Advertisers want to follow the eyeballs, and CTV ad spending is expected to grow by 14.4% this year. While brands are more likely to invest in CTV than linear, advertisers want to know that there is a transparent and assured way of demonstrating a return on investment on the channel. And while CTV might be the hot new thing, clarity around metrics, insights and brand-safe, quality content is critical. For CTV to truly gain buyer confidence and mature, there are several goals that marketing teams are working to achieve.

Thorough and transparent post-campaign reporting gives advertisers insights into CTV performance

Linear TV advertising essentially works one way. Media buyers make upfront deals with networks, guaranteeing their ads will run alongside the shows that attract their audience. Things have shifted recently as shrewd brands leverage the scatter market — all of the advertising inventory not bought at upfronts — and detailed analysis beyond basic gross rating points (GRPs). The old model persists for one big reason: brands know what they are buying against. This transparency provides the confidence to be happy with being associated with any networks or content.

This exists in some areas of the CTV market, but it’s hardly standard across the ecosystem, especially in the broader programmatic CTV landscape. Streaming is an on-demand format, so media buys aren’t the same as purchasing an NFL game Sundays at 1 p.m. Sellers have also been slow to pass back details around programming because of technical reasons, business decisions or, maybe, not realizing how critical this data is for the market.

Regardless, post-campaign reporting is the only way brands can really see what programs they run against. The problem is that a detailed breakdown with content, genre or even show-level data is not the norm right now. Brands know which streaming channel their ads run against, but more detail than that is hard to come by consistently. Without this, brands have little understanding about the kinds of programming that are suitable, drive performance and help reach their target audience. For brands to continue to spend on CTV, knowing where they are running to assess quality, suitability and performance is a top priority.

Developing and implementing suitability controls to help brands find quality content

CTV is widely regarded as a safe environment for advertisers, but the need for suitability controls has been challenging to scale. On paper, CTV combines TV’s engagement power with digital media’s targeting strategies. Brands adopt suitability in their display campaigns to ensure that ads don’t appear alongside objectionable or offensive content. CTV is different because brands need to apply broader suitability and quality controls that will not materially impact scale.

For example, ‘Squid Game’ was a massive surprise hit for Netflix. If the channel had offered advertising at the time, most brands might not have wanted to be associated with the show’s graphic violence. It’s safe to assume that similar shows will shoot to the top of various streaming platforms’ most-popular charts, and while brands want the audience, they also want the ability to measure and control the type of content and genre that is suitable to their brand. 

Conversations around CTV advertising tend to focus on the most popular streaming platforms, but the overall quality level varies significantly across the wider CTV landscape. While brand-name players like Netflix and Disney+ have recently launched their ad products, more than 1,400 free ad-supported streaming TV (FAST) channels are available to advertisers and viewers. 

The sheer volume of potential inventory partners means old display advertising issues are creeping into the CTV ecosystem. Low-quality, unprofessional content, mobile content labeled CTV and divisive news or political content are all looking to sell ads. In some cases, the ads do not even reach an engaged audience but instead get served on a screen saver. 

In some campaigns, more than 10% of a brand’s budget is spent on low-quality, unsuitable inventory, including unprofessional quality, fake content and mobile video. Spending $1 out of every $10 on waste isn’t likely to inspire confidence, but again, brands can avoid this pitfall by setting proper suitability strategies and controls.

Expanded measurement is critical for achieving CTV’s potential as a performance channel

TV has always been viewed more for branding than performance. But if CTV is to truly deliver on the promises of digital native signals combined with the reach of linear, brands need to prove ROI and see how ads perform beyond traditional audience reporting. New insights such as content, genre, shows and ratings are more accessible, covering more of the CTV inventory buyers are seeing. These insights should fuel future investment and optimization, much the same way brands build their digital strategies. 

It’s that final bit that should give buyers the most confidence. The CTV market is incredibly competitive, and all of the streaming platforms are in a battle for revenue. As more inventory enters the market each quarter, new suppliers will compete with added signals and insights to prove performance, thus continuing to enrich the CTV landscape. Brands and their agencies are well served to continue adding these new signals and suitability strategies to maintain their confidence in CTV’s future investments.

