AI and Blockchain Dominate DMexco (But Not Reality)

We withdrew from doing business in Europe temporarily until GDPR sorts itself out, so we didn’t feel the need to attend DMexco.  However, the people who did reported back that it was a more heavily European-market focused conference, and like Cannes, a bit smaller. As usual, following it on Twitter gave us an overview, and since we have deep technology chops we were able to understand that most of the presentations were about the future, and not about the present. Neither AI nor blockchain are ready for prime time.

The most common current use of artificial intelligence outside marketing is for predictive analytics in industry. It is used in factories, where connected devices have produced a kind of industrial “internet of things.’ Thus present day AI can tell us when a machine will need maintenance, based on historical data. But most consumers are not machines, and AI is still not in a position to predict big changes in consumer sentiment, such as the fall-off in demand for soda. Large trends in consumer sentiment have caught marketers unaware, if all they’re using is data from AI. So AI is still somewhat backward facing rather than forward facing. That’s why IBM Watson still does not make 100% accurate medical diagnoses.

For example, there were a dozen presentations on AI, including Deutschebank’s, despite the fact that most people in advertising don’t now how best to use it.  The most heavily used AI applications require vast datasets, and when companies say they are using AI to target customers at every stage of the customer journey, what can they possibly mean in the context of GDPR? Moreover, AI cannot yet tell us what customers want, since the action of an individual is fine-grained. At best, it can tell us what classes of consumers want.

Eventually, AI will be used to identify targeted ad buys, but it is not quite there yet. 

The classic example of programmatic advertising is SEM advertising on channels like Google (AdWords), Facebook, and Twitter. Companies like PredictiveBid and Israel-based Albert have decided to put a significant amount of their focus on programmatic advertising specifically.

Programmatic ads bring a tremendous amount of efficiency to bear on the “inventory” of website and app viewers. Platforms like Google and Facebook have set the standard for both efficient and effective advertising – and it can be supposed that these systems will become more and more user-friendly in terms of allowing non-technical marketers to start, run, and measure campaigns on line

Yes, but! What we’ve been hearing more and more lately from marketers is that Facebook ads, despite the granularity of their targeting, do not convert.  We said this years ago:-)

Where AI is actually useful today is in improving search,.especially for smaller ecommerce sites. Obviously Amazon and Google have their own search, and those heavily use AI.

Closely related to search is recommendation, and if you watch Netflix or shop at Amazon you can understand that although recommendation engines have been around for a long time, and are depended on by consumers, they’re far from perfect.

Another area for exploration is text-to-speech or voice. There are a number of possibilities for AI here, from digital assistants to conversational commerce.

But if you went to DMexco wondering what you could put into practice today, there was probably precious little.

 

 

 

Peretti Says Electing Trump Changed the Media Business

Jonah Peretti is traditionally an optimist about the media business, and especially about his own business, which has been a beacon for digital first media businesses. But in the past six months, even he has had to come to grips with the fact that reach and scale don’t necessarily turn on the revenue spigot as everyone used to believe. As an example, in a recent Digiday podcast he cites his Tasty business, which has over 100 million visitors on Facebook, and yet he makes NO money from Facebook and has had to develop different revenue streams. Tasty makes money through recipe and product sales, and through native advertising.

Peretti missed his numbers in the last quarters, which was a surprise even to him. But when asked whether this was Facebook’s fault, he was quick to explain that there’s no way Facebook can solve the problem for the digital media industry. He has divided the industry into segments, and he feels each segment has a different problem and a different potential solution.

For high end media companies like Conde Nast and the NY Times, legacy cost structures mean that digital advertising can never match the declines in advertising revenue that have taken place over the past two decades.

Facebook cannot solve the problem for those media players through revenue sharing. For these, only subscriptions can point the way forward. Low end companies are often revenue-generating on digital advertising, but this is the domain of fake news, conspiracy theories and misinformation, and Peretti certainly doesn’t want Facebook revenue sharing with those players.

But for the middle tier, of which Buzzfeed is a member, Peretti thinks that Facebook could do what YouTube currently does: share revenue equitably with the publishers who generate the most traffic.

However, it does not, and thus Buzzfeed has to create its own new revenue streams. One of those traditionally was native advertising, where the site was a pioneer. But an unusual thing happened when Trump was elected: digital marketers realized how divided the country was, and were no longer sure who their audiences were. Marketers began to ask themselves questions like “Should we reach out to Trump voters”? “Should we show the LBGT community  and immigrants we still support them as a brand”? Brands didn’t know what they wanted to say after the election, so that took away the impetus for native advertising. In addition, native advertising had become commoditized, and was no longer as attractive to site visitors.

