Mary Meeker Sets the Agenda

Mary Meeker’s annual Internet Trends Report has been published. The long and short of it is that half the world is now connected to the internet by mobile phone, and while mobile phone sales may be saturated and therefore slowing, mobile phone use online is still growing. Most users still have Android devices, although Apple is growing a bit. In the US, mobile phone users spend an average of three hours a day on their phones.

And with this growth in mobile device use finally comes more advertising dollars, Last year, mobile passed desktop in ad spend. But there’s still a discrepancy between the time spent on mobile devices and the number of ad dollars there — a $16 billion opportunity, says Meeker.

Unfortunately for other publishers, Google and Facebook now have 85% of the global online ad spend, up somewhat from last year.

And so is ad blocking, especially in Asia, where 58% of Indonesians and 28% of Indians (as well as 9% of Chinese) opt out of having data collected on them through advertising. The European GDPR (new privacy regulations) may also cause changes, although ad blocking in Germany is mainly on desktop.

But the biggest change from last year is in the presence of better measurement tools from the big players (Google, Facebook, and Snap), who have been pressured to ad better reporting to their offerings. For Google, product listing ads drive traffic to product pages, while contextual ads drive purchases on Facebook,  and goal-based bidding ads work best on Snap.

In addition, geo-targeted local ads drive foot traffic to retail stores.

Here are the types of ads consumers appear to like most:


Meeker says inefficient ads are rapidly being exposed by data. She says it is now possible to get the right ad to the right consumer at the right time. This may be a little futuristic, but it’s certainly what is coming.

The presentation goes on for a long time (355 slides) through gaming, and through changing user interfaces (mostly voice). She also talks about image recognition and how that will become the most important part of search.

Perhaps most important for publishers, she says on slide 50 that the line between ad, content, store, and transaction is blurring, and that the most successful publishers in the future will also be targeted stores.

We are ready with these new formats, in which you swipe up to buy or tap to book right from the ad on the site. And we know that targeted well, consumers like these ads because they’re useful.  Now is a good time to get in touch with us.

ZEDO: A Safer Way to Buy and Sell Digital Ads

I was talking to a woman on our sales team in the midwest last week, and she said “you know, in the midwest many agencies haven’t even heard of ZEDO and ZINC.” In some ways, that’s not a surprise. We’ve been around since 1999, when we were founded as an ad server for publishers, and our headquarters then was in San Francisco. We later expanded to deliver out-sourced ad operations services, yield optimization services, and pretty much anything a publisher would need to increase revenue. But we’re a solutions development company, not a marketing company.

About three years ago, we started a division called ZINC and brought to market innovative high impact ad formats as the industry changed. We were, if I remember correctly, first to market with an ad called the “Inview Slider,” an ad that only appeared when a visitor was there to see it. we followed that with an equally innovative video format designed to be displayed by publishers with sites that didn’t publish video. The “InArticle” Video was quickly picked up by the industry and re-named “outstream.”

We went on to focus on mobile, developing an entire suite of ad formats that do not anger mobile users and get better results than any of our competitors. Along the way, we moved the company to New York to signal our entry into the advertising side of the digital media ecosystem.

Once in New York, we realized we had access to a new customer: brands and agencies.

Along the way we participated in a range of industry-wide initiatives, and realized that ad fraud and brand safety were becoming paramount in the minds of industry thought leaders, so we jumped ahead once again, developing a completely private, secure, end-to-end solution  — a platform on which our customers can buy innovative formats that are served directly to our premium publisher network without the danger of supply chain corruption.

At the same time, we eliminated several former partners with whom we worked until we realized they weren’t playing the game on the up and up and their networks were fraught with bots and malware. We also severed connections with some non-quality publishers.  And last, we partnered with a company that checks all the URLs to which we serve to make sure we serve ads in a brand safe environment.

All the while, we were heads down continuing to develop new technologies, and ignoring the elaborate marketing plans other companies user to generate transactional sales. We much prefer relationship sales. We’ve just developed our first slide deck in years. We’re coming out to build additional relationships.

