"On TV And Video" is a column exploring opportunities and challenges in advanced TV and video.
Today’s column is written by Tracey Scheppach, CEO at Matter More Media.
Buckle up. We’re about to get nerdy about tech and addressable TV – which should interest you if you like scale, and progress and profitable new markets.
First, advertising is a scale game, and if current initiatives prove successful, we can scale addressable TV from currently 3% of linear impressions to more than 50% – and it will continue growing. When you add that to the already addressable OTT, CTV and streaming viewing, more than 70% of total TV impressions are addressable-capable.
Opportunities abound, but these opportunities need to be proven to work.
The beta tests
Project OAR is deploying solutions on Vizio TV and has lined up seven national programmers to participate in its beta trials, including AMC, Discovery, Disney, FOX, NBCUniversal, Viacom CBS and WarnerMedia, which collectively represent approximately 80% of linear viewership.
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Brace For Streaming
Just as NBCU plans to reorg to accommodate streaming, so too will WarnerMedia. The Information reports that the AT&T-owned entertainment company will soon unveil a “major reorganization” that will result in layoffs and the promotion of Andy Forssell, a streaming exec, to oversee the company’s entire DTC business. He’ll answer directly to WarnerMedia chief Jason Kilar. This transition signifies a shift in WarnerMedia’s philosophy. Kilar has reportedly commented to his peers that he “wants the company to be more focused on selling directly to consumers, rather than advertisers and cable companies,” and that, ultimately, his aim is for WarnerMedia to own all of the content on its streaming service. WarnerMedia took a heavy hit from the pandemic economy in Q2. It lost $1.5 billion in revenue, dipping 23% YoY. Its ad tech unit Xandr declined 25%.
We Don’t Chat Anymore
President Trump signed an executive order last week, to take effect within 45 days and counting, barring any business transactions with TikTok and WeChat by American companies, thereby formalizing the timeline he set earlier in the week for a potential TikTok acquisition by Microsoft. In other words, the clock is TikTocking. (Sorry, that was irresistible.) Trump’s WeChat ban relates to the same yet unproven national security fears he has about TikTok sharing data about Amercans with the Chinese government. It’s not clear exactly what type of transactions would be banned, and questions remain about whether companies that Tencent has invested in (such as Snap, Activision Blizzard and Epic Games) will be impacted. Beyond the impact on American businesses marketing and transacting with consumers in China, it’s also important to note that cutting off access to WeChat could sever everyday communications between people in the two countries, The New York Times reports.
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Johnny Ryan, a professional thorn in the side of big tech and ad tech, left browser company Brave this week to go nuclear on data rights.
He’s now a senior fellow at Open Markets Institute, a think tank focused on antitrust issues, and a senior fellow at the Irish Council for Civil Liberties, a Dublin-based human rights organization which has a long history of campaigning for data rights.
Ryan spent two years as chief policy and industry relations officer at Brave, during which time he helped file complaints in 16 different European countries calling out real-time bidding as a violation of the GDPR.
But, so far, there’s been no enforcement action of “any substance whatsoever,” Ryan said. But in his new roles, he’ll push more aggressively.
“My objective is to obtain total and complete enforcement of data protection law in this industry,” he said. “Our colleagues in ad tech firms, and even some enforcers, seem to think they can hide behind small gestures until this goes away – but this is not going away.”
AdExchanger caught up with Ryan for a few hot takes.
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The Trade Desk’s stock was up nearly 5% in after-hour’s trading on Thursday, despite posting a 13% year-over-over dip in revenue in the second quarter.
To what does TTD owe this optimism? Two words: connected TV.
“We believe that the COVID pandemic has permanently accelerated the growth of CTV,” CEO Jeff Green told investors on the company’s earnings call Thursday. “It’s changing the TV landscape forever.”
Although revenue declined to $139.4 million from nearly $160 million in the year-ago quarter, CTV spend grew roughly 40% year over year. And The Trade Desk anticipates CTV spend will more than double this quarter’s growth rate to around 80% in Q3.
Despite the significant pullback in ad demand, The Trade Desk has benefited from an anemic upfront season, the ongoing flight from user-generated content toward more premium environments and the uptick in CTV consumption during the pandemic, Green said.
Although The Trade Desk ended Q2 with a revenue decline, spend on its platform has increased every month since April and nearly every consecutive week, and this has remained true into July.
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Exchanges actually paid their publishers on time more often than not during the height of the pandemic.
It’s counterintuitive, but true, said Hanna Kassis, CEO and founder of OAREX, a company that helps finance publishers by purchasing their digital media and advertising receivables.
The economic environment is brutal. For example, hundreds of ad tech companies signed a petition in late March pushing for Google, Facebook and Amazon to offer more flexible payment terms during the uncharted territory of a pandemic economy.
But OAREX found that for the month of May, payments that were late by more than two weeks dropped to an 18-month low. The number of payments that were more than 15 days late declined from 23% to 13%.
Thanks for the PPP
Although businesses are struggling to stay afloat, they have a couple of semi-tailwinds blowing for them.
