Mi3 Audio Edition

Privacy Commissioner Carly Kind was “surprised” – read underwhelmed – by the first tranche of Privacy Act legislation laid before parliament last month. But she says the hard stuff is still coming after the election, which means businesses now diverting budgets away from compliance to other activities may regret it, especially as the regulator has sharper teeth. Kind says firms are failing under the current Privacy Act – and they are in the regulator’s crosshairs. Tracking pixels are under serious scrutiny across the piste, as are companies using data beyond what it was collected for and potentially passing it to third parties.

In that vein, Kind has “existing concerns” about loyalty programs, customer data enrichment businesses and data broking: “It's something I'd like to look at again under the current framework,” she says, suggesting those operators “make sure that they're watertight”. Likewise firms targeting via geolocation: “We’re looking at a case at the moment … We have some real concerns about how it's being used.” Lookalikes, customer audiences, hashed emails and data clean rooms appear to be in the clear. But under the next wave of reforms “the changing definition of personal information could certainly have an impact,” she says, though for now it’s not clear-cut.

In the meantime, Kind says there are four areas for businesses to laser in on – including small firms who will no longer be exempt from regulation.

First, “know what data you hold and who you’re giving it to.” Second, “make sure you've got a retention and destruction regime in place – anything that’s old, you don’t need to hold it any more.” Next, get into the weeds on contracts with third party service providers and be sure to have a data breach response plan in place. “It's an area of vulnerability we're seeing a lot at the moment,” says Kind.

In short: “Don't take your foot off the gas, because we're looking to take a more enforcement-based approach to regulation in the interim.”

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Part One: Seven companies now account for a third of the total value of the US S&P 500 – and the bulk of their collective trillions in market value happens to come from marketers and advertising. It’s a crazy number, but Terry Kawaja, the fast talking banker, considered by some the ‘godfather’ of adtech start-up investment, says another wave of advertising and marketing related tech spin offs are incoming that’s making him a little more bullish than the cooling of the past 18 months.

Kawaja’s New York firm Luma Partners is behind the Lumascape spaghetti maps that try to make sense of the sprawling, connected pipes of the adtech industry. Kawaja thinks consolidation has to happen for the industry to shake the cowboys – “the environment is highly fragmented and that allows people to hide,” he says.

That’s code for nefarious market behaviour which undermines adtech’s credibility - and Kawaja argues a clean digital ad system is more important now than ever if open web players are to compete with big tech, especially as he sees retail media quickly eating a third of open web ad dollars.

But there’s little sign of that consolidation right now and Kawaja admits adtech is still notoriously opportunistic and has played a starring role in the creation of some of the problems the market is struggling to address with junk digital data, fake people and opaque trading practices that nobody seems able to solve.

Regardless, Kawaja says another wave of tech investment is coming and for good measure and says Google’s pervasive global advertising trading system being broken up would have huge financial upside for Alphabet shareholders – and the industry at large. The US Department of Justice has been landing punches over the past three weeks in its current US Federal District Court adtech "monopoly” trial against Google.

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Paramount went early on both converged trading and a streaming ad tier in the US. Now it’s doing likewise in Australia and Lee Sears, Paramount’s international ad sales chief, thinks both plays will pay off for the media and entertainment conglomerate, its advertisers and crucially – viewers.

Unlike some rivals, Paramount didn’t push subscribers automatically onto the streaming ad tier. Sears says it didn’t need to, because “we have a huge audience elsewhere, so don’t have to be reliant on just the SVOD ad tier”. He suggests forcing ads onto subscribers that signed up for an ad free service wouldn’t be right. Either way, the strategy appears to be paying off.

Locally, sales chief Rod Prosser won’t divulge numbers, though analysts Telsyte estimate Paramount SVOD subscribers at 1.8m, with sign-ups outstripping its competitive set. Prosser said the reality is much higher than the Telsyte estimate and, confirmed “We are still the fastest growing [SVOD]”.

Moreover, Sears suggests Paramount’s subscribers are actually using the service amid some “wild” numbers being touted in market, per OMG investment chief Kristiaan Kroon, “because it's not an add-on to something else, or it's not a byproduct of a bill that you're paying elsewhere within your household”.

On converged trading across BVOD, SVOD, AVOD and FAST (linear TV’s set to follow locally in H2 next year), Sears says the approach is now driving a “major” chunk of revenue in the US and other global markets. He anticipates Australia will follow that playbook: “It is now part of everything we do … Converged trading, connecting everything together, is how we lead with our conversation. I think that’s the way everybody will try to lead conversations in the future, unless you only have a one-dimensional play.”