You will see more of us now in the media world, because we have begun reaching out in the midwest, New York, and the west coast, doing somewhat more aggressive storytelling about what we have to offer.

 

The New Fronts Felt Different This Year

The new emphasis on brand safety has done more to change the digital media landscape than anything since the rise of programmatic. It is incumbent on everyone who buys media to know where they’re buying, and on publishers to make sure a brand ad doesn’t appear in an inappropriate place, even though everything is done by algorithms. We predict that the push for brand safety will make random reach less important, and will ultimately give advertisers more knowledge of what they’ve paid for.

Already Chase has cut its buys from 400,000 sites to 5,000 (without seeing a difference in results) and Sir Martin Sorrell’s salary has been cut by a third. Not to put too fine a point on it, the days where ad exchanges could support porn, fake news, and hate sites by selling blind buys to young media buyers whose KPIs were based on numbers of impressions are over. Programmatic be damned, everyone is going to have to know their inventory on the sell side, and agencies are going to have to know what they’ve bought on behalf of a client.

This year’s digital New Fronts, according to Ad Age, were all about safety, rather than sexy. Instead of glitzy parties there was substance, and everyone will be remembering the brand revolts against YouTube and Breitbart. Ad Age’s prediction:

Even if the YouTube brand revolt isn’t explicitly mentioned, everyone from Hulu to PopSugar will take the opportunity to assure marketers that their content is high-caliber and brand-safe. Many are likely to also stress transparency, verification, third-party audits and viewability. 

Conde Nast will send a message to the industry that it needs to trade on brand safety, said Jim Norton, president of revenue and chief business officer, adding that the business has gotten away from that principle.

So many different issues plague the digital advertising industry that it’s difficult to decide what it should fix first.

There is the issue of platform control by Google and Facebook, and the struggle of smaller publishers, even the Wall Street Journal and the New York Times, to support themselves off what is left.

Then there are the issues of fraud and malvertising, and the industry’s efforts to clean up the supply chain.

And we haven’t yet talked about the unwillingness of Millennials to watch ads, or on the other hand pay for content on the web.

Follow that by the downloading of ad blockers by 25% of the population, and the rolling out of new privacy rules in the EU,

As for metrics?  The industry is still trying to decide what the best metrics are for mobile advertising, especially for mobile video.

No wonder WPP has decided to cut expenses, especially for Cannes, and to leave Sir Martin with the paltry salary of $62 million this year.

Facebook’s Day in the Sun May be Over

For publishers, Facebook is no longer the darling it once was.  To be honest, it was never a darling; it was more like a force that had to be reckoned with, as all the publishers who jumped on Instant Articles thought they knew. For them, once Instant Articles launched, it was damned if you do and damned if you don’t. Now, with display advertising largely being replaced by video, Instant Articles isn’t worth the loss of control over their own sites.

The Times is among an elite group of publishers that’s regularly tapped by Facebook to launch new products, and as such, it was one of the first batch of publishers to pilot Instant. But it stopped using Instant Articles after a test last fall that found that links back to the Times’ own site monetized better than Instant Articles, said Kinsey Wilson, evp of product and technology at the Times. People were also more likely to subscribe to the Times if they came directly to the site rather than through Facebook, he said. Thus, for the Times, IA simply isn’t worth it. Even a Facebook-dependent publisher like LittleThings, which depends on Facebook for 80 percent of its visitors, is only pushing 20 percent of its content to IA.

But what’s happening with video? Sites like Bloomberg are launching tech demo offerings that publish video to Facebook live. But like everything else Facebook, Facebook Live arrived with the promise that it would solve monetization problems, but no one knows for sure (yet) how well it works.

Mark Gurman, the expert from 9-5 Mac who got hired away by Bloomberg because he had so many contacts at Apple who fed him rumors, has just started a gadget show that will stream live on FB live. This follows the successful sale of the Wirecutter to the New York Times, and the launch of Circuit Breaker by The Verge. Apparently everyone thinks unboxings, demos, and reviews of gadgets will be the best way to monetize video on Facebook.

