How Walmart Connect Is Challenging Amazon Ads

How Walmart Connect Is Challenging Amazon Ads

by Tim Colucci Walmart

The rise of retail media networks continues to dominate the advertising landscape. There are hundreds of them now, offering advertising services built on all the data they collect from their customer online and in-store. Approximately 75 percent of the net retail ad spend in the U.S. is commanded by Amazon Ads. But there are many other impressive retail media networks that are ascending in this highly fragmented industry. Walmart Connect is one of them. Walmart Connect enjoys an advantage over Amazon Ads in one significant way: Walmart Connect can capitalize on data collected from customers shopping both online and in-store.

Within the U.S., nearly 139 million consumers frequent Walmart’s brick-and-mortar stores, website, or mobile application on a weekly basis. As a result, Walmart has nearly doubled the scope Walmart Connect, according to statements made by executives during a call about the retailer’s Q2 results for fiscal 2024. Walmart Connect experienced a 36 percent increase in ad sales year over year in Q2, mirroring the growth in Walmart’s global ad business, including Flipkart in India. Advertising for Walmart’s Sam’s Club brand saw a 33 percent year over year rise.

The growth is credited to a strong demand for sponsored product advertisements, a core aspect of the retail media sphere where Walmart Connect is a competitor. Leadership also recognized the growing appeal of in-store marketing methods. Earlier this year, Walmart said that customers at Walmart stores will soon encounter an increased number of third-party advertisements, including visual ads at self-checkout areas and TV sections, audio advertisements over the store’s radio system, and product samples at designated demo stations.

This move into advertising by Walmart mirrors similar strategies undertaken by other retailers such as Kroger, which recently entered an agreement to install digital smart screens in the refrigerated sections of numerous stores. Similarly, Target has started experimenting with in-store demonstrations and giveaways, like a co-branded “Barbie” event with Mattel, which was held in around 200 stores.

Walmart’s strategy of selling advertising space provides an additional revenue stream, leveraging the company’s vast influence and paving the way to higher-profit ventures. As a major discount retailer, Walmart operates close to 4,700 stores across the United States, with approximately 90 percent of the country’s population residing within a 10-mile radius of a Walmart location.

Executives at Walmart reported that, on average, advertisers see a 30 percent boost in the return on digital ad spending. In May, Walmart brought on a team of third-party partners to enhance marketing creativity and connect with consumers.

Walmart Connect’s ongoing success is indicative of the continued growth in retail media, notwithstanding some advertisers’ dissatisfaction with the fragmented nature of the industry and uncertainty in the broader digital advertising market. As a point of reference, Amazon Ads posted a 22 percent year over increase in ad sales in Q2, amounting to $10.7 billion. Amazon recently announced that it will expand its Sponsored Products ad unit to sites beyond Amazon, including Pinterest and BuzzFeed.

We suggest that advertisers:

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement.
  • Monitor the effectiveness of your advertising on Meta and Google amid the demise of third-party cookies. Retail media networks offer the advantage of tapping into first-party data that is unaffected by the erosion of third-party cookies.
  • 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.

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

Why Amazon Prime Day 2023 Succeeded

Why Amazon Prime Day 2023 Succeeded

by Morgan Reilly Amazon

Are you ready for the next Amazon Prime Day, which will probably happen this fall? Based on the results of the July 11-12 Prime Day, you should be. Amazon reminded everyone that the company is the top dog in e-commerce despite challenges from the likes of TikTok and Walmart. Businesses that prepare for Prime Day properly will benefit.

Amazon Prime Day Results

According to data from Adobe Analytics, the recent two-day event that occurred on July 11 and 12 witnessed a remarkable increase in year-on-year spending, reaching $12.7 billion in the United States, with a surge of 6.1 percent.

During this event, Prime members globally indulged themselves in purchasing over 375 million products, taking advantage of Amazon’s discounted deals and saving an impressive amount of over $2.5 billion.

The average Prime Day spend per order is $56.64, up from $53.14 in the same reporting period on Prime Day 2022, according to data firm Numerator.