Instead, marketers retreated to brand advertising. Banners came back, as did performance ads, and  Buzzfeed , which had sworn never to run a banner ad, had to diversify backwards! In the meantime, the digital audience continued to fragment, making niches profitable and sites with Buzzfeed’s reach less appealing – especially since GDPR.

Nevertheless, almost two years past Brexit and Trump, brands have figure out that they have to take one side or the other, and they’ve figured out what they want to say so they’re coming back to native.

 

 

Values Re-Enter the Marketer Vocabulary

A number of trends have converged in my mind this week to convince me that marketing has to change — AGAIN. A pendulum has swung too far without us noticing it, and it’s about to hit us in the face as it swings back if we aren’t careful.

Here are six trends that point to the need for change:

1) the #MeToo moments that have altered the career trajectories of a number of (mostly male) influencers,

2) the publication of Clayton Christensen’s new book Competing Against Luck: The Story of Innovation and Customer Choice, with its core theory that we hire a product or service to do a job, and products and services must be designed to be hired by the right customers,

3) the growth of the mindfulness movement in Silicon Valley, with entrepreneurs who have made it going off on ten-day silent retreats and starting organizations to curtail the influence of companies they helped to build,

4) the disillusionment all of us early adopters feel about social media, especially Facebook, especially after young, red-headed Christopher Wylieexposed how our own personal data was used against us. This includes a plaintive post by Brian Solis about taking control back, and a five-year old crusade by Randi Zuckerberg to put digital technology into perspective for our children,

5) the coming of the values-driven Millennial generation into the job and consumer markets (hint: they buy on values)

6) and, the launch of the Global Data Privacy Regulation in May.

These are big events that don’t leave marketers untouched.

For the past two decades, we’ve been focused on becoming data geeks in the marketing department. Old style CMOs were forced out by quants, and the goal was to get “more accurate data” about where the ”customer” was on her “journey” to buying our product.

But one thing data has overlooked is values, and I believe values will be the most important piece of marketing in the future. Companies will have to declare their values and live by them. And this is not a mission statement that gets put up on the office wall in the break room. Values are different. You can’t lie about your values, because they’ll show and customers will know. Southwest values employees, Starbucks values connectedness, RichRoll.comvalues a healthy lifestyle.

Once companies have figured out what their values really are, marketers will be able to begin the search for human beings who naturally align with the company’s values, and turn those people into customers. It should be easy, because it converts what used to be a sales process into a reaching out and calling to the people who naturally value what you have to offer.

Wouldn’t it be cool if marketing evolved again from shoving things on customers, to prying into peoples’ lives to find out more about them, to naturally aligning with people who already share our values — for whom we’re the right product or service for the job they want done?

We’d like to be part of that transition.

Publishers Need a New Understanding of Business Models

Jason Hirschhorn is a man with an illustrious past in the media business and much to say about the future of media. The industry ought to be listening to him now that he’s writing again.

Born in New York, home of the media business, he cut his teeth on a company, Mischief New Media, that was bought by MTV, and joined that company as Chief Digital Officer. This meant he worked for the great Sumner Redstone. As if that weren’t enough, he went on to work for Rupert Murdoch as CEO of MySpace.  His belief that the media business was going to change then led him to work for Blake Krikorian, the founder of Slingbox.

Since then, he has served on the boards of MGM and Pandora. But the most interesting thing he has done, from our standpoint, is found a free newsletter service called MediaRedef, which quickly became a source for all the industry changes the content business was undergoing. Here at ZEDO, we read MediaRedef voraciously, as everyone in the media business should.

That’s how we learned in advance of most people who were still in the weeds that the TV business was shifting to digital, and with it the business models and the ad dollars. In October 2016, Redef put out a 3-part series on the future of the video business.  

He believes new fortunes will be built on video, as they were on TV. In the deck he uses to discuss this future, he details the changes.

  • Why the television business is less stable than it appears
  • How the fundamentals of video industry has been upended – not in the sense of “digital distribution”, but also in how you make, fund, release, discover and share content
  • The seven consequences of the new video status quo, from the commoditization of content to the emergence of new storytelling formats and the monopolistic dangers of digital distribution
  • Why we’ve seen over-the-top efforts from incumbent media companies struggle and new entrants pursue growth in under very different operating models
  • To this end, we put forward our take on new models of distribution – not AVOD versus SVOD – but brand new operating models. We define them in five ways, “Scale Feeds”, “Social Feeds”, “Identity Feeds”, “Feed Navigators” and “Feedless SVOD”

What are these business models? Well, SVOD stands for subscription video on demand, which is the model of Netflix and Hulu. TVOD is transactional video on demand, which is the model of Amazon and Apple.  And then there is AVOD, ad-based video on demand, which is the segment we are in.

