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

Google Introduces New Privacy Controls – Here Is What They Mean

Google Introduces New Privacy Controls – Here Is What They Mean

Google

Google is upping the ante for privacy once again. At its annual developer conference (known as Google I/O), Google announced a number of chan ges aimed at enhancing user privacy. They include two new tools that give users even more control over their data:

  • Results about the user in Search. With a new tool to accompany updated removal policies, people can more easily request the removal of Google Search results containing their contact details — such as phone numbers, home addresses, and email addresses.
  • My Ad Center. Toward the end of 2022, Google will launch more controls for users’ ads privacy settings: a way of choosing which brands to see more or less of, and an easier way to choose whether to personalize a user’s ads. My Ad Center gives users more control over the ads they see on YouTube, Search, and their Discover feed, while still being able to block and report ads. Users will be able to choose the types of ads they want to see — such as fitness, vacation rentals or skincare — and learn more about the information Googles use to show them to users.

Google elaborated on the release of the new search privacy tool as follows:

When you’re searching on Google and find results about you that contain your phone number, home address, or email address, you’ll be able to quickly request their removal from Google Search — right as you find them. With this new tool, you can request removal of your contact details from Search with a few clicks, and you’ll also be able to easily monitor the status of these removal requests.

Google said the search privacy feature will be available in the coming months in the Google App, and users can also access it by clicking the three dots next to individual Google Search results.

What Advertisers Should Do

The new privacy controls in and of themselves could help advertisers. Why? Because conceivably, users who choose which types of ads they want to see will be more engaged and interested in the ones they do in fact see – which could increase purchase intent. That said, advertisers need to look at the big picture: these developments are another sign that Google is intensifying its commitment to a privacy-first world. And that starts with Google’s depreciation of third-party cookies on Chrome — which is one of the hottest stories in ad tech event though it has not happened yet.

Google will phase out tracking of third-party cookies on Chrome in 2023. And 2023 is coming sooner than you think. The Google Privacy Sandbox projects the following timeline for phasing out third-party cookies:

  • September/October 2022: Google will announce the transition timeline and the actual date when Chrome will retire third-party cookies.
  • November 2022-April 2023: Google will provide insights and guidance for businesses to adjust to the upcoming change; they will publish playbooks and other documentation.
  • May-August 2023: Google will officially retire cookies within Chrome.

It’s important to come up with a transition plan now to measure campaign performance in a world without third-party cookies on Chrome. Yes, Google’s original timeline was delayed – but the 2023 date seems to be holding firm. Contact your advertising partner to ask how they’re managing the transition (at True Interactive, we’re doing the heavy lifting for our clients).

Are you ready?

Contact True Interactive

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

Google Analytics 4: Advertiser Q&A

Google Analytics 4: Advertiser Q&A

Google

If you use Google Analytics, by now you are probably aware that a new version known as Google Analytics 4 is coming. By July 2023, Google Analytics 4 will replace the current version of the popular web analytics service, known as Universal Analytics (UA). This news has sent shock waves throughout an ad tech world that has grown dependent on UA to track and report website traffic. Here are some questions you may have – and some answers:

What exactly is happening to Google Analytics?

UA – the current version of Google Analytics — is going away. UA will stop processing hits in July 2023. That’s because Google is replacing UA with Google Analytics 4 (GA4). If you want to continue using Google to track and report website traffic, you’ll need to transition to GA4. Google actually began to introduce GA4 in 2020, as noted in this blog post. But in July 2023, Google is making GA4 mandatory, as Google said in March 2022. While standard UA properties will stop working July 2023, Universal Analytics 360 properties will receive an additional three months of new hit processing, meaning these will stop working come October 1, 2023.

Why is Google Replacing Universal Analytics with Google Analytics 4?