What People Bought

Throughout the span of the two-day event, various categories played a significant role in propelling online sales. Notably, appliances accounted for 45 percent of the sales, followed by housekeeping supplies at 28 percent, and electronics at 18 percent. Additionally, there was a noticeable increase in the popularity of apparel, experiencing a growth of 17 percent, and stationery/office supplies, skyrocketing by an impressive 76 percent. These surges were partially fueled by the influx of back-to-school shoppers.

How People Shopped

Consumers exhibited a growing inclination towards adopting flexible approaches in managing their expenditures. Buy Now Pay Later (BNPL) orders experienced a significant surge on both days of the event. On July 11, BNPL constituted 6.4 percent of online orders, resulting in a remarkable revenue of $461 million. This marked an astounding 19.5 percent increase compared to the corresponding day of last year’s Prime Day event. Similarly, on July 12, BNPL accounted for 6.6 percent of online orders, generating $466 million in revenue and demonstrating a notable growth of 21 percent compared to the second day of last year’s event.

Online sales were predominantly influenced by smartphones, accounting for nearly half of the total sales at 46.5 percent. This figure has seen a growth from the previous year’s 43.7 percent, indicating an upward trend in consumer confidence when it comes to shopping on smaller screens. The increase in smartphone-driven sales can be attributed to both the growing comfort of consumers with mobile shopping experiences and the prevalence of last-minute impulse purchases.

“Prime Day has become of one the biggest e-commerce moments of the year, as consumers latch onto major discounts from a number of different retailers,” said Vivek Pandya, a lead analyst at Adobe Digital Insights, in a statement. “The record spending so far shows us that consumers are tapping into their inner bargain hunters, stocking up on specific categories such as electronics and apparel while the discounts remain steep.”

Across major marketing channels, affiliates/partners saw the biggest lift when it came to revenue contribution (up 11 percent). Other major contributors were email (up 10 percent), display (up 5 percent) and social (up 4 percent).

How to Prepare

Here are some tactics advertisers should take to prepare themselves for Amazon Prime Day – and start preparing now:

  • Offer exclusive discounts and bundles. Prime Day is all about deals. So make sure you’re offering discounts that will make your products stand out from the competition. You could also offer bundles of products to give customers more value for their money. Participate in Amazon’s Lightning Deals and coupon promotions to drive increased sales and conversions. These limited-time offers can create a sense of urgency and encourage impulse purchases.
  • Re-examine your search campaigns on Amazon. Given how much Prime Day shoppers seek out deals, are your keywords aligned with what value-based shoppers are looking for?
  • Optimize your product listings. Make sure your product listings are optimized for search so that people can easily find your products. This includes using relevant keywords, clear and concise product descriptions, and high-quality images. Consider using Enhanced Brand Content or A+ Content to provide enhanced visuals and detailed product information.
  • Stock up on inventory. Make sure you have enough inventory to meet demand. You don’t want to lose out on sales (and annoy Amazon) because you’re out of stock.
  • Promote your deals on social media and email. Let your existing customers know about your Prime Day deals by promoting them on social media and email. You could also create a dedicated landing page for your Prime Day deals.
  • Track your results. It’s important to track your results so that you can see what’s working and what’s not. This will help you improve your strategy for future Prime Day events.
  • Do post-Prime Day follow-up. After Prime Day ends, leverage post-event insights and customer data to retarget potential customers and nurture ongoing relationships. Develop post-Prime Day campaigns, including remarketing efforts and personalized offers, to maintain momentum and drive additional sales.

Contact True Interactive

To succeed in Amazon’s world, contact True Interactive. Our experience with Amazon Ads makes us well suited to help your brand succeed all year-round.

Amazon Loses Ground in Social Commerce

Amazon Loses Ground in Social Commerce

by Clare O'Shea Amazon

When it comes to social commerce, Amazon isn’t the only dog in the fight anymore. While Amazon may still be the top product search channel for consumers, it is ceding ground as consumers increasingly turn to social platforms for shopping. In fact, social media is shaping up as a real competitor. 

