Agencies Forced by Trends to Seek New Models

June was not  the most fortuitous month for advertising agencies. Not only did the Association of National Advertisers’ report on business transparency issues in our media buying ecosystem come out, tagging most of the big players with  borderline unethical if not illegal practices like kickbacks, but Kevin Kelly’s new book “The Inevitable,”  published on June 9, talks about getting rid of advertising agencies altogether and having marketers just pay influencers to promote their products, cutting out both agencies and publishers.

You will need to know the reasoning behind that position.

First, who is Kevin Kelly? Kelly is a very well-known and respected tech thinker, one of the founders of Wired magazine.  In this latest book he talks about a dozen trends  that we should embrace rather then resist, because they are going to be very important in the next couple of decades. Of course there are the usual suspects like artificial intelligence and robots, But Kelly also talks about changes in intellectual property rights since the dawn of the Internet. He characterizes the Internet as a gigantic copying machine capable  and laughs at our thinking we could impose digital rights management on intellectual property  online.

He also talks about the incredible proliferation of content spawned by the Internet, and the fact that the most valuable commodity today isn’t content  — it’s attention from consumers who are confronted by an almost overwhelming variety of it. So why should we have to pay for it ?

Kelly suggests that in a future of limitless content the advertising model may well be flipped on its head, and consumers would be paid directly to watch ads and try products without agencies as intermediaries. Or, in another variation, publishers would choose the ads on their pages and could even craft a publication just by stringing together really cool ads:

The simple idea is that you can craft a publication, or a reading/viewing experience, primarily by choosing and sequencing ads. Selecting the right cool ads — not merely cool content — is the attraction. Not just tiny adsense text ad boxes, but full page ads, or even commercials inside widgets. When I was part of the team making Wired magazine a decade ago, half the battle at launch was landing the right cool ads. We had to convince the advertisers to join (and pay) us. But what if we could just choose the cool ads we wanted, without having to ask permission? What if we could simply harvest the the best ads (measured by any metric we choose) and were paid for the ones we ran according to the traffic we brought to them?

In either of these new models, advertisers would not control where their ads appeared and thus the role of the traditional agency would be over.

Facebook’s FAN Will Serve Ads to Non-Users

Once again, Facebook has signaled its power in the ad tech business. After sunsetting Live Rail and its ad exchange, the social network-cum-media company has now gone all in on the Facebook Audience Network, designed to reach people who do not have Facebook accounts but look like similar audiences that do.

On the face of it, this is a good idea. But we wonder if it’s really as good as Facebook expects. There is actually a question on Quora, the well-regarded question and answer site, that gives us insight into what kinds of people don’t have Facebook accounts.

The foremost reason, which has had almost 2 million views, is that Facebook is a time suck. The second reason, not unexpected, is a concern for privacy and having one’s information out all over the internet. And the third reason is reject a Facebook account is lack of regular internet access.

Given these three reasons, we wonder whether this kind of targeting, as described by Adam Bosworth, Facebook’s VP of ads and business platforms, “the company hopes to use its interest-based data to target ads to lookalike audiences who don’t have Facebook accounts. It also hopes to use its “like” button to serve ads based on the content that engages people. ”

Bosworth admits that he doesn’t yet know how well this expansion of the total addressable market will work for Facebook, so the company is going to roll it out slowly. He feels he has the right tools to evaluate  whether he is adding value for publishers. But how will he test the impact on non-users of ads they didn’t expect? And how will he prevent fraud, once the ads get out into a broader market?

When companies are as large and powerful as Facebook is, they tend to think they have the engineering resources to deal with these questions. Our take on it is that Facebook is trying to get younger users, who seem to favor Snapchat, involved in Facebook’s ad network. This, however, is somewhat dangerous, because people under 13 do participate in Snapchat, while Facebook does not allow them to open accounts.

We are already beginning to recognize that Facebook is much more than a social network. Recently, because of the flap about liberal v. conservative views, we began to see Facebook as a media company. And now, if the FAN network succeeds, we may also have to think of it as an ad server.

What does Google think?

 

 

Mobile Video Ads Play Without Sound

At first, publishers were excited about auto-play video, and video ads also played with the volume turned up.  But we quickly found out the audiences did not want volume on in their offices, so we developed our inArticle (a.k.a. outstream) format to run without sound. As usual, everyone is now following our lead. A new study has revealed that 85% of video content runs without sound, especially if it is on Facebook. Even the ads. Facebook hosts up to 8 billion video views daily, and most of them are without sound. It’s as if we were returning to the era of silent, captiond movies.