Sponsored by: Peer39

— Kayleigh Barber, Sara Guaglione and Tim Peterson

Q1 recap

“We saw a flattening-out in March, which was a very welcome sign because the last nine months have been brutal, comparing on a year-on-year basis. But March gives us a slight bit of optimism that we might start to see some more favorable year-on-year metrics. The banking crisis could mess that whole thing up.”

“Good Q4 [for commerce revenue] and continued into Q1. Our Q1 has been higher than we expected it to be.”

“We’re having to work harder. My stuff is mostly podcasting, and so we’ve been on a run. People that used to be in the space are pulling back. People that weren’t sure have to be reassured. We’re going from this sort of feast to — I wouldn’t say it’s famine, but definitely the salad days are over. Everyone has seen everyone retrench. We’re still going up, but the frothiness of the whole thing is gone.”

“We’re a small company. Cash flow is tantamount.”

“We’re still going up, but it’s more effort to do so. Overall it’s going to be a rough three or four quarters. It’s so variable. Things seem okay, and then there’s the bank collapse. It’s so many of these macroeconomic things that just keep knocking you off. It doesn’t feel existential, but it certainly feels hard. And it certainly feels that we’re tight.”

Buyer negotiations 

“Something we’re exploring is those kinds of data relationships and just getting as much data as possible to our buyers. But it’s a lot more work. It’s a lot of infrastructure.”

“We see a lot more questions about audience data, segmentation opportunities, targeting opportunities. That’s just stuff I think a lot of publishers have access to but not to the scale that the platforms have access to.”

“I’ve never heard of a publisher collecting cancelation [fees], other than maybe somebody who’s huge.”

“I can’t believe the level of scrutiny from the C-suite level for the amount of dollars that marketers are spending right now. We’ve had deals get on hold, go up to a CEO of a Fortune 100 — a nine-figure-revenue technology company — and the deals got scuttled at that point by the CEO who doesn’t want his company to spend $60,000 worth of marketing budget. The level of scrutiny within the brands is something we’ve been battling for the last six to nine months. It doesn’t seem to be getting better.”

“We’re seeing a lot of scrutiny from the hierarchy because people are still operating in this fear cycle. But the other thing that’s happening: procurement, fulfillment. We’re getting a lot of procurement challenges about rate and things like that.”

“Open exchange is a firehose of requests into a firehose of bids. There’s no curation. Ultimately the binary decision comes down to is there a deal ID or not? If there’s a deal ID, it’s curated and it’s not an open market. And if it’s curated, you’re going to be able to sell for more, because you’re making accessing the inventory easier for the buyer.”

Payment window blow out

“The bigger long-term pain is the clients and agencies that are getting longer payment terms. It’s really impacting cash flow. We had an advertiser that was net-260 [i.e. that paid 260 days after receiving an invoice for a campaign]. Their terms are net-120, but they didn’t pay until almost a full year around. They moved agencies. The new agency, part of the agreement was to go net-120. The legacy [insertion orders], they didn’t approve that for payment until 130 days later. And finally, by the way, we’re starting to work on this year. So we call the client and be like, ‘Can you do anything here because your new agency doesn’t give a shit?’ [Digiday: “And what’d they say?”] They expedited.”

“The agencies are so paralyzed by the fear of getting fired for anything, and they’re strapped on everything. They’re not pushing for their own bills to be paid. I don’t know if it’s bandwidth or whatever, but things are getting processed later than ever. On average, even if it’s a net-30 or a net-90, it’s taking 60 days to invoice.”

“I don’t think anyone’s going to start and offer net-60 to a publisher. But you have to feel confident asking for that. Otherwise you see [net-]90.”

“[Net-]90 is what they’re asking for.”

“Net-30 never worked because it was net-30 to the agency, and the agency has to get paid. So it was always going to be [net-]60 regardless. But yeah, it’s painful.”

