The State of the Media Industry

CollisionConf2014-301-1024x678New York (and London),  we’ve got a problem. At the Collision Conference in Las Vegas, there was both a Marketing Stage and a conference-within-a-conference called BrandX. We attended both, and came away with the feeling that there’s been so much change in the advertising industry lately that no one quite knows how to respond. The media industry is in a tailspin that looks a little like the one 20 year ago when the internet first became a household world. As an industry we responded too slowly then, and we have to be careful we’re not responding too slowly now.

The problem is the consumer. She’s disappeared, even though she’s in more places than ever before. We keep trying to locate her amidst the almost infinite media fragmentation. You, publisher, are part of that fragmentation. She’s hopping on your site and then off somewhere else before you get a handle on what she really wants. She no longer clicks on ads, although they may have have influenced her. So the price you can offer for your ads has gone down.

And you don’t have all the inventory you used to either, because of the new push for viewability. First you were put under pressure to re-design your site for mobile. So you went to a responsive design. But now, with some advertisers clamoring for 100% viewability ( and each advertiser giving you a different metric for what viewability actually means), you are redesigning again to make sure all your inventory can be tested as viewable.

You’ll wind up with less salable inventory, and your income may plummet further, as it did when you lost the consumer the first time.

If you’re lucky enough to have a site that targets Millennials, your problems are both larger and smaller simultaneously. You’ve got the great content that brings the largest demographic in the world to your site (18-34 year olds) but they hate ads. They’re cynical and turned off, and they let you know it. As a publisher, you’ve got the great content, but you can’t sell against it if you can’t prove your customers buy the products being advertised.

So you lower the editorial bar by going to “native ads.” Native ads are what you used to hate: content that is often created by or created by your own staff for brands. You have now redefined your mission: you are no longer a publisher, you’re in league with your advertisers.

But you have to get over this. The distinction between advertising and publishing is going away. There’s now only one category: information. Whether under the publisher banner or the brand banner, you’re giving the consumer, that hard-to-find and harder to win Millennial what she wants — good information on which to base a decision.

As an ecosystem, we’ve wrapped a boatload of terms around this new set of circumstances: programmatic, viewability, native, real time bidding, DSP, SSP, DMP and many more. But in the world of the internet, no matter what side we’re on — publisher or advertiser — we are selling the same product to the consumer. Information.

Perhaps we shouldn’t forget that.

Yahoo’s Mobile Growth Signals Marketers’ Shifting Priorities

We just finished reading Nicholas Carlson’s book on Marissa Mayer and Yahoo, and  we think it’s a must read for anyone in the media business.  Set aside the politics, the boardroom battles and the glamorous Vogue photo shoots and you have a picture of a tremendously talented and hardworking CEO who during the past two years has revolutionized the Yahoo product with a strong focus on mobile. If you haven’t visited Yahoo’s various media sites in a while — especially news, weather, and tech — you will find them totally transformed from the old Yahoo. They have the thoroughly modern, easily navigable look of a Flipboard or  Circa, and the mobile versions have even won design awards from Apple.  It’s easy to see that Mayer has taken seriously the need to design data-driven user experiences that can attract younger readers.

Tumblr, too, continues to do well.

And yet, Yahoo’s revenues did not grow in 2014.  Does this mean betting the farm on mobile was wrong? Here’s Mayer putting the best spin on things in the 2014 earnings release:

“I’m pleased to report that our performance in Q4 and in 2014 continues to show stability in our core business,” said Marissa Mayer, CEO of Yahoo. “Our mobile strategy and focus has transformed Yahoo and yielded significant results. In Q4, we saw $254 millionin mobile revenue, up 23% quarter-over-quarter. Across all of 2014, we saw gross mobile revenue of $1.26 billion and GAAP mobile revenue of $768 million. Our investment businesses – mobile, video, native, and social – collectively delivered more than $1.1 billion in GAAP revenue, up 95% year-over-year. These growth drivers have really focused our investments and energy on the future of digital advertising.”

The future of digital advertising. Mobile. In those words lie the answer to why Yahoo isn’t doing so well presently, and why it will do better in the future. And also in those words is a lesson for all other media execs who have yet to make big strategic bets on mobile.

Because Mayer was a tech exec and not a media exec, she focused on mobile from almost the moment she arrived at Yahoo. She knew that was where consumers were headed, and she wanted to get there first to beat them there. But for the same reason — because her background is in tech and not in media — she underestimated how slowly the advertising community would move its budgets to mobile. As a result, she landed Yahoo squarely on mobile just in time to meet her users but a couple of years before marketers realized the need for a mobile strategy and the bigger need to shift budgets.

Mayer might have been too early to mobile, but if you look at the paragraph above you’ll see how quickly the mobile business is growing. Either this year or next it will overtake the traditional Yahoo display business. And then it’s our opinion she will be considered a success in her transformation of a company everyone thought was out of the major leagues.

How is your mobile user experience?