We’re curious about the future of mobile video ads in this environment. At present, they command high CPMs from advertisers, but the ROI hasn’t bee determined yet. According to an eMarketer study, the pace of mobile video advertising will double by 2019. However, publishers and platforms are making what eMarketer calls “egregious errors” that turn off watchers.

Advertisers are guilty of the most obvious video errors, but publishers and platform providers sometimes share the blame. Among the more egregious offenses are serving the same video pre-roll multiple times during a content series, forcing long-form ads ahead of short-form videos, reusing video spots without regard to screen aspect ratios, and autoplaying—with audio!—without the user’s permission.

Almost any advertiser worth their salt knows that these lackluster experiences won’t deliver the desired results. And yet bad user experience is, if not the rule, certainly more than mere exception.

This is exceptionally true with Facebook, which now shares with Google as much as 80% of mobile ad spend.

Tailoring content to the whims of the Facebook news feed has helped publishers scale on the platform. It’s also turned news feeds stale as publishers put up countless videos that have the same look and feel. Take, for instance, this NowThis video about a Tylenol ingredient that makes people less empathetic and this Tech Insider video about a futuristic bike. While they focus on completely different topics, the key ingredients are the same: a striking visual or message up front followed by a text-heavy explanation of the content.

One thing that does work well on Facebook is branded content, even if it is silent. So at the moment, brands are flocking to that way to get their messages out. Another word for branded content, although often abused, is “native” advertising. And our Innovative Formats work well for that. We  just hope advertisers stick to a high quality standard for their branded content, so that it, too, doesn’t alientate customers.

New Consumer-Driven Ad Standards Proposed

Will changes to the advertising industry come from within, or from outside? Doc Searls, one of the authors of the Cluetrain Manifesto (markets are conversations) and the founder of the VRM (vendor relations management) movement) and a well-known privacy and security expert, Mary Hodder, are about to release what they call a “term,” which amounts to a set of choices consumers can make about what ads they want to see.

They have convened a group of high quality publishers and ad tech companies, including the ad blocker software developers, and are rolling out a set of choices consumers will be able to make about what ads they see. Once the consumer says “I want only ads that don’t track me,” or “I want only brand ads,” the publisher will serve ads according to the individual consumers’ choice.

This puts the responsibility on the publisher to comply, and on the ad blocking software maker to implement correctly. It’s for people who have already said they want to block certain ads, in an effort to make sure they don’t block ALL ads and force the escalation of the ad blocking/anti-ad blocking war that threatens to cause more turbulence in the industry.

As for advertisers, who want more and more data, and are the ones who encourage tracking (and the ones who pay the bills), they will be asked to accept these limitations on how far they can stalk consumers who have already chosen to download ad blockers.

This same “term” will also be presented at the United Nations this week, in an effort to bring it in line with what the EU and other global entities have already enacted with regard to data privacy.

The TL;DR here is that programmatic and RTB will not vanish, but retargeting will cease, for everyone, just as popups did ten years ago. And most advertising will be brand advertising, for which ultra-tracking is not necessary.

In a way, this is just “back to the future,” for advertisers, who got carried away with metrics and forgot they were dealing with human beings.

Time to Think Context, Not Reach

The digital advertising business is in a state of chaos and turmoil. Twenty years ago, the first display ads produced high click through rates (CTRs) and plenty of subsequent conversions–enough for them to be called performance ads. But over the decades, consumers have developed “banner blindness,” and publishers have seen a race of revenues to the bottom.

Advertisers, who pay the bills, have seen a lower ROI on campaigns, which has forced them to buy more ads, and has forced publishers to load their sites with boxes, banners and takeovers. Page load times slowed, and a dash of fraud and malware completed a disturbing picture.

And then came mobile.  With mobile, consumers had the opportunity to turn off ads in large numbers, because the ad blocking software early adopters had already downloaded was automatically included  for the average Joe in Apple’s latest mobile operating system.

Angry consumers who had been targeted and re-targeted turned off ads altogether.

The industry badly needs a savior. That savior will have to offer narrower targeting and more context for consumers, so they only see ads they want. It will change the way media planners buy media. They should no longer buy for “reach,” but for relevance.

