New Law Threatens Privacy

Another marathon political month ends with the US going in the opposite direction regarding consumer data from the EU.  This could end up being confusing to both consumers and advertisers.

The US Senate has passed a bill saying that ISPs can now monetize consumer data in the same way Google and Facebook do. This bill is headed over to the House for a vote. On the face of it, the bill actually equalizes rights, giving ISPs the same rights as platforms. The FCC Chairman who replaced Tom Wheeler has defined this as  part of net neutrality, although that’s not what net neutrality used to be.

““The federal government shouldn’t favor one set of companies over another — and certainly not when it comes to a marketplace as dynamic as the Internet,” said FCC Chairman Ajit Pai and FTC Chairman Maureen Ohlhausen in a joint statement. The two agencies will work together to achieve “a technology-neutral privacy framework for the online world,” they said. “Such a uniform approach is in the best interests of consumers and has a long track record of success.”

Several privacy advocate groups have, of course, come out against the new legislation, including the Electronic Frontier Foundation.

Americans have enjoyed a legal right to privacy from your communications provider under Section 222 of the Telecommunications Act for more than twenty years. When Congress made that law, it had a straightforward vision in how it wanted the dominate communications network (at that time the telephone company) to treat your data, recognizing that you are forced to share personal information in order to utilize the service and did not have workable alternatives.

Now Congress has begun to reverse course by eliminating your communication privacy protections in order to open the door for the cable and telephone industry to aggressively monetize your personal information.

Of course the EFF is an advocacy organization, but privacy groups have become very powerful. And we care about this because anything that makes consumers feel uncertainty about their personal information has a propensity to interfere with the advertising business model most publishers depend on.

We work closely with the Online Trust Association, which also saw this as a potential blow to consumers, and thus to the ad-supported business model, since privacy advocates are now saying ISP stands for “Information Sales for Profit.” As a platform, we neither hold nor track  consumer data, so we’re not directly involved. But we do have a dog in this hunt because we are strong supporters of free internet content that is ad-supported. We work with our partners to make better ads, so there can be fewer ads. We also work with our partners on brand safety in media buying.

We must take pains to maintain the highest ethical and privacy standards so we don’t entice consumers to download more ad blockers. Before this ruling, we had achieved stasis, and were moving on. Let’s do everything we can to keep going in the right direction for both publishers and advertisers, as well as for consumers.

 

 

 

 

Hearst’s New Central “Operating System” Powers a Digital Company

Whatever happened to the newspaper empire William Randolph Hearst founded in 1887? It has grown out of newspapers almost entirely, and now has 350 different businesses in 150 countries.

According to Troy Young, President of Digital for Hearst, half of the company’s content will be video soon. Young, who joined the company four years ago from Say Media to help build a platform that could guide the legacy print publisher into the 21st century, has not had an easy time trying to align a company focused on siloed magazines and newspapers around a single digital objective. Hearst is actually still moving from its old content creation processes to what it will be — a centralized, platform-driven content factory that rolls out creative assets to whatever brands wish to run it and collects data.

To get from where Hearst was to where it must be for the future, the company had to learn new ways of generating content, new ways of editing, and new ways to interact with its audiences, wherever they happen to be.

Four years in, Hearst has had a 350% increase in its audience, both on and off the site, and its revenue has almost tripled. It has the most brands on Snapchat of any media company, and it makes good use of Instagram.  And while Young does admit that anyone in the digital media business must be “ruthlessly efficient,” he says Hearst’s profitability is the best in the business.

The change started with a unified digital platform called “media OS,” and the centralization of many processes around that core technology. Today Hearst has about 40 services detached from a specific CMS that allow people to edit content, fix photos,  manipulate video, all culminating in a front end with the needs of advertisers in mind. The digital Hearst is like a gigantic content library managing all the company’s digital assets from GIFs to text, to video and all the data associated with that content..

