Native and Mobile Ads Draw High CPMs

The advertising landscape continues to shift. This time the news appears to be good for the publishers. MediaRadar’s newest study on advertising trends in 2016 and Q1 2017, which came out at the beginning of the summer, revealed that high CPM ad placements are on the rise (whew!), especially if they’re mobile or native; niche and enthusiast sites still flourish in print (along with regional titles,) and native ad placements have grown 74% in Q1 year over year.

Native ad formats have grown the most and command the highest CPMs. While many forms of native advertising are still frowned on,  the demand for native has nearly tripled since 2015. That’s partly because native ad formats typically escape ad blockers, but also because consumers don’t mind reading or viewing something that’s truly informational and isn’t interruptive. Native ads are predominantly  brand ads, and the further good news is that digital advertising has finally arrived at a point where it’s not all remnant inventory, performance ads, and low CPMs. This will allow digital advertising to be effective at points nearer the top of the funnel.(If there is still a funnel at all). For now, native seems to outperform more traditional ad units.

As for print advertising, it still hasn’t gone away, although spend did decline 8% year over year. While general interest titles are languishing, niche and regional publications appear to be on the rise. And many advertisers have begun to target smaller volumes of engaged users over sheer reach.

This seems counterintuitive to us, but we’ve observed it ourselves: programmatic buying has declined. In fact it’s down 12%, and we think it’s because media planners are tired of not knowing where their ads are going to be seen. Brand safety is one of the problems, and the other is viewability.  Viewability is the new currency for advertisers and it’s tough to track viewability accurately with programmatic buying. Brands really need to buy programmatically, however, because it’s far less effortful, especially for large buys. We think the market will settle somewhere around programmatic direct, which allows far more control than simple programmatic.

If the current market trends continue, publishers should see increases in revenues, brands should see growing effectiveness of ad spend, and consumers should be less annoyed by formats that offer little else than interruption.

 

 

 

 

 

European Privacy Rules Should Not Kill Free Media

Randall Rothenberg, CEO of the Interactive Advertising Bureau, one of our largest digital media industry groups, is on the warpath again. This time he is afraid that a new proposed rule in the GDPR (General Data Privacy Regulation), which takes effect in May of next year, will eventually kill  the ad supported free media ecosystem that has been in place for the entire existence of newspapers.

Buried in pages of amendments to the European Union’s latest privacy proposal, the ePrivacy Regulation, members of the European Parliament recently recommended language that would strip European publishers of the right to monetize their content through advertising, eviscerating the basic business model that has supported journalism for more than 200 years. The new directive would require publishers to grant everyone access to their digital sites, even to users who block their ads, effectively creating a shoplifting entitlement for consumers of news, social media, email services, or entertainment.

The language specifically says

“No user shall be denied access to any [online service] or functionality, regardless of whether this service is remunerated or not, on grounds that he or she has not given his or her consent […] to the processing of personal information and/or the use of storage capabilities of his or her [device].”

In practice, it means this: The basic functionality of the internet, which is built on data exchanges between a user’s computer and publishers’ servers, can no longer be used for the delivery of advertising unless the consumer agrees to receive the ads – but the publisher must deliver content to that consumer regardless.

Rothenberg refers to this proposed regulation as about to enable behavior akin to shoplifting or turnstile-jumping. Moreover, he says that since 76% of internet media is supported by advertising, much of the world’s free media would inevitably disappear, leaving us essentially without all the freedom of the press that the internet enabled for the past twenty years.

Rothenberg is paid to advocated on behalf of the internet advertising business model, and we all realize that, but here is an exceptionally good point that he makes about mobile advertising and how its demise would affect democratic values:

The impact in the mobile environment, where the majority of mobile applications depend on advertising revenue to survive, would be just as devastating. With few consumers willing and able to pay the additional taxes, the majority of the online content they enjoy today could disappear forever – at exactly the time authoritarian governments around the world are attempting to seize more control of the news and entertainment media.

While some might argue that Rothenberg’s latest rant is overstated, we think  this is a very unusual period in the history of the world’s democracies, and it makes sense to advocate strongly for free, ad-supported media  –as long as it is not overly intrusive and provides value to consumers.  That’s the key point that Rothenberg forgets to make, but is never far from our minds. To earn consumers’ attention, we have to provide fundamentally better advertising. And that, paired with free media, can preserve the array of voices in the digital media landscape that contribute to the preservation of both human rights and democratic values.

