Netflix Chooses Microsoft As Its Ad Tech Partner

Netflix Chooses Microsoft As Its Ad Tech Partner

Advertising Microsoft

Netflix continues to roll out its previously announced plan to provide an ad-supported subscription tier. The streaming company has chosen Microsoft to be its global advertising technology and sales partner. This means Microsoft will supply technology to facilitate the placement of video ads on Netflix. All ads served on Netflix will be available exclusively through Microsoft’s platforms.

In a statement, Netflix Chief Operating Officer and Chief Product Officer Greg Peters said:

In April we announced that we will introduce a new lower priced ad-supported subscription plan for consumers, in addition to our existing ads-free basic, standard and premium plans. Today we are pleased to announce that we have selected Microsoft as our global advertising technology and sales partner.

Microsoft has the proven ability to support all our advertising needs as we work together to build a new ad-supported offering. More importantly, Microsoft offered the flexibility to innovate over time on both the technology and sales side, as well as strong privacy protections for our members.

It’s very early days and we have much to work through. But our long term goal is clear. More choice for consumers and a premium, better-than-linear TV brand experience for advertisers. We’re excited to work with Microsoft as we bring this new service to life.

The news comes weeks after Microsoft completed its acquisition of the Xandr ad-tech unit from AT&T, which had been involved in programmatic advertising. Xandr provides a data-enabled technology platform with tools that help power a diverse ecosystem connecting marketers and media owners through first-party, data-led advertising solutions across its network. The Wall Street Journal reported that the acquisition gave Microsoft the technology necessary to become a contender for the Netflix deal. The Wall Street Journal also noted that in pitching itself as a contender against rivals suchas Google, Microsoft “stressed one word: agnostic. Microsoft emphasized that it won’t compete in streaming with Netflix, the person said. Comcast’s NBCUniversal operates the Peacock streaming service while Google owns YouTube.”

It was widely known that Netflix would seek an ad tech partner to support its nascent ad-supported tier. The company, facing declining membership and sagging stock price, is under pressure to compensate for lost revenue by adopting ads. Rivals such as Disney+ are set to launch an ad-supported option, too.

But Microsoft is a surprising choice as a partner. Microsoft has not, historically, been known for video ads. Having said that, going with Microsoft likely means that Netflix will launch its ad-based platform as a reservation buy when it goes into beta, but that would be short-term. Long-term, I think this means that Netflix, as well as Microsoft, is looking to open up Netflix advertising in the same way that Google does on YouTube/YouTube TV.

That would mean that after Microsoft works out the kinks through reservation buys, the company would open up placements for all advertisers, regardless of budget, to run video ads on Netflix. Reservation buys would continue for any advertiser, but anytime those placements are not bought, they would go up for auction. I foresee, though, that big series like Stranger Things, The Crown, and The Witcher will require large reservation busy since demand will be high. The same goes for movies.

Disney+ recently announced that the cheaper D+ offering would have ads as well, but those would be done through The Trade Desk. TTD is a popular DSP (demand side platform), but typically they require a reasonably sized budget in order to run campaigns.

With the Netflix/Microsoft deal, it opens up “TV commercials” for the everyday advertiser.

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

Celebrating 15 Years of Growth at True Interactive

Celebrating 15 Years of Growth at True Interactive

Advertising

2022 marks a big milestone: True Interactive celebrates our 15th birthday. We’re now old enough for a learner’s permit to drive a car in Illinois.

Our story, and the story of the internet, has been shaped enormously by the actions of a few influential companies:

  • Google organized the world’s information online and taught everyone how to find it.
  • Meta connected people through social media.
  • Thanks to Apple, we took the internet with us on our mobile phones.
  • YouTube changed how we consume content with video.
  • Amazon made the world comfortable conducting commerce online.

These and a handful of other companies rewrote the rules for how businesses and people discover each other and build relationships.

Online advertising is at the center of this change. At True Interactive, we are grateful to the clients who have trusted us to help them figure out how to succeed in the digital age, and to our own people who’ve brought to our client relationships a spirit of hard work, collaboration, transparency, and a commitment to results. Businesses like to say that their people are their strongest assets, but people are more than that: they form our culture. Both the people who work for us and the people who work with us.

And we are proud of that culture. The magic that happens when great people and clients collaborate has produced remarkable results, such as triple-digit returns on ad spend and a dramatic reduction in costs. (You can read more about our work here.) And from our experiences, we’ve developed services ranging from search engine marketing to social media advertising that create a foundation for our team to innovate.