The platform handles data not only from Hearst’s publishing businesses, but also its TV business, and some businesses that Hearst does not even own. That data can be used both by editors and by advertisers. This is where Young thinks the future of the digital media business will be, with platform builders who can server multiple businesses.

That’s different from a fancy-named proprietary CMS, Young says. Hearst’s MediaOS includes advertiser data,  native advertising, data that helps them rank all the content, all the video pieces and all the syndication across brands, and bundles everything up into a package that can be distributed to all Hearst’s end points.

Not only does the new system handle all the back end processes you would expect it to handle, but the company now has a horizontal approach to its newsrooms as well, and reporters collaborate to product content for more than a single Hearst brand. A central news team is on point for breaking news and distributes it out to any editor who plans to cover that piece of news. No editor is obliged to take the content created by the central organization, because the most important part of each business is still its brand, but if they were planning to cover it anyway, why use different resources for each brand?

To us, this seems like a very forward thinking approach to maintaining a unique editorial brand and still being able to capitalize on shared resources. Hearst is a mighty ship, and it has turned in a decidedly different direction over the past four years.

 

 

 

 

 

 

 

Everyone Wants to Be An Agency

If you go to an ad industry conference, you will hear speaker after speaker talk about how the agency model is in jeopardy, and how agencies are doomed by brands who are taking media buying in house, refusing to pay commissions and fees, and building their own DMPs.

So how come everybody but agencies wants to be an agency? It all started with Buzzfeed, which developed one of the first in-house agencies to develop branded content and unique ad formats for its advertisers. Now many of the premium publishers have decided to capture more of their “rightful” ad revenue by creating in-house ad production and ad operations agencies. They also argue that they know what kinds of ads appeal to their particular visitors.

Advertisers have also taken many agency functions in house, believing that they can buy efficiently through programmatic platforms, manage and mine their own data by building their own DMPs, and develop their own branded content.

And last, but not least, there are the large consulting firms, who have been gradually turning themselves into agencies. PWC Interactive says it can advance brands through lead acquisition and retargeting, search and display advertising, performance optimization, and digital program design and management. In other words, outsource your marketing program to us.

KPMG bought Cynergy, and now talks about omni-channel engagement and increasing brand loyalty. And the most far-reaching program, at Deloitte Digital, is the equivalent of a $1.5 billion ad agency. Deloitte Digital has 6000 employees worldwide, and can provide everything from strategy to logistics to agency services. McKinsey has an agency arm, and Accenture also has an interactive agency.

The one place where agencies have a real edge is in their traditional niche: creative. Only agencies know how to hire and manage creatives, and how to develop and present campaigns. These are right brain activities, and the consulting firms are populated by left brain people. The publishers, too, are unfamiliar with creative, although in theory they know how to develop great content.

It’s instructive to watch each of the three contenders — brand, publisher, and consulting firm –vie for the functions that belonged to agencies. We think agencies lost the battled when they decided to base their selling propositions on metrics rather than creativity. The best ads are the ones we remember, and they probably won’t be created by publishers, brands themselves, or consulting firms.

Actually, in the future, they may well be created by consumers.

 

Ad Fraud Ruins Analytics

Ad fraud. The gift that keeps on giving.

Marketers are beginning to understand that ad fraud affects their actual spend (they get less for their ad dollar), but they haven’t yet caught on to the fact that it affects their metrics as well.  Fake traffic and clicks generated by bots throw off analytics and can cause a marketer to optimize a campaign for the wrong things and waste even bigger dollars.

One way to make ad fraud less lucrative for the fraudsters is for marketers to stop paying for “each,” or volume, and start paying only for quality. That would mean coming to terms with the fact that low quality traffic is even worse than no traffic at all. At the recent IAB Annual Leadership Summit, P&G Chief Brand Officer Mark Pritchard announced that his company, one of the largest advertisers in the world, will only pay for traffic if they can see where it is coming from and whether humans actually viewed ads. Since P&G spent $7.2 billion last year, his announcement caused more than just a slight ripple in the industry.

