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.

2021 Holiday Ads: Hope and Realism

2021 Holiday Ads: Hope and Realism

Advertising

Ready for some memorable holiday ads? In response to widely reported supply chain issues, some brands have teed up their holiday ads to come weeks ahead of traditional schedules. And as was the case last year, the campaigns are tasked with addressing the elephant that hasn’t left the room: Covid-19 and its lingering effects. If striking the right tone somewhere between hope and realism can be tricky, a few reliable themes — from connection to music, humor, and cheer — are helping brands thread that needle. Here are some examples:

Connection

We may live in divided times, but Etsy’s hopeful Give More Than a Gift campaign for 2021, which highlights unexpected connections, reminds us of our best selves. In one spot, a friendship springs up between two people from different walks of life. The tightly edited ad runs a mere 30 seconds, but it packs a wallop. The e-commerce company’s focus on unique, handmade items figures into the story, and the implicit message — that Etsy’s constellation of DIY sellers may help shoppers avoid the headache of larger retailers with supply chain issue delays — doesn’t hurt the brand, either.

Music and Surprise

The right music is key to a successful ad campaign, and brands have long been incorporating modern interpretations of classic hits in hopes of connecting with shoppers on a nostalgic level. In fact, according to Chelsea Gross, director analyst at research firm Gartner, nostalgia is particularly resonant this year as consumers potentially gather with loved ones after a year or more of pandemic-era separation.

For financial reasons, advertisers don’t always use the original song. It’s also worth noting that employing a cover can also add a unique spin, beyond the song’s original interpretation, to a nostalgic favorite. Consider the spot from Dutch e-tailer Bol.com, which is set to a cover of Cyndi Lauper’s “True Colors.” In the ad, a boy who originally asked for a doll turns the soccer ball he got instead into an imaginary friend. Cue all the expected cozy feelings — but Bol.com is mining a different theme here, and an unexpected twist at the end of the spot gives Lauper’s familiar song added resonance. (Spoiler alert: this kitten has claws!) By subverting expectations — of a familiar song, of a storyline that, at least initially, seems familiar — the brand grabs our attention.

For a brand like Amazon, deep pockets can mean the freedom to use a song in its original incarnation. This year, the e-commerce giant debuts “Hold On” from Adele’s new album 30; the song hits a home run on several levels, playing backdrop to a spot that doesn’t shy away from the lingering challenges people face from the pandemic. The storyline isn’t overtly festive: two women share a quiet connection over their love of birds. But the ad, which is aligned with the launch of Amazon’s Christmas gift shop, covers a lot of ground, addressing mental health, loneliness, and the power of connection in a subtle two-and-a-half minutes.

Humor

Like Amazon, Extra gum isn’t afraid to look at the curveballs life can throw, but it takes a different tack, using humor to lean into some inconvenient truths about the holidays. As Extra spins it, while it’s great to be gathering for the holidays in a way 2020 simply didn’t allow, some time-honored traditions — from passive-aggressive presents to long-winded relatives — remain as tricky as they ever were before the pandemic. The solution? “Chew it before you do it.” In other words, chewing a piece of Extra gum can give that extra moment of pause, and transform a potentially awkward moment into a time of grace and connection. And who can argue with that?

Cheer

Of course, holiday ads for time immemorial have succeeded by tugging on the heartstrings, and a few notable campaigns from 2021 take that approach and run with it. Consider the McDonald’s U.K. ad that introduces us to a little girl and her imaginary monster friend, who bond over the Christmas ritual of leaving out bags of McDonald’s carrots as treats for Santa’s reindeer. Time passes (a cover of Cyndi Lauper’s “Time After Time” plays in the background – apparently 2021 is Cyndi Lauper’s year), and we think the girl has outgrown her joyful friend. But — spoiler alert! — you might need to pull your hanky out. Some friendships are meant for the long haul.

Finally, consider Apple’s spot, which was filmed with an iPhone 13 Pro by the father-and-son team of Ivan and Jason Reitman. The three-minute short follows the efforts of Olive, a little girl determined to keep her snowman buddy alive all year ‘round. An unexpected finale doesn’t quite cue up as expected, but the overall vibe — and a dedication to the ones we’ve waited all year to be with — goes for the feels in a big way, and succeeds.

Contact True Interactive

Looking to navigate the nuances of a complex world and connect with audiences via digital? Contact us. We can help.