“What we’re finding a lot [is] you get to day net-80, and then honestly an agency is like, ‘You put the wrong, one-digit-off number on your invoice. Please revise.’ And then we start over a lot of times. But I think that they’re pushing it off, not wanting to ask for their payment, and then it’s trickling down. I’ve seen a lot more technicalities like that to draw out the process that just makes our yardline look very huge when we’re tracking who’s paying when and how often.”

IAB meltdown 

“[As for the IAB] representing the publisher, I’m just not getting it and I feel like it’s more than tax membership.”

“We need less organizations as well. Shouldn’t they all combine forces together and present a unified front Congress for whatever is coming down the pike?”

“The IAB lawyer or lobbyists was like, ‘We need you guys to come to Washington,’ like we’ll be there, dude. You need to set it up. You’re the lobbyists getting the meetings. So let us know when we can help. And nothing has happened since.”

“When I was at the IAB Leadership Conference last year, looking at the Board of Trustees, the lack of publishers on the board was glaring, but especially glaring was the lack of independent publishers.” 

“It just felt like [The IAB was saying], ‘You know what, we just don’t see you.’ And we remember and we paid whatever it was and I got virtually no value. So we’re not members anymore.”

“When they say get more involved, they mean spend more money.”

“All these organizations now are open to everybody and so when I went to a new IAB meeting around gaming it was going in so many different directions. Each different person was looking for a different way to push the organization forward. And it was just clear that it’s never going to get there, because everybody has different objectives.”

“The IAB released some sort of release recently about autoplay sound-off being considered as outstream video. So when it comes to web based publishers, like we are, who look at the cost benefit of originally produced video programming … the challenge is we’re not in the CTV space at scale. And so when you look at the value of the video, the yield on the video versus the investment into the original, high quality programming, where does that market go? [Do] the premium content owners that aren’t broadcasters need to get involved in CTV in order to thrive? Or can you distinguish yourself?”

Verification firms frustrations 

“One of the challenges that we’re facing is [with the] general ad tech stacks like IAS and DoubleVerify. Being a news publisher, we’re finding that brand safety filters are affecting us significantly, not only from an [effective CPM] perspective, but just generally the lack of support and getting capacity and serving our inventory, whether it be indirect or direct as well.” 

“One of the evaluations that we’re undergoing is whether or not it’s even necessary to have [IAS and DoubleVerify] as a partnership. We’re also hearing from the demand side concerns around their ability to deliver almost from a potential fraudulent perspective around their methodologies as well as algorithms.”

“Why are we paying six-figures every year annually, when we’re not seeing the benefit? Hopefully money cost savings [from ending partnerships with IAS] support losses in the indirect [programmatic revenue].”

Generating uses for AI 

“We’re figuring out what our company policy is around those [AI] tools. Because we definitely can’t use it for editorial. But for discovery, there are a couple of really interesting tools that are using GPT-4… to scrape [for] these keywords. Essentially, it’s taking every article that’s ever been written about optimizing for SEO, then you say, ‘hey, optimize this headline for SEO for these keywords.’”

“I will say for podcasting, we use [AI] for brainstorming, for [titles] and stuff like that.”

“For our marketing team, we’re using it constantly, testing our own copy versus the AI copy. The AI copy usually wins [in terms of conversions].”

“I don’t think we properly use [GPT] yet. I think we’re still learning… We typically really highlight things like, Who is the person you’re writing for? What’s the call to action you want? What’s the tone that you want?”

“We are starting a task force across the organization… People are starting to [explore using it and] the next question becomes, what are the ethics? What are the guidelines? What is our corporate stance on this?”

“We keep getting more pressure to have more authority and more expertise and more experience. But actually, what’s happening to that content is that Google’s AI is just ingesting all of it. So they can sort of scrape it and make their own content, and very vocally not attribute any credit to the people who are providing that input.”