A casualty of the big wave that rolled over the media supply chain happened to be Facebook, which has always provided its own metrics, and has announced this week that it will allow its ad platform to be verified by the Media Rating Council’s standards.

This will be fun.

And you can’t blame this all on the rise of programmatic. It’s not how the ads are sold or bought, but the kinds of sites selling inventory on the exchanges. Most of the bots happen to be in programmatic ad exchanges, because, as fraud researcher Augustine Fou says, “when those bots cause an ad impression to load on a “long tail” website, they earn ad revenue for that site. Bots don’t make money by causing ad impressions on mainstream publisher sites.”

This is the drum we have been  banging for what seems like forever: buy smaller, higher quality audiences. Again, from Dr. Fou,

one key thing for [marketers] to realize is that there are only a finite number of real human beings. So when they target real human identities, the volumes of ad impressions will probably be far less than they are buying now—but that is a good thing, because they want their ads to be shown to real humans, not bots.

Marketers know who has purchased from them before, who has signed up for email newsletters, or who has visited their website.

By onboarding their own data, they can more easily achieve the identity targeting we just talked about—and thus make their media much more effective because they are actually getting their ads in front of real humans.

We are not sure why this is such a difficult lesson for marketers to learn.

 

 

 

 

 

 

 

 

 

Mobile Video Monetization Strategies

Everyone in the industry is wondering  when mobile video will begin to be monetized properly (by which we mean in proportion to the time consumers spend watching it).As part of our work on the IAB Digital Video Committee, we attended a meeting  to learn what may be holding the industry back from getting the kind of ad rates for mobile video that it deserves. Three different issues emerged from the meeting: how publishers feel about available video formats (often unsuitable for mobile), the state of cross-device measurement (just getting started),  and the unfamiliarity of TV media buyers with the digital video environment.

You may already know that ZEDO pioneered a format called InArticle, which later was reinvented by Teads as “outstream video.” While this format has been highly successful for us, we know it is not for everyone, and we  heard two publisher panelists (Meredith and Weather Channel ) say that they will never run out stream because they don’t like the user experience on their sites. They talked about 15-second preroll as preferable, although they admit that most advertisers send them 30-second spots. These publishers are pushing back at agencies and brands who try to use existing TV creative, esp. 30-sec spots, on mobile  have pretty good statistics on completion rates, and they feel shorter is better. In fact, one attendee suggested five-second video, just to get the brand’s name in front of the audience without offending it.

Because there is a relative scarcity of pre-roll another format publishers are testing for video is mid-roll, Facebook is rolling these ads out right now to see how well they are accepted.

At ZEDO and ZINC, we are testing our own version of pre-roll, as well as a new format we call “polite Swipe Up.” Our objective with our formats, which achieve high visibility and engagement, is not to antagonize site visitors. In the Digital Video Committee, several publishers complained that group M’s demand that all Ads be 100% viewable means that they waste inventory and annoy viewers by upping the frequency of ads while trying to  achieve those viewability numbers.

The issue of cross-channel metrics also came up in the meeting, because marketers are only beginning to be able to follow consumers from device to device and from home to work. Before investing in digital video, they need more assurance that they are following the same customer from display to video to TV.

And then there is the “people problem.” TV media buyers often don’t buy digital video, or want to pay less for it, because they don’t know how to buy it. This is such an industry-wide problem that IAB is preparing a Digital Video Guide and a curriculum, and will hold workshops and classes to educate media buyers. The guide will be introduced during the Digital New Fronts, and the education programs will begin shortly thereafter.