Consumer Shopping Trends for the 2021 Holiday Season

Consumer Shopping Trends for the 2021 Holiday Season

Amazon Google Social media

What does the holiday shopping season hold for businesses? We have already heard plenty about the potential problems that a global supply chain crisis will pose. They include product shipping delays, bare shelves, and higher prices. But how are consumers planning to research and buy as the shopping season kicks into full gear? A recently conducted webinar by ChannelAdvisor, “Navigating Online Consumer Behavior: 2021 E-Commerce Trends and Forecasts,” provided some answers.

ChannelAdvisor and Dynata surveyed 5,000 global consumers to learn how they are shopping this holiday season, including 1,000 U.S. consumers. ChannelAdvisor also relied on secondary research from sources such as eMarketer. Here are some major takeaways:

E-Commerce Is Exploding

eMarketer data

 

Chart showing people shopping more

E-commerce has accelerated by two-to-three years as a percentage of total retail sales. ChannelAdvisor says that the accelerated pace will continue for the next few years. That’s because Covid-19 forced more shoppers online. Nearly 60 percent of consumers are shopping online more frequently than before the pandemic, and 32 percent of U.S. consumers have more confidence shopping online than they did before the pandemic. A whopping 58 percent of consumers are spending more time on Amazon.

Key takeaway: businesses should expect the major ad platforms such as Amazon, Facebook, Google, Instagram, Snapchat, and TikTok to integrate advertising and commerce more aggressively. We recently saw Google make it easier for shoppers to find products through visual search and display. TikTok continues to launch new shopping features. It’s important that businesses capitalize on these opportunities to capture revenue in these moments when people are searching and browsing on digital.

Get Ready for a Strong Holiday Shopping Season

A chart showing people shopping online

Holiday shopping is increasing in 2021

More than half of U.S. consumers will shop online more than before the pandemic. By contrast, 38 percent of U.S. consumers said they’d shop more online when they were surveyed in May 2020. And 37 percent of U.S. consumers expect to do more holiday shopping online compared to 2020. Only 6 percent of shoppers will shop less.

This finding is not surprising. We saw that even during the hardest days of the pandemic when the world faced economic uncertainty, consumers were willing to open up their pocketbooks and spend. But as ChannelAdvisor noted, much of that spending happened online.

Key takeaway: it’s going to be a busy holiday shopping season, and savvy advertisers are already ramping up their holiday shopping advertising. According to Deloitte, consumers will spend 9 percent more this holiday season compared to 2020. A new survey from JLL says that consumers plan to spend an average of $870 per person on holiday expenses this year, a 25.4 percent increase from last year. Consumers are ready to shop. On the downside, if the global shipping crisis is as bad as economists say it’s going to be, those consumers may experience the disappointment of product shortages. So advertisers are encouraging people to shop sooner while inventory is in stock.

Amazon and Google Dominate Product Research and Purchase

 

Research online

Purchase online

Amazon is the Number One destination for people to research product: 41 percent use Amazon to research products. Google, though, is a strong second place finisher. Amazon has built strong trust because when people are checking reviews, prices, and product inventory, Amazon gives them one easy place to do all that. During the holiday shopping season, even more consumers will do research on Amazon, and  65 percent will purchase on Amazon.

Key takeaway: capitalizing on Amazon Advertising products is a must if you want your brand to be visible when shoppers are doing deep product research. But don’t shift your ad budget from Google if you’re already a Google Ads customer. A two-pronged approach works best.

Social Media Is More Important for Younger Audiences

 

chart showing Instagram usage

People buying on social

Social is the key research channel for younger audiences. 53 percent of 18-to-25 year olds have researched products on Instagram. 51 percent have discovered products they purchased on social media sites. Facebook remains a strong source of product research for 26-to-35 year olds. Meanwhile, 30 percent of 26-to-45 year olds will do the majority of their holiday purchasing on social sites.

Key takeaway: although social media sites lag far behind Amazon and Google for product research, they index high for Millennial and Gen Z shoppers. Given the popularity of Instagram as a shopping destination, it’s important that advertisers capitalize on Instagram ad products such as Instagram Shop to reach younger shoppers. Essentially, Instagram ad products make it possible for businesses to turn posts and stories into ads. Instagram also makes it possible to create ads across Instagram and Facebook, which sounds very efficient – but remember that what works on Instagram might not be as effective on Facebook because Facebook appeals to a slightly older audience.