The next 15 years will evolve differently than the last. We’re probably nearing the end of an era when single companies could wield such enormous impact. The industry has become far too diversified for one business to change consumer behavior in far-reaching ways as Google did with its founding in 1998. And the fast-moving digital world still has few barriers to entry, which opens up the playing field.

Consider TikTok, which didn’t even exist until 2016 and has now challenged YouTube’s dominance with inventive short-form video. Or Snapchat, which keeps nudging the marketing world to embrace augmented reality even though its main rivals such as Meta had a long head start. The connected TV space still feels wide open.

And then there’s the metaverse. It’s just too vast and far-reaching for any single company to dominate. In fact, the fundamental notion of the metaverse is predicated upon the development of a decentralized web, Web 3.0. We’re only six months into 2022, and we’ve already seen just how much of a free-for-all that this emerging world feels like right now. Some of the building blocks of the metaverse, such as cryptocurrencies and nonfungible tokens (NFTs), sounded so fresh and exciting at the beginning of the year. Now businesses and people everywhere are learning (sometimes the hard way) how far those technologies still have to go before they redefine the landscape the way search, mobile computing, and video did.

We’re as bullish on emerging technologies and forms of computing as we were 15 years ago when we figured out how to help businesses build powerful brands even as human beings were learning how to search online. We can promise you that regardless of how the digital world evolves, we will always:

  • Not succumb to hype. We’re on the forefront of change, but everything we need to do must be grounded in reality, not wild speculation.
  • Deliver measurable results. If we can’t deliver measurable value, we won’t do it.
  • Be totally transparent. Our clients know what they’re getting from us. And they know how we deliver value. Trust is a wonderful thing. It must be earned through openness.

What excites us most? The unknown. The next wave of change that no one sees coming. The unknown creates a level playing field. The unknown is a vast well of opportunity. Much of the digital world was unknown when we were founded, and look where we are now thanks to our people and our clients. Whatever happens next, our culture of hard work, collaboration, transparency, and commitment to delivering results will ensure that we thrive. Together.

Happy 15, everyone! 

— Kurt Anagnostopoulos and Mark Smith

Streaming Services Embrace Ads: Advertiser Q&A

Streaming Services Embrace Ads: Advertiser Q&A

Advertising

Netflix sparked one of the biggest stories in the ad tech industry in April when the streaming company announced it was going to embrace advertising. This move was long anticipated from industry watchers who wondered how long Netflix could satisfy investors and recoup the costs of content creation based on subscriber growth alone. Well, Netflix finally relented after distancing itself from ads. That’s because Netflix’s subscribers are not growing at the rate Netflix once enjoyed when the company was challenged by few competitors. In its first quarter of 2022, the company actually lost subscribers. But Netflix is not the only company adopting an advertising-supported tier. Disney+ will also adopt advertising in 2022. The two platforms join streaming companies such as Hulu and HBO Max in doing so. Here are some questions advertisers might be asking:

Will people who subscribe to Disney+ and Netflix start seeing ads with their current plans?

No. Both Disney+ and Netflix have made it clear an ad-supported plan will cost less than the ad-free plans that exists now.

Netflix CEO Reed Hastings recently told investors, “If you still want the ad-free option, you’ll be able to have that as a consumer. And if you would rather pay a lower price and you’re ad-tolerant, we’re going to cater to you also.” Disney Chief Financial Officer Christine McCarthy said the same about Disney’s plans.

Why are Disney+ and Netflix running ads?

The obvious answer: advertising brings in revenue to offset the costs of content creation. But advertising also gives audiences more options. Recently, Hulu revealed that 70 percent of its viewers were on ad-supported plans with the remainder on the pricier ad-free tiers. Both Disney and Netflix expect that audiences will respond to having both an ad-free and cheaper ad-supported option.

“Based on our Hulu experience, we actually have more AVOD [ad-supported video-on-demand] than SVOD [subscription VOD] subscribers,” Christine McCarthy of Disney said, speaking at the 9th Annual MoffettNathanson Media and Communications Summit. “We expect about the same percentage for both Disney+ and Hulu, just based on the experience curve that we’ve witnessed.”

Reed Hastings of Netflix also cited Hulu’s success when he unveiled Netflix’s plans to investors. Hastings specifically called out Hulu as proof that ads are working for video subscription services: Hulu ended 2021 with 40.9 million paying subscribers, up from 35.4 million a year ago.