Less Market Share

Declining numbers tell the story: according to Insider Intelligence, in Q1 2023, 56 percent of U.S. adults started their product search on Amazon, a drop from the 63 percent evidenced in Q1 2022. So where are consumers initiating product searches instead? One need look no further than platforms like Tik Tok, Instagram, and YouTube.

The defection from Amazon is currently a generational phenomenon that skews young: a February 2023 GWI survey reveals that for Gen Z product research, social networks have lapped search engines annually since 2020. In the United States, Gen Z is definitely the biggest group turning to social. As Insider Intelligence points out, 43 percent of Gen Z uses TikTok to search products online. By contrast, only 2 percent of Baby Boomers do so.

Money Talks

When it comes to actually making purchases on social platforms, Gen Z again leads the way. As a recent Capgemini survey points out, influencers introduced nearly 50 percent of Gen Z adults to a new brand or product in the six months prior to the survey’s publication; almost one-third of them went on to purchase that product.

Story of a Social App

Snap’s foray into shopping offers a glimpse into the real challenges Amazon faces hanging on to its share of the social commerce pie. In March 2023, Snap announced the launch of a new business unit, called ARES, to help retailers use—and make money from—AR and AI shopping tools.

According to The Verge, AR Enterprise Services (ARES) will furnish retailers with a suite of tools that will make it easy for consumers to virtually try on products like clothing, sunglasses, and shoes  — from home. On a practical level, Shopping Suite features allow users to shop and make purchase decisions just as they might in a brick-and-mortar store. For example, a shopper can upload a photo of themselves, then see how a product looks on them, in real time, at home, with that fresh cup of coffee still hot from the kitchen on hand.

Other ARES tools provide recommendations, based on body size and shape, to help ensure shoppers get the right size and fit on the first try. The goal: reduced return rates, which translates into a win/win for both consumers and retailers. Finally, a 3D Viewer tool allows shoppers to examine products from different angles — again, from the comfort of home. According to Snap, more than 300 customers, including Gobi Cashmere and women’s clothing/fashion retailer Princess Polly, have embraced various Shopping Suite features.

More to Come

In the face of shopping tools such as those touted by Snap, Amazon will likely continue to feel the squeeze. TikTok appears to be a particularly strong competitor for the tech behemoth. As a February 2023 Bizrate/Insider Intelligence survey indicates, nearly 20 percent of U.S. adults aged 18 to 34 shopped (and dropped cash) on TikTok in the past month.

And the prediction is that this shopping trend will only intensify: Insider Intelligence forecasts that TikTok will enjoy an uptick in social buyers in 2023—a jaw-dropping 9.6 million, in fact. That’s more than the net increase of Facebook, Pinterest, and Instagram combined. 

All This Despite the Drama

Advertisers are certainly paying attention. And even though there’s been talk of a straight-up ban of TikTok, marketers are still spending there. As Ben Jankowski, the former head of global media at Mastercard Inc., shared with The Wall Street Journal, “A lot of marketers are getting really good value out of TikTok and if something is performing really well, marketers are typically super slow to try to find alternatives.” And TikTok, by beta-testing search ads, is making it hard for advertisers to ignore the promise inherent in the platform’s 150 million American users.

Contact True Interactive

If Amazon is currently being invited to share the wealth when it comes to social commerce, that only means more opportunities for marketers to explore. Eager to get a better handle on social shopping? Contact us. We can help.

Image source: https://unsplash.com/photos/YddMIRck34I

 

2023 Advertising and Marketing Predictions

2023 Advertising and Marketing Predictions

by Kurt Anagnostopoulos Advertising

Gather around advertisers, pull up a comfortable chair, and take a look at our advertising and marketing predictions for 2023! We take on some big topics, ranging from the rise of AI to the impact of the economic downturn. Oh, and TikTok and Twitter, too. Check out our predictions, and let us know yours!