For more insight into holiday shopping trends, read a recently published True Interactive post, “How Retailers Can Prepare for the Holiday Shopping Season.”

Contact True Interactive

To maximize the value of your holiday shopping ad campaigns, contact True Interactive. We help our clients create effective online advertising all year-round, including the holiday season, and we understand the nuances of creating effective holiday ad campaigns.

Photo by Jakob Owens on Unsplash

Why Big Retailers Are Ramping up Holiday Shopping Promotions – and What Advertisers Should Do

Why Big Retailers Are Ramping up Holiday Shopping Promotions – and What Advertisers Should Do

Advertising

It still feels a bit like summer in early October, and retailers are already starting to ramp up their holiday shopping promotions:

  • On September 29, Walmart announced its Top-Rated by Kids Toy List, “featuring the must-have toys of the holiday season.”
  • On September 30, Target announced that its Holiday Price Match Guarantee would kick off October 10 (earlier than ever) and that Target Deal Days would be back October 10-12.
  • Amazon quickly responded on October 4 by releasing “Black Friday-worthy deals.”

Why are these retailers getting out in front of the holiday season, and what are the implications for other advertisers?

Digging Deeper in Major Announcements

The announcements require a bit of unpacking.

Target’s Holiday Price Match Guarantee allows shoppers to request a price adjustment on all qualifying items purchased if they go on sale before December 24. This news sends a signal that Target expects shoppers to begin looking for deals earlier in the season.  On the other hand, Target Deal Days and the Walmart Top-Rated Kids Toy list (the largest ever such list by Walmart) are clearly intended to stoke shopper demand for the holidays. As Target announced, “For three full days, shoppers can get a head start checking off their holiday lists with incredible deals on favorite products like Beats, fleece, kitchen gifts and more.”

Amazon made the most overt holiday land grab with its October 4 announcement. The company’s epic-length 3,000-word press release looked like a laundry list of holiday deals and related news, ranging from discounts for “need to have electronics” to a detailed list of gift guides. The announcement was peppered with references to Black Friday – an attempt to gain the upper hand on traditional offline Black Friday events.

What the Announcements Mean

Retailers want to stoke demand now for a few reasons:

  • They want to capitalize on the anticipated surge in holiday spending resulting from pent-up demand for discretionary goods. Buoyed by stimulus checks, consumers have been confounding economists with their robust spending, showing once again how unpredictable consumer behavior can be during the pandemic.
  • Retailers also want to encourage people to buy now before the effects of the global supply chain crisis kick in. The lingering supply chain bottleneck is expected to result in higher prices and product shortages later in the holiday season. Retailers want people to spend now when consumers are more likely to find what they want.
  • Retailers are also following a practice that has prevailed since before the pandemic: extending Black Friday. For the past few years, retailers have been tinkering with the Black Friday format as holiday shopping becomes more multi-channel. Black Friday as an in-store event still matters very much, and in 2021, with shopping returning to pre-pandemic behaviors, we should see the offline Black Friday becoming more popular again. But Black Friday has changed forever: it’s an online event, too, and retailers are no longer constricted to saving Black Friday deals until the day after Thanksgiving.

So, in a sense, bellwether retailers are following a pattern they started in recent years – creating holiday shopping demand earlier – but with a newfound sense of urgency to get out in front of the impact of the supply chain bottleneck.

