March is a pivotal month for many; it signals the end of a business quarter where targets are tracked and performance is monitored, and it also signals a change in season – generating a ‘new beginnings’ mindset that gets us ready for the next few months ahead. And whilst I look forward to some well-needed vitamin D, I am back by (not so) popular demand, to reflect on the biggest headlines that caught my attention this March.

 

01 | Is Netflix winning the Ad-Supported Streaming War?

The post-covid era forced almost all streaming services into a period of adjustment as life slowly slotted back into place; consumer habits were once again changing and their subscription numbers were struggling as a result. And, to add further salt to the wound, the cost-of-living crisis forced us to rethink our ‘nice to haves’. These two factors combined, created a recipe for disaster for the streaming giants.

Last July, the BBC reported that Netflix further lost a million subscribers in Q2 2022 as more consumers decided to quit the service. Further, rivals Disney+ lost 2.4 million subscribers from its worldwide roll, the first significant drop since its launch in November 2019. However, it wasn’t just the cost that caused such withdrawal from these streaming platforms. According to Mail Online, Netflix lost a third of its value (£38BN) as viewers stated there’s ‘nothing to watch’ and they have ‘no interest in Harry and Meghan’s lectures’.

The streaming platforms did listen, and subsequently began to build a subscription model that provides access to their incredible content at a lower cost – supported by ads. And boy has the battle of the ad-subscription model kicked off with a bang! Just a week ago headlines were pitting Disney+ as the leaders in the race to gain new subscribers, with new research from Antenna. The firm found that [in the first month, 20% of new SVOD subscribers went to the Disney+ ad-supported plan, compared with 9% for Netflix’s ad-supported tier.]

However, despite Netflix having a slightly slower start to the race, headlines have celebrated its success in recent days, with new reports stating the streamer hit 1 million active users for its ad-supporter tier in its second month. And, equally important, the delivery met the promise to advertisers on the new service, meaning no need to serve up makegoods (free ads to balance out under delivery of commercials). Good job Netflix!

Conclusion:

These latest results potentially signal a seismic shift in the streaming wars. Up till now, popular opinion had suggested that streaming subscribers didn’t want advertisements surrounding their content – if they wanted that, they would simply stick to the broadcaster models. The main selling point in the early days was the ability to bypass ads while you binged a TV series, even if that meant paying a little bit more.

However, this new wave of ad-supported models will provide huge flexibility for the end user, who shouldn’t be priced out of enjoying the same entertainment as they used to. What the streaming giants need to be wary of now, is ensuring those who advertise on their platforms do so in an empathetic, and relevant manner. There has to be a value exchange. Otherwise they risk pissing off the consumer, and we all know how that ends.

 

02 | International Women’s Day + Diversity: Are Things Changing?

I couldn’t do the March round-up without making a nod to the annual celebration of women. International Women’s Day has (quite rightly) become a staple in the calendar for many industries, and can be used as a spring-board for discussions surrounding gender equality and diversity. This year, these topics were met with a mix of inspiring news, and the not so great.

One of the main headlines that inspired me this month was The Drum’s feature into drinking giant Diageo, who reportedly spent $527m on diverse-owned suppliers in 2022 – 65% more than year before. Led by the incredible Chief Marketing Officer, Cristina Diezhandino, the business has committed to achieve 50% female representation in leadership roles by 2030 and to increase representation from ethnically diverse backgrounds to 45% by the same year.

As of this year, Diageo’s board is 60% female, has an executive team which is 45% female, and its marketing directors are split 50/50. [Diezhandino spearheaded Diageo’s inclusive design training, which has been completed by 1,200 marketers since its 2022 rollout. “This training is not a one-off. You do it and keep growing it and make it stronger every year.”]