Part of the converged approach is a “blended CPM”, i.e. a bundled price that factors in the different channels the ads run across. Prosser said how that pricing works has been the biggest question from agencies in recent weeks, alongside bringing linear TV into the converged mix.

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Salesforce reckons it’s the end of the DIY AI era – and global CMO Ariel Kelman is tasked with addressing what his CEO, Marc Benioff said last week is Salesforce's biggest marketing challenge: convincing global markets to think less about Open AI, Microsoft copilots and other generative AI companies that require businesses to custom-bake the tech into their organisations to make it work – and more about the deployment of low code, no code, autonomous AI agents that can be built and tested and live within weeks, if not days.

The difference is that Salesforce is pointing these agents directly at existing customer systems and data, rather than brands spending “literally tens of millions of dollars with cloud providers to train these models” from scratch.

“There are lots of use cases where you do need to train and fine-tune your models. But absolutely not sales, service, marketing and commerce – the models are smart enough that they can go and grab information,” says Kelman. “It can just scale the work that our customers have already done.”

It’s working for the likes of Saks, Gucci and Wiley – and some local firms like Fisher & Paykel and Queensland University of Technology are now likewise plugged into what Benioff reckons is “AI’s third wave”.

Kelman says AI agents “blur the lines” between sales, service and marketing functionality – and coming next is a variant for sales lead development, where the agent will develop the leads until they are warm enough for a human to take over.

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Before launching its first-ever brand campaign, Virgin Velocity had to convince finance and commercial teams that investing in brand would drive long-term demand, re-engage its 10m members – and ultimately power growth. So it tapped Beatgrid, the same cross-media measurement platform used by Virgin Australia when relaunching its airline brand.

Beatgrid’s audience measurement system uses a passive, single source panel – via an opt-in mobile phone-based app – that uses subtle audio pitch shifts to the ad creative to determine which channel the audience was exposed to. That means it can detect if an ad has been seen and how many times per user across different screens and channels – with total recall because it’s not relying on humans to remember what they saw, when and how accurately. It also enables an accurate read on cross-channel incremental reach.

For Velocity’s GM of Member Engagement, Emma King, demonstrating the panel’s robustness via control groups meant she could prove incrementality and unlock the media budget. It’s also given Velocity and their media partner PHD, a sharper insight on which channels deliver the highest growth per campaign and cumulatively across campaigns – and where the best balance of effectiveness and efficiency lies.

Beatgrid’s data also threw up some surprises. “In one example, we saw total TV drive a lift of 11 points. And when we tease out the impact of BVOD, we can see it drives an incremental result of three points above TV,” says PHD Head of Research, Lillian Zrim – counter to the narrative of declining audiences and effectiveness.

Velocity’s King says Beatgrid’s data also enabled her to justify investing in other brand channels. “We saw television work really well with out-of-home to drive incremental KPI results. If you have a lot of overlap in reach, sometimes you’re thinking - maybe we don’t need to cover both; then you see results like this that say [if someone’s exposed to both channels], they’re going to get a much higher lift.”

While King and Zrim acknowledge that nothing happens in a vacuum, “In April, our CEO confirmed that member growth trend was 35 per cent above the growth trend the previous year,” says King. “So that's an example of the kind of commercial impact that these kinds of campaigns can have.”

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The proposed ban on social media for teens has polarised industry and academia with warnings aplenty it could backfire. Ex-Facebook ANZ MD Liam Walsh argues rather than a ban, dumbing down the algorithms, forcing algorithmic transparency through regulation or removing them altogether – could actually be the solution if fears of the effects of algorithmically-generated dopamine addiction and attention-hogging dark patterns on teenage mental health are the primary problem.“If we took that out, how many problems do we have with social?” he says. Walsh warns society has no structures in place to deal with fallout that could land in nine months’ time when the Albanese government proposes a new age limit on social media use. “If you take away kids’ whole network, how they commune with others, that’s kind of a big deal.” Walsh doubts teens will “suddenly start hanging out in the park and helping old ladies paint the fence.”Erica Thomas, Principal at private girls school Kincoppal in Sydney's Rose Bay, agrees teenagers will “seek other things” to fill the void “and that is one concern” but warns there is no time to wait for a protracted legal battle with tech giants in attempts to curtail or open up the algorithms. She sees daily, first-hand, how badly action is required. Across a 30-year career in education, she says social media is “the most damaging influence I have ever seen”.Concentration levels are plummeting with teachers struggling to find a fix, girls are being conditioned to perfectionism from a young age, boys exposed to increasingly extreme violence, toxic influencers and highly sexualised images and bots of girls and young women – and in the last five years, “it’s got worse”.Brands have long championed ESG and purpose. But they’ve been strangely silent on the proposed ban. Katie Palmer-Rose, a social media marketer who has worked with the likes of L'Oreal, PepsiCo and Aldi and now runs influence agency Kindred, thinks many are waiting to see how it plays out. But she says they face a “moment in time where they tend to think very differently about how they show up in social media, how they build communities and connectedness in a digital world that doesn't live in social media,”Production company Finch’s Rob Galluzzo and Greg Attwells fully expect legal challenges from tech platforms – who they claim have told staff to “stonewall” 36 Months, the campaign they founded with Nova’s Michael ‘Wippa’ Wipfli to push for a social media ban for under 16s. Dumbing down algorithms won’t cut it, says Attwells. Keeping regulation about health, not tech, and moving fast is key, they suggest – with more backer brands about to be announced. The next phase is designing the massive educational and societal infrastructure required to fill the looming gap.

