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| Coronavirus’ Media Fallout Spreads |
Source: Yieldbird
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| We hope all of you are keeping your distance and enjoying this newsletter on the hottest news from home. It seems none of us can get enough news lately—Axios calls the news “America’s biggest pastime” at the moment but we think it might be a crippling addiction. And supply could soon be strained if news sites don’t get more money coming in. Axios notes that traffic to news sites is way up; however, data from Yieldbird notes that while ad requests for news sites in its programmatic network are up 78%, ECPMs are down 10%. Overall, Yieldbird found that ad requests across its network were up 28%, but ECPMs were down 20%. With most sports leagues currently suspended, it’s not surprising to see ad requests related to sports on the downswing (14%, but… the 14% rise in ECPMs certainly lifts eyebrows. It seems in some situations, advertisers are willing to dole out cash to market away from the pandemic—though definitely not in dining and nightlife (according to Yieldbird, revenue down 70% and impressions sinking 63%) and travel (revenue down 40%, impressions 46%). If you’re grumbling to yourself that social media companies will probably be just fine throughout this crisis… think again. People may be more engaged on Twitter than ever, but Twitter’s CFO just warned investors of slumping ad revenue, particularly in the last few weeks. Social media marketing platform SocialBakers reports that ad spend on Facebook has nearly fallen off a cliff since the beginning of March. Overall ad spend on the platform has declined by nearly 50% since December 2019. |
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| We’ve noted for a while that guaranteed ad sales were going to take a hit during this pandemic, but were cautiously optimistic that programmatic revenue might pick up the slack. So far, no dice, but we are in early innings. (Are those enough mixed gaming metaphors for you? Man, we must really need some sports—watching the toddler slam dunk on her kiddie basketball hoop is not cutting it.) However, it does feel like we’re fast approaching a distressing crossroads. Even though people are more active online than probably ever before, many publishers can’t monetize the traffic because they can’t draw advertiser spend. This is most evident on the local level, where regional news outlets are breaking traffic records left and right, but can’t squeeze any spend out of their regular local advertisers (many of which are businesses currently lying dormant). Buzzfeed is warning of a “Media Extinction Event,” with massive industry layoffs and local news outlets collapsing in droves. Don’t think local publishers banding together will stop the bleeding—publicly traded networks of publishers like Gannett have been tanking in the market (though some investors see an opportunity…) So consumers are demanding more and more content (particularly news), but digital media companies can’t pay the bills… At least not with advertising. Let’s think about this—advertising subsidizes the cost of content for consumers, so the next logical option would seem to be… subscriptions. It was arguable that the industry was hitting subscription fatigue before coronavirus made it to these shores. Certainly with a major economic downturn cresting, consumers will probably be less likely to crack open their piggybanks for subscriptions. On top of that, Washington Post and New York Times have put coronavirus coverage outside of their paywalls, setting an admirable but potentially costly precedent. Publishers might want to follow the model of companies like The Guardian, which basically solicits donations from highly engaged readers while leaving content open to all. In addition, consumer relationship management companies enable publishers to offer customized subscription products, such as sliding scales or pay-what-you-can. Long story short—if you’ve been pondering some kind of subscription or consumer payment service, now’s the time to follow it to fruition. Also, chase down all of those alternative revenue schemes you’ve put on the backburner. |
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| What Are Brand Marketers Thinking Anyway? |
| Oh, to get inside a brand marketer’s head in this trying moment… Wait, why not conduct a survey? That was a wise move by Wyzowl, a company that focuses on video explainer content. In polling 160 marketers mainly from the US, Wyzowl found 71% were reducing spend in physical events and 45% in print, while 31% were pushing more spend toward video, 31% toward paid ads, and 28% on broadcast. (I bet many a digital publisher feels they are yet to see these increases.) |
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| The most interesting finding in the survey is that 46% of marketers expect no reduction in marketing spend due to coronavirus, while 48% are already resigned to a decrease. Publishers are going to have a hard time waiting this out till the advertising faucets turn back on. |
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| LocalStorage Crackdown? |
| Bad news, guys: the new version of the Safari browser and its Intelligent Tracking Protection technology is going to block third-party tracking cookies by default. Wait a second—didn’t Safari already do that? Actually, not formally—however, the restrictions were so harsh (Draconian?) that third-party tracking cookies were basically non grata within the browser. Now with iOS version 13.4 and macOS version 13.1, ITP officially bans third-party cookies. BEGONE, FOUL TEXT FILES! “It might seem like a bigger change than it is,” writes John Wilander, the Apple Webkit Engineer behind ITP, and you can hear the ad tech industry scoffing in reply. But deeper within this announcement, the masters of ITP have turned their eyes to other areas of first-party spaces—such as LocalStorage—which are “littered” with forms of tracking IDs. In flies ITP to the rescue: “ITP has aligned the remaining script-writable storage forms with the existing client-side cookie restriction, deleting all of a website’s script-writable storage after seven days of Safari use without user interaction on the site.” |
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| A variety of ad technologies like DMPs have been leaning on LocalStorage for edge-based (aka, browser-based) computing—for While a seven-day limit probably disrupt a lot of these technologies that don’t use LocalStorage for that long, falling under ITP’s glare is bad news. ITP always tightens control in the interest of privacy, never loosens. And as the Safari blog post gloats, the rest of the browsers tend to follow Safari’s lead (maybe you heard about Chrome sunsetting support for third-party cookies?) There’s always been a dark cloud hanging over companies leveraging LocalStorage. We may have felt our first drop of rain. |
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| The States Come A-Taxing |
| As if the ad tech industry didn’t have enough to worry about, it might soon owe taxes. Well, just to the state of Maryland, which sent a bill taxing digital advertising to the governor’s office this week. This tax—which is not-so-secretly aimed at grabbing slices of Facebook and Google’s digital ad revenues—could potentially bring in $50-$60 million dollars to the state, but is likely in violation of the Federal International Tax Freedom Act (ITFA), which prohibits state and local taxation of various Internet services, and is probably be vetoed by Maryland Governor Larry Hogan. How the tax would even work is confusing—especially regarding who actually owes it— but in the end it would definitely trickle up to advertisers. |
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| Two weeks ago we told you that if this moved through Maryland we could expect other states to follow with legislation of their own. Here’s New York with a proposal. ITFA probably has a Supreme Court date in the near future to decide its constitutionality; if IFTA is struck down, watch every state try to get their fair share. |
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| Sliding Programmatic Fees |
| Speaking of which… Are we still calling it the ad tech tax? Tech providers have been under a lot of strain to keep their take rates down as competition within the strained open programmatic ecosystem gets tense. SSP Index Exchange has added a new wrinkly to the equation: Exchange Fee Reduction. This program will “enable large buyers to drive down the fee IX receives from publishers on each transaction, passing those savings straight to the publisher. |
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| Sliding ad tech fees could be a real boon for supply-path optimization efforts. Buyers could negotiate with publishers a handsome guaranteed CPM in a private marketplace knowing that the publisher will take home more revenue because of a lower take rate. It’s a win-win for both ends of the transaction, and making it volume-based ensures a great deal of transactions will run through the SSP/exchange. |
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