“The question for us is, will there always be things that humans do better? And will audiences know the difference? There’s a ton of content out there that just should have been written by a machine all along because it’s just bad… and if that gets replaced by an answer from a chatbot someday then you deserve that because you’ve made crap.”

“My CEO is fucking obsessed with AI… but I’m not totally convinced. I’m definitely on the side that I think humanism is really important. I think brands need to have a human element to it.”

“The biggest issue with AI is the lack of media literacy we have right now.”

Revving up referrals 

“We launched [the newsletter function on LinkedIn] and literally within a week had like 50,000 subscribers. It was insane… We put some ads in there, but really the goal of it for us was just brand awareness, to push you onto our website.”

“One thing I found is we have no data from [LinkedIn’s newsletters] at all. We knew how many people subscribe but we could never get a clear answer on, is anybody actually opening this? I wasn’t even clear on how it was delivered. Because I was a subscriber to our LinkedIn newsletter, but I never actually got it in my inbox.”

“I’ll say for traffic, MSN and Yahoo still deliver [as a referral source]… They give royalties as well. It’s not a huge amount of money. They’ve got pretty cheap CPMs on their site.”

“[Twitter is] one of the few platforms left where if you post more, you will reach more — you’ll see your page views go up. And sometimes on Facebook, you really overdo it. You post too much and your reach goes down… But we’re being very cautious with our Twitter strategy.”

“You know what’s a crazy referral source that I just happened to stumble upon the other day? Pinterest. It’s a platform that as things get older, they yield more traffic… [We have] posts that are five plus years old and are still delivering significant traffic, it’s ridiculous.”

“We were seeing significant referral, and building audience [on Pinterest] and it just diminished significantly over the past few years, to the point where we’re not investing in it.”

“It costs more, but the audiences convert if you’re doing paid on Pinterest, at least what I found. The CTs are higher.”

“Flipboard never gets commerce content. So when something shows up, it’s shiny and new and people are more inclined to read it, click on it and look at it.”

“At this point, you’ve got to throw everything onto the page that you think would help [with SEO].”

Numbers to know

3.4%: The amount that U.S. advertising spend is projected to grow in 2023, according to ad-buying firm Magna, down from its prediction of 3.7% in December 2022.  

$7.6 million: The amount of money that The New York Times’ CEO Meredith Kopit Levien earned in 2022, up 73% from $4.4 million in 2020. 

90%: The portion of money that Gannett’s top 100 daily newspapers contributes to its newspaper business. The publisher currently owns 217 papers, but CEO Mike Reed is reportedly planning to sell off an undisclosed number of those papers. 

$20 billion: How much Twitter’s owner Elon Musk values the social media platform currently, down almost 55% from the $44 billion he paid for the platform in October 2022. 

What we’ve covered

How Dotdash Meredith worked through the challenge of integrating two major publishers’ tech stacks:

• Marriages aren’t easy. Neither are mergers. Neither are integrating the product infrastructures undergirding the combining companies. 
• At the Digiday Publishing Summit, Dotdash Meredith product chief Adam McClean shared why he had initially expected the integration to be done by summer 2022 and why the work is still ongoing.

Get a deeper look into the Dotdash Meredith merger here. 

How one publisher is using generative AI to publish thousands of evergreen posts, create a chatbot:

• Ingenio has used generative AI technology to publish over 11,000 articles. 
• The company, which owns websites like Horoscope.com and Astrology.com, will soon launch a chatbot that will provide readers with personalized spiritual guidance.

Read more about Ingenio’s use of generative AI in its content strategy here. 

Wirecutter tests new content on different platforms to increase affiliate revenue:

• It’s clear that the economic downturn has had a negative impact on publishers’ advertising revenue, but the impact on consumer revenue streams, like commerce, has been less obvious from the outside.
• During a session at the Digiday Publishing Summit in Vail, Colorado on Monday, however, Leilani Han, executive director of commerce at Wirecutter, said affiliate revenue was up and consumers are reading commerce content on new platforms.

Learn more about Wirecutter’s audience engagement strategy here. 