 

Fixing the News Business (For Now)

Jeff Jarvis, former founding editor of Entertainment Weekly and creator of Buzz Machine, and now professor of Journalism at CUNY,  has written a very profound article on how to save newspapers. The article is relevant not only to newspapers, but also to any publication that seeks to maintain its life in the current digital environment. In this environment, there is competition for attention, and an almost infinite supply of news, both fake and real, and entertainment.

As an experienced partner to publishers (since 1999), we would like to recommend that they think about some of the points Jarvis makes in his article. He begins by setting the stage:

The burning house sits on the foundation of media’s old business model, which is built on volume: reach and frequency in mass media terms, unique users and clicks online. This house is doomed to commoditization as the abundance and competition the internet spawns drive the price of the scarcity we once controlled — media time and space — toward zero. Yet this is the model that still makes us our money and so, just to survive and perchance to invest in an alternative future and home, we must still feed that fire with cats, Kardashians, and every new trick we can find, from programmatic ads and so-called content-recommendation engines (which commoditize media yet further) to native advertising (which, when it fools our readers, only depletes the seed corn that is our trust and brand). We know where this ends: in ashes.

Well, we all know that. Now what do we do about it? Jarvis says we have to build our businesses on value over volume, and we must develop relationships that go deep into communities. And by communities he means not just localities, but affinity groups and other self-identifying niches and segments — perhaps parents, perhaps, transgender young adults, perhaps cancer patients. The key here is self-identifying.

This means not buying data, but developing our own — first party data that comes from talking to our current customers, subscribers, visitors, and finding out more of what they want. For some publishers, this is more difficult than it would seem. As publishers, we’re used to putting out content and assuming we can target the audience from outside. We can target, for instance, Hispanics. But Hispanics don’t necessarily define themselves as Hispanics; they have characteristics that cut across the obvious label.

Note well that in each of these situations, we must shift from media-centric products — our newspaper, our content, our home page, our comments — to public-centric services: a place for people to come together with residents of their town; a place where seniors can find the right adult development for them; continuing alerts about developments in an issue a high-school parent cares about; a means of connecting with others who are concerned about filthy park to get it fixed; and so on. I am not talking about personalizing the serving of the content we already have (though that would be a good and necessary start). I am talking instead about building new products to serve specific constituencies in new ways.

And what do we do to solve this?

Start with advertising. At the most basic level, if you are making products and services that are more useful, engaging, relevant, and valuable to people, then you will get greater loyalty, engagement, and usage, and even under the old, CPM-based advertising business, you will have more ad inventory. More important, knowing about people’s interests and needs — at an individual level — will enable you to sell higher-value and highly targeted advertising.

The only way we can fight media’s commoditization at the hands of programmatic and retargeting advertising and the large platforms is by gathering our own first-party data. And the best way to gather that data is not by forcing our users to give it to us through registration, by inferring it through demographics, or by sneakily compiling data from privacy-pillaging services such as Acxiom.

This is your decision, publishers. What kind of publication do you want to be?

How to Make User Experience Better on Digital Sites

Ad blocking is not the end of the world for ad-supported digital content. In fact, it’s just forcing all of us to do better. It’s as if we received an industry-wide wakeup call while there was smoke but not yet an outright fire.

A combination of better ad formats and different KPIs for advertisers can save the current situation from getting worse, and can even repair the damage already done. ZEDO is always working on behalf of publisher partners to find ways to monetize and protect the viability of free digital content. We have representatives at the major industry groups, and a constant stream of input into industry developments.

For example, a recent Digiday webinar we attended on publishers and ad blockers shared the emerging best practices of premium publishers, which are really all over the place as they struggle to keep ahead of industry changes.  These publishers make frequent changes and perform lots of A/B testing to find out how to respond to consumer demand.

There is general agreement that asking consumers to turn off ad blockers only works a small percentage of the time. And charging for content only works in the case of very high value financial information.

But here is the good news: several publishers have simply used a technology to turn ads on for consumers who have installed ad blockers, and their page views have not gone down. They only turn on a small number of ads, and they’re careful how the place the ads and they try to serve ads that are truly engaging. This has told them that consumers often install ad blockers and forget they’ve done it, and don’t mind when the ads return. As long as the ads are not overwhelming. Further research has demonstrated that when people install ad blockers they do it to avoid tracking and slow page load times rather than to avoid ads per se.

We think that programmatic came in too quickly, making it too easy for publishers to stuff their sites with ads that cheapened the user experience. And users, who couldn’t get through a slow-loading site loaded with ads, bailed in droves, either by not visiting the site again or by installing ad blockers or both.