Google says that GA4 is coming for three primary reasons:

  • Provide more user-centric data. UA is built on a session-based data model that is 15 years old. Google built UA to measure independent sessions, or groups of user interactions within a given time frame on a desktop device. This measurement approach has become obsolete. GA4 does not measure goals by user, only by session. For instance, if someone watches four videos in one session, the interaction can only count as one conversion. By collecting user data as events, GA4 seeks to provide businesses with more accurate insight into user activity.
  • Work across platforms. UA was built for a desktop experience. GA4 is designed to work across platforms, including mobile. According to Google, GA4 provides a complete view of the customer lifecycle with an event-based measurement model that isn’t fragmented by platform or organized into independent sessions. Google cites the example of UK-based fitness apparel and accessories brand Gymshark, which is already using an iteration of GA4 to measure user activity across its website and app. This allows the Gymshark team to better understand how users move through the purchase funnel. Google says that as a result, Gymshark has reduced user drop off by 9 percent, increased product page clickthroughs by 5 percent, and cut down their own time spent on user journey analysis by 30 percent.
  • Transition to a privacy-centric world. Google is under tremendous pressure to adapt to a world in which user privacy is a much bigger priority than it used to be when UA was introduced. GA4 does that. For instance, GA4 4 will also no longer store internet protocol (IP) addresses. GA4 also offers a workaround for when users reject cookies. UA works by setting cookies on a user’s browser when visiting your website. But more people are opting out of sharing their data via cookies. So, UA cannot report on all the people who visit a website. GA4 will rely on a technique known as conversion modeling to provide results in a cookie-less world. Conversion modeling uses machine learning (a form of artificial intelligence) to enable accurate measurement while only reporting on aggregated and anonymized data. GA4 will still collect data from first-party cookies, but conversion modeling makes it possible for GA4 to continue collecting user data when cookies are rejected by users.

In short, Google is changing website tracking and reporting to adapt to a more privacy-centric world in which people use multiple devices to interact with brands.

How does Google Analytics 4 differ from Universal Analytics?

GA4 is a replacement, not an update. It’s a completely new way of tracking and reporting website traffic. The key difference is the adoption of more user-centric data as discussed above. This post from the Google Help Center explains in more detail how the more user-centric data model differs from Universal Analytics. Don’t read it until you’ve had your morning coffee.

There are many other differences too numerous to describe here. For instance, with GA4, you can choose to retain data for two months or 14 months. And GA4 offers custom reporting templates (whereas UA favored the use of pre-built reports).

What will happen to Universal Analytics?

UA will go away. It will not be possible to track and report website traffic with UA as of July 2023 for standard accounts, and October 2023 for UA 360 accounts.

After UA properties stop processing new hits, all previously processed data will remain accessible for at least six months. In the coming months, Google will provide a future date for when existing Universal Analytics properties will no longer be available. After that date, users will no longer be able to see UA reports in the Google Analytics interface or access UA data via the API.

What should I do to prepare for Google Analytics 4?

If you rely on a marketing and advertising agency to manage GA4, it’s highly likely that they are managing the transition for you. Just the same, contact them to understand how they are going to make the transition and how your website tracking and reporting will change. True Interactive uses UA in our client work. We’re doing all the heavy lifting for our clients by transitioning them to GA4.

If you manage GA4 yourself, it’s important to start your transition now. Don’t wait until 2023. For example, right now you’ll need to start building historical data so that you can do a year-over-year analysis in 2023.

In addition, we recommend downloading historic data from your UA account and storing it for future reference before Google shuts off access to it via both the web interface and its reporting API as mentioned above.

Make no mistake: the learning curve is steep. You’ll need to understand how GA4 conducts event reports, conversion reports, and many other details. We recommend that businesses review resources such as:

It’s going to take an effort from an integrated team to pull this off. You’ll need to make this effort a high priority managed with a project timeline to get it right.

Contact True Interactive

To succeed with online advertising, contact True Interactive. We design and develop successful marketing and advertising campaigns and know how to track results, including the use of Google. Read about some of our client work here.

Why In-Game Ads Are Taking Off

Why In-Game Ads Are Taking Off

Gaming

eMarketer recently forecast that U.S. mobile gaming ad revenues will reach $6.26 billion in 2022, up a muscular 14.0 percent from $5.49 billion in 2021. And that’s not all: robust double-digit growth is predicted to continue through 2024. What does this news mean to brands?