The Economic Downturn Will Present an Opportunity

— Kurt Anagnostopoulos, co-founder

This is a time for companies to make smart decisions about their marketing spend. We’re clearly in an economic downturn. Over the next six months, the downturn will intensify although not to the extent of the Great Recession of 2008. When downturns occur and uncertainty happens, inevitably some businesses scale back on their marketing spend. History has demonstrated time and again that during lean times, the cost cutters lose out to the businesses that continue to invest in their brands. Companies that stay the course will come out the other side of the recession ahead. If you are smart about how you market and price yourself, you can leave your competitors behind when times are tough. It’s not necessarily about doubling down on marketing, and it’s not about cutting at the other end of the extreme. It’s about spending wisely.

A mentality of spending wisely could hurt the major ad platforms such as Google and Meta. They’ve become more expensive. With advertisers seeking to spend more wisely in 2023, Google and Meta might price themselves out of the running in favor of platforms that deliver better CPCs and performance for the money. An agency such as True Interactive can help businesses navigate the landscape by leveraging platforms in a more cost-effective manner.

The water is too murky to see too far out beyond the next six months. We need to see how things are going to play out for the second half.

Artificial Intelligence Will Need People More Than Ever

— Mark Smith, co-founder

You cannot spend a minute on LinkedIn these days without seeing someone talking about ChatGPT, the generative AI tool that makes it easy to do everything from write content to code. It’s understandable that ChatGPT has gained so much attention. OpenAI released the tool publicly in November 2022 and made it easy for anyone to use it. The public responded. But ChatGPT is just one in a growing number of AI tools being used to do everything from manage customer queries to create royalty-free music. Right now, a number of executives are experimenting with these tools to do the heavy lifting for them – the writing, image generation, and so on. But soon, the novelty will wear off. And everyone will realize what we know already: AI cannot do your work for you. People need to be involved managing AI like any other technology. If you use Google’s myriad advertising tools as we do, you likely understand. Our experience has consistently shown that automated ads powered by AI underperform without people involved to monitor and modulate them when necessary. The same is true of generative AI. These tools are slick, but they make mistakes, and they are notoriously biased. They are nowhere near the point of being self-sufficient. In 2023, some businesses will learn the hard way that AI alone is not the answer to making smart investments in digital marketing. They’ll realize that people matter more than ever.

Google Ads Will Get Costlier

— Beth Bauch, director

2023 could prove to be challenging for businesses highly invested in Google Ads. I anticipate more automation by Google, resulting in less control for marketers.

One of the most common suggestions in the “Recommendations” tab in the Google Ads platform is to convert keywords to “broad match,” away from the more traditional “exact and phrase match.” Exact and phrase match keywords are meant to only match to searches that contain your keyword, making search queries highly relevant. Broad match keywords allow your ad to show on searches that are related to the meaning of your keyword and can include searches that do not contain the keyword terms.

While we have seen some success when testing broad match keywords with Googles automated bidding strategies, we have also seen some significant failures resulting in high spend and poor conversion rates. So, you need to proceed with caution when using broad match. One of the ways we improve the quality of search queries is by adding negative keywords to prevent our ads from showing on searches that are irrelevant.

However, whereas in the past we had access to view all search queries matching our keywords, Google now limits that visibility, only showing the top search matches. This makes it more difficult to block irrelevant traffic resulting in more spend on searches with low conversion rates.

And poor-quality traffic is very costly, especially as we have seen significant increases in the cost-per-click (CPC) of both brand and non-brand keywords in 2022 – as high as 50 percent increases for brand terms alone year over year. For some clients, we saw rising CPCs even though we were not seeing an increase in competition on brand keyword bidding when reviewing the Google Auction Insights report. This is an indication that Google has raised the base price for participating in a specific auction, regardless of competition.

As Google looks to rebound and increase its profits, I expect to see even higher advertising costs for Google Ads in 2023.

TikTok Will Extend Its Influence

— Bella Schneider, senior digital marketing manager

With the increasing popularity of TikTok, I predict that the brand will expand and improve its ads manager to be more comparable to Facebook Business Manager. Currently the platform is lacking in a few areas, and if TikTok is to compete with some of the larger social channels, then it will need to make adjustments to allow for easier advertising on the platform.

Meanwhile, thanks to TikTok, I predict the world of video will dominate the advertising space. More and more video content is starting to look and feel similar to the videos displayed on the TikTok native platform. Whether it’s dances, trends, or challenges, I predict that advertising will shift towards this style of video content.