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The latest analysis of SVOD growth rates from tech and telco analyst Telsyte proves one thing: fear of streaming services losing subscribers by pivoting to ads is overblown: They’re growing – though some more than others. MD Foad Fadaghi says ads, plus AI personalisation, integration and format innovation, will power the next growth cycle but streaming growth has peaked.  

Omnicom investment chief Kristiaan Kroon suggests Stan, Nine’s ad-free SVOD holdout, should heed that lesson because Nine has something globals like Netflix and others do not: “A really sophisticated, at scale, sales infrastructure, which means they could make really good money from an ad tier.” There’s more competition incoming from HBO and Disney. But Kroon reiterates that the best sales wins because unlike the US and UK, Australia’s premium end of town doesn’t operate on fully automated systems and open exchanges. “They are still very much handheld markets.”

Who’s winning right now? “Amazon Prime and then Binge and Kayo. Why? They have come to market with scale, both have sales teams, both have sophisticated data infrastructure,” per Kroon. He thinks streamer ad tiers will eclipse his earlier predictions of $75-$100m take in 2024 with Amazon, Kayo and Binge taking most of the pie. Next year, he thinks SVOD ad tiers could beat $200m, but there’s debate about how big ad-streamers like Amazon and Netflix actually are. Fadaghi suggests 80 per cent Telstye’s estimated 4.8m Amazon Prime subscribers could technically receive ads. Kroon puts the active Prime user base around 2-2.5m, broadly on a par with Nine and Seven. There’s also an effectiveness debate, with data from Adgile suggesting streamers can’t yet match TV’s results. Kroon says the MMM-effectiveness-ROI debate has become “very finger pointy in recent months”, but agrees there’s a gap to close.

Ultimately, he thinks local content integration could prove decisive in determining winners and losers – and for some of the globals, Australia may prove too small.

“I don't see how we can support that many BVOD, SVOD [players] – and we haven't really even talked about YouTube and the amount of ads that are served on CTV now,” says Kroon. “There's only going to be a certain number that can be supported.”

Fadaghi predicts the streamers will triple in size to 10m subscribers in the next four years, “with more than a third on ad tiers.” 

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For anyone in ecom or performance marketing, this podcast is a must listen. Forget ROI and ROAS, think unit economics, says former investment banker (her last big deal was the Myer float) turned entrepreneur Carla Penn-Kahn. She was early into ecom and left Credit Suisse to launch four of her own –Kitchenware Australia, A Gift Worth Giving, Everten and Buy My Thing. But she sold her last venture last year when she realised it had hit peak profitability. With performance ad prices doubling in four years, and Amazon reaching full speed, the unit economics weren’t going to get any better. Penn-Kahn thinks direct-to-consumer trailblazers have likewise lost their mojo – and their moats – and face the same dilemma, because they can no longer sustainably scale through advertising and VCs are sharpening their bottom line focus as much as the top.

Meanwhile, Amazon has just signed an exclusive deal with Australia Post to deliver on weekends. “I can’t see other brands like Myer and DJs getting Aus Post to do the same for them … which 100 per cent gives Amazon an edge in this market over Australian businesses.” Hence she’s cool on the outlook for many, but particularly the likes of The Iconic, Temple and Webster, Adore Beauty and Australian marketplaces like Woolworths-owned Catch, which last week put a $96m dent in Wesfarmers’ balance sheet. Loyalty programs and retail media offers a lifeline for some, per Penn-Kahn, but most DTC brands don’t have the latter option.