What Advertisers Should Do

  • Realize that when big retailers launch holiday promotions, they create general consumer awareness of the holiday shopping season. As a result, retailers should expect an uptick in searches for holiday sales and promotions. Now might be a good time to capitalize on that increased search activity to activate your own campaigns.
  • Create a sense of urgency in your holiday campaigns – but don’t overplay your hand. If you expect the supply chain bottleneck to create limited inventory later this season, do get proactive about promoting deals now, and let shoppers know why they need to act sooner rather than later. But be careful with your tone. A “shop now and avoid headaches later” approach could backfire if your inventory levels are not affected as seriously as you thought they would.
  • If you’re an Amazon Advertising customer, optimize your holiday advertising now by maximizing the value of Amazon’s various advertising products, such as Sponsored Ads. Amazon also recommends experimenting with video with shoppable links, Amazon Live, and actionable ads (voice and remote). Amazon raising awareness for holiday shopping deals is like the rising tide that lifts all boats. With increased awareness for holiday deals comes more search traffic on Amazon, and you should capitalize on that.
  • Capitalize on Google advertising products. Inevitably, the increased chatter about the holidays from these big retailers will create an uptick in searches for holiday merchandise online. For example, Discovery ads are designed to show more relevant products in moments where customers are exploring their interests in Google’s feeds.
  • As shoppers respond to the holiday blitz, make sure you are using all tools at your disposal to accelerate the path to purchase. For instance, we’ve discussed on our blog the rise of social commerce options on apps such as Instagram, Pinterest, Snapchat, and TikTok, which make it easier for shoppers to browse and shop with an easy click. Snapchat recently shared a holiday shopping guide with detailed campaign strategies. Snapchat notes that most Snapchatters start planning gift purchases and creating wishlists two-to-three months before Christmas. Snapchat urges retailers to launch holiday ads in October to stay top of mind with shoppers who are browsing for gifts and building wish lists.
  • Manage your expectations – and shoppers’, too. Yes, there will be an uptick in search and shopping behavior sooner than normal. But human nature is not going to change: many people will continue to wait until the last minute to do their shopping. Have a game plan in place to respond to shoppers who experience product shortages (if indeed predictions for the 2021 season play out as expected). Be ready for an uptick in negative reviews, and be ready to respond. Retailers should also be ready to offer top rated alternatives to products out of stock as this example shows.

Contact True Interactive

At True Interactive, we help businesses maximize their online spend all year-round, and we have deep experience managing holiday shopping campaigns online, ranging from campaigns on Google to Amazon Advertising. Contact us to learn how we can help you.

Why Google Is Doubling Down on E-Commerce

Why Google Is Doubling Down on E-Commerce

Advertising Google YouTube

How often do you go shopping on Google? If your answer is “Never,” you’re not alone. Google is feeling the heat from Amazon’s rise as an e-commerce giant. Most product searches begin on Amazon, not Google. Amazon is easily the Number One online retailer, and that’s saying something at a time when e-commerce growth overall has accelerated by five years.  And throughout the past few years, Amazon has been building on all that search and purchase activity to create a gold mine of customer data that it has used to develop a thriving advertising practice. Although Google remains the largest online advertising company, Amazon is coming on strong. All this is why Google announced a major change September 29 to compete more effectively with Amazon.

What Google Announced

Google announced that it is:

  • Making online searching and shopping more visually appealing by emulating the product display features you see on Amazon. For certain items such as apparel, Google will return search results with a product results that page that resembles a visual store, not a list of links and text descriptions.
  • Soon introducing a new way to search visually, with the ability to ask questions about what you see. According to a Google blog post, “With this new capability, you can tap on the Lens icon when you’re looking at a picture of a shirt, and ask Google to find you the same pattern — but on another article of clothing, like socks. This helps when you’re looking for something that might be difficult to describe accurately with words alone. You could type ‘white floral Victorian socks,’ but you might not find the exact pattern you’re looking for. By combining images and text into a single query, we’re making it easier to search visually and express your questions in more natural ways.”
  • Including in search a feature, “Things to know,” that will make it easier to explore and understand new topics. For example, if a person searches for “acrylic painting,” Google understands how people typically explore this topic, and shows the aspects people are likely to look at first though “Things to know.” Google says it can identify more than 350 topics related to acrylic painting in this example.
  • Introducing a new experience that identifies related topics in a video, with links to easily dig deeper and learn more. Per Google, “. . . we can even show related topics that aren’t explicitly mentioned in the video, based on our advanced understanding of information in the video.” Interestingly, Bill Ready, Google’s president of commerce, told the Wall Street Journal that Google “wants to stitch e-commerce across Google’s entire suite of offerings from search to maps to YouTube. Mr. Ready envisions people watching a YouTube video of someone unboxing new apparel and viewers being able to click nearby to purchase the items, or being served an ad on Google Search if they later look for the clothes.”