Does Twitter Have a Future?

— Max Petrungaro, account manager

I have a difficult time seeing advertisers return to Twitter as long as Elon Musk is at the helm. When Musk bought the company, things immediately started poorly with most of Twitter’s top advertisers putting their ads on pause or stopping outright. In December 2022, the situation for Twitter deteriorated, with advertising spend being slashed by more than 70 percent. Twitter tried to combat this by offering incentives to the companies that would keep advertising, but I do not believe that this will be enough to overcome the polarization that Elon brings to the table.

With most of its revenue coming from advertising, and top spending advertisers not showing ads and/or slashing budgets, there may not be a Twitter by the time 2023 is over. As long as Elon is associated with Twitter, I believe that more advertisers will start to focus their advertisements on other popular platforms, like TikTok.

Customer Data Platforms Will Have a Big Year

— Héctor Ariza, senior manager

As the push for tighter data privacy in the digital world gains momentum, I expect 2023 to be a big year for customer data platforms (CDPs). With stricter data privacy regulations being imposed by governments around the world, and the imminent cookie-less era looming, companies and advertisers are already exploring privacy-enhancing technologies in their search of a more secure, yet accurate way of tracking user activity online.

Still, whatever the alternative to cookies and existing tracking methods may be, it will likely rely heavily on data aggregation/modeling. Thus, first-party data will become ever so more important in the digital advertising world. CDPs allow companies to manage what data is used, where it is used and how it is used more easily. These systems also help with data consistency across marketing/advertising platforms and reduce the risk of mishandling customer data.

Retail Ad Networks Will Lean into Mobile Even More

— Tim Colucci, vice president

One of the biggest stories in advertising in recent years is the rise of advertising networks managed by retailers ranging from Amazon to Macy’s to Walmart. Amazon’s own ad business has become so big that it is challenging the Google/Meta duopoly. These networks have succeeded because they tap into first-party data shared by people searching and shopping on their sites. The next phase of growth will happen when they more effectively integrate consumer shopping data from physical stores into the first-party data they use to sell targeted ads. This is why retailers that operate physical stores and ad networks will invest more into their mobile apps. With self-service mobile apps, in-store shoppers give retailers data about their interests in real time in a faster and more efficient way than they do by having their purchases shared via point-of-sale technology. Look for retailers to make it easier for consumers to search and purchase on their apps – and for advertisers to run ads via self-service such as sponsored listings. Walmart has an edge on most retailers in that regard. Given Walmart’s influence and resources, I expect the company will lean into its competitive advantage while Target tries to play catch-up.

Contact True Interactive

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

How Retailers Can Succeed on Amazon during the Holiday Season

How Retailers Can Succeed on Amazon during the Holiday Season

by Morgan Reilly Advertising

By Tim Colucci and Morgan Reilly

It’s a challenging time to be a merchant selling products on Amazon. In October, Amazon’s vaunted Prime Day II sale underperformed according to analysts’ analysis. And then Amazon forecast its Q4 retail sales to be $140 billion to $148 billion in the fourth quarter, far short of analysts’ average estimate of $156 billion. Meanwhile, Adobe Inc. forecast that US e-commerce sales in November and December will rise just 2.5% from the prior year.

All of this is because consumers are more price conscious amid inflation and fears of a pending recession, so they will likely spend less.

Independent sellers on Amazon’s website, who account for a majority of unit sales, are bracing for a challenging holiday season in the run-up to Cyber Week. Many of them advertise their products on Amazon via Amazon Ads. How should they adapt their approach if at all?

Here are some tips:

1 Don’t Let Prime Day Results Spook You

Klover, a company that analyzes real-time commerce and financial data, found that households spent around 40 percent less during the October event compared with the July Prime Day. But merchants were constrained by Amazon’s ground rules for selling on Prime Day II, which prohibited vendors from featuring top discounts on both October Prime Day and Cyber Week. So, many merchants likely were hesitant to feature their top discounts/promotions because they needed to save them for Cyber Week. Also, many retailers might not have been prepared to have inventory ready for two Prime Days (July and October) and Cyber Week — and in those cases, they are likely holding out for Cyber Week.