Two years ago, Jason predicted the changes we are seeing now, but he also predicts further change. If you are a publisher in our business, you should have already seen this deck. 

It should be reassuring if as a media company you are willing to change, but it is terrifying if you think your current models will survive.  Media companies focused on ads v. subscriptions are fighting the wrong battle. The war is over content.

There will always be an audience for niche passionate users, and publishers should now concentrate on encouraging and creating their niches. Once the niches (the audience) have been created through good content, there will be multiple distribution models

 

Are Techniques Like Microtargeting and Retargeting Worth it?

There was a very interesting article in the NYTimes last week about how Facebook has “weaponized” ad tech. Although the article was really meant to highlight the abuses of political advertising on Facebook as we move toward the 2018 elections, the impact of micro targeting in the political sphere carries over to all publishers.

Facebook has made a mint by enabling advertisers to identify and reach the very people most likely to react to their messages. Ad buyers can select audiences based on details like a user’s location, political leanings and interests as specific as the Museum of the Confederacy or online gambling. And they can aim their ads at as few as 20 of the 1.5 billion daily users of the social network.

Brands love it. So do political campaigns, like those for President Trump and former President Barack Obama, which tailored their messages to narrow subsets of voters.

But microtargeting, as the technique is called, is coming under increased scrutiny in the United States and Europe. Some government officials, researchers and advertising executives warn that it can be exploited to polarize and manipulate voters. And they are calling for restrictions on its use in politics, even after Facebook, in response to criticism, recently limited some of the targeting categories available to advertisers.

Commercially, the worst offenders of microtargeting are high frequency users of retargeting, often e-commerce sites. Retargeting has now grown so accurate and often so intrusive that it does things like target people off Facebook who have had a conversation about a product on Facebook or the converse: showing Facebook ads to someone who has had a conversation about a product over, say, Gmail. Retargeting is the activity folks who are sensitive to privacy violations refer to as web stalking.

Not only that, but according to some experts retargeting isn’t even a good way to measure whether ad spend works. Retailers tend to think it helps cure the problem of cart abandonment, but they never can tell whether retargeting brought the consumer back, or perhaps payday did. Or a competitor’s ad did. We’re measuring what’s easy to measure, rather than whether our ad spend really works. This is one writer’s cynical view:

Since there is no easy way to measure if ads drive incremental revenue, it is in the best interest of performance-marketing directors, retargeting companies, ad agencies and Google to aggressively target consumers who are highly likely to purchase anyway. It amounts to a retargeting conspiracy among willful participants, and it threatens to drag down digital people-based marketing’s potential long into the future.

We think it would be much easier to measure attribution if more media buys were done with context in mind. Perhaps that’s what Amazon has in mind when analysts predict its ad revenues will surpass its AWS revenues by 2020.

 

 

New Game: Consent String Fraud

Well, that didn’t take long. GDPR went into effect at the end of May, and as we all return from summer holidays we are already the victims of consent string fraud. I guess fraudsters don’t vacation. They spent the summer generating fake consent string numbers.

Digiday has already run its “WTF is a Consent String” piece, which signifies that the term has already entered the ad tech lexicon. You’re probably still applying your mosquito repellant, so here’s what it means:

A consent string, also referred to as a “daisybit,” is a series of numbers added to an ad bid request, which identifies the consent status of an ad tech vendor. That means whether or not they have a user’s consent to use their data in order to serve them personalized advertising — a stipulation now needed under the General Data Protection Regulation. The Interactive Advertising Bureau Europe has assigned a consent string to every vendor that has signed up to its global vendor list.

Of course Google does not use IAB’s consent scheme framework and has developed its own analogue for companies that use its Funding Choices platform. That makes things even more complicated.

The difficulties in achieving compliance have led many smaller vendors to write off Europe as a market until things settle out and they know how onerous the enforcement will be.

But those are the good guys. As always, the fraudsters are undeterred and while you were trying to spend quality time with the kids they were designing fraudulent GDPR consent strings.

Some ad tech vendors have already identified fake consent strings , which means they may have inadvertently served personalized ads to users who have not given their consent. This has the potential to become an escalating crisis, since once a user has decided not to give consent, she’s not expecting to have her data misused and her privacy violated.

In the nearly 20 years we’ve been in ad tech, we have seen this game of whack-a-mole over and over again. The good guys try to fix the ecosystem, and the bad guys quickly catch up and pass them. One form of fraud gives way to another.