This is easy to fix. Don’t measure the old outdated stuff: how many ads served, how many ads seen. Measure engagement, which may be more difficult, but will ultimately produce the right rewards. We know we’ve ruined display advertising, so let’s not overuse video either. And let’s not think that all digital advertising is for direct sales; let’s make sure our sites are places where advertisers can place a brand ad and receive value. A smaller number of ads in engaging formats,  strategically placed and served to the right customers, can co-exist quite nicely with ad blockers.

 

 

 

 

Brand Safe Outstream Video for Publishers

We have been offering what the market now calls “outstream video” ads for almost three years.  As one of the earliest experimenters with the format as we knew it — as a video ad placed on a text site — we found the ads well-received. Indeed, when we began offering this format, we called it “instream,” because it was a  mobile video that showed in a stream of text content. It was a way for publishers to get the higher CPMs for video advertising without having to produce their own video content.

We have no idea why the industry re-named this format “outstream,” which has caused confusion about what the format really is and whether it has advantages for publishers. Now EMarketer has done a study showing that this format has a future, if certain obstacles can be overcome. These obstacles do not apply to the way we sell outstream, because we are not an open exchange; we use our ZEDO secure premium platform.

Here are eMarketer’s reservations about the future of outstream  along with our responses:

Concerns over potential ad fraud

When we sell an ad format to a brand, we do not put the ad on an open exchange. Instead, we go after publishers in our network who we think will want the ad, and fill from our internal publisher partnerships. We have been measured as 97% fraud free, and we have purged our network of suspicious “publishers.” We will only do business with premium publishers, which is why we are smaller than some of the open exchanges. Most of those open exchanges will eventually have to change their business models to accommodate new IAB and Trustworthy Accountability Group certifications coming next year.

A relative lack of measurement data to corroborate its value

On a private platform, it is easier to see where and when an ad appears. We have partnerships with measurement tools so we can provide information on completion rates

A perceived disconnect between text-based content and video-based ads

Again, in our case we use a partner to scan all our publisher pages for appropriateness of content and brand safety. Truthfully, it’s possible to track many of the things that have given digital advertising a bad name if people will just try a bit harder. All the brand safety tools are out there, and have been out there for the past five years. In the past, we partnered with a company called Proximic, which was eventually sold to comScore, and now we are partnering with AmplifyReach.

The possibility that out-stream ads could be detrimental to media brands in the long term.

This has more to do with design thinking on the part of media brands and the way they present ads on their own sites than about outstream itself.  Fewer ads at higher CPMs appearing within a stream would naturally upset visitors less than obtrusive takeover ads that appear before a visitor even begins to interact with a site. A big reason for us to develop outstream was our desire to get away from takeovers and interstitials, which brands loved and publishers hated.

 

Highly Differentiated Offerings Survive

We recently listened to Terence Kawaja, founder and CEO of Luma Partners, our industry’s investment bankers. Kawaja participates in many of the mergers and acquisitions now occurring in the industry, and he had some interesting information that made us believe ZEDO and ZINC are moving in the right direction — toward highly differentiated offerings.

We are no longer defining ourselves as an ad tech company, because we are no longer simply a middle man in transactions. We are a private platform that services a premium publisher network on the one hand, and major brands who want innovative formats that generate high engagement on the other. Our latest innovation is “Watch and Engage,” designed for affinity groups and fans on mobile devices and made to run within apps.

Kawaja says that the dark night of ad tech is occurring in the pullback of undifferentiated companies, many funded during the ad tech hey- day by venture capital.  Some of those companies, which he declined to name, “are zombies, under siege but hard to kill.”

There are currently 4000 companies in the Lumascape. (We remember when there were fewer than 2000.) In the current environment, you can have a company with $20, $50, or even $100 million in revenue and not be safe, because most ad tech companies are not SaaS and they do not have continuing revenue. To succeed, a company today needs scale, growth and profitability.

One company Kawaja mentioned favorably is The Trade Desk, whose IPO was highly successful even in what has been called the dark hours for ad tech.

When questioned about the “duopoly” of Facebook and Google, and its effects on the future of the sector, Kawaja was surprisingly optimistic. There will still be market opportunities, he said, even when everyone is perceived to be fighting about scraps, because the industry is now so large that a good company can take market share from another, less technically astute and customer-focused company and grab a slice of  the $34 billion market remaining after the duopoly has soaked up 75% of the ad spend. Behind Google and Facebook,  Amazon has the best shot at being a credible #3, because with its Alexa devices, Amazon has made every house into a Trojan horse for information.