 

 

 

 

Legacy Media Adopting New Models

Time Magazine is one of the legacy names in the media business. But like all  media, it is struggling to adapt to new business models. In a Wall Street Journal podcast interview, Jen Wong, COO of Time, discussed her opportunity to grow the Time subscription business as well as some of its forays into new business models. The most interesting area of the podcast for our offerings is Wong’s assertion that her offerings can now compete against Facebook and Google in the ability to provide brands and agencies cross-device attribution.

Even in an age of difficulty for traditional publications, Time still has 30,000,000 subscribers — about the same number as Netflix. It has also built up the infrastructure to sell magazines from its own database of current and former subscribers. The company expects to grow its business using that consumer marketing infrastructure. And Time also owns The Foundry, its content marketing arm. Content marketing, one of the hottest topics in media, is an area many newer publications, like Buzzfeed, are also getting into, because there is an almost insatiable demand on the part of brands for appropriate content.Wong predicted that the branded content market would double to $9 billion by 2018, and that her company would have a substantial segment of it. Foundry both creates  content and operates websites on behalf of brands, and even now it’s the fastest growing segment of Time’s business, growing about 2x year over year.

However, Time is in the same position as most legacy media: while it is branching out in new directions, three quarters of its revenue still comes from print advertising, which is an endangered source. That’s the conundrum for the established media companies: how much to invest in new platforms that have not demonstrated the capacity to monetize as well as their former businesses.

Still, Time considers native, which is now 20% of revenue, a needle-moving bet for digital, along with people-based targeting and video.

People-based targeting is a euphemism for the ability to target a user with device attribution — finding the same user on mobile and desktop. This is Facebook’s strong suit because of the size of its dataset, but Time has now acquired Viant and Adelphic to compete in this arena. With these acquisitions, specific targets can be found on the web, and then can be attributed across channels in a manner similar to what Facebook offers. In Wong’s view, agencies are looking for alternatives to Facebook and Google, and unlike most publishers, Time does have people-based data which would seem to be a major advantage, especially if the metrics Time provides to agencies prove more accurate than Facebook’s.

In video, Time has a pre-roll business that is growing, and has launched an OTT services as well. In addition to the Time subscriber base,  Viant brought 1.2 billion profiles, and 700,000,000 device IDs in the US, and into that database Time contributed its own 100 million expired and 30 million active subscribers. To make it simpler for agencies to transact against that data in an era of programmatic advertising,  the company even developed its own DSP — although Wong said she would not advise other publishers to try to do this if they didn’t have as much data.

Data is the area in which publishers now must compete against Facebook and Google.

 

 

 

 

 

 

 

 

 

 

 

 

Facebook Faces Competition from Snapchat

On the day Snap, Inc.(SNAP), the parent company of Snapchat, became a public company, its stock soared 44 per cent.  That’s because Snapchat reaches a demographic everyone wants to reach: young people who are just forming allegiances to brands. But it’s also because there’s a dirty little secret out there: Facebook advertising doesn’t work.

The Copyranter blog from Digiday says it best:

 You know who knows better than anybody that Facebook advertising doesn’t work? Facebook! Of course they do! All that proprietary data they’ve got on 1.8 billion people, they know pretty much everything about brands, consumers, and interactions between the two. That’s an unprecedented level of lying, even in the skeevy ad industry. Or maybe you think this is all just conspiratory “truther” talk?

We’ve always loved Copyranter because he calls it like he sees it. Last fall Facebook ran into trouble three different times over incorrect or incomplete numbers:

Facebook has always been very purposely opaque and doesn’t share its methodology and algorithms with anyone, which makes it impossible for anyone to do any objective reporting — or regulating — of those numbers.

Then last September, right about the time it was announcing that its first three quarters profit was near $6 billion, up from $3.69 billion in 2015, it also reported a big whoopsie: It had been inflating video view numbers by 60-80 percent (94 percent in Australia).

Facebook has now been forced by P&G at least to allow third parties in to verify its numbers, and perhaps that will help. But Facebook has done its job: it has soaked up advertising dollars not only without producing accurate and verifiable returns, but with at the same time destroying the creativity that made brand ads bearable for viewers. Facebook does not have engaging formats; its entire value proposition is targeting. Well, guess what? It’s difficult to engage attention without creative, especially on a site where people do not come to buy.