Newsletter publishers cautiously plan to expand editorial and sales teams:

• Newsletter publishers have shown resilience during the advertising slowdown, maintaining ad revenue and email subscriber growth. 
• As a result, publishers with newsletter-focused businesses are looking to grow their editorial and sales teams this year — but cautiously, to keep spending down during a time of economic uncertainty and to continue their focus on profitability.

Read more about how newsletter publishers are growing their teams here.

Newsletter publishers say they continue to see uptick in revenue despite advertising slowdown:

• At a time when larger media companies are feeling the pressure of the economic downturn and advertising slowdown, publishers that center around producing newsletters say they are growing their subscribers to those emails and the ad revenue they are attracting with them.
• The Gist, 1440, Industry Dive and The Ankler are continuing to run profitable businesses and are not seeing the impact of the advertising slowdown on their revenues.

Read more about how newsletter publishers are fairing the economic uncertainty here.

What we’re reading

Grid News is shutting down: 

Just a week after Jimmy Finkelstein’s The Messenger announced its acquisition of Grid News, Axios is reporting that the new media startup will shut down the media brand, which currently has about 50 employees. 

Google Search wants readers to know more about the author: 

In order to give its users more context around who content is written by, Google will add “perspectives” and “about this author” features on its search engine, TechCrunch reported. 

Publishers brace for a fight with Microsoft and Google over generative AI:

Platforms have a history of taking – and profiting off – publishers’ content without proper consent and with the inclusion of generative AI technology into chatbots Bard (Google) and Bing (Microsoft), media companies are getting ready to fight for proper compensation this time, according to The Wall Street Journal.  

TheSkimm is pursuing more advertisers with its new in-house creative agency:  

TheSkimm is expanding its branded content business by launching a new in-house creative agency called SKM Lab, according to Adweek.

To address this challenge, BuzzFeed is hoping to tempt media buyers and ad clients with its proprietary campaign measuring tool, the BuzzFeed Creator Score. The tool generates a grade for creator-made branded content an ads, determining their efficacy. And its use is expanding to include predicting how impactful a campaign will be based on factors including which creator is paired with the brand, which platform the campaign runs on and even what the creative is within the campaign. 

Scores are based on a percentile scale of zero to 100, with 50 being the average score across all of BuzzFeed’s brands. On average, creator campaigns — both branded content and other ad types — net out in the middle of that range, according to Nadel. And of the top five highest scoring ads, three feature creators.

BuzzFeed’s Creator Score is determined primarily through audience engagement metrics like click-through rates and video completion rates, which are set against the company’s ad accounts versus organic pages. When asked how a platform’s overall performance impacts how scores are determined — for example, Facebook has been lagging as a traffic driver for BuzzFeed over the past few quarters —  Jason Nadel, BuzzFeed’s senior director of revenue operations and social discovery, said thresholds are set to make sure that scores aren’t based on a low audience sample size.

The first version of the BuzzFeed Creator Score wasn’t actually linked to the creators that BuzzFeed works with at all, however.

Collaboration with creators

First built in 2018 by Nadel, the Creator Score’s intended use was to solve the internal question of which piece of branded content performed best and then how could the publisher get more eyeballs on it. But after putting it into use, Nadel said the external applications for the score became more evident. The sales team could incorporate it into pre- and post-deal conversations, but the tool could also be used to measure how successful the creators in BuzzFeed’s creator network were at producing branded content and ads for BuzzFeed’s clients.

“What it’s turned into is a focus on creators specifically as this has become a much bigger priority in our product suite,” said Nadel. “It’s really powerful to figure out [which] audiences are engaging with the content and interacting with the content, and we share that directly with the creators. They can see which versions of their ads perform best and which audiences perform best.”

This, in turn, helps creators get better at producing branded content, and gives BuzzFeed more concrete data to help develop the 100-plus creators in their network and outside the network as well. 

