said a growing number of creators use AI to build their social media presence and make their workflows more efficient. Interestingly, she thinks that can lead back to more organic content.

“Historically, trends in the creator economy tend to boomerang back to human creation,” Owen said. “Just look at how TikTok, for example, has re-popularized raw and unfiltered content. If we are to use what we’ve seen in the past as an indicator of the future, I believe we may lean into AI for a while but ultimately we’ll always crave human content — perhaps even more so.”

Despite the popularity of generative AI content, however, agencies are cautious about some of the ethical and privacy concerns. As more influencers turn to AI, greater risks could arise around transparency of the content and brand safety issues for those that utilize influencers. Daria Belova, marketing and PR director of influencer agency HypeFactory, said creators need to be forthright about using AI.

“[Creators should ensure] they are not deceiving their audiences and are presenting exclusive content that is tailored to the audience and that has a creative pinch from the influencer,” said Belova. “Malicious usage of generative AI is one of the biggest current concerns.”

This is where human involvement will be important. In terms of working with brands, Belova contends that influencer marketing campaigns will still need to rely on content teams that know how to use generative AI and other tools: “Brands cannot place all their faith in AI generated content to achieve top performance without having people operate behind the scenes.”

And as Owen at Billion Dollar Boy also mentioned, creators need to consider potential violations and challenges as they continue using AI in a quickly evolving environment. “Regulation will also naturally become a challenge,” Owen added. “As with all new emerging tech, generative AI doesn’t come with a rule book in the creator economy and beyond.”

In March, Tesla CEO Elon Musk and leaders in academia and tech signed an open letter to halt development in generative AI “more powerful than GPT-4” for at least six months, citing risks to “society and humanity.” More than 1,700 have signed, including Steve Wozniak, co-founder of Apple, Evan Sharp, cofounder of Pinterest, and Craig Peters, CEO of Getty Images.

Owen expects to see regulation catch up to this emerging tech as AI and privacy come into focus for lawmakers in recent years. And it remains to be seen how generative AI in particular will affect the larger creator economy and the agencies that operate within it.

Color by numbers

Small businesses make up some 44 percent of the U.S. economy, according to the Small Business Administration. The Connected Commerce Council recently studied that group’s impact on buying and selling digital advertising, speaking with 2,400 SMBs. Its conclusion: digital ads help level the playing field with the major corporations that small businesses compete with. — Michael Bürgi

Here are some findings from the Maximum Impact study:

• 78% of SMB advertisers say digital ads contribute more revenue to their business than traditional offline ads.
• 82% of SMB advertisers say digital ads allow them to more efficiently reach their target customers than traditional offline ads.
• 30% of SMB advertisers earn revenue attributable to digital ads of more than $650,000 a year, while 57% overall earn at least $50,000 a year.
• 40% of SMB publishers say selling digital ads drives over half of their overall revenue.
• 63% of SMB publishers predict that revenue from selling digital ads will be higher in 2023 than 2022 – by an estimated 35% on average.

Takeoff & landing

• Publicis acquired South American tech and digital transformation firm Practia, with plans to fold it into its Publicis Sapient arm. 
• Independent performance agency Tinuiti tapped Jeremy Cornfeldt to be its first-ever president, reporting to CEO Zach Morrison and joining the firm’s executive team. Cornfeldt most recently was U.S. CEO of Brainlabs. 
• Speaking of Brainlabs, the independent media agency landed paid search and shopping, and retail media duties for mobile phone service Consumer Cellular, beating out incumbents Performics and Rain the Growth Agency.
• Ad exchange Sharethrough last week said it is launching its own carbon calculator, the Carbon Emissions Estimator, a free tool that aims to help advertisers figure out the approximate amount of carbon produced by a digital media campaign. 

Direct quote

“I did this [Beatles] ‘LOVE’ show in Las Vegas with like 7,000 speakers in the room … That’s a spatial audio-like thing. It’s really impactful and emotional. I thought this was the future and then it wasn’t — at that time. I never thought the headphones would be the introduction to spatial audio because they’re the most compromised, phase-y experience. [But] it has gotten exponentially better in the last three years, it’s become listenable.”

— Music producer Giles Martin (son of legendary Beatles producer George Martin), on the advances in spatial audio. 

Speed reading

• Given TikTok’s omnipresence in the headlines recently, Digiday’s power tech team of senior news editor Seb Joseph, senior tech reporter Ronan Shields and platforms reporter Krystal Scanlon teamed up to write the definitive guide to what advertisers should and shouldn’t worry about with a prospective ban on the hugely successful platform. 
• Although the metaverse has been crowded out of the headlines by TikTok and generative AI, agencies continue to play with the nascent world in a story I wrote last week.  
• Even though he was busy co-hosting the Digiday Publishing Summit in Vail, Colo., last week, senior media editor Tim Peterson found time to report out the increasing likelihood that programmatic will be a larger part of this year’s upfront marketplace, in the latest installment of the Future of TV Briefing.

Paramount isn’t alone: The Guardian reported last month that the number of new podcast shows dropped 80% worldwide compared with the two previous years. Data from podcast engine Listen Notes showed 219,000 shows debuted last year, down from 729,000 new titles in 2021.