The shift from brand advertising to direct advertising that accompanied the dream of “metrics” has forced advertising agencies and brands to change their models and their goals. No longer do we expect advertising to create either brand lift or sales — instead we show the boss meaningless metrics, such as Facebook “likes.” At the end of the day, those do not move the sales needle.

On the other hand, Snapchat filters are really countable; when a person sends a snap with a sponsored filter, that person has actually made a choice to engage with a brand. It’s a very different energy from the energy used to click on “like” on Facebook.

We’re watching publishers drift away from Facebook live, and we predict they will continue to drift away from Facebook as it continues to fail both the sell side and the buy side.

2016: a Banner Year for ZEDO

For ZEDO, 2016 was the year  the ZINCbyZEDO Innovations Suite of video formats pulled out to lead the market in both completion rates and viewability. It was also the year we became known for our ability to outperform much bigger competitors, even those who offered customer incentives we didn’t match. At the end of the day, results count, and in head-to-head trials, we almost always emerged the winner. You can imagine how excited we are about 2017.

While ZEDO has long been known as one of the largest independent ad servers, ZINC is a relative newcomer to the scene. ZINC is a division of ZEDO that we launched three years ago for the express purpose of providing a secure, end-to-end platform for both advertisers and publishers to combat the obvious problems associated with programmatic buying: lack of viewability, downright fraud, and malware.

ZINC’s first attempt to penetrate the market came with the Inview Slider, a tasteful display ad that only appeared when a viewed scrolled down the page. It was very well received, but we knew we had to keep innovating, and last year, we were first to market with the inArticle video format, which we developed before out-stream was a “thing.” In fact, we called it “InArticle” because we felt that best described where it appeared and there was no other category. We think we actually invented this category.

And then a Nielsen Study found that when ads are viewed in an outstream format rather than as pre-roll, even skippable pre-roll, purchase intent is increased by 50% for the advertised product. Most important, outstream increases purchase intent by 74% among those critical millennials. Outstream also produces 60% brand recommendation on the part of millennials. This format overtook most other attempts to provide video advertising, because 44% of millennials felt it fit naturally with other content and made ads more likable.

Our own experience proved that outstream could be good for both brands and publishers, and it quickly caught on. Soon we were in a very competitive landscape, in which other companies also sold outstream. But ZINC’s outstream ads showed their advantage over competitors.  We saw 70% completion rates, very high for the industry, and certainly higher than the 8-12% for skippable pre-roll.

We also delivered scale, because we have 18,000 publishers in our network. We delivered 109 million monthly uniques and 80 billion monthly impressions, even after we spent most of the year purging our network of publishers we felt were not brand safe or appropriately premium.  Our CTRS were among the highest in the industry, between 1.25 and 1.3%.

Half way through the year, we launched a mobile FLIP ad unit, and three variations of a SWIPE up format. And we introduced a self-service platform.

However, one of the things we are most proud of is that we made the Online Trust Alliance’s Honor Roll for the fifth year in a row, having demonstrated that our policies with respect to privacy, data security, and native ad serving were aligned with the highest standards in our industry.

Bring on 2017!

 

 

 

 

 

 

Will Numbers and Scale Give Way to Value?

We’ve noticed a movement lately away from scale,  the high volume content strategy of major publishers. While they thought they needed to publish more stories to gain more readers, they’ve now overwhelmed those readers in a deluge of content, some of it not worth viewing. They then run ads against all that content, further inconveniencing visitors. This is the model of The Huffington Post, which recently modernized its platform to let anyone contribute without moderation. We predict this will be a strategic mistake for Huffpo. This is the old way: publish as many stories as you can, reblog as much as you can, aggregate the rest, and use Outbrain and Taboola.