What eMarketer Reported

According to eMarketer, the pandemic has given mobile gaming a boost. The most popular device for gaming appears to be smartphones — good news for advertisers, as casual smartphone gamers may not feel the need to pay for ad-free platforms. Media companies have certainly taken note of the inherent opportunities in this arena: consider Netflix, which acquired mobile game studio Next Games and mobile game developer Boss Fight Entertainment. Significantly, the gaming trend appears to be staying strong: eMarketer projects that mobile gaming is poised to reach $7.87 billion in ad revenues in 2024. That’s a total of 2.5 percent of all digital ad spend. Long story short: gaming isn’t going anywhere, and marketers stand to benefit.

The Netflix Effect

It’s likely that Netflix’s deep dive into gaming will boost the in-game advertising market over the next few years. The company also stands to draft a blueprint as to how gaming can revitalize a stagnant, even suffering, brand. Netflix, under tremendous pressure to boost its revenues after reporting a disappointing first quarter of 2022, has plenty of motivation — it lost 200,000 subscribers in the first three months of this year, with a forecasted further loss of 2 million subscribers.

But gaming could help the subscription streaming service find its groove again. As reported by the Washington Post, Netflix plans to make 50 games available before year’s end, some of which may be tied in to shows. The company is hardly starting from scratch, having already dipped a toe into gaming waters by licensing intellectual property or adapting already popular games. But now it’s clear that Netflix will be leaning even harder into gaming—and all the opportunities that will subsequently come their way.

Handle with Care

As exciting as those opportunities may be, it’s important for advertisers to proceed with caution when it comes to in-game ads. As eMarketer notes, gamers are anxious about ads possibly interrupting their play. What format the ads take is part of the issue: while in-game billboards in racing or open-world games may be unobtrusive, the prospect of ads served up between game matches or, even worse, obscuring the screen mid-match, have consumers worriedly gnashing their teeth. To be fair, ads have been part of the gaming experience since gaming first became a thing. But as eMarketer points out, “ads still aren’t baked into the medium the way they are for TV, and advertisers should be mindful of players’ wishes for a non-disruptive experience.”

What Advertisers Should Do

 So, what is the best way for brands to capitalize on the gaming phenom? We recommend that you:

  • Know your audience. Gamers are a diverse bunch. Know their habits, know their passion points. Above all, understand what games your target audience enjoys. You’ll find moms playing games like Home Sheep Home, while 18-to-24-year-olds reliably gravitate to Fortnite. Understand the trends, and who’s where, before attempting to advertise on a gaming platform.
  • Know gaming. Make sure you understand the medium. Furthermore, really understand the game itself. It’s not enough that a game is popular—or even popular with your chosen demographic. Is it a good match for your brand? A game like Doom, well liked if admittedly violent, may or may not be consistent with the messaging your brand hopes to impart.
  • Know your limits—and the limits of your audience. Returning to the point made above about proceeding with caution: make sure that your ads aren’t ruining the gaming experience for your potential customers. Respecting the integrity of a game represents a win/win for gamers and marketers alike.

Contact True Interactive

Eager to learn more about the opportunities gaming—and in-game ads—can afford your brand? Contact us. We can help.

What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

What’s Next for Advertisers on Twitter with Elon Musk as an Owner?

Twitter

Will advertisers leave Twitter under Elon Musk’s ownership? That question is getting bandied about a lot these days. That’s because of widespread speculation that Musk will relax Twitter’s content moderation policies. This, in turn, could conceivably create brand safety issues by making controversial content more prevalent on the app, which has nearly 400 million monthly active users. For example, Advertising Age reported that “Marketers are worried that Musk will reopen the floodgates on uncivil behavior on the platform.” Ad agencies consulted by Ad Age said that their clients are increasingly asking about the risks of staying on Twitter. Here’s what I think will happen:

  • Some advertisers will flee Twitter and never return.
  • Some advertisers will put Twitter advertising on pause but eventually return to Twitter.
  • Most advertisers will do nothing.