2 Focus on Value, Not Price

As a partner to advertisers this holiday season, our own experience indicates that the lowest cost item isn’t necessarily the most popular. So far we’re seeing traditionally popular sellers are doing well. Consumers are willing to pay for what they really want. They’re willing to trade down for a lower-cost alternative, but that doesn’t mean they’re going for the cheapest items on the menu. Beware inventory dumping, which burned many businesses on Prime Day. During the inflationary times we’re living in, price-conscious shoppers are less likely to buy something extra just because it’s on sale.

3 Consider Sponsored Brands and Sponsored Display in Addition to Sponsored Products

For many merchants, Amazon’s Sponsored Products ad unit is the bread-and-butter of their ad spend. Sponsored products are used to promote a single product and take the consumer directly to the product page. Additional creative such as images and text are not needed, making sponsored products the simplest ad to set up. Merchants use keyword targeting to match products to a consumer’s search and show ads on the search results page or product detail page. 

Amazon Sponsored Products

Sponsored Brands allow for multiple products or titles to be promoted together using a custom headline and logo. Consumers are taken to a product page if they click on a product, or to a designated landing page if they click on the image or ad text. Sponsored Brands are good for driving awareness, in addition to sales. For example, advertisers can pair new or seasonal items with a related top seller in an ad to increase visibility in other product offerings. Or if a seller has multiple versions of the same product, using Sponsored Brand ads showcases the variety available within a single ad.

Amazon Sponsored Brands

Sponsored Display, on the other hand, makes it possible to engage with shoppers on and off Amazon with self-service display ads. Advertisers can engage audiences browsing specific detail pages, on the Amazon home page, on Twitch (owned by Amazon), and across third-party apps and websites. Amazon says that on average companies that use Sponsored Display see up to 82 percent of their sales driven by new-to-brand customers.

 

So, why do Sponsored Brands and Sponsored Display matter? Because the 2022 holiday season is more competitive. As Amazon noted in its earnings forecast, shoppers are spending less. They’re choosier. So, advertisers have to work harder at the awareness and consideration phases, which is where Sponsored Brands (for consideration) and Sponsored Display (for awareness) can be especially useful by showcasing more of a product’s features on and off Amazon.

4 Know Your Cyber Week Strategy

Today merchants everywhere (whether on Amazon or not) need to manage their holiday advertising spend against an increasingly complex set of choices: Black Friday, Cyber Monday, and now Cyber Week (Thanksgiving Day, Black Friday, Small Business Saturday, Super Sunday, and Cyber Monday).

You do want to fund your advertising for all of Cyber Week, but some days are more appealing than others depending on what you sell. Cyber Monday remains huge, especially the peak shopping evening hours. Cyber Monday will likely loom very large in 2022 as shoppers hold out for the best possible deal.

Each day a retailer gets closer to Christmas, sales will inevitably taper off, off, but retailers should keep placeholder budget in place up until the last day free shipping is possible.

Contact True Interactive

True Interactive has deep experience helping clients plan and implement holiday shopping campaigns online, and this includes the use of Amazon Ads. We can help you, too. We understand how to create nimble search campaigns and multi-channel ad outreach to target consumers with the right message at the right time. Contact us to learn more.

Why the NFL on Amazon Prime Is a Victory for Connected TV

Why the NFL on Amazon Prime Is a Victory for Connected TV

by Tim Colucci Amazon

For decades, watching NFL games on television has meant gathering in front of a TV set and watching a game on one of the major networks. NFL games have been events that vanquish the competition. Featured programming such as Sunday Night Football, Thursday Night Football, and Monday Night Football have dominated viewer ratings. All of this is still the case. But how we watch football is changing.

On September 15, the NFL officially entered a new era of television broadcasting when the Kansas City Chiefs and Los Angeles Chargers took the field for Thursday Night Football. Instead of televising the game on an established linear TV network, the NFL streamed the match-up on Amazon Prime as part of a $13 billion, 11-year deal with Amazon.