When do ads come to Netflix and Disney+?

Disney plans to launch an ad-supported plan in 2022 at some point; although Netflix has not specified a timeline, a leaked internal memo from Hastings indicated that an ad-supported plan could be coming before the end of the year.

What will the ads look like?

At the MoffettNathanson conference, Rita Ferro, president of Disney Advertising Sales, said that the Disney+ ad-supported tier will start with 15- and 30-second spots, but will expand to a “full suite of ad products” over time. The ads will have an average of four minutes per hour, which is fewer ads than at Hulu. That’s partly because 65 percent of viewing on Disney+ is movies, which has fewer ad breaks than series.

According to Variety, the ad-supported version of Disney+ will not accept alcohol or political advertising at launch, nor will it run ads from rival streamers or entertainment studios.

Nothing is known yet about Netflix’s plans. But since Netflix cites Hulu as a model for successful advertising, Hulu’s own ad units are worth learning more about. And there are many of them. Here are a few:

  • Standard video ads appear as a commercial break during the streaming of any of Hulu’s full episodes. Such ads can also appear as a pre-roll for clips hosted on distribution partners of Hulu or as companion banners.
  • Binge ads let advertisers deliver contextually relevant messages to the audience during a viewer’s binge session. These ads help businesses to engage with audiences in a non-disruptive way. Binge ads are for viewers who have watched three or more shows of the same series.
  • Sponsored Collection brand placements gives advertisers extended ownership of a collection sponsorship through logo placement adjacent to content in Hulu’s UI across devices.
  • Hulu’s Pause Ad is a non-disruptive, non-intrusive user-initiated ad experience that appears when a viewer presses pause when watching content.
  • The Ad Selector allows the user to control their ad experience by choosing the ad they want to see. The user will be presented with two or three video options. Once a selection is made, the user will be presented with the commercial of their choice. If no selection is made after 15 seconds, one video in the unit will be randomly selected to play.

Hulu shares its ad units in more detail here.

Netflix is renowned for using analytics to personalize content for its audiences around the world. Its own ad units may skew toward the Ad Selector option cited above, tailored to global audiences. But the company will need help.

“Netflix already has a trove of first-party data that can deliver a variety of audience segments for advertisers, and relevance for consumers,” said Adam Helfgott, CEO at MadHive, the programmatic ad tech firm. “In order to sell that inventory in context with TV overall for advertiser objectives, they will need to integrate into the ecosystem and partner with DSPs, SSPs, and infrastructure providers.”

Netflix may also step up product placements in its shows such as Stranger Things. Netflix has not really actively monetized product placements even though its shows are not shy about integrating real products into their plotlines, as Stranger Things does with businesses ranging from Cadillac to Eggo.

Meanwhile, competitors Amazon Prime Video and Peacock will literally drop products into actual shows. These received less attention than the news from Netflix from Disney+, but they are also intriguing. At the 2022 NewFronts, Amazon and Peacock demonstrated new ad formats that use similar virtual product placement (VPP) tools, a post-production technique for inserting a brand into a TV show or movie scene.

Amazon’s VPP tool, operating in beta, lets advertisers place their branded products directly into streaming content after they have already been filmed and produced. Peacock’s new “In-Scene” ads will identify key moments within a show and digitally insert a brand’s customized messaging or product post-production so that the brand is showcased in the right TV show/movie and at the right time. These function very similarly to in-game ads.

It’s going to be an interesting and exciting year for advertising.

What should advertisers do?

  • Understand the growth of advertising on streaming platforms in context of the rise of connected TV. If you’ve not done so already, take a closer look at why connected TV is growing and how it could expand your audience. (True Interactive can help you with that.) Connected TV is enjoying 60-percent growth, driven by a public’s appetite for streaming that continues unabated, Netflix’s slowdown notwithstanding.
  • While you await more clarity on available ad units, get to know the audiences on each platform. Which is right for your brand?

Contact True Interactive

True Interactive can help you navigate the connected TV landscape. Our services range from media strategy and planning to automated performance reporting. Learn more about our services here, and contact us to learn more.

Photo by Souvik Banerjee on Unsplash

For Further Reading

How Brands Are Winning March Madness

How Brands Are Winning March Madness

Advertising

March Madness means great basketball. It also means creative brand activations. And this year, perhaps inspired by the returning energy of in-person fans (because of Covid, fans hadn’t been present at the games since 2019), the campaigns seem more innovative than ever. The slate of advertisers is certainly robust: “We’ve written more revenue in this tournament than we ever have before, record-setting revenues for this year,” notes Jon Bogusz, the executive vice president of CBS sports sales and marketing. Let’s take a closer look at what brands are doing for this event—and what that means for you.