The fact of the matter is this: advertisers have shown by their actions that they have a higher tolerance for social media controversy than news media reports might have you believe. We have seen time and again controversies erupt on platforms such as Facebook, Instagram, Twitter, and YouTube. Most recently, Facebook became the target of widespread public scorn after whistle blower Frances Haugen, an ex-Facebook employee, shared internal documents that showed Facebook executives knowingly allowed its algorithm to publish harmful and divisive content on users’ news feeds.

The resulting expose, published in The Wall Street Journal, also sparked speculation that advertisers would leave Facebook. Some did. But most did not. Why? Because the fact that a publisher and aggregator of news content (which is what Facebook does) knowingly shares divisive information was not exactly shocking news to advertisers. Mainstream news media have been attracting audiences by publishing divisive content for decades, long before the internet existed. And they’re doing so today. As a result, advertisers have a higher tolerance for conflict than Facebook’s critics did.

What really hurt Facebook was Apple. Facebook’s parent, Meta, disclosed recently that the company would suffer a $10 billion revenue hit in 2022 because of the impact of Apple’s iPhone privacy controls launched in 2021. Meta’s stock tanked dramatically so as a result. Why? Because privacy controls would likely make ad targeting more difficult on Facebook. It was ad targeting, not a Wall Street Journal expose about the company’s culture, governance, and content policies, that hurt Facebook.

The real concern among advertisers is not whether controversial content will appear on Twitter. The fact is that controversial content already does appear on Twitter. Advertisers are more concerned that their ads could appear alongside controversial content. This is more of an issue with how an app manages its algorithm. YouTube, for instance, landed in hot water recently because advertisers’ content was appearing alongside hate speech, but most advertisers understood then (and understand now) that it’s impossible to stamp out hate speech completely. Many more also understand that controversial content is not necessarily hate speech. These realities are part of being a brand on social media – and they always have been.

Twitter has been down this road before, too, such as when a major hack involving a crypto currency scam embarrassed the platform and cast a spotlight on how easy it is for bad actors to exploit Twitter to commit crimes. Or when the proliferation of trolls and bots threatened Twitter’s reputation. Advertisers were concerned, to be sure, but for the most part they reacted by pressuring Twitter to improve its algorithm as opposed to demanding wide-scale changes in how Twitter operates fundamentally.

My advice to advertisers is:

  • Keep advertising on Twitter if you are satisfied with your results so far.
  • Monitor brand safety closely, but that’s true whether you are advertising on Twitter or any other social media app.
  • Watch where your audience goes. There is a very real possibility that ongoing controversy at Twitter could cause a drop in users. The question is whether your audience will leave Twitter. It’s a question. It’s not a certainty. Work with your agency partner to keep tabs on the situation, but don’t make assumptions based on news headlines.

True Interactive monitors developments on social media all the time as part of being a well-informed partner to our clients. Keep watching this blog for updates.

Contact True Interactive

To maximize the value of your social media advertising, contact True Interactive. Our expertise in this area delivers measurable value to our clients.

Twitter image by Alexander Shatov on Unsplash

Elon Musk image by https://pixabay.com/illustrations/elon-musk-space-elon-spacex-tesla-6222396/

 

What’s Next for Netflix?

What’s Next for Netflix?

Connected TV

Remember when Meta shocked the world by announcing a historic drop in its stock price? Well, Meta has some company now that Netflix realized a massive drop in its own market capitalization after announcing that the streaming service had lost subscribers for the first time in 10 years. The news shook investors, but it also inspired speculation about new directions for Netflix – notably the likely introduction of advertising, a move that Netflix has resisted for years. But times have changed, and now Netflix must adapt or die. Here’s what I think will happen next:

  • Advertising will happen sooner than you think. Netflix said it will take a few years to integrate ads into the platform. But I’m thinking it will take months. The company has endured two consecutive disastrous quarters and forecast another bad one on the way. Netflix is under too much pressure to wait two years. Plus, its audience is receptive: two-thirds of connected TV viewers in the U.S. prefer to see ads if they can pay less for the service, according to a recent survey conducted by DeepIntent and LG Ads Solutions. On top of that, Netflix is already set up to create an ad business. The company is sitting on top of deep first-party data. All Netflix needs to do is partner with an ad tech platform to get an ad business up and running. (The Trade Desk has been circulated as a likely partner.) And watching content on streaming is a pretty straightforward experience: it’s easy to drop in ad spots before or after shows, and during them, just like linear TV. And connected TV offers even more options such as ads appearing alongside the search bar or in the screen menu. Knowing Netflix’s aversion to advertising, I suspect the company will avoid interruptive ads even for a lower-price tier.
  • Ads will get creative. Sure, we’ll see plenty of traditional commercial spots like you see on Hulu. But Netflix has been quietly building a merchandising operation over the past few years. The company recently launched its own digital commerce site to sell clothing tied into its popular shows. Netflix will likely create merchandise licensing deals to feature products from other businesses in its shows, such as Stranger Things. So far, Netflix CEO Reed Hastings has been reluctant to go down this route. But all bets are off now.
  • Netflix will get sold. I don’t think advertising will be a savior for Netflix. True, there is a receptive audience, but is there enough to sustain Netflix’s future? I predict that Netflix will be sold to Apple. Apple launched its own streaming service, Apple TV+, in 2019, and the company is hungry to grow. 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. The most expensive part of owning a streaming service is creating contentNetflix gives Apple TV+ a way to accelerate content development.

What Brands Should Do

The Netflix news is a wake-up call for advertisers to embrace connected TV. The only reason Netflix has a future is because connected TV (CTV) has evolved far enough to allow for ads in the first place. Oh, and guess what? Executives at competitors such as Disney+ are doing exactly what Netflix is doing. Hulu, for one, already figured out how to crack the code with CTV ads.

According to Forbes, a recent study from the Leichtman Research Group estimates that 80 percent of TV homes in the U.S. have at least one connected TV device. That number represents a steady increase from the 57 percent logged in 2015, and 24 percent in 2010.

Predictably, CTV use soared during the pandemic: Forbes also cites a Nielson report, which notes that CTV viewing exploded from 2.7 billion hours during the pre-pandemic week of March 2, to 3.9 billion hours during the weeks of March 23, March 30, and April 6. Even during the week of May 4, when stay-at-home laws eased in some states, CTV viewing remained above pre-pandemic levels at 3.5 billion hours.

These stats are good news for advertisers embracing CTV. So is the fact that CTV allows brands to reach out to specific audiences. As Forbes notes, “CTV’s targeting capabilities are the ‘holy grail’ for advertisers.” Many CTV companies use ACR, or Automated Content Recognition, which collects data that can inform programming recommendations for users and better target ads to niche groups. Although audiences in the era of connected TV may not be as huge as the linear TV days, CTV helps brands better understand and reach their niche market effectively.

Contact True Interactive

Eager to capitalize on the opportunities CTV can offer your brand? Contact us. We can help.

What Does Meta’s Big Move with Horizon Worlds Mean to Brands?

What Does Meta’s Big Move with Horizon Worlds Mean to Brands?

Meta

Meta, the parent company of Facebook and Instagram, has announced that the company will help individual creators generate income in Meta’s Horizon Worlds platform. This is a significant sign that the so-called metaverse will open up ways for people to monetize the metaverse as it takes shape.

What Is the Metaverse?

The metaverse is a shared virtual world where people can work, play, and live through digital twins, or avatars. Aspects of the metaverse are here already: every time we use a digital currency, every time we hang out on Fortnite or Roblox (gaming is currently a big slice of the metaverse), we’re engaging with parts of the metaverse. They’re just not connected seamlessly yet.

Businesses such as Meta aren’t waiting for all the details to get sorted, though: they are staking a claim to this nascent world by building their own virtual worlds.

What Is Horizon Worlds?

So, what exactly is Meta trotting out? Horizon Worlds (formerly Facebook Horizon) is a free virtual reality, online video game that allows people to build and explore virtual worlds on the metaverse. In short, Horizon Worlds is one potential access point into the metaverse via a gaming platform.

Meta first published the game on its virtual reality Oculus VR headsets in the United States and Canada on December 9, 2021. This approach meant that the audience for Horizon World was necessarily limited to people who could afford a virtual reality headset (specifically, Oculus VR). But Meta is now making Horizon Worlds available even if users do not have virtual reality headsets.