The stakeholders in the current ecosystem are the agencies, retailers, and brands on the demand side (the advertisers), publishers, social networks, and apps where those consumers are already spending time, and the coveted object, the purchaser.  With mobile, locating consumers is easy: there are a small number of apps that consumers use for search, including Amazon, Facebook, Google, Yelp and they’ve largely aggregated the buyers.  Companies like RetailMeNot and PocketMath, which deliver mobile coupons, need to find those consumers only while they are shopping. Context is everything.

It would be helpful if every product in every store in the community were geotagged, and if you wanted to buy a Diet Coke you’d only see an ad for the places near you offering Diet Coke. You wouldn’t get ads for stores not in your geography, nor for products that were not Diet Coke. This would enable Real Time Bidding (RTB) platforms to deliver a truly contextual experience. This has been what’s been wrong with RTB platforms  up to now; they’re delivering without context.

Most research says people don’t consider ads for products they’re actually shopping for bad. Rather, they are perceived as information or content. How many times have YOU typed “gas station near me” or “Chinese food near me” into your phone? The ads and listings that come up are perceived as information. All too often, advertisers impatient for reach have made media buys too broad in their targeting. The advertisers need better data. And so do the publishers.

Mobile advertising is a rapidly growing data thirsty industry, and consumers are dissatisfied because the targeting is too broad and without context. In mobile, reaching a large number of people is less important than reaching the single right person at the right time — which is when they’re actually looking for something.

 

 

ZEDO SELECTED FOR OTA HONOR ROLL FOR FOURTH CONSECUTIVE YEAR

ZEDO OTA Award

The NYC ZEDO Team with its Award

14 June 2016, NYC — ZEDO, INC., the leading private end-to-end platform for innovative advertising formats, has announced it has qualified for the Online Trust Alliance (OTA) 2016 Online Trust Honor Roll for the fourth consecutive year. This honor demonstrates excellence in data security, responsible privacy practices and overall commitment to consumer protection, helping to protect customers from increased threats of cybercriminals and abusive privacy practices. This year saw a dramatically higher bar for selection.

OTA, a 501c3 nonprofit organization that works collaboratively with industry leaders to enhance online trust, completed comprehensive audits analyzing more than 1,000 domains and privacy policies, including approximately 100,000 web pages and more than 500 million emails for this report. The composite analysis included over two-dozen attributes focusing on 1) site & server security, 2) domain, brand, email and consumer protection and 3) privacy policy and practices. In addition to the in-depth analysis of their web sites, Domain Name Systems (DNS), outbound emails, and public records were analyzed for recent data breach incidents and FTC settlements. Key sectors audited include the Internet Retailer Top 500, FDIC 100, Top 100 Consumer Services, Top Media / Content sites, as well as OTA members and consumer facing US government sites.

“We are proud to once again recognize ZEDO for its leadership and commitment to working with peers, the industry and competitors to embrace consumer protection and embrace their right to privacy,” said Craig Spiezle. “ZEDO plays an incredibly important role in the advertising supply chain helping increase the integrity and trust of online advertising.”

“ZEDO strives to make security and privacy of its customers’ data a top priority.” stated Roy De Souza, ZEDO CEO. “We fully support the OTA’s guidelines, and we also adhere to industry guidelines for data protection. Trust is the foundation of the Internet and we need to work together moving from a compliance mindset to one of being stewards of consumer data.”

Nearly 1,000 companies comprise the Honor Roll, including ZEDO. The report indicates that company size and/or sales are not true measures of the level of security and privacy a company implements. “All companies are equally evaluated by the same criteria regardless of size. We have seen large e-retailers with significant sales fail to make the Honor Roll; conversely we have seen small to mid-size companies taking top grades,” said Spiezle.

Started in 2008 as an effort to drive adoption of best practices, the objectives of the Honor Roll are to 1) recognize leadership and commitment to best practices which aid in the protection of online trust and confidence in online services, 2) Enable businesses to enhance their security, data protection and privacy practices, 3) Move from compliance to stewardship, demonstrating support of meaningful self-regulation, and 4) Promote security & privacy as part of a company’s brand promise and value proposition.

“We are honored to be recognized for the measures we take around security and responsibility for our customers,” said De Souza. “We feel an enormous responsibility to provide protection and security for our customers.”

To review the full 2016 Honor Roll report, please download a free copy.