We long ago decided to be one of the good guys, and we’re not bitter. If you are interested in compliance, Prebid.org has you covered with its GDPR Compliance Module. Prebid.org is an independent organization designed to ensure and promote fair, transparent, and efficient header bidding across the industry. Funded by dues-paying members, it manages the open source projects Prebid.js, Prebid Mobile, Prebid Server, Prebid Video, Prebid Native, and others.

The problem is that these open source industry resources, along with Github, are also accessible to people who are out to mess with the system, so now we have to develop a way to spot and expel fraudulent consent strings.

Sometimes I wish consumers understood even a little bit about how hard those of us in the industry work at combatting fraud.

 

How the Blockchain Might Help Advertising

The media industry is still a long way from realizing the dream of digital advertising: the ability to target customers and know whether the targeting or the messaging worked.  Although many metrics exist for measuring the effectiveness of digital ads, we still don’t now which ones are the best.
Wrap into that some industry specific problems like fraud and viewability, and you get a somewhat disturbing picture, one that makes brands reluctant to pour large dollars into digital. And yet, the largest demographic today is millennials, and they are digital natives. We’re just not going to reach them any other way than digital, and within digital, mobile, and within mobile, video.
So print is gone as a tool, as is desktop. Display is not far behind. The most promising forms of advertising today (and we say today because things change rapidly) are in-app ads, native ads, and incentivized ads.
At the same time these changes have been happening, the industry has been plagued with an epidemic of bots and click fraud. Because there isn’t much transparency during the online auction process through which ads are now bought and sold, advertisers have had problems finding out where  or even if their ads have appeared.
This has led to a new emphasis on contextual advertising: the ability to target ads based on where target customers might already be.
Blockchain might also help here, because blockchain transactions are both transparent and encrypted. Unfortunately, not enough is known about how blockchain could be used, so we’re just in the pilot stage. One problem with current blockchain implementations, such as those used in cryptocurrency, is the inability of today’s blockchains like Ethereum to handle transactions at the speed with which ads are currently served. We’re assuming this will be solved in the future, as it is a technology problem.
More important is the issue of customer experience. Taken by the ability to reach millions of people, advertisers decided they wanted to reach audiences “at scale” all the time, regardless of the wishes of those audiences. It has taken the better part of two decades for the industry to realize that — just like with print or TV–less is more. Loading up pages or streams with advertising has led to a boycott of advertising altogether by the 25% of consumers who run ad blockers.
In surveys of people who do run ad blockers, to them the most offensive part of digital advertising isn’t the actual ad, but the tracking of information and the sale of that information to third parties (data brokers). A common statement from about five years ago, “the value is in the data” overlooks how the provider of the data, the consumer, might feel about how her data is being used. This oversight has led to what Doc Searls calls the greatest consumer boycott in history — the boycott of digital advertising.
For consumers to trust advertising again, they have to be assured that their data will not be bought and sold against their will. This is the objective of the GDPR (General Data Protection Regulation). While the GDPR nominally applies only to Europe, because of the global possibilities that come with digital advertising it has engendered compliance in companies that are not headquartered in Europe but may have European customers, like Facebook and Amazon.
Ideally, data privacy will one day be coded into a blockchain that guarantees each consumer the right and ability to control her own data and decide when to make it available. Companies like Digi.Me are already giving consumers the ability to control and share data at will, and when the blockchain matures, we will finally have a totally trustworthy advertising ecosystem again.

 

 

IAB Rolls Out Blockchain Pilots

We’ve been around since before the dot com bust, which gives us the authority to predict the future (just kidding). But one thing we know, because it has been more a reality than a prediction in the past, is that the IAB under Randall Rothenberg is a powerful industry group that can drive change in our industry in the direction it chooses.

The last two big changes involved visibility metrics, and verification metrics. Now IAB Tech Lab is moving the industry in the direction of the block chain.

The blockchain, a technology that really isn’t new but became prominent when Bitcoin, a cryptocurrency built on its technology, briefly became a “store of value” last year. When we say store of value, we mean people began to invest in Bitcoin  the way they invest in gold or the stock market.

Although Bitcoin crashed, blockchain remains as an interesting option for the advertising industry because it is an “immutable, distributed ledger or record of transactions between a network of participants. The entries in the ledger are governed by pre-defined rules and validated by the network. The network can be public like bitcoin or private with only select participants.” IAB says there are benefits to the blockchain for advertising:

What are the benefits of blockchain in the media and advertising space?

  • Given the complex nature of the digital advertising supply chain, blockchain technology can offer greater efficiency, reliable and high-quality data.

  • Blockchains can create a more efficient medium by which two or more completely anonymous or semi-anonymous parties can complete various types of transactions potentially at a low cost.