Gaming Online

Video game streaming platform Twitch is embracing March Madness with two new brand activations. /TwitchSports, Twitch’s sports streaming service, has revived two shows—“Let’s Go! College Hoops” and “SuperFan FaceOff”—with sponsorships by Wendy’s and Philips Norelco. It’s a win-win (no pun intended!) for both the brands and the platform: the brands help Twitch expand its reach and popularity in the sports community, even as the brands benefit from /TwitchSports’s huge viewership. “With hours watched of sports content on Twitch growing in the triple-digit percentages last year, we’re thrilled to open up some of our original content on /TwitchSports to both returning and new advertisers on Twitch,” notes Sarah Iooss, head of sales for the Americas at Twitch. As Iooss explains it, /TwitchSports gives brands exposure to sports fans in the powerful Millennial and Gen Z demographics.

The campaigns capitalize on the power inherent in the Twitch platform. Philips Norelco, which is sponsoring “SuperFan FaceOff,” makes use of Twitch’s integrated chat feature. Meanwhile, Wendy’s returns to Twitch to feature a segment of “SuperFan FaceOff” in which hosts call out their fave daily menu items from the fast-food chain. Branding from both sponsors will appear on the Twitch platform and livestreams.

Gaming in Person

Wendy’s has also pursued an in-person activation at the Entertainment Capital of the World. Partnering with Adult Swim’s “Rick and Morty” animated series, the chain participated in “Morty’s Mayhem,” an immersive LED experience housed at Resorts World Las Vegas. Running from March 17 through 20, “Morty’s Mayhem” featured games, an area to watch the basketball tournaments, swag from both sponsors, and the not-to-be-missed Pickle Rick Frosty, a salty take on Wendy’s Frosty graced with dried pickle garnish. The Pickle Rick confection was offered for free; Wendy’s also got the chance to promote treats such as the new Hot Honey Chicken Biscuit. As Tricia Melton, chief marketing officer for Warner Bros. Kids, Young Adults and Classics, notes, “It’s a perfect trifecta. You’ve got Vegas, you’ve got college basketball at its apex and you’ve got this ‘Rick and Morty’ partnership with Wendy’s that brings this other whole layer of surprise and silliness and fan experience altogether.”

A New Look — and New Products

For Coldwell Banker, the basketball tournament represents an opportunity to unveil not only a new website but three new tools: CB Estimate, Move Meter, and the Seller’s Assurance Program. Called “Dream,” the campaign aired March 15 during March Madness, and leaned into the idea that Coldwell Banker can help make people’s dreams of home . . . come true. As the real estate franchise sees it, even our fondest dreams may require a jumpstart from data, and Coldwell Banker aims to help with its seller-focused tools.

They do address a need. As reported in MediaPost, almost half of American homeowners don’t know the current value of their home. The campaign also underlines the seismic changes that have taken place in brand outreach. As David Marine, CMO of Coldwell Banker Real Estate, says, “The pandemic changed some aspects of media with the surge in streaming, and the fact that early on some media outlets that we wouldn’t ordinarily focus on, like cable news, all of a sudden became really efficient.”

Hitting the Road

Meanwhile, Nissan, an official partner of the NCAA March Madness basketball tournaments, has launched its “Road 2” campaign featuring mascots from 27 teams. The message? The path to the Final Fours can be . . . unpredictable. The campaign, which embraces media like TV as well as onsite activations at both the men’s and women’s tournaments, features eight new spots and incorporates new Nissan models like the all-electric Nissan Ariya crossover. And fans who complete both the men’s and women’s online bracket challenge, created in partnership with CBS Sports, may have a chance at winning some brand-new wheels in the form of the new Nissan Frontier.