What Advertisers Should Do

  • Capitalize on Google’s advertising tools that are designed to be more visually appealing. For instance, Google recently rolled out Discovery ads, which are image-rich ads designed for a more “laid back” search experience (more about that here). Google is clearly doubling down on the visual web, and advertisers should expect more visually appealing ad products as it attempts to become a stronger e-commerce player.
  • Make use of more tools that make it easier to connect online searching and shopping. Google isn’t the only company figuring out search and commerce. Instagram is another, as we discussed in a blog post recently. And there are many more apps doing the same thing.
  • Do a gut-check with your organic search team. How well are they aligning content with visual search, for example? How will Google’s “Things to know” feature affect the depth and breadth of content that you provide on your website, Google My Business listing, and elsewhere?
  • Keep your eyes open and your budgets flexible. The online advertising space is getting more competitive and interesting for retailers. We have been blogging about the rise of Amazon Adverting for some time – as well as the growth of advertising services from retailers such as Macy’s, Walmart, and Walgreens. They’re all using their first-party customer data to build online advertising platforms. Depending on your target audiences, they may provide very competitive alternative to Google – an example being Macy’s for fashion-conscious shoppers or Walmart for advertisers whose audience aligns with Walmart’s multi-channel customer. (And we can help you succeed on all these platforms.)

Contact True Interactive

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

Why Streaming Companies Are Embracing Ads

Why Streaming Companies Are Embracing Ads

Advertising

Amazon got all the headlines with the news of its $8.45 billion acquisition of MGM on May 26. But days earlier, HBO Max made an announcement with equally big ramifications for streaming companies and advertisers: the launched of a tiered version in which consumers will pay less for a subscription that includes advertising. The news raised eyebrows. After all, HBO has essentially been known as something of a “walled-off garden”: freedom from advertising has been practically a calling card for the television network since its origination. The new offering is the latest example of a streaming company introducing ads — and a sign that HBO is paying attention to trends and consumer behavior. Let’s take a closer look at the news.

Ad-Supported Streaming Is Gaining Ground

HBO is clearly aware of a shift to more ad-supported services in the streaming realm. And as noted by CNBC, Nielsen data supports the uptick: “In January 2021, 34% of U.S. households that had video streaming capability used ad-supported streaming services, up 6 percentage points from January 2020 . . . That applies both to ad-supported on-demand video platforms and linear streaming.”

The advent of ad-supported services is just the latest chapter in the so-called streaming wars, which have been raging over the last year and a half as media and tech giants rolled out their versions of competitors to Netflix and Amazon Prime. Ad-supported tiers have become part of that contest, as streamers gauge what balance of ads consumers will tolerate — for a lesser fee.

HBO Max’s bid to navigate that balance is HBO Max With Ads, which at $10 a month represents a $5 discount to HBO Max’s ad-free subscription. Even with the discount, HBO Max is still one of the pricier alternatives out there. As CNET observes, “HBO Max’s $15-a-month ad-free pricing goes up against Disney Plus at $8 and Netflix’s cheapest plan at $9. Even among the services with discounted advertising-supported tiers, Hulu and Paramount Plus both charge only $6.”

But Julian Franco, vice president of product management at HBO Max, is confident that consumers will appreciate the dynamic their ad-supported platform creates (if at a higher price point): in Franco’s estimation, viewers won’t be bothered by the ads at all.

In some cases, that’s because even on HBO Max with Ads, there may not always be any. Franco explained that the amount of video advertising one sees — that is, the ad load — may vary depending on what one watches. Programs licensed to HBO Max, like Big Bang Theory, will have ad breaks. But programs that originated on HBO’s regular network won’t feature bumpers or spots during playback. Bottom line: HBO Max estimates that typical ad load for an ad-supported subscriber will clock in at just under four minutes per hour. If this projection holds true, HBO Max will be honoring its vow that it will have the lightest ad load in the streaming industry (NBCUniversal’s Peacock currently holds that crown, with an ad load of five minutes per hour).

Why Are Streaming Companies Introducing Ad-Supported Options?

In part, it all goes back to the streaming wars referenced earlier. More people are online watching content, a phenomenon that really picked up during the online surge of 2020. Streaming companies are competing for those eyeballs — and trying to entice viewers by offering ways those consumers can pay less.

Another factor: it costs a lot of money to operate a streaming service, whether you are producing original shows and movies (like Amazon’s new Lord of the Ring series) or buying rights to someone else’s content. Ads help defray those costs.