While Raizes didn’t have a number to share when asked how many new podcast shows Paramount will launch this year, he said “it is going to be fewer shows on a brand by brand basis.”

Paramount has 120 podcasts in its network. “Honestly, it’s a lot. As we go forward, we’re going to be evaluating everything and making sure that the audience is there and we’re certainly not going to be going at that pace going forward,” Raizes said.

Paramount’s numbers are up

Though Paramount is taking a more prudent approach to podcast launches this year, the company’s podcast downloads and revenue are up, Raizes said. Revenue increased 183% year over year, and downloads are up 42% year over year, he said, without providing exact figures.

“We’ve been very deliberately judicious in how we’ve approached this, even in kind of the fat times. We didn’t try to do any M&A. We tried to grow the team organically,” Raizes said.

And while Paramount is still drawing in budgets from a mix of new and existing advertisers, according to Raizes, he noted a “general advertiser hesitancy right now. It is a tricky time.” Paramount’s strategy to combat this is to offer host-read ads from its talent roster from existing TV shows and franchises, such as “Survivor” host Jeff Probst for the companion podcast “On Fire with Jeff Probst.”

“I think all podcasting is going to be in a different state going forward. I think everyone’s going to be a little more buttoned up,” Raizes said.

Change in strategy

 In the past, Paramount was testing and producing more podcast shows when there was a “big push for content,” Raizes said. But in the past six months, “we are being much more judicious in terms of what we’re putting out,” he said.

Going forward, Paramount will only produce podcasts that are “really differentiated,” Raizes said. Overall, Paramount’s focus will be on shows that are franchise extensions of shows like “Star Trek,” “The Daily Show” or “48 Hours.”

“A good show is not necessarily a good pod. That’s a critical piece to figure out and that took us a while. Because it’s hard to say no,” Raizes said. “We’re now only doing pods if we can get creators or [executive producers] or people who really have deep insight, and they have to care. So we do the research, we determine then if there is a passion angle, if we’ve got the right people — then we pilot. Being an amazing talent or executive producer or otherwise does not mean that you’re good on mic.”

Upcoming shows include three podcasts around the “Star Trek” universe, “48 Hours” and true crime shows.

Challenge of discovery

Discovery remains a challenge for podcasters, as it can be challenging to find an audience for new shows. Raizes said an advantage for Paramount podcasts is “name IP and linear.” The “Survivor” podcast, for example, is marketed by Probst on his social channels and in a “lower third” during the TV show.

“Mobituaries” host Mo Rocca launched a companion podcast in 2019, which “got decent numbers, not great,” Raizes said. Rocca filmed an explainer video to tell fans of the show how to download the podcast to get more listeners. Downloads “10-xed” as a result of that video, Raizes said.

Raizes also believes fewer shows being produced by the podcast industry at large might be a benefit for those still developing new shows and that it might make it easier for listeners to find those shows. “There are too many choices, which I also think the economic conditions may narrow that.”

“We feel very confident in the industry. For all of us, we just have to kind of make it through the next six to nine months,” he said.

As part of this dynamic leading independent players are likewise jockeying for position. This process has been in play for years but (for some) last year’s unveiling of OpenPath by The Trade Desk was a watershed moment.

According to some critiques, this amounts to disintermediation as OpenPath involves the industry’s leading demand-side platform building direct relationships with publishers — traditionally, the domain of supply-side platforms. Albeit, The Trade Desk characterizes this as a natural (and necessary) means of market maturation.

Media agencies have been making similar moves with GroupM’s Premium Marketplace (unveiled just weeks after OpenPath) serving as a prime example of this trend. Meanwhile, SSPs have been hustling themselves as that sector of the market becomes increasingly Darwinistic.

Over the course of the past year, the sector’s leading SSP Magnite has gone about building more overtly commercial relationships with media agencies in a move that mirrors OpenPath over the past 12 months.

According to separate sources, this is termed its “media facilitator” whereby the SSP lets media agencies buy directly from Magnite, either via programmatic direct deals or private marketplaces, another indication that open marketplace buying is a decreasing trend.

“If DSPs are going to say they can bypass SSPs, then two can play that game,” said a source from within a premium publisher, who requested anonymity due to their employer’s PR strategy. “Although, both sides of the will find the transition difficult, as onboarding measures likes contracts can be tricky… there’s a lot of growing pains with things like blocking creatives, etc., that the other side of the market has spent years specializing in.”

“The days of media dollars flowing through 10 or 20 platforms on the supply side without intention are rapidly disappearing,” added a separate source. “Buyers are putting substantial resources behind SPO and consolidating their supply-side partners in order to forge deeper, more dynamic relationships with a much smaller set of strategic partners.”

For Ratko Vidakovic, founder of consultancy service AdProfs, Magnite’s moves are indicative of how players in this (increasingly tricky) sector of the market are all attempting to prevent being commoditized. “I think this is an example of how SSPs are trying to achieve ‘stickiness’,” he added, “and this involves trying to make attractive offerings to both the buy- and sell-side of the market.”