Lessons Learned

What can we learn from the brands who have hitched their wagons to the March Madness star? Some takeaways as we see it:

  • Know your audience. Brands like Philips Norelco surely understand that a platform like Twitch is frequented by Gen Z and Millennials. By making themselves visible on Twitch, they are increasing exposure to these key demographics.
  • Don’t be afraid to have fun — and take some chances. Wendy’s pulled out the stops with a fun take on an old favorite. While we may not immediately associate pickles with a Frosty, Wendy’s made the leap, and it’s been a successful one: this isn’t the Pickle Rick’s first rodeo. It first debuted in Los Angeles in 2021.
  • Give your audience a little gift — and a lift. Free Pickle Ricks. Free tools like Coldwell Bank’s CB Estimate. Consumers the world over respond positively to getting something at no cost.
  • Don’t put all your eggs in one basket. Nissan’s “Road 2” campaign reaches out to consumers in different ways, from the television commercials to social and onsite activations.
  • Stay flexible — and informed. Coldwell Banker’s understanding of how the pandemic has shaped advertising helped them formulate a campaign that makes sense for how consumers connect with messaging in 2022.
  • Finally, think about what annual events might represent a good opportunity for your brand. Is there a connection to what you sell or do? Does the event draw the same audience you hope to woo?

Contact True Interactive

March Madness illustrates how brands can harness the power of popular events to reach a broad audience. Want to learn more? Contact us. We can help.

How Brands Are Celebrating Women’s History Month

How Brands Are Celebrating Women’s History Month

Advertising Social media

In March, businesses are stepping up to celebrate Women’s History Month, not to mention International Women’s Day on March 8. Of course, it’s always a good idea to uplift women; savvy brands also understand that women happen to possess incredible purchasing power. As Inc. points out, women drive the majority of consumer purchasing, making buying decisions not only for themselves but for their families, in so doing driving a whopping 70 to 80 percent of all consumer purchasing. Here’s how some brands are responding to Women’s History Month:

Taking Action

According to Adweek, Pinterest is honoring the month by supporting 10 women-owned businesses on its platform. The initiative is part of the company’s Pinterest Elevates program; participants receive not only ad credits but also a personal coach to help boost their brand visibility and better connect with Pinners. As Pinterest global head of inclusion and diversity Nichole Barnes Marshall blogged, “At Pinterest, it’s important that the content on our platform accurately represents and reflects the world we live in. We’re excited to honor these women and the work that they do, bringing them greater awareness and attention this Women’s History Month and beyond.”

Hershey’s, meanwhile, is highlighting the SHE in Hershey: as the candy powerhouse sees it, those three important letters in the middle of the iconic Hershey name deserve to be celebrated, and one way to do so is with limited edition packaging. Perhaps the Hershey site puts it best: “there is no Hershey’s without SHE.” This year, the company’s award-winning #HerSHE campaign, which originated two years ago in Brazil, will brighten seven international markets, from Brazil to Canada, with the Hershey’s milk chocolate bar wrapper celebrating cultural female icons in each country, their accomplishments, and the impact they’ve made. The chocolate company has also brought in a special influencer to help get the word out: actress and comedian Mindy Kaling appears in a special Celebrate SHE ad. As Kaling notes, “Girls rule. Celebrate accordingly.”

London-based jewelry brand Missoma has found a partner with which it can honor the month—and do good. Fifty percent of sales of Missoma’s limited edition Shine On necklace will go to Girls Out Loud, a social enterprise dedicated to raising the aspirations of teen girls in the U.K. Marisa Hordern, CEO and creative director at Missoma, gets why this collaboration is so powerful, explaining, “As a female-led brand with a female founder and CEO, and just over 85 percent of our leadership roles held by women, we [at Missoma] are invested in the female leaders of tomorrow. We really believe an important part of increasing female leadership is mentorship, confidence, and giving girls and women the opportunity to have a voice.”

Here in the U.S., American shoe brand Keds has been honoring women since the company first came on the scene in 1916. Their Champion Sneaker has always been made for men and women; the design remains iconic more than a century later. This year, Keds pledges to donate $25 from every pair of Champions sold on the official Keds e-commerce site to global nonprofit Dress for Success, an enterprise that supports low-income women by providing professional clothing to aid in the job search and interview process.

Online grocery platform Instacart has announced that it’s allocating $1 million to support women-owned food and beverage brands that advertise on the company’s website and app. Instacart has partnered with three women-led brands: gluten- and dairy-free cookie brand Sweet Loren’s; Three Wishes Cereal; and Twrl Milk Tea to expand an initiative that began last year to support Black-owned CPGs. According to Ali Miller, the head of ads product at Instacart, highlighting women entrepreneurs is a no-brainer: about 80 percent of Instacart customers are women. Women also make up 70 percent of Instacart’s shoppers—the folks who collect, purchase, and deliver items ordered by customers. As Miller notes, “Our goal is to continue to identify and amplify more women entrepreneurs and brands with Instacart Ads to help them drive discovery and business growth.”