“Increasingly, as you talk to more creators, they need help and would love to see cross-platform data,” said Ken Blom, BuzzFeed’s evp of business strategy and operations. He added that creators who are native to TikTok may be more confident about creating branded content for that platform, but less so when it comes to Instagram or Facebook. The Creator Score tool becomes a “differentiator” in giving those creators the assistance they need to figure out more definitively what does or doesn’t work for their audiences on other channels, Blom added.

Creators who score low are not demonetized or kicked out of the BuzzFeed Creator Network, however, Blom clarified. Instead, that low score is factored into future deals and can help to determine ill-fitting pairings between creators and brands. And while revenue-share deals are negotiated upfront with creators, he added that scores do factor into future campaigns. (He would not provide further context around what average revenue share deals look like or how the scores impact negotiations.)

“I don’t usually hold it against a creator if they had a bad campaign. There are so many variables,” Nadel added.  

In the world of influencer marketing, what BuzzFeed is doing with Creator Score is all but expected nowadays on the creator side of things.

For instance, what BuzzFeed is offering to creators doesn’t seem to be too dissimilar to how their managers and talent representatives provide feedback, according to Gabe Gordon, co-founder of social shop Reach Agency. “They’re acting like a talent management group to some level, which they should, because their success is based on the performance of the creator in their content,” he said. 

Selling creator campaigns with the score component

On the ad side, the Creator Score is not meant to be the end-all be-all for how BuzzFeed measures its campaigns. Instead, it’s an additive for overall campaign improvement. Brand lift studies and key performance indicator results like click-through rates are still factored into post-campaign analysis, Nadel said.  

“Campaign success isn’t necessarily just tied to this one score … [but] what I think this score is really useful for is uncovering what may be missed if you just focus on those [KPI] metrics,” Nadel said. Working together with the Creator Score, those metrics can help deduce “the best combination of variables” that provides for the best outcome for a creator-led campaign, Nadel added.

When it comes to media buyers, they’re split on whether BuzzFeed’s tool is being used by the publisher to grade its own homework. One buyer said that without third-party validation confirming the score, their trust in the data is ultimately diluted. But on the other hand, some data is better than no data when it comes to measuring the success of a campaign. 

That buyer also said the Creator Score would only be considered a value add to a campaign if the creators that their clients were able to access were exclusive to BuzzFeed. Otherwise, there are so many other cross-platform tools to measure talent that the Creator Score becomes redundant in the industry. 

Meanwhile, Ross McCormack, vp of influencer marketing at Havas Media Group North America, said that because the influencer marketing space has become so saturated, having the size and quality of BuzzFeed’s Creator Network is seen as an additive, especially if a client’s specific goal for a campaign is media efficiency. In that case, the Creator Score tool could help BuzzFeed close the deal with advertisers.

What it ultimately seems to come back to is how exclusive the BuzzFeed Creator Network is in the first place, which determines the value of the Creator Score.  

“If [BuzzFeed] has an exclusive talent roster or established deals with creators that uncover cost efficiencies, then that, in connection with the new measurement feature, could be very compelling from a buyer’s perspective,” said Jay Powell, svp of communications and influencer at MMI Agency.

Ultimately, it comes down to getting to a point where marketing in games is ad free, not brand free. 

Epic’s recent announcements at last week’s Game Developers Conference make that all too clear. The new developments include Unreal Engine for Fortnite, a new toolset that helps players make deeper experiences in Fortnite Creative, and the Fab marketplace, a gigantic catalog of high quality digital assets, as well as the Creator Economy 2.0, which gives 40% of revenue from Fortnite Creative and Battle Royale to in-game creators. It’s a sandbox of new tools for any marketer thinking about how their brand might exist in a game.

Digiday sat down with Epic Games CEO Tim Sweeney and executive vice president Saxs Persson to learn about how these new developments could impact the role of brands, creators and ads on the platform.

The interview has been edited for length and clarity.

Do you believe advertising has a role in Fortnite’s future, or do you think the current model is robust enough to handle the challenges of the market?