The game marked the NFL’s official embrace of streaming. It also meant that to watch TNF going forward, football fans would need to sign up for Amazon Prime, which is Amazon’s premium service costing $139 annually. And so far, it looks like fans are willing to pony up. According to an internal Amazon memo, the September 15 broadcast drew a record number of Prime sign-ups for a year-hour period.

Given the popularity of the NFL – easily the most dominant brand on TV based on viewer ratings – the streaming agreement has significant ramifications for advertisers. Notably, this is a victory for connected TV, which means watching TV content through a device such as Roku or Amazon Fire. Many people refer to connected TV as over-the-top (OTT) TV, which refers to streaming content directly over the internet instead of cable, broadcast, and satellite television platforms. Although technically the two terms differ – with connected TV referring specifically to the device people use to stream content – for all intents and purposes, they are the same. Whatever you want to call it, connected TV has arrived: streaming is now more popular than cable. It’s no longer optional for businesses to have an OTT advertising strategy.

Connected advertising is similar to linear TV advertising because both formats rely obviously on video. But connected TV is different in many important ways. For one thing, advertisers need to understand how to create video content that will reach viewers across a variety of viewing devices in addition to TV screens, and connected TV ads are competing with multiple content streams. (You can watch TNF on a laptop, mobile phone, or gaming console with multiple screens open.)

And each streaming service and connected TV device (ranging from Amazon Fire to Roku) offer their own ad units. For example, Amazon Ads, which is Amazon’s fast-growing advertising business, offers ad units such as inline ads (which appear as selectable rows in each major browsing section of Fire TV) and feature rotator (a carousel-like ad placement appearing above the fold of the screen).

Ahead of the launch of TNF on Amazon Prime, Danielle Carney, Amazon Ads’ Head of NFL Sales, said:

We’re offering myriad opportunities to get involved with TNF, catering to brands’ range of needs. Our premier sponsorships give advertisers the ability to elevate their brands during the pre-game, pre-kick, halftime, and post-game shows. But that’s not all. We’re continuing to innovate and explore other potential sponsorships and packages that will enable brands tell their stories in unique ways through our surround, alternate feeds, and ancillary programming. Our newly built creative sports team will help customize the experience for our partners.

Outside of sponsorships, brands can use Streaming TV ads to reach fans throughout games on Prime Video and Twitch. Like our sponsorships, these video ads are backed by Amazon’s first-party insights, bringing more value and insight into campaign performance for brands.

To succeed, though, Amazon Prime needs to deliver viewing numbers to advertisers. Reportedly, Amazon has told advertisers that it expects to see nightly viewership of about 12.5 million people for its inaugural season of TNF. We’ll soon see. Amazon agreed for Nielsen to track ratings for TNF, and ratings for the September broadcast are still forthcoming.

Amazon Prime also needs to deliver a desirable experience. Amazon promises alternative ways to watch TNF, including Dude Perfect, a popular trick-shot comedy group. Amazon Fire TV and Alexa are bringing new features to NFL fans as well, such as trivia and real-time access to statistics (which should appeal to Fantasy Football devotees). Early fan reactions to the September 15 broadcast were mixed, and it looks like Amazon has some technical issues with content buffering to fix. Of course, no one can predict the quality of an actual NFL game, but Amazon can certainly deliver on the overall experience. Let’s see how Amazon adapts.

The broadcast is also significant for another reason: a victory for first-party data, which is the information that businesses collect directly from their customers. Amazon will use first-party data to sell targeted ads to help drive revenue for the games. This is huge. Right now, third-party audience data is withering away thanks to Apple’s and Google’s privacy measures. Businesses that figure out how to monetize first-party data enjoy an enormous advantage. Amazon has already become the third biggest ad platform in the world (behind Google and Meta) by using first-party data to sell targeted ads. The ascendance of first-party data is one reason why retailer-based ad networks have become so popular.

Bottom line: what is your advertising game plan for connected TV?

Contact True Interactive

To succeed with connected TV advertising, contact True Interactive. We have deep experience with this format.