Another cause for Luma’s  optimism is Kawaja’s belief that ad tech will see multiple exits next year over $100 million each. He says ad tech is like any other tech sector, although it has more “false positives,” by which he means companies that appear to be innovative and successful, but are actually not differentiated enough in their product offerings to compete in the marketplace. Those will continue to be acquired next year.

In the media industry itself, Kawaja sees the beginnings of a big migration from I/O to programmatic that we have been seeing and participating in for four years. When he spoke of the beginnings, we thought he must be referring to the video end of the business, convergent TV, or streaming over the top, because display went to programmatic years ago. But the convergences of TV and video, happening as we speak, disintermediates a market that consists of $75 billion in cable and network TV spend, and another $75b in paid TV.

So there’s plenty of money for companies that can truly add value, as we believe we can.  Get in touch with us at adsales@zedo.com to find out.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For Publishers, Tomorrow Has Come

Advertising was born as a way to introduce consumers to new products. It was placed in a mass medium through which  consumers got both information and product knowledge. Because consumers had to go to a store to buy, advertising was often separated from the buying experience by hours, days, weeks. The goal of traditional advertising was to keep the name of the product in the mind of a consumer until that consumer was ready to buy. That was called branding.

However, today information about products is everywhere, especially on e-commerce sites like Amazon.  You may want to ask whether we even need advertising in a world so full of product information.

We do. We need it to distinguish between one product and other in the same space. And we still need it to keep the names of products top of mind until we are ready to buy. 99% of the time people are online, they’re not there to buy anything.  That’s the big  mistake digital advertising made in its early years. Every time an ad appeared, it tried to sell someone something.  This annoyed the non-purchasing visitors.

We are entering a different world for advertising. The app store now has 2,000,000 apps that have been downloaded 130,000,000,000 times. $50b has been paid by Apple directly to developers. There are now four separate Apple platforms, each of which is world changing, and each of which has its own apps. And we haven’t even talked about Android, which has the lion’s share of the mobile market.

Every app developer is a publisher, and each is competing with traditional publishers for attention. If you are playing Candy Crush, you are not consuming news. And if you are consuming news, chances are its curated within an app. The open web has lost ground to the application economy. The audience is fragmented beyond belief.

What does this mean for advertisers? It means many opportunities to bring a message to potential customers, but in a different environment with different affordances. It’s not about the masses anymore, it’s about the niches.

To reach niches, engagement is key. Advertisers need to be clever about how they attempt to engage people who are not online to buy. Their goals need to be changed from performance to branding, and their strategies altered accordingly.

 

 

If You Care About Security, Come to ZEDO

We have taken security very seriously lately on the ZEDO ad server. In fact, we have three major concerns for our customers and partners:

  1. resisting all the fraud, malware, and piracy problems that have plagued the industry since it began, and offering our customers a clean supply chain.
  2. Making sure our technologies load quickly and do not slow page load times for publisher partners
  3. Ascertaining the brand safety of the sites where our ZINC ads appear.

Every month we roll out technical updates that contribute to these goals.

This month:  for page load times, we are migrating to Gecko ad tags, to allow our publishers to run two of our innovative formats simultaneously .  Gecko is an ad serving tag that is designed to have seamless capability to serve different formats and innovations.  It can be configured to serve one or more ad formats per page view, such as a standard 300×250, a 728×90 InView panorama and an InArticle video for one tag call.

For brand safety, we have partnered with AmplifyReach.  We have started the process of categorizing Page URLs of various sites from our inventory pool into first level IAB categories. We also store brand safety score for each URL as identified by AmplifyReach.  We are learning every day how to make our inventory safer for advertisers.

We have added the capability to monetize secure sites. We saw that a number of publishers from our inventory pool going secure had increased lately, and if we get a request from a secure site, we send a secure flag in the BID request to all the DSPs. Because non-secure scripts cannot run on secure sites (the browser returns an error) this flag is important. By passing this flag DSPs know that they have to send down secure Ad Code if they bid and win.

We continue fighting the good fight to protect advertisers while increasing revenue for publishers. This has become a very complex endeavor, but advertisers are cutting the number of sites they will appear on and publishers have begun enforcing greater security as well. Vendors who cannot bring adequate security and brand safety to the table will be cut from both premium inventory and ads from quality brands.

For years we have been predicting that things in the digital advertising industry will improve so everybody gets better results, and we think this year it is finally happening. This will be good to everybody. The premium publishers will make more money, and the advertisers will get better results.

 

 

 

 

Will Facebook Groups Hurt Publishers?

Publishers who have struggled to maintain revenues for years against the onslaught of Facebook’s command of the audience  now must face another example of how little the site truly cares about its publisher partners..