Sweeney: I hate advertising in games. The best moments in Fortnite have been other brands entering the world of Fortnite – fashion companies, the Ferrari dropping into the world, Marvel and Star Wars crossovers. I think brand presence is a much healthier way for companies to get involved in the metaverse than advertising. Playing an ad is just annoying. Players hate it and they aren’t very engaged with that content — whereas, give them a drivable Ferrari or a cool shirt they can wear, and they love it. 

There is a wealth of opportunity there for all these companies that have previously advertised to do partnerships with creators and to create crossovers of all sorts. Branded islands, branded concerts which incorporate these brands in fun ways that players actually like, as opposed to displaying advertising to play some stupid video. That’s not fun. 

We’re not in that business at all. Epic is not in the advertising business. We are operating an ecosystem that doesn’t let people do the bad things that are found elsewhere. Within the world of Unreal Editor for Fortnite, Verse [Epic’s new coding language] doesn’t expose a way to get player data. That’s a really important part of the player experience. It’s a place for having fun. 

Do you think there is any other option for advertising in Fortnite? Or Rocket League or Fall Guys, for example?

Persson: For Fortnite, no. 

Sweeney: You have billboards on the stages in Rocket League. I think they should be true to the real world and not feel intrusive into your game playing experience. 

If that’s the only option, then how do you scale those native integrations within Fortnite?

Persson: Brands do it themselves. We don’t do it. We have clear commercial practices of what creator teams are allowed and not allowed to do, and they make their own experiences. 

If a brand wants to do a product unveiling in Fortnite because we have an audience that fits better than anything you can find on TV, then they can. It’s not our work; it’s not our initiative. We just have the rules and regulations for what you can do in the ecosystem. 

How imperative is it for Epic to roll out more direct virtual commerce opportunities inside Fortnite and other virtual platforms?

Persson: If we found a way that would fit players’ interest, then maybe. But that’s not the plan. The direct economy is a tricky one because I don’t know of a way to stop that wave once you start it. 

Sweeney: It depends largely on what they’re selling. If you’re selling a ticket to an awesome experience, then that’s the whole model of the game business. That’s great. If you’re selling loot boxes, then no. We don’t like that. If you’re selling people a gameplay advantage, then that’s pay-to-win, and we don’t want that.

We see Fortnite as an opportunity to build a better world that’s free of the race to the bottom that’s driven mobile gaming to where it is. The key problem in the mobile ecosystem is that user acquisition is completely advertising-based, and the companies that have the worst consumer practices with pay-to-win and loot boxes make the most money from the consumer, so they’re able to bid the highest amount on advertising. So all the top games driven by all the top advertising are really bad games. We very much don’t want that world in Fortnite.

Persson: The next stage of our growth doesn’t require direct purchases. But if the next Star Wars movie wanted to premiere in Fortnite, and they wanted to sell a ticket on premiere night, and that’s where you went to watch it, that seems like a good value for players. 

Do you see any issues with copyright popping up with the increase of branded experiences in Fortnite? If a brand were to create an ‘official’ set of branded assets, how would you handle individual creators creating ‘knock-off’ versions of the same experience or asset?

Sweeney: There’s an entire legal framework behind copyright enforcement that we adhere to. The DMCA [Digital Millennium Copyright Act] process is a part of it. We’re also looking at more direct ways to help realtors resolve disputes among themselves if we can be of help there. We aim to have a high quality ecosystem that isn’t just a dump of infringing content. Because it’s open to users and one company like Epic can’t know all the copyrighted content in the entire world, there will be times that users release something that’s infringing and we hear about it from the creator and we take it down. That’s the imperfect, but best-known way of doing that. 

Why have the brand collaborations on Fortnite worked so well to date? Is it because they’re conceived more as something that seamlessly ties into the game and not a typical ad format? Do you see that becoming the norm for in-game advertisements?

Persson: Technically, it’s advertising when you play as Iron Man — but that’s not why it was fun. It’s wish fulfillment. It happens that Fortnite is a great sandbox for wish fulfillment. When we get the balance right, it’s fantastic.