U of Digital Newsletter - 10/17/24 (premium)

October 9th-October 16th // Estimated Reading Time: 12 minutes

Below is a roundup of last week’s notable industry news, with summaries and our opinions. Two fun top stories to unpack in this edition, starting with Sovrn going SaaS…

Check out the recording + deck from U of Digital’s LIVE LEARNING EVENT: TikTok Ban? Google Breakup? Where Will Ad Budgets Go?

In this session, we covered:

• Just how much money could be up for grabs?

• How should advertisers and agencies think strategically about re-allocating their ad dollars?

• If a bunch of money goes up for grabs, which platforms are likely to be the biggest winners? How can you position your platform to be a winner?

With special guests Brian Wieser, CFA and Olivia Morley of Madison and Wall. CLICK HERE TO ACCESS.

Top Stories 👁️ 

To Reduce The Ad Tech Tax, Sovrn Expands Its SaaS Pricing Model 
Source: AdExchanger
October 14th, 2024

Summary: In a bid to drum up more business from small publishers, supply-side platform (SSP) Sovrn is offering flat CPM pricing based on how many impressions a publisher auctions programmatically through Sovrn’s header bidding tool called “Ad Management”. In comparison, other ad networks and sell-side vendors charge a percent-of-media fee. This pricing applies only to impressions that are won through its header bidding tool; SSP fees will kick in for impressions won through Google Ad Manager. 

Sovrn’s savings translate to about 7 cents per impression auctioned via Sovrn’s SSP, according to the company. But the company says the savings aren’t the only draw. Publishers also get self-serve access to Sovrn's header bidding optimization tools, which include A/B testing for multiple wrapper configurations and the ability to consolidate auctions into one page-level auction. Initial testing of some of these features resulted in 10% greater yield from publishers' programmatic auctions.

Opinion: There’s a race to the bottom in supply-side ad tech. You know value is being created when companies launch new innovative, new products. You know value is being commoditized when companies launch gimmicky pricing schemes to try and steal market share. 

Of course, Sovrn has done their math; this pricing gimmick likely won’t hurt the company’s revenue or valuation much at all. They are probably just exchanging immediate revenue upside for more long-term, stable revenue.

For the ecosystem, this pricing gimmick generally makes business sense for two reasons: 

1. Publishers need every bit of savings they can get right now and so they’re probably more open to exchanging other “things” (like long term commitments) for dollars and cents.

2. Buyers are looking for ways to cut their “ad tech tax” and have more of their dollars go towards working media. 

It’s smart for the company to zig while the rest of the industry zags. That will surely open up pockets of opportunity. Regardless, the point remains: no new value is being created here, it’s simply being redistributed. As such, we don’t expect this to create a windfall of business for Sovrn or fundamentally change the economics / pricing models of the ad industry. 

Here is some helpful perspective on the history of SaaS pricing in media from Terry Kawaja of LUMA Partners:

DOJ, NCIS ask ad executives about brand-safety companies 
Source: Marketing Brew
October 11th, 2024

Summary: The Department of Justice and the Naval Criminal Investigative Service (NCIS) appear to be looking into some of the brand-safety problems highlighted by ad industry research firm  Adalytics. The firm has dropped a string of bombshell reports alleging that YouTube collected kids' data and Google placed ads on sanctioned Russian and Iranian websites on behalf of various advertisers, including several government agencies and military branches like the US Army and FBI. 

Caught up in the mix are the verification companies that are paid to help brands detect fraud and ensure that their ads don't appear alongside offensive content, including Integral Ad Science and DoubleVerify. Both companies have been called out in Adalytics reports, including one over the summer that found that ads appearing adjacent to racist and sexually explicit content which contained code from these brand-safety providers. Both Integral Ad Science and DoubleVerify have disputed the reports as misleading and flawed, but that hasn't stopped some industry players from criticizing the brand safety and verification vendors for failing to innovate their capabilities in lockstep with changing market conditions. 