What Did Meta Announce about Horizon Worlds?

Mark Zuckerberg said Meta is testing new tools that allow creators to expand their reach—and create some lucrative opportunities—within the worlds they build on Horizon Worlds. In a video, he said, “The ability to sell virtual items and access to things inside the worlds is a new part of [the] e-commerce equation overall. We’re starting rolling this out with just a handful of creators and we’ll see how it goes but I imagine that over time we’ll get to roll it out more and more.”

If there’s anything Meta wants you to take away from this development, that would be:

  • Meta is testing a way for creators to sell virtual items and experiences within their worlds.
  • Meta is also testing a Horizon Worlds Creator Bonus program.

While Meta is currently working with a handful of creators to get feedback on this initiative, the long-term plan is to create an environment in which creators can earn a living in a world of digital goods, services, and experiences. The overall vision is that the metaverse will crack possibilities for entrepreneurs—wide open. And it’s not a matter of creators being thrown into this world without a safety net or guide: a $10 million Horizon Creators Fund, announced last October, is meant to provide resources to Horizon Worlds creators.

The opportunities are certainly compelling: Meta is rolling out a test with a few creators that facilitates the selling of virtual items within their worlds. This might manifest as attachable accessories entrepreneurs create for a fashion world, say, or paid access to a new part of a creator’s world.

Meanwhile, the Horizon Worlds Creator Bonus program, meant for participants in the United States, offers bonuses in the form of goal-oriented monthly programs that reward creators with a pay-out at month’s end. The bonuses honor progress made towards the creator’s goals, and are not subject to fees (read: creators will be paid in full). While rewards may evolve, creators are currently rewarded (in the limited test) for building worlds that attract the “most time spent.”

What Does All This Mean?

This is how we read this news:

  • Horizon Worlds is yet another sign that the metaverse is getting bigger with extraordinary speed. For confirmation, one need look no further than JP Morgan, which says the metaverse is a “trillion dollar industry” in which it acknowledges “explosive interest.” They aren’t just talking the talk: the investment bank has opened a lounge in the blockchain-based virtual world Decentraland. The Onyx lounge, named for JP Morgan’s Onyx blockchain unit, includes a roaming tiger that greets visitors and a portrait of CEO Jamie Dimon, not to mention a suite of Ethereum-based services. JP Morgan’s claim to fame? That it is the first major lender to enter the metaverse.
  • It’s also an example of how businesses are empowering the so-called creator economy, a class of businesses comprising millions of independent content creators and influencers. We’re hearing about creators more partly because apps like TikTok have granted them more power and more influence.

But the creator economy stands to become even more powerful. That’s because collaboration networks are proliferating, networks that 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 brand partnerships, even as crypto currency sites like Rally.io empower creators to mint their own currency.

It’s a rich vein to mine, and big social networks such as Meta are responding by making themselves more attractive to creators (that brings us back to the news about Horizon Worlds and the resources Meta is making available). Going forward, more businesses will tap into niche networks to partner with emerging creators who are lesser-known but possess tremendous street cred. Will big-name partnerships with stars still thrive? Sure, but the social media icons are going to need to make room for the new kids in town.

What Brands Should Do

What does this mean for your brand? As you consider the opportunities inherent in the metaverse, we recommend that you:

  • Remember your audience. Do they care about the immersive worlds that the metaverse makes possible? That is, will marketing and advertising in the metaverse even matter to them—much less reach them? The biggest audience for the metaverse currently skews young, although some brands are making a concerted effort to reach out to older consumers. Ask yourself who your audience is, and if you have the resources and energy to reach out to them if their engagement with the metaverse represents a tougher sell.
  • Reflect on your appetite for experimentation. This is a new frontier that is already evolving. Are you ready to pivot—and pivot again—as conditions change?
  • Learn from businesses that have already found their marketing access point in immersive gaming worlds, which are, as noted, a popular segment of the metaverse.

Contact True Interactive

Want to learn more about the metaverse? Eager to dip a toe but looking for some guidance? Contact us. We can help you map a way in this new world.