We don’t think so. One of the problems with Facebook is that no one goes there to buy things, or even to look at branded content. Rather, they go to connect with other human beings in Facebook Groups, or to respond to invitations to Facebook events. We think that as time goes on and Facebook’s numbers get audited by third parties, we will all learn that Facebook, although it has such amazing scale, does not produce proportional results.

And all of this may be further complicated by new tools Facebook has just released that allow users to suggest that specific articles and sites might be fake news.

We’re pretty sure that the days of sheer scale are numbered, and advertising will go back to more sensible goals — reaching the right potential buyers.

 

 

 

 

Trends in Mobile Privacy

Mobile advertising has yet to come into its own, perhaps because advertisers are not yet sure what users will tolerate on a device actually held on the body.  Perhaps it seems more invasive because mobile advertising is capable of collecting information about users’ activities across different apps over time to deliver ads to those users based on those activities. It includes retargeting and tracking conversions,  and it may extend to any collection of information on one property to serve an ad on a different property. The data  collected is not tied to an identifiable individual but is tied to an individual device. And users are aware of being tracked across devices.

Lately, just about everyone is collecting user data for cross- device tracking, and users are not happy. The publisher collects user data from registrations and the use of the publisher’s app or site. Demand  and supply side platforms track users through their SDKs installs on the site, or receive user data from advertisers to calculate retargeting or fees. Advertisers also track user data, as do real time bidding (RTB) platforms, by which a user in a certain inventory is sold to the advertiser making the highest bid.

if this sounds awful to you, imagine how it sounds to the consumer who is being tracked for what is known as interest-based advertising. No wonder consumers opt out, forcing the FTC to make advertisers provide enhanced notice and choice.

In the mobile environment, the Digital Advertising Alliance and IAB Europe have determined to self- regulate. DAA has an opt out app that can be downloaded by consumers. There are also protections in mobile browsers to enable consumer choice. But in the EU  there are special considerations for apps and privacy.

The four key data protection risks in the EU include transparency consent, security,  and limitations on both purpose and amount of data that can be collected from an app. It is up to the consumer to control which data processing functions should be permitted: location data, contacts, credit card and payment data, browsing history.

A  company may use information collected across devices through cross device tracking software for content personalization,  interest based advertising,  fraud prevention and analytics.  In the US, opt outs are device specific but users must be provided with notice and a choice if they browsing activity on one device maybe used to deliver advertising to them on another device. In the EU, regulations are stricter: the privacy directive requires prior consent from the user for “storing for accessing information in the terminal equipment of the user.”

In the US, geolocation data can be collected only after the user is told that the data is being collected, and it may not overwrite consumer preferences. Although general geolocation derived from an IP address is not considered  “information”, it should still be disclosed in a privacy policy.

Snapchat and Path both fell afoul of this policy,  and Snapchat had to settle with the FTC over allegations that its Android app transmitted wifi and cell- based data location information from users mobile devices to its analytics tracking service provider in violation of its own privacy policy.

For that reason, although mobile marketing has many possibilities, it is wiser to leave the user in control of her own device marketing preferences.

 

Google at a Crossroads

It all started when the London Times published an investigative piece a couple of weeks ago about ads from prominent brands appearing on terrorist sites and alongside other types of objectionable content. Of course this has been going on for years, at least since the beginning of programmatic buying, but all of a sudden brand safety leapt to the front of advertisers’ consciousness and they began pulling out of Google sites like YouTube and the Google display network. And these are not minor brands; they’re WalMart, Pepsi, Starbucks, Coke and other powerhouses.

Quite often, these little volcanoes erupt in the digital advertising world and brands make noise about something they don’t like. But then the furor dies down and things go back to “normal.” The Wall Street Journal, however, says this is the beginning of something new for the Google ad business, because marketers have been here too many times before, and they really can’t fall back on the excuse that they don’t know what they’re buying. Behind every marketer who may not understand, there’s an agency that does, and the agencies should know better.