Lessons Learned

What can we learn from the example these brands have set? For starters, it’s important to understand that:

  • Tone matters. Women’s History Month is about celebration! Hershey’s exemplifies this upbeat tone in their partnership with Kaling, who brings a spirit of lightness and fun to the topic of gender equity. Also celebratory: the bright designs on the Hershey milk chocolate bar wrappers.
  • Visuals have power. Missoma has encapsulated its messaging in a beautifully designed piece of jewelry. Every time a customer wears their Shine On necklace, they might think about the themes of Women’s History Month, long after March is over.
  • Actions matter. It’s not enough to talk the talk—savvy brands also demonstrate a commitment to equity and lifting women up. Keds’ efforts to support low-income women with sales from their shoes illustrate this principle perfectly.
  • Overthinking things can muddy the waters. In short, stay focused on uplifting your audience (see point 1), because getting too clever with purpose-driven advertising may distract from your message. One need look no further than McDonald’s disastrous 2018 International Women’s Day campaign, in which the brand tried to playfully overturn their logo, from an M to a W, on platforms such as Twitter and Instagram. The stunt backfired, with critics ridiculing the brand’s purported commitment to women’s success—or anyone’s, for that matter—and calling on McDonald’s to pay its employees a living wage. McDonald’s learned the hard way that in this case, a cute stunt didn’t cut it.

Contact True Interactive

How can your brand authentically, creatively, celebrate your customer base in the right spirit? Contact us. We can help.

2022 Advertising and Marketing Predictions

2022 Advertising and Marketing Predictions

Advertising

Welcome to a new, adventurous year of advertising and marketing. The traditional tech giants are going to continue to fight each other for dominance – while TikTok will tap into the burgeoning creator economy to challenge them all for a slice of the advertising pie. Retailers everywhere are creating ad networks, but Amazon and Walmart have already established strong leadership early on. For the most part, businesses will be spending more – more on TikTok, more on Amazon, more on Google, and probably more on Apple’s fledgling ad business. But will they spend more on Meta? Read on for our insights into the year ahead.

Retailer Media Networks Proliferate – and Meta Loses Ground

One of the big stories of 2021 was the proliferation of media businesses operated by retailers such as Amazon, Macy’s, Target, and Walmart. In 2022, we’ll see more of them. Retailers are under great pressure to squeeze more margin out of their core businesses as the industry endures uncertainty. The most well established networks – Amazon and Walmart – are thriving because they tap into the data they collect about their customers (first-party data) to sell targeted advertising on their sites. In 2022, more retailers will use first-party data to help businesses create more targeted ads off-site, too, as an antidote to Apple’s privacy controls. In addition, non-retailers with large troves of first-party data, such as TikTok, will expand the same way.

I also believe Meta’s ongoing push into immersive reality will lose momentum. Meta has made an even bigger push into immersive reality (e.g., virtual reality and augmented reality) as part of its attempt to become the builder of the metaverse. Meta also intends for immersive reality to help the company maintain a dominant hold on social media and to squeeze upstarts such as Roblox out of the market. But the horse is already out of the barn: there are just too many players such as Roblox and Snapchat developing immersive reality applications for Meta to play copycat and use its size as an an advantage. And Meta has faced so much public blowback over its size and reach that squeezing out smaller players makes Meta more of a target for anti-trust regulation. Meta will lose ground, and gaming platforms such as Roblox will ascend in power.

— Tim Colucci, vice president, digital marketing

TikTok Dominates

TikTok is the world’s most visited site in the Internet in 2021, toppling Google, according to Cloudfare. TikTok will become the leader in paid social. Videos and fast-breaking cultural trends are becoming more prominent factors across all social media marketing, and TikTok has mastered both. Oh, and TikTok has another big trump card to play: the site is a magnet for Gen Z and Millennials, who together comprise about 42 percent of the U.S. population. As a recent New York Times profile noted, advertisers “are present like never before, their authentic-seeming advertisements dropped in between dances, confessionals, comedy routines and makeovers.” But TikTok is just beginning to monetize all that interest from advertisers. TikTok will follow the example set by Amazon Advertising and roll out more ad units that capitalize on the customer data the company is collecting. And look to TikTok to become a social commerce giant. If you thought 2021 was the year of TikTok, you ain’t seen nothing yet.