In stark contrast, recent headlines place Spotify under the spotlight, as their ‘$100 million Creator Equity Fund – designed to promote diversity in music and podcasts – saw less than 10% of the money spent on crucial work as it rounded out its first year. For those who don’t know, Spotify hit headlines last year regarding a backlash against Joe Rogan, host of the ‘number one podcast on the service’, over accusations that “The Joe Rogan Experience” spread COVID misinformation. It was also revealed Joe Rogan had used the N-word in dozens of episodes, which sparked huge debate about the platform’s response to brand safety, diversity and its responsibility to protect its users.

The initiative got off to a slow start, with the music and podcast giant stating it had suffered ‘from shifting priorities’. Another Spotify fund aimed at promoting diversity in podcasts suffered after that business was hit by layoffs last year, a union representing workers said.

In an AdAge article, Spotlify unfortunately declined to comment on the specifics surrounding its spending, but a spokesperson did mention that ‘it backed a number of initiatives in its first year, including Glow, which highlights music from LGBTQ artists, and Nailing It, a podcast hosted by three Black women.

Conclusion:

The diversity subject is one that deserves respect and attention. It’s becoming increasingly easy to identify those who are putting action behind their words, and those who are simply providing lip service. And while I truly believe it is everybody’s responsibility to make a change – no matter how big or small your business is, or where you sit in the pecking order – I do believe any business who is aptly named a ‘giant’ within its field, should lead by example. And to have an excuse which is centred around ‘shifting priorities’, is simply not good enough.

It really shouldn’t be that hard, should it? Massive Kudos to Diageo. Must do better, Spotify.

 

03 | The future of the SSP – is it time to say goodbye?

2023 has seen the gradual decline of many SSPs (Supply-side Platforms). Prompted by new data privacy laws and the looming cookieless future, publishers are increasingly shifting from third-party data to first-party data to help nurture relationships with advertisers and consumers, and subsequently reassessing their vendor partners.

Traditionally, publishers have employed a range of SSPs to organise their inventory into particular ad ‘slots’ and deals, whilst advertisers use demand-side platforms (DSPs) to manage and execute their campaigns. With publishers often working with several SSPs, supply chains have become fragmented and opaque, and this fragmentation has led to a lack of oversight and transparency, resulting in difficulties with brand safety, privacy and audience targeting.

[For some, the decline of the SSPs is a reckoning for a sector of the digital landscape; a sector that has been heralded as the most dynamic branch of the ad industry for the past 10 years.]

Earlier this year, Yahoo announced it is to close its SSP amid a 20% reduction in its overall workforce. This emerged just the same day as Big Village Media, previously known as Engine Group, and its SSP EMX Digital filed for bankruptcy, leaving creditors uncertain about receiving payments. The filings indicate that Big Village and EMX Digital have an estimated 5,000-10,000 creditors, with assets ranging from $10-50M and liabilities between $50-100M. The bankruptcy follows the departure of two consecutive CEOs from Big Village and EMX Digital, Kasha Cacy and Michael Zacharski.

SSPs are also starting to face previously unforeseen challenges, such as brands’ environmental, social, and governance commitment; pledges that prompt them to work with fewer partners. “It’s very clear that agencies and media companies want to do more with fewer,” stated Matt Barash, SVP, Americas & global publishing, Index Exchange, “They don’t need as many partners as they once had”.

In addition to these factors, The Trade Desk’s OpenPath – a program that allows its DSP advertisers to bid directly on publisher inventory without the involvement of SSPs  was launched a year ago this month. By circumventing SSPs, OpenPath offers advertisers an efficient supply chain with more bidding power. Some publishers have seen OpenPath become one of the primary ways The Trade Desk buys impressions from them, yet some are concerned that The Trade Desk is simply becoming too powerful. And for those SSPs who are still clinging on, they are concerned about margin pressure.

Conclusion:

For all the money OpenPath is making publishers, many can’t quite shake the feeling that nothing good comes without sacrifice. The main worry is that OpenPath will eventually help The Trade Desk aggregate even more buying power than it already has. That’s going to give the ad tech vendor quite a bit of leverage down the road. Whenever this happens the chances are it won’t be a net win for publishers. It never is.

 

Until next month, stay safe, be happy, and drink wine.