ABOUT The Online Trust Alliance (OTA)

The Online Trust Alliance (OTA) is a member-based, non-profit representing the global internet ecosystem – including the public and private sectors. OTA’s mission is to develop and advocate best practices and public policy which mitigate emerging privacy and security threats while enhancing online trust, innovation and the vitality of the digital economy. OTA is committed to the protection of critical infrastructure, balanced legislation and data protection through the promotion of best practices, benchmark reporting, and self-regulation. For more information, visit: https://otalliance.org

ABOUT ZEDO

ZEDO, Inc. is a platform offering clever, proprietary high impact formats that help publishers get new revenue. Known for technical innovation and ability to scale, ZEDO offers publishers products and services – including ad serving – and rich media formats with 99% viewable impressions. ZEDO also serves advertisers through ZINC, a suite of high impact formats including video and native ads on premium sites. Founded in 1999, ZEDO is headquartered in New York, with offices

In San Francisco and Mumbai, Singapore, Sydney, Seattle and Phoenix. As the largest independent ad technology player, the company is distinguished by its global reach and cosmopolitan market knowledge.

 

 

Ars Technica Defeats Ad Blockers

Ars Technica has some of the best tech writers in the industry. Founded seventeen years ago, it is serious in its reporting and reviews, and it has a serious audience of tech nerds who differentiate it from publications like Tech Crunch or Mashable, which focus on culture and lifestyle tech. So of course Ars also has the audience that knows the most about ad blockers, which is why it is the most experienced at dealing with people who don’t want to see ads.

Ars Technica has been dealing with ad blockers for much of its existence, But now it is owned by Conde Nast (since 2008), and as part of a large media empire, the site has had to figure out a strategy to keep its 6.3 million readers and still make money. The “suits” at Ars chose to deploy a mixed method, which is what we think most publishers are going to have to do. And according to Digiday,  the strategy cut the use of ad blockers from 40% to 25%, which the site finds acceptable (or at least realistic).

First, they concentrated on fast page load times, paying attention to which ads slowed their page loads and making alterations and adaptations accordingly. Second, they’ve cut out intrusive ads, like page takeovers. Except their own: Ars Technica shows a pop-up for people with ad blockers asking them to whitelist the site. It’s a “we’re in this together, and surely you didn’t mean to block US,” type of strategy.

Ken Fischer, who founded the site and still serves as editor-in-chief and CEO, says he has built 25% use of ad blockers among his audience into his business model.

“It won’t get any lower than 20-25 percent for us, because we have a lot of CTOs, CIOs of companies that install business script blockers, so there’s corporate-level ad blocking. It doesn’t really worry us at all,” said Fisher.

We think that’s what all publishers are going to have to expect. There are a number of people who, no matter what incentive you offer, will never turn off their ad blocking software, and rather than freaking out, it would be best if the entire digital media industry built consumer preferences into business models and balanced costs with revenue to safeguard survival.

 

Verified by TAG Gains Momentum

If you’ve been in the ad tech industry, you know that until a couple of years ago, although many people knew the industry contained fraud, nobody was really incentivized to do anything about it. And then, suddenly, the lights came on for the advertisers, who realized they were footing the bill for some of these fraudulent ads, and for the consumers, who realized that they were paying for ad fraud in malware and data costs. Now, with the new Verified by Tag initiative, ad fraud is at the top of everyone’s list of things to erase.

A survey conducted by E&Y for IAB revealed that in the $52b ad industry, $8.2 billion can be saved each year if the digital advertising industry worked together to eradicate corruption across the supply chain. Invalid and fraudulent traffic takes $4.6 billion out, internet piracy takes $2.5 billion, and malvertising takes $1.1 billion. Thus, every responsible company has a role to play in combatting fraud.

Last year, IAB created the Trustworthy Accountability Group (TAG). TAG is creating a meaningful seal of approval system for the digital ad ecosystem; it wants to be the leading organization promoting transparency. Because it was formed at precisely the right time, TAG has a fancy board composed of all the big players, from the Association of National Advertisers to  Mondelez to Facebook.

We’ve been working on the business transparency committee, which is developing the registration and payment ID procedures. We have also been working on incorporating the new Inventory Quality Guidelines. At present, companies can still self-attest about their inventory quality, but that’s going to change in the future, with independent audits replacing self-attestation. We want to be ready.

The TAG registry is a closed system of supply chain participants that demonstrate a commitment to higher standards of transparency. It’s called “Verified by TAG.”   “Verified by TAG” is the gateway to all of TAG’s other certifications, tools, and working groups.