— Bella Schneider, digital marketing manager

The Creator Economy Gets Real

The creator economy refers to a class of businesses comprising millions of independent content creators and influencers. We are reading more about them partly because apps such as TikTok have given them more power and influence. The creator economy will become even more powerful. That’s because collaboration networks are proliferating. These networks give creators an all-in-one platform to create communities and build influence. In addition, gaming sites such as Roblox and Twitch offer creators opportunities to monetize their work with potential partnerships with brands, and crypto currency sites such as Rally.io make it possible for creators to mint their own currency. The big social networks such as Meta are responding by making themselves more attractive to creators. More businesses will tap into niche networks to partner with emerging creators who are lesser-known but possess tremendous street cred. Big-name partnerships with stars will still thrive, but the social media icons will need to make room for the new kids in town.

— Mark Smith, co-founder

Tech Titans Roar

We hear a lot about the big technology firms facing increased scrutiny from Congress and legislators around the world. But to me the more intriguing story is how the tech titans keep trying to outmuscle each other for advertising revenue, an example being Apple enacting privacy controls to hurt Facebook’s ad business. 2022 will ratchet up the fight:

  • Apple will start leveraging and monetizing the data they are collecting (and not allowing others to collect) in the form of some type of advertising platform. This is the culmination of Apple’s stricter privacy controls.
  • Google will remove more visibility and targeting options in the name of advances in machine learning and automation, thus protecting its core ad business by taking more control of it.
  • An increasing number of platforms will emerge that use first-party data to target and track and savvy advertisers will take advantage of this and diversify their advertising spend
  • Amazon will grow with even more ad units for Amazon Advertising and marketing offerings such as livestreamed commerce for businesses of all size, especially smaller ones. Google and Meta will lose market share.

Unfortunately, we can count on CPCs to rise across all platforms as they attract more businesses competing for ad inventory and keywords. It’s going to be a more expensive 2022, but also a more interesting one with more ad units proliferating.

— Kurt Anagnostopoulos, co-founder

Google Ads Become More Powerful

Given the evolution of keyword matching (now AI-powered to serve ads based on the meaning of a search query), and the simplification of the ad product offerings (as Google deprecating Expanded Text Ads next summer), we will see Google Ads become leaner but more powerful. Advertisers will be forced to rely more and more on Google’s algorithm to drive results – all this, at the expense of reduced control advertisers have over campaign settings (ad content, keyword matching, targeting choices, etc.). I believe the biggest changes will continue to happen on Google’s back end as it seeks to make the algorithm (automated bidding strategies used in ad campaigns) smarter. Thus, we will see increased focus on cookie-less conversion tracking and an expansion of first-party data collection capabilities in Google Ads (i.e., scaling up enhanced conversions).

— Héctor Ariza, digital marketing and analytics manager

Social Media Ad Dollars Get Redistributed

Lush Cosmetics recently said it is quitting Facebook, Instagram, Snapchat, and TikTok over concerns that those platforms have a negative impact on teens’ mental health. (The company will remain active on LinkedIn, Pinterest, Twitter, and YouTube.) Lush said it will happily lose $13 million in sales because of the digital detox. It remains to be seen whether Lush will reactivate the accounts it quit (Lush quit some social sites in 2019 before returning), and of course a big question is whether more businesses will take such a drastic approach. I don’t think we’ll see more businesses take the Lush approach – social media is just too important – but they will shift some of their ad dollars away from Facebook and Instagram. In the past, businesses have remained loyal to Facebook (now known as Meta) because the site is critical to their advertising and marketing strategies. But the whistleblowing activities of ex-Meta employee Frances Haugen have raised the stakes. She asserted that Meta has kept internal research secret for two years that suggests its Instagram app makes body image issues worse for teenage girls. Businesses will monitor what their customers, investors, and employees say about Meta especially in this era of purpose-driven branding. Some will shift their advertising to Snapchat and TikTok while Meta takes the heat for brand safety issues. But this shift may be temporary. Meta will probably mollify brands with some updates to its products to create more brand safety, as it is already doing with its news feed to address concerns over lack of user control over their news feeds. In addition, Meta faces the ongoing threat of regulatory oversight. More accountability will come to Meta in 2022.

— Beth Bauch, director, digital marketing

Contact True Interactive

To succeed in the ever-changing world of online advertising, contact True Interactive. Read about some of our client work here.