  • Since blockchains are decentralized peer-to-peer networks, there is no single point of failure and no single access point for malicious hackers. Thus, it enhances safety and security for data.

  • This ability to keep a fully verifiable and immutable ledger or database that is available to all members of the blockchain provides a layer of trust and transparency that isn’t always available within media and advertising processes.

  • While blockchain will not cure all of ad tech’s problems, it can be beneficial in situations where there is censorship and both sides of the supply chain (i.e. publisher and advertiser) are disadvantaged by not having access to that information.

Here’s what is being tried, according to CMO Australia:

Members actively involved in the IAB program include FusionSeven, Kochava Labs, Lucidity and MetaX, with each piloting emerging blockchain-based offerings with supply chain partners including advertisers, agencies, DSPs, exchanges, publishers and technology vendors.

 

As an example, IAB said Lucidity’s ‘Layer 2’ infrastructure protocol is being used in a pilot to verify ad impressions and improve programmatic supply chain transparency through a decentralised, shared and unbreakable shared ledger. This will be followed by other pilots looking into fee transparency, digital publisher signatures and audience verification.

Another company not involved in the IAB Tech Lab’s group is Brave, creators of the browser that pays publications through its own cryptocurrency, the Brave Attention Token (BAT).

There’s almost no way that the blockchain will turn out to be completely useless to advertising, since  the entire purpose of Ethereum’s technology was to create smart contracts. However, unless it can scale in speed, you won’t see it in ad tech any time soon to do things like serve up ad calls.

ZINC Formats and Services Still Available

A ZINC customer called us this morning and expressed surprise and concern that our outstream offerings might no longer be available. We hurried to reassure him that we were just changing the brand name and that the same formats he wanted to buy would be available from the ZEDO site under the ZEDO name.

We are making some updates to the ZEDO site to reflect this new positioning, and we will be shutting down the ZINC Twitter and Facebook accounts after we make the announcement.

The reason for this should be obvious: five years ago when we launched ZINC it was because we didn’t want our publisher partners to think we were abandoning them. We thought they’d be confused. There were so many acronyms: were we an SSP, or a DSP? Well, we were and are both.

Five years later, things have changed in the industry, and it is no longer unusual to serve both sides of the digital advertising ecosystem. Also, in that intervening time we became a secure platform.

Rest assured, nothing has changed except the way we go to market, which I hope will become less confusing as we develop the single brand.

For more information, get in touch with adsales@zedo. com.

ZINCx Merges with ZEDO: Will Operate as ZEDO

We are pleased to say that we are merging our ZINCbyZEDO brand back into ZEDO. As of August 1, 2018 both divisions will operate as ZEDO.com and the ZINC site will shut down.

We launched the ZINCbyZEDO brand five years ago to sell high impact formats to agencies and brands. In our first blog posts on the ZINCx.com site, we told everyone that 2014 was going to be the year mobile video ad spend would grow. We knew mobile would be different, and that it would require some special ad formats.

At the time, it was difficult to message the direction in which we were headed: to create and market the kinds of ads our publisher partners would need as consumers shifted to mobile. So we decided, rightly or wrongly, that the simplest thing to do would be to create another brand on the advertising side of the business to avoid confusion with our publisher partners, who knew us as an ad server.

Back then, serving both side of the ecosystem was not being done, and that’s why we had trouble positioning our capabilities. Your company was either a DSP or a SSP. The industry was just a gobbledygook of acronyms categorized by the now legendary LumaScape.

What a difference five years makes! Our company, in response to industry trends, evolved into a private, proprietary platform on which either buyers or sellers could transact. We shifted our focus to avoiding ad fraud and malware by creating a sort of closed loop between our publisher partners and our agency contacts.

But the truth is that ZINCbyZEDO was a middleman in the transaction between brand and publisher. Now that greater transparency is possible, we are eliminating ourselves as a middleman so a greater percentage of the advertising dollar actually goes to the publisher.

We are also taking steps to make sure that we’re not holding any brand customer data, or sharing it in potential violation of GDPR. Some larger companies have spent millions of dollars to make sure they comply. That’s out of our price range. It’s simpler and more authentic simply to retire the ZINC brand and continue our original mission to be a revenue-enhancing partner for publishers.

We’re not letting people go, we’re just shifting them around within the company. We are, however, slowly making some updates to the ZEDO site to reflect this new positioning, and we will be shutting down the ZINC Twitter and Facebook accounts after we make this announcement.

The digital media industry is a wild ride, as are most businesses as technology continues to advance and consumers continue to make choices. After nineteen years, we know that the way to ride this horse is not to fight it, but to work with it, and that’s what this new move means to us.