We sent our Compliance Officer through a training program at which she was shown how to create a “Description of Methodology” for what processes, procedures, and controls we have in place to assure that our inventory is clean when it enters our platform, and the transaction between buyer, seller, and any intermediary who might be involved, is completely transparent.

We’re excited that the industry has finally come to recognize the importance of good business practices, even though this will entail a lot of work for our team as we increase the sophistication of our detection and reporting tools.

 

 

Programmatic Needs a Dash of Trust

At the quite contentious IAB Annual Leadership Meeting,  four Town Halls were set up to address some of the big problems facing the industry: ad blocking, fraud, mobile, and programmatic. Because all of them met at the same time, attendees had to choose one.

We attended the programmatic Town Hall, there most of the conversation was about making programmatic tools better, so they could be used to connect the right buyers and sellers — not just more buyers and sellers. Last year, the advertising industry has learned that more — more ads, more frequency, more reach — is definitely not better. On the other hand, there are many imperatives urging us to advertise with fewer ads that are more visible, more costly, and more acceptable to consumers. There’s still some doubt about whether programmatic can actually bring that off.

Programmatic has certainly taken over the industry and automated the work flow. However, it got off on the wrong foot as a tool to help publishers monetize the worst of their inventory rather than the best. Because the buyers know they’re buying remnant, and are only using it for reach, it’s easy for targeting to go wrong in programmatic. What’s missing is trust.

We’ve been around the ad business a long time. During most of that time, a buyer and a seller met for lunch and a drink and discussed the “buy.” The buyer (agency or brand) could not only tell the seller (publisher) the objectives of a campaign, but could ask questions about the availability and desirability of the inventory. Software, while it should have been able to replace these conversations, hasn’t done it. Rather, it has provided both sides greater opacity in a process that used to be relatively transparent.

No wonder so many ads miss their targets, raising consumers’ ire. I’m not sure publishers who refuse to serve content to people who use ad blockers are the solution to this problem any more than ad blockers themselves are.

 

Medium Has Decided to Remain a “Platisher,” Adds Brands

At the recent Ad Age Digital Conference in New York, a shy Ev Williams delivered a first-day keynote announcing a new direction for his third company, Medium. Until now, Medium has been the prettiest content management system in the writers’ world. It was conceived by Ev as “a nice well-lit place for ideas,” because even after he exited from Blogger and Twitter, Ev has not lost his passion for helping people publish their ideas to the world. Looking uncomfortable with what he was about to announce, he talked a lot about “place,” and about how some places were better than others for big ideas.

He said that there had been, in the past fifty years, a population shift to cities, because cities were where the opportunities were. In the last twenty years, the shift had been to “digital cities. He characterized the top three apps on everyone’s cell phones as their digital cities, and remarked that traffic was shifting from the open web to these digital cities. As of 2010, the top ten online sites had 75% of internet traffic, up from 40% in 2006. It is now nigh impossible to get an ordinary web site noticed.

Ev compared a “traditional” web site to a shop in the country. No matter how unique, or worthy, a country store will not have the traffic of one in the city. You want to be where the people are, in the right context, and the easy opportunities are in the digital cities.

When he started Medium in 2012, it was to answer the question “can a new digital city still be built?” The value of Medium is in its editor, its tools, and its responses. From inception, it has been a platform with high engagement. Engagement is the metric by which Williams measures success; if you’ve ever visited Medium, you know it tells you not how many words are in a story, but how many minutes that story will take to “consume.” (The optimum length for a story on Medium is a 7-minute read.)

Talia Jane, the intern from Yelp who wrote a letter to Jeremy Stoppelman, Yelp CEO, complaining about her dead end job and low wages, got ten million minutes of reading time from people who engaged with her rant, including several who responded either by writing their own contradictory rants, or by supporting her.

What Ev had come to AdAge Digital to announce was a new commercial zone: Medium for Publishers, that can be used by both brands and businesses, at no cost for now. The new zone will have support for AMP and Instant Articles, and will contain brandable space that existing publishers can use as a site.

We were wondering how long it would take brands to come to Medium, and this speech answered that question.  But it raises a new one: as brands begin publishing what will amount to native ad formats on Medium’s platform, how long will it take “regular” readers and writers to find the exits?

What Medium Looks Like to a Writer

What Medium Looks Like to a Writer