What’s Next: A Prediction

Will more streaming companies adopt advertising? Possibly so. But Netflix may not be able to pull it off. Netflix is spending billions to create new content, and the company has gradually increased subscription prices to recoup some of the costs. Netflix does not dare introduce advertising to its 200 million subscribers who are already paying a premium. But offering a lower-priced subscription with advertising may not attract enough subscribers at a time when its customer base is plateauing. I predict that Netflix will be sold to Apple. That’s because Apple has deep pockets and is eager to achieve brand cachet, which it lacks right now.  But Netflix has plenty of brand cachet. I could see Apple buying Netflix but allowing the company to keep its own name. Time will tell. But the day is coming.

What Advertisers Should Do

How should brands respond in this evolving environment? We suggest:

  • Consider the different options available. According to CNET, HBO Max intends to embrace some unconventional ad formats, including “pause ads,” which come up only after viewers have paused playback for at least 10 seconds, or a “branded discovery” option that places a sponsor’s banner at the top of a page of recommendations. Think about what format best serves your brand.
  • Use analytics to monitor the reaction to ads. The industry is still learning how receptive people will be to ads — and if different approaches, such as HBO’s effort to provide a more “high end” ad experience, engender a more positive response.

Contact True Interactive

Eager to learn more about this new world of advertising in the streaming world? Contact us. We can help.

Walgreens Doubles Down on Its Advertising Business

Walgreens Doubles Down on Its Advertising Business

Advertising

In December 2020, Walgreens launched its own advertising business, Walgreens Advertising Group, wag.  Now Walgreens is doubling down on advertising by expanding wag’s capabilities into over-the-top (OTT) services, connected TV (CTV) and traditional linear TV across 100 apps and 10 supply-side platforms, with an inventory of 2.5 billion daily impressions. This development demonstrates a growing trend of retailers using their customer data to provide advertising services.

What Walgreens Announced

Walgreens has touted wag as an effective way to leverage insights from 100+ million Walgreens loyalty members and one billion daily digital touchpoints with customers to create personalized advertising. wag provides businesses access to advertising platforms on Walgreens-owned and third-party channels, with the potential of achieving higher match rates versus the industry standard method of digital media buying. wag provides the ability to reach shoppers across digital display, video, social, streaming audio, email as well as Walgreens digital platforms and stores. On May 17, Walgreens announced that wag will extend its reach into television. According to Walgreens, the new capability consists of:

  • The addition of OTT & CTV inventory accessible via the wagDSP — a proprietary programmatic buying technology that integrates Walgreens customer and transaction data with dynamic creative capabilities and real-time optimization.
  • A first-to-market collaboration with OpenAP, and integration with the OpenID that enables brands to reach audiences powered by Walgreens first-party data as part of their television buys. Brands will be able to collaborate with Walgreens to execute against deterministic audiences now, and closed loop measurement will be in place by the start of the broadcast year.

Inventory is sourced through 100+ apps and 10 supply-side platforms with 2.5 billion+ available impressions daily, including access to inventory from key platforms.

Brands activating against this inventory can do so with all of the same functionality, optimization, and measurement capability as in digital video and display executed through the wagDSP. This enables people based media targeting, with measurement and real-time optimization.

Why the Expansion of Walgreens Advertising Group Matters

This news matters for two reasons:

  • wag’s expansion is part of a broader effort by retailers to capitalize on their own-first party data to provide advertising services. Retailers such as AmazonDollar TreeKrogerMacy’sTarget, and Walmart are all monetizing their first-party customer data by building ad businesses. Each retailer can give advertisers access to different types of consumers. For instance, wag gives advertisers access to consumers in the health and wellness space, and Macy’s is geared toward businesses wanting to reach fashion-conscious shoppers. We expect more of these platforms to emerge as businesses seek alternative ways to reach consumers amid the demise of third-party cookies, which are crucial for third-party ad targeting. With third-party ad targeting across the web threatened, platforms that give advertisers entree to shoppers within retailers’ walled gardens are more appealing.

What Advertisers Should Do

We suggest that advertisers:

  • 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).
  • Learn more about the ad products that might apply to you – and those products are evolving, as the expansion of wag demonstrates. In addition, we recently blogged about how Amazon is creating more ad units. The time may come soon when advertising on the web means constantly capitalizing on walled gardens’ offerings.
  • Work with an agency partner that knows the terrain. For instance, at True Interactive, we help businesses advertise through connected TV, complementing our deep expertise with online advertising on Google, social media, and the retailer networks such as Amazon and Walmart.

Contact True Interactive

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