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Brand safety is always top of mind for advertisers. But it’s become more important than ever as issues from coronavirus misinformation to the ongoing Facebook ad boycott dominate industry headlines.
For Joshua Lowcock, chief digital officer at UM and global brand safety officer at IPG Mediabrands, the renewed focus is an opportunity for advertisers to hold platforms and publishers across the board to a higher standard.
“The challenges to Facebook are not unique to them,” he says. “We need to use this moment to hold all platforms more accountable, and really make advertisers think about what they fund and where their ads run.”
While a boycott may not do much harm to Facebook’s bottom line, it does increase pressure on the company to accept accountability – and make real changes.
“It shouldn't be thought of as a boycott for 30 days,” Joshua says. “These are ongoing conversations that need to be had with partners … every time you have a meeting. They'll never be perfect, but we can keep pushing them toward perfection.”
To help advertisers frame brand safety in the context of their corporate responsibility goals, UM introduced its Media Responsibility Principles in June, which break the massive issue of brand safety on the internet down into digestible pieces so brands can tackle it head on.
Joshua talks with AdExchanger from Manhattan, where he’s been riding out the pandemic since March. During the lockdown he kept busy by publishing a book based on the diary of a relative who was a prisoner of war during World War II.
“Reading about someone who went through an absolutely awful time has given me a great sense of perspective,” he said.
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On The Clock
Microsoft’s acquisition offer for TikTok has expanded to the app’s entire global business outside of China, including its operations in India and Europe, Financial Times reported. Previously, the takeover bid just covered TikTok’s business in the United States, Canada, Australia and New Zealand. Talks between the companies about a deal, which must be completed before Sept. 15 or risk TikTok getting banned from the United States, are complex and still preliminary. Microsoft is reportedly doing its best to take a neutral stance when it comes to the ongoing controversy between the United States and China. But there are additional complicated issues to ponder beyond geopolitical tensions, including what it would look like to unwind TikTok’s technology infrastructure from parent company ByteDance. Here’s a silver lining, though: If Microsoft were to buy TikTok in India, it could revitalize the app in its largest market.
Fog Ahead
Travel advertisers showed a glimmer of confidence in May and June as they began spending again on marketing geared toward local travel and road trips. But spending has declined since the second wave of COVID-19 outbreaks in Texas, Arizona and California surfaced in July, according to MediaRadar data. After cutting ad spend by 93% in mid-April to $4 million per week on average, travel brands quadrupled their ad spend to $11 million per week in June. The increase was driven by hotel brands, which spent $4 million per week on average, up from $1 million per week in April. But as cases rose, ad spend fell a second time. Spend from US Local Tourism Bureaus, for example, started ticking back down to slightly more than $1 million per week after hitting their highest numbers in three months in June at $2 million per week.
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Did you hear the one about Microsoft maybe buying TikTok? No, really, there’s a potential deal in the works.
Amid ongoing drama over TikTok’s Chinese ownership and threats from the Trump administration of a ban on the app in the United States, the technology company most associated with office software could become the owner of the social media app most associated with dancing, sarcasm and lip synching.
It’s a head scratcher, but the AdExchanger team mulls the rationale. (FWIW, I’d love to see Clippy do a TikTok dance.)
Next, the team dissects Facebook and Google’s most recent earnings results. Facebook won’t stop growing despite an advertiser boycott and gale force industry headwinds … but there’s a little something coming down the pike that Facebook actually is worried about: Apple’s IDFA restrictions. Dave Wehner, Facebook’s CFO, acknowledged to investors that the changes could have an impact on revenue this year and beyond.
And over at Google, ad revenue dropped for the first time in the company’s history. But take that with a grain of salt. As senior editor Sarah Sluis notes, “Everyone is seeing really big declines in their advertising business. In the case of Alphabet, a decline in their advertising business means that they’re actually flat, because they were growing so much before.”
Also in this episode: An examination of the in-housing trend, which is clearly here to stay. Sixty-nine percent of brands have either partly or fully moved their programmatic buying for display, video and/or connected TV in-house. What’s driving this activity? Tune in to find out.
Hypercasual dominated the mobile gaming charts even before the pandemic.
Installs of hypercasual games, characterized by extremely lightweight, free-to-play mobile titles, more than doubled between December 2019 and March of this year, according to joint research from Adjust and Unity. Once lockdowns started, the growth accelerated, with play sessions up by 72% in March.
But margins are razor thin in hypercasual gaming, and with IDFA restrictions coming next month in iOS 14, CPMs are set to nose dive.
Yet on Wednesday, Zynga said it intends to acquire Rollic Games, a hypercasual gaming studio based in Istanbul with more than 250 million downloads collectively across its portfolio.
Zynga will acquire 80% of the company for $168 million in cash at a $210 million implied valuation. The deal is expected to close on Oct. 1, and Zynga will purchase the rest of Rollic in installments over the next three years. This is Zynga’s second acquisition in as many months. It bought Peak Games, the maker of Toy Blast and Toon Blast, for $1.8 billion in June.
It’s great to have a scaled portfolio of gaming titles – but what about monetization in an environment where tracking is hobbled on iOS and performance can only be measured at the campaign level, rather than the user level?
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