Opinion: We’ll just go ahead and say the quiet part out loud:

Other Notable Headlines ✍️

Connatix And JW Player Merge To Create A One-Stop Shop For Video Monetization - Say hello to JWP Connatix. That's the new, interim name of the entity that will unite Connatix and JW Player. This potential merger was talked about last summer, but now it's a done deal. The companies complement one another: JW Player offers a SaaS-based video player and ad sales for broadcasters and media owners, while Connatix has a supply-side platform (SSP) with buy-side integrations, a video ad server, and contextual ad platform. Combined, JW Player and Connatix reach more than 1B monthly unique users and deliver about 30B video plays. Bringing the two together creates a vertical merger that will help the combined company sell content-powering tech (video player) and ad monetization tech (SSP) to the same customers (publishers). For example, Vizio uses JW Player for ad delivery on WatchFree+, its streaming service, but now JWP Connatix has an opportunity to upsell Vizio on more demand and monetization through Connatix's tech.

PayPal enters the ads game, led by an architect of Uber's $1 billion advertising business 🔒- The new PayPal Ads unit will let brands run ads across the PayPal, Venmo, and Honey properties beginning this year. In 2025, PayPal will offer a commerce-media ad network that will help brands buy ads from more than 30M merchants using its payment systems. PayPal Ads will tap into its massive transaction data set and use base, which includes 429M active accounts. Mark Grether, who was hired earlier this year to run the business and previously led Uber's ad business, has been busy. PayPal plans to branch out into video ads, develop self-service ad capabilities, and expand PayPal Ads internationally.

Roku launches shoppable ads with Instacart - A year after joining forces through a data-sharing partnership, Instacart and Roku are expanding their work together. The companies have created new ad units that allow Roku users to scan a QR code which takes them to Instacart's platform to buy products. Brands can also run shoppable ads on Roku's home screen. The companies say that together they can offer brands better CTV targeting based on Instacart's purchase data. These shoppable ads also helps brands easily track how many viewers saw their ads and took action. 

Google's share of the search ad market could drop below 50% for the first time in a decade as AI search engines boom 🔒- EMarketer predicts that Google will no longer control the majority of the search advertising market next year. Blame the shift partly on AI tools such as OpenAI's ChatGPT and Perplexity AI, which are able to quickly answer questions using large language models, and partly on the rise of platforms like TikTok and Amazon. Amazon is projected to control 22.3% of the search advertising market this year, with a 17.6% growth rate. ChatGPT reached 100M monthly active users within two months of its launch, setting a record as the world's fastest-growing consumer app. And Perplexity, which is valued at more than $1B, says that its AI search engine processed 340M queries in September. Google, of course, has released its own AI search capabilities and recently started rolling out ads in its AI-generated summaries appearing at the top of search results. But is it too little, too late?

Attention doesn’t move sales or other brand outcomes, studies find - Attention has been touted as a proxy for media quality that can drive help more conversions. A study from Kroger Precision Marketing (KPG) and the Advertising Research Foundation (ARF) found otherwise. KPG tested DoubleVerify’s Authentic Attention product, which is accredited by the Media Rating Council, to see if there was any impact on incremental sales and didn't find any correlation. However, it did find a correlation between viewability and higher sales and click-through rate. KPG concluded that attention was just a "modern vanity metric." Separately, ARF studied attention metrics from 12 companies, not including DoubleVerify, and found almost no correlation between attention metrics and outcomes like brand favorability and purchase intent. The organization is now testing attention metrics in relation to sales or conversions, which are the two outcomes advertisers care about most.

Forget The FUD, Now DoubleVerify Wants Advertisers To Get Back Into The News - Speaking of DoubleVerify (again), the company has launched News Accelerator, an initiative aimed at helping brands advertise through legitimate news outlets and reach valuable audiences while avoiding misinformation and shady sites. The initiative is a response to the widespread, but harmful, blocking of news due to automated brand safety tools, which tend to filter out legitimate news content. The company has also released NewsPlus, which are new brand-safe contextual segments that include news sites and exclude made-for-advertising sites. DoubleVerify will periodically review advertisers' keyword blocklists and let them know if any are outdated. The initiative follows a year of collaboration with news publishers and buyers to create a programmatic buying methodology that addresses the concerns of both sides.