But Amazon might not have it all it’s own way. She suggests Microsoft might be gearing up to buy Shopify (which in Australia lays claim to controlling 25 per cent of all ecom transactions). If it happens “they will own the space”, suggests Penn-Kahn. “You will be advertising on Bing through the Shopify network as an ecom brand and leveraging Microsoft's AI to build your website, build the content. It could be a full ecosystem roll up if it happens. It's very possible.”

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The effectiveness “revolution” is colliding with the AI-spawned efficiency uprising and it’s leaping the early consensus AI use cases in marketing around automating personalised content and communications. So much so Mark Ritson choked on his Wellfleet oysters when Jon Lombardo and Peter Weinberg told him they were leaving top jobs at the LinkedIn-backed thinktank, the B2B Institute. Then they told him why. Ritson promptly joined their venture, along with what Weinberg calls “the advisory board to end all advisory boards”.  Thus the synthetically-enhanced AI marketing outfit Evidenza was born.

The founders argue their new piece of “synthetic customer” tech, which starts with creating AI copies of target customers, can create an annual marketing strategy, category entry points, messaging and positioning at a fraction of the cost of traditional market research and in a fraction of the time it takes for a marketing team to do the same. They claim it completes major research projects in minutes – and have proven their digitally synthetic customers match real customer responses it took some of the world’s biggest brands long cycles to gather. “It can imitate essentially anyone by gathering and synthesizing massive amounts of data,” per Weinberg, including almost impossible-to-reach professionals, like airline chiefs, or the bosses of mining companies. Which is exactly what Evidenza did in a head-to-head test with EY Americas CMO Toni Clayton-Hine’s actual survey data – and “reached 95 per cent of the same conclusions,” per Weinberg. EY “has been a fantastic client ever since.”

But as well as synthesizing customers, the system also synthesizes marketing strategy and science: Imagine on one side a synthetic combination of Mark Ritson, Professor Byron Sharp teamed with ad effectiveness maestros Peter Field and Les Binet. Then on the other side, hundreds of synthetic CEOs, CFOs, CTOs, CIOs, CMOs and each of those functions linked to the nuances of different industries and categories. Put them all into an AI blender, and you get what Lombardo and Weinberg think is an efficiency revolution in marketing fused with the effectiveness revolution from the marketing academics. The upshot for marketers? “A finance-friendly marketing plan that used to take months now takes maybe minutes, but more likely, a day,” per Weinberg. According to Lombardo that’s good news even for traditional market researchers. “Everyone is going to get better. Average is over.” So what’s left for the humans? The synthetic duo say the smart stuff - experience, strategic frameworks and brand and category nuance, for instance - that makes the machines do better. 

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Marketing mix modelling (MMM) only works if brands grant their agencies access to critical business data – and many don’t in a perplexing and decades-long challenge. But equally, agencies can be guilty of slowing media pricing and audience data into their client MMM models, rounding out the two-way data conundrum. It’s ironic given all the talk of partnerships and outcome-based incentives, per Mutinex APAC CEO, Mat Baxter.

Bupa and Atomic 212°, says Baxter, are standout examples of genuine client-agency transparency – and it’s powering not just “marginal gain theory” in which lots of small, incremental components are optimised to drive growth, but hard, 28 per cent ROI gains in specific incidences. Bupa plugged into the platform in 2022 and performance lead Angas Hill says without a free flow of business data to Atomic 212° – sales, revenue, pricing and competitiveness data included - “there's not much point in standing up an MMM model.”

Bupa does and now the CFO sees the MMM outputs as “the most trusted source we have in terms of attribution and forecasting”.

Bupa uses those monthly ROI insights to shape the quarterly media plan – with Atomic 212° already plugged-in across what’s working and what’s not at a business level. “It’s just speeding up that whole process,” says Hill. “We are seeing long-term growth in our effectiveness for what is essentially flat media budgets.” Plus, he says, on-off testing via MMM, e.g. testing one region and channel against another, “is where we are seeing much more drastic changes.”

Atomic 212°’s Tom Sheppard underlines broader benefits from using MMM outputs to inform trading strategy: “If we understand what the ROI is, we can negotiate. If [as a result] we can decrease that cost base of certain channels, all of a sudden we can automatically improve the return that the client is getting,” per Sheppard.

“The MMM is fantastic at telling us what's worked in the past and to give us the next best decision,” he adds. Now he says Atomic 212° and Bupa are adding new inputs and channels “to get even better signals – so as a result, everyone wins.”

Next step is making automatic media transaction feeds via API the norm, per Baxter. “That is the future of where we are going.”

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