Quite frankly, this “more is better” strategy has buried the good stories in the crap.

A few new publications have decided to do it differently. We’re written about Josh Topolsky’s new publication, The Outline, on the ZINC blog.  The Outline strives to run fewer, better ads against longer form content that is edgy, but not trivial. The new Bill Simmons site, The Ringer, publishers around two dozen stories a day, and The Information, Jessica Lessin’s subscription site, publishers just two.   The hope is that by publishing fewer, better stories, these publishers will draw more actual engagement. That certainly seems to be true in the case of The Information, which doesn’t accept ads and has about 10,000 subscribers paying $399 a year. It also has active commenters from among its subscribers, and a Slack backchannel on which readers can talk to reporters.

Of the ad-supported sites, fewer ads and deeper niches will win over time. This will be good for all ends of the ecosystem, because publishers who have scarce inventory that is actually desirable can charge more for it. And advertisers, even if they buy programmatically, will have a better understanding of the audience they’re buying.

Which brings us to a point we’ve made repeatedly. Scale was a bad strategy for digital advertising. From the first, the infinite supply of content drove ad prices down and made it impossible to price the premium sites, or the desirable content, higher than everything else. That in turn led to the emphasis on click bait and viral content. And to ads that generated poor ROI.

An exception to this has been video advertising, which provides a better return because it is more expensive to produce and therefore there’s less of it. It’s the good old law of supply and demand: when there is less of something, its price always goes up.

Now that publishers realize that more is not necessarily better, it is time to educate advertisers. What will help? The growing perception that fake news and non-brand safe sites should not be part of anyone’s marketing program.

 

Google Blocks Twice the Number of Bad Ads as A Year Ago

Despite the “moon shots” under development by its Alphabet decision, the Google organization still makes its living through advertising. According to its most recent earnings report, Google grew 8.3% this quarter, largely driven by search ads. However, the company is looking to mobile for new sources of ad revenue, and that’s not working quite as well (yet).  According to the Wall Street Journal, 

The search for new ad revenue comes with a downside: Users are seeing more ads, but advertisers are paying less for them. While ad clicks increased 36% in the quarter over a year ago, advertisers’ prices for those ads fell 15%. Both figures were the highest in at least three years.

The gap between the prevalence of ads and their prices was previously driven by the increasing share of mobile searches, because advertisers pay less for mobile-search ads than desktop ones. In the fourth quarter, the company attributed the gap to the growing share of YouTube ads, which generally earn less than ads shown above Google search results.

Google has also tried to preserve its reputation by culling out bad ads. Google said it blocked 1.7 billion bad ads in 2016, twice as many as in the previous year. That’s a pretty shocking comment on the state of ad fraud in our industry.

Ads that are misleading, inappropriate, promote misleading products or trick users into installing harmful software are generally deemed “bad,” Google said. The company also blacklisted ads that were once considered acceptable in 2015.

Payday loans that carry an annual interest rate higher than 36%, for example, were banned from appearing as Google search ads last year. The company was applauded for its move, as the measure was expected to cost Google millions in revenue. Yet digital loan sharks quickly adapted to Google’s newfound rule, as many loan companies now offer payday loans with an APR as high as 35.99%.

And there’s a new genre of “bad” ad called “tabloid cloakers.” Tabloid cloakers are misleading ads that feature “news” on their surface, but when clicked lead the reader to an unrelated selling message:

One example the company shared was about an ad showing Ellen DeGeneres and aliens. However, consumers who click on ads like this are taken to a site selling weight loss products, for example.

Google said it suspended 1,300 accounts for tabloid cloaking last year. In one sweep, the company took down 22 accounts that were responsible for displaying 20 million cloaker ads over a one-week period.

Can you imagine being Google and having to keep up with all these insidious trends?  And that’s before the company gets to dealing with fake news sites. We’re still a long way from a clean supply chain.