We have been saying for a long time that there something wrong with Facebook’s measurements in the light of our own experience. And now the advent of third-party metrics has revealed that some of Facebook’s video ads have as little as 20% viewability, which is only one aspect of the measurement corrections the site has had to make over the past six months.. That’s not  likely to change very soon, because Facebook does not prioritize publishers and never has. Nor, it seems does it prioritize brands, even though they pay the bills..

But Facebook has bigger problems than either publishers or brands. Now that the world has recognized it as a media company,  it has governments coming after it and users accusing it of spreading  fake news. It’s at once a publisher and a platform for publishers.  Like Google, whose motto may be “don’t be evil,” but who has recently been fined by the EU for another kind of evil,  Facebook has gotten too large to be seen favorably by everyone, and its management has to juggle a multitude of conflicting priorities.

To address what it believes is the biggest of those priorities, keeping users engaged and on the platform as much as possible, Facebook has rolled out a new strategy around groups. It is no longer enough in Mark Zuckerberg’s  eyes that the world be merely connected to friends and family, it must also be brought closer together. Taking his cue from some very large groups that formed around interests such as specific diseases or leisure activities, Zuckerberg first began  to talk about the value of groups.

Then in June Facebook held its first community summit and announced a change of mission. From USA Today

After a decade of promoting Facebook as a service that connects small groups of friends and family, Facebook is broadening its focus for the next decade to “give people the power to build community and bring the world closer together.”

The new mandate stems from Zuckerberg’s soul searching on how Facebook should evolve to help people pull together in divisive times.

Facebook was supposed to give people a sense of common humanity. Instead critics say Facebook has played a role in increasing polarization with the spread of fake news and reinforcement of filter bubbles during contentious elections in the U.S. and overseas.

This seems to further distance Facebook from its publisher partners as it seeks its own continued growth.  It also begs the question of how advertising will be served to users in groups. Making money has always been a necessary evil for Facebook, which has the attention in an economy based on attention.

Facebook, like any other company, has its own survival imperatives. Most premium publishers we know have already dedicated more resources to Instant Articles than they are getting back in revenue, and some already pulled back.

We would advise publishers to focus on their own audiences with quality content that is highly targeted and served on a well designed site that loads quickly. Depending on Facebook for driving traffic or increasing revenue is, as always, naive.

 

 

 

 

 

 

 

Outsourced Ad Ops Can Solve Publisher QA Issues

One of the reasons we have always offered ad operations to our publisher partners is because the publishers are so busy with other things. And the rise of programmatic buying and selling has made all of this more complicated and less transparent. As digital ad products get more complicated, they require more and more heavy lifting to make sure ads run as they are supposed to according to your own specs and industry standards. A new report from GeoEdge finds that some publishers’ ad ops teams are spending up to 40% of their time doing QA on creative.

In the old days, QA was only “does this ad really run.” But now, because of all the interest in brand safety,

quality assurance is really about risk management. The QA process entails getting detailed ad specs up front, clearly identifying stakeholders and responsibilities,  and effectively setting expectation for how an ad is supposed to work, whom it is meant to reach and actually meeting those expectations in order to insure a good user experience.

According to this report, part of the problem comes from conflicting priorities between the buyer (the agency) and the publisher. For the buyer, ad performance is the highest priority. But for the publisher, continued existence depends on monetization and optimization. Their goals are clearly misaligned.

Publishers ought to focus on their own needs, nor just follow whatever process the agency follows. And not spend so much time pursuing every new platform, to the detriment of QA. What good is it if you are on Snapchat if your ad doesn’t run the way it’s supposed to? Again, from GeoEdge, “the ad integrations that come with new platforms are more complex than publishers are accustomed to, making QA even more laborious.” Video and native ad executions are far more difficult than banner ads used to be. When a complex ad product changes hands among so many different teams, it’s easy for errors to slip through the cracks.

The highlight of this report for us was the experience of Forbes:

… who made a major advertising faux pas in 2016 when it released its 30 Under 30 list. Like most publishers starved for ad dollars, Forbes requested that those looking to view the list disable their ad blockers. Dutiful readers did just that only to open themselves up to malware ready to steal personal data, drain bank accounts and hold passwords hostage. With 56 million monthly unique visitors, this Forbes oversight was no small slip up.

But on our private platform, we can also do the ad operations, and with them, the QA. There is no danger, if you buy our ad formats and run them on our network, that malware can enter our closed system.

Admittedly GeoEdge is selling its automated verification solutions in this report, but the problems it identifies are real ones, and we’ve all been dealing with them in one way or another since advertising became digital.