How Apple Will Grow Its Advertising Business

How Apple Will Grow Its Advertising Business

by Tim Colucci Apple

Apple changed the advertising industry when the company launched an important privacy control in 2021, Application Tracking Transparency (ATT).  ATT asks iPhone users to decide whether apps can track them across other applications and websites. After the introduction of ATT, 62 percent of iPhone users opted out.

This has created a problem for advertisers and ad tech platforms such as Meta that rely on the ability to track user behavior across the web in order to serve up targeted ads to them. Without tracking user behavior via third-party cookies, their ads are less personalized. Meta said that ATT would cost the firm $10 billion in revenue in 2022. Apple, for its part, justified the new privacy control as taking a stand for consumer privacy.

Well, we now know Apple had something else in mind with ATT: taking a stand for Apple’s advertising business.

As Bloomberg reported recently, Apple is now earning $4 billion in revenue annually by selling ads on its devices, and the company plans to grow that amount aggressively. Granted, $4 billion is a far cry from the $209 billion that Google pulled down from advertising in 2021, but Apple’s newfound focus on ads sure casts its consumer privacy push in a different light.

How Does Apple Earn Ad Revenue?

Apple makes money selling ads on spaces that people see all the time on their iPhones and connected TVs as they navigate their screens to download apps, read the news, and watch content. Those include:

  • The App Store, as shown here:

Apple Ads

  • Apple’s own News and Stocks apps.

The additional ad revenue will come from:

  • The Today tab (the home page of the home page of the App Store, which includes content ranging from App of the Day to Game of the Day).
  • The You Might Also Like section of the App Store (this is found at the bottom of the App Store).
  • Third-party app download pages.

Does ATT Apply to Apple?

How will Apple sell targeted ads? By collecting first-party data, meaning the information that users of Apple devices cough up to Apple whenever they use the App Store, News and Stock apps, and so on. And, by the way, Apple will not make it easy for users to opt out of having their data tracked. You can disable the ad personalization feature, but you have to look for it under Apple Advertising in the settings app’s Privacy & Security menu. There is no pop-up menu asking you if you’d like to have tracking disabled as is the case with ATT, as shown below:privacy noticeBut shouldn’t ATT also apply to Apple? Not in Apple’s view. According to Bloomberg:

You may ask then, why don’t Apple apps have to ask permission to track users via a pop-up message? That’s what happens with other apps under ATT.

The reason, Apple says, is that the system “does not follow you across apps and websites owned by other companies.” That’s what ATT is designed to prevent. If a third-party app doesn’t track across outside apps and websites, it also doesn’t need to show a pop-up.

The “we are exempt from our own policy” rationale is how Google justifies its plans to kill third-party cookies on the Chrome browser. Google apps such as YouTube are exempt because technically they collect first-party data, not third-party data.

It’s easy to connect the dots and see what’s going on here: by attacking third-party cookie tracking, Apple bolsters its own ad program, which relies on first-party data collection.

Apple’s ad business is far too small to threaten the lead enjoyed by Amazon, Google, and Meta. But Apple has the muscle and money to grow its business quickly. ATT was a declaration of war.

What Advertisers Should Do

  • Understand the big picture. There is no going back: tech firms such as Apple and Google are undercutting the value of third-party cookies. Accept the reality that as third-party cookies crumble and technology companies enact privacy controls, your ads will be less targeted than they were. This does not mean you should stop advertising online. Online advertising remains the most efficient and cost-effective way to reach your audience. At the same time, first-party data is more valuable than ever to advertisers as a means to creating targeted ads. Consider ad platforms such as Amazon Advertising and Walmart Connect, which give businesses entrée to a vast base of customers who search and shop on Amazon and Walmart. True Interactive offers services on both platforms in addition to our longstanding work on Google, Bing, and other platforms. Learn more about our services with Amazon Ads here and Walmart here. Apple and Google cannot undercut what these companies are doing.

True Interactive can help you navigate the ever changing world of consumer privacy and advertising.

Contact True Interactive

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

Lead image source: https://pixabay.com/photos/apple-inc-mac-apple-store-store-508812/