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Why Retailers Are Launching Ad Businesses

Why Retailers Are Launching Ad Businesses

Advertising

Best Buy recently announced the launch of Best Buy Ads, a new in-house media company. Best Buy Ads offer a range of ad units including paid search ads, onsite and offsite display ads, onsite and offsite video ads, social ads, and in-store ads. According to Best Buy, Best Buy Ads capitalizes on the fact that Best Buy interacts with its customers three billion times a year. From those interactions, Best Buy learns about the search and shopping habits of its customers. This makes it possible for the retailer to sell ad units that target a specific demographic: people with a strong interest in consumer technology.

Best Buy is the latest retailer to launch an ad business. Other examples include:

  • Walmart Connect, the leading ad business run by a brick-and-mortar retailer.

As with Best Buy, they offer services ranging from display to media buying. They all have one thing in common: they monetize their customer data.

Why an Ad Business Appeals to a Retailer Like Best Buy

An online advertising business is appealing to Best Buy for a number of reasons, including:

  • This is a proven model. The growth of Amazon Advertising (Amazon’s own in-house ad operation) speaks for itself. Amazon Advertising is so successful that Amazon is now challenging Google’s and Facebook’s dominance of online advertising. In light of this, we’ve witnessed a slew of retailers jumping into the ad business. For example, Walmart Connect (Walmart’s ad operation) has enjoyed strong growth.
  • Customer data is a competitive weapon. Retailers such as Best Buy collect a treasure trove of data about their customers, starting with their search and shopping preferences. This data gives each retailer an edge because they can promise advertisers access to a targeted audience with intent to buy. As noted, Best Buy targets consumers in the market for home electronics. By contrast, the recently launched ad platform from retailer Macy’s targets a fashion-conscious consumer. Walmart promises entrée to grocery shoppers and price-conscious consumers. Of course, retailers must know how to mine all this data and then develop attractive ad units. But the data provides a built-in advantage.
  • Retailers’ customer data is getting more attractive to advertisers. Businesses are looking for alternative ways to reach consumers amid the demise of third-party cookies, which are crucial for third-party ad targeting, and the advent of stricter consumer privacy controls on Apple’s iOS, which has also made it harder for businesses to target consumers with ads. With third-party ad targeting across the web threatened, platforms that give advertisers entree to shoppers within retailers’ walled gardens are more appealing. Basically, retailers are using their own customer data to do what Apple and Google won’t do for advertisers anymore.
  • e-Commerce is booming. Online ad businesses in particular are catching fire because of the e-commerce boom. According to S&P Global Market Intelligence, “The e-commerce industry is expected to hold on to pandemic-elevated sales into 2022, with big retailers including Amazon.com Inc. and Walmart Inc set to benefit as consumers stick to new, hybrid shopping patterns.” S&P Global Market Intelligence says U.S. e-commerce sales are on track to exceed $1 trillion for the first time in 2022. Businesses want to reach those shoppers, which creates a demand for online advertising. The surge in online commerce also means more people are using retailers’ sites to search and shop, which creates more valuable customer data that retailers’ ad businesses can monetize. This also means advertising.

What Advertisers Should Do

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement. If your strategy focuses on Facebook and Google, for instance, don’t move your ad dollars over to a retailer network. Remember that Facebook and Google also already offer proven advertising products that capitalize on their vast user base. For example, location-based digital advertising tools help strengthen Google’s advertising services at the local level.
  • Do, however, monitor the effectiveness of your advertising on Facebook and Google amid the demise of third-party cookies and the onset of Apple’s App Tracking Transparency, which includes more privacy controls that may make Facebook ads less effective (which remains to be seen).
  • Work with an agency partner that knows the terrain. For instance, at True Interactive, we complement our history of helping businesses advertising on Google and social media with expertise across retailer ad networks such as Amazon and Walmart.
  • Learn more about the ad products that might apply to you – and those products are evolving. In 2022, more retailers will use first-party data to help businesses create more targeted ads off-site – meaning advertising across the web, as well as via connected TV.

Contact True Interactive

To succeed with online advertising, contact True Interactive. Read about some of our client work here.

For More Insight

Walgreens Doubles Down on Its Advertising Business,” Tim Colucci, May 19, 2021.

Amazon Unveils New Ad Units Across Its Ecosystem,” Kurt Anagnostopoulos, May 4, 2021.

Why Macy’s Launched an Advertising Platform,” Tim Colucci, March 3, 2021.

Walmart Asserts Its Leadership in Advertising,” Tim Colucci, February 8, 2021.