Amazon’s DSP redesign and AI audio ads—what advertisers need to know from unBoxed 🔒- Amazon will give its demand-side platform UX a "complete overhaul" to drive efficiency and ease of use, the company said this week at its annual conference. Expect simpler campaign setups, better campaign performance reporting, new frequency capping tools, and "insight cards" that deliver important real-time campaign info. Amazon has also deepened the DSP's integrations with Amazon Marketing Cloud and introduced a new ads data manager for uploading first-party data. These moves are meant to upgrade a DSP that many say is still not on par with competitors The Trade Desk and Google DV 360, even though Amazon’s share of ad spend continues to grow. In the first half of 2024, Amazon’s ad revenue reached $24.6B, a 22% increase over the same period last year.  Also at the event, Amazon said it would expand Prime Video ads to Brazil, India, Japan, the Netherlands, and New Zealand, but it plans to keep ad loads low. And like everyone else, Amazon is going big on AI, introducing new AI-powered products such as new generative AI tools to help build ads and an AI creative studio app that will help marketers incorporate all of its generative AI capabilities in one place. 

HUMAN Raises $50+ Million in Growth Funding to Protect the Digital Customer Journey and Defend Against Bots, Fraud and Risk - HUMAN Security, a cybersecurity leader specializing in bot and fraud defense, has raised another $50M in capital. The funding will enhance their Human Defense Platform, which protects digital interactions across advertising, applications, and accounts. HUMAN plans to expand its AI capabilities, develop new media security solutions, and increase engagement in the public sector. The company recently appointed Stu Solomon as CEO and has been recognized as a leader in bot management by Forrester and G2. This investment aims to strengthen HUMAN's position in safeguarding digital commerce ecosystems globally.

Scope3 starts tracking the carbon footprint of AI - Scope3 has raised $25M in new funding to help the startup start tracking the greenhouse gas emissions of AI. So far, the company, led by Brian O'Kelley, has created the methodology for measuring generative AI's carbon footprint and water use, which it has just released for public comment. The evolution from just measuring the carbon footprint of digital advertising to also measuring AI comes as media and AI increasingly intersect. In digital advertising, reducing the carbon footprint of ads can help companies optimize their investments and eliminate waste. O'Kelley expects a similar dynamic in AI, with significant "alignment between economic cost and environmental cost." 

Taboola is looking to compete with Google and Facebook for small-business clients using a new generative AI tool for ad campaigns 🔒 - Native advertising company Taboola has launched Abby, a generative-AI-powered chat assistant to help small- and medium-sized businesses use its platform. The tool can quickly create an ad campaign for Taboola's network and choose the best images to use. Taboola sees Abby eventually acting as something of an account manager for advertisers. Taboola built Abby with OpenAI's GPT-4o and data collected from years of Taboola ad campaigns spanning 18K advertiser clients and a network reaching nearly 600M daily active users.

This is cool! But, Viant did it first. So it’s a little less cool.

Other Notable Headlines
(that you should know about too) 🤓 

Meta lets brands shut off comments on Facebook and Instagram ads—what marketers should know - The updates to Meta's brand safety and suitability platform help brands avoid unsuitable content.

Google Puts Data-Retention Limits On Advertising - Historical data access through the Google Ads API, via GoogleAds, Search, or GoogleAds.SearchStream, will be restricted to 11 years.

The next evolution of MessageGears: A fully composable end-to-end data activation and engagement platform - MessageGears gets a rebrand and new data activation and engagement platform to help brands slay customer engagement.

Kochava Settles Class-Action Complaints Over Location Data - The three complaints were filed by smartphone users who accused Kochava of improperly selling their geolocation data. They were filed after the US Federal Trade Commission sued Kochava for selling location data that could expose sensitive information, such as whether users visited doctors' offices.

LinkedIn bolsters video and event marketing, while adding AI campaign creation tool - LinkedIn's new Accelerate tool can simplify the campaign development process for advertisers by creating product descriptions, audiences, and creatives based on a URL.

Attribution Data Matching Protocol released by IAB Tech Lab - Advertisers, publishers, and data clean room experts created the protocol to help partners securely share and measure conversion data.

Elon Musk Apparently Managed to Sue Unilever Into Advertising on X Again - X has dropped Unilever from a lawsuit against GARM and other advertisers alleging an illegal boycott of their platform. X claims they have reached an agreement with Unilever to continue their partnership. Unilever has not responded to a request for comment…

That’s It For This Week 👋

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