Despite Google’s apologies and promise of new tools, ads were still on hate sites, fake sites created by bots, and pornography last week, which prompted the Journal to put a couple of veteran reporters on this lingering story.  CEOs and CMOs of big companies are now involved, and perhaps because of potential implications of being linked to terrorist sites, Google is going to have to make some changes.

And not just Google alone. When you are going for  scale, it is almost impossible to perfectly police what is being bought. Or so it is said. But the research done by the Journal reporters seemed to point to willful blindness. It does seem incredible that big companies, either the advertisers or Google itself, can’t type in some search terms and find out whether their brand ads are still running on hate sites.

This led reporter Suzanne Vranica to say that no one in the industry is really incentivized to fix problems like these when they occur, because everybody gets paid. The publishers get paid, the holding companies try to push as much inventory through these platforms as possible so they’ll get paid, and the advertisers have the advantage of cheap ads. So throughout programmatic’s history, people on all sides of the supply chain have simply looked the other way at ad fraud.

Encouraging terrorism, however, is a horse of a different color, especially after being seen on fake news sites during the election got them worried. Just after fake news subsided as a concern, the fear of seeing your brand in the headlines for funding terrorism arose for these companies, many of whom are public.

Admittedly, in the back of every advertiser’s mind is the reality that they’re getting what they pay for when they buy cheap ads, but that doesn’t mean they won’t turn on Google and Facebook to save their own reputations. They are coming to realize that they helped build these platforms and they are really the people who pay the bills. The walled gardens are not giving them the data they need, and at the end of the day, that’s the main issue. The advertisers ceded their power, and now they are demanding it back.

 

 

Quality Print Design Could Help Publishers Succeed Online

The backlash is upon us. Publishers who have misjudged the online market will have more problems in the coming months if they don’t figure out a way to trade useless scale for more targeted reach, because the flight to quality continues for advertisers. While that means more niche and less reach, it provides an amazing opportunity for quality publishers with great design who might not have mattered in the past. It also provides the utmost in brand safety. Publishers aimed at Millennials, who are the biggest users of ad blockers, have begun to try new approaches toward reaching their audiences.

This week we got a look at a new publication launched through crowdfunding. It’s called Racquet, and it appeals to the tennis industry. You don’t have to be a tennis player, just someone who likes the tennis lifestyle.

Here’s what the media kit says:

With a target age range of 25-50, Racquet is a lifestyle brand primed to attract an engaged readership who wants quality in all their lifestyle choices—travel, entertainment, food & drink, accessories, design and more. These are influencers, who move and think globally, value the experiential and carefully curate their consumption—from what’s in their Netflix queue to what’s on their coffee table. Our readers might never pick up a tennis racquet, but they love the style and culture of the sport, and look to us to guide them towards what will make them more cultured, stylish and informed.

At the front of the first issue is a list of “founders,” who contributed to getting the magazine off the ground. This in itself is different. Also different is the look of the print copy. The design is stunning. Each issue is designed to be a collectible.There are perhaps a half dozen ads in the entire print copy. And the print run is 5000, distributed worldwide. That’s not many, so if this company plans to monetize, they’ll have to go beyond print.

Online, the main revenue stream is merchandise for now. Here’s where the unique combination of online-offline becomes more interesting. As an advertiser, you might want to sponsor a podcast, or add your brand to an issue of the magazine that is actually printed, but sold online afterward as a printed copy. Back issues of Racquet, for example are $15.00. This is a different and exciting cross-channel promotion opportunity, and we see it as having great potential for luxury brands.

The ad formats will have to be different from what is usually sold through programmatic, although we predict that eventually the magazine’s site will itself have a limited number of appropriate ads. If it is going to scale, it must. But doing it slowly and carefully, and keeping the product special, may prove to be a differentiator.

 

 

 

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.