 

 

 

Metrics That Matter

In the midst of all the discussions about viewability and fraud in online advertising, it’s helpful to look back on what started the conversation.

About two years ago, three  industry trade organizations, the Association of National Advertisers(ANA), The Interactive Advertising Bureau (IAB) and the American Association of Advertising Agencies formed a consortium called “Making Measurement Make Sense”  to figure out how to measure digital advertising  to make it more valuable for brands. The initiative was driven by a need across the marketing and advertising industry for clear standards-based metrics for interactive advertising  comparable to those of legacy media and based on the fundamental opportunity for consumers to see online ads. Until there were good enough metrics, like the ones Neilsen produced for TV, online advertising could not command the CPMs of offline media. Besides, there was already a suspicion that many ads weren’t even being seen given the split second nature of online ad serving.

Everyone in the industry rushed to the table, afraid of being left out when the Media Rating Council (MRC) an independent body, began to set the standards. Like all standard-setting bodies, its most important objective was to drive consensus in the industry on what should be measured, and how it should be measured.

The first buzz word out of the group effort was “viewability”: the ability for a consumer to view an ad. It came to light that some ads were served under others, and still others were not viewable long enough to make an impression. And yet, the advertiser still paid, because at the time, the industry was paying ad servers on the number of impressions they served rather than on whether the ads had any impact..

The move to viewability happened very quickly. As the industry shifted toward viewable impressions, we immediately partnered with comScore to measure the viewability of one of our newest ad formats, the Slider. We were excited to find that it was 99% viewable, and we re-named it the Inview Slider. We also began to build on the success of the slider from a technical perspective; and we had to convince our publisher partners to sell it.

After a shaky beginning (as with everything novel), the Inview Slider became popular, and we developed some other similar formats. And then we took a big plunge into video, developing a video ad format that could run on a print site, thus increasing the ad’s reach. For the first time, we were able to promise advertisers unduplicated reach.

This year, the MRC said it was time to begin trading on viewability, and then IAB released a study proving that 100% viewability was not yet achievable, and that advertisers should be content with 70%.

We’re still sitting at 99% for the Slider, and at higher completion rates for our video ads than all the industry benchmarks. Why? Because we have always been a company that focuses on measurement, and because we always try to measure the right things instead of just the easy things.

What are we doing as the industry begins to trade on viewability? We’re innovating around attention. We think it’s the next frontier.

 

Real Time Bidding at Scale: the Promise of 2015

2014 was the year Real Time Bidding truly took off. A subset of programmatic, RTB was met with suspicion on both sides of the ecosystem. Although at first advertisers were afraid of it, and publishers thought it would drive eCPMs through the floor, it turns out this hasn’t happened. In fact, the opposite may be happening as targeting gets better and online ROI grows along with it. Publishers who know their audiences and use their audience data can offer it to eager advertisers at higher CPMs.

RTB is probably the biggest advance in online advertising in years, because it puts power in the hands of advertisers, the people who are paying the bills. However, it also helps publishers. Handled by people who know how to buy media, RTB can finally provide brands the answer to the question John Wanamaker first asked: “which of my advertising dollars is wasted?”

That’s because, for the first time, advertisers can buy individuals rather than buying audiences in bunches like grapes, according the Mike Smith, author of the new book “Targeted,”  a primer of online advertising.

Smith points out that RTB radically changes the old audience aggregation paradigm. Advertisers can now decide which individuals suit them, and despite the fact that RTB means everything happens within split seconds, an advertiser still has the opportunity to choose individuals. In real time bidding, the advertisers make their own decisions, instead of relying on agencies or even networks. They can also choose how much to pay for each impression separately. In theory, this makes for a more transparent process.

Smith compares RTB to the music industry, in which it is no longer necessary to buy entire albums after iTunes made it possible to buy just a single cut out of an album. The aggregated audience is analogous to the advertiser’s play list. However, to create that play list takes time, and it takes the cooperation of both publishers and advertisers, who may have different data about the same customer. Most advertisers  have lots of customer data, but they don’t often mine it properly. They began by outsourcing their data management, but increasingly they are taking  data management in house and building their own DMPs, because with RTB they can use the viewing and shopping behavior of their own customers to determine their optimal audience.

Buying individual impressions rather than aggregated audiences is a massive shift.

The only remaining problem is how to buy them at scale, and that’s where a network like the ZEDO premium publisher network comes in. We can take an ad buy that comes in through our ZINCbyZEDO high impact formats division and produce scale for the advertiser through our network.  We can offer advertisers news, sports, travel, and other custom segments as we continue to grow our publisher network. And we can do this through a private exchange, which is an even more desirable way to buy.

We’re predicting a profitable year for our premium publishers as our ZINC team hits the ground running on the advertiser side.

 

When Brand Advertising Comes Back, Google Gets Eclipsed

The well-respected blogger Ben Thompson wrote quite a controversial post titled Peak Google after seeing Google’s Q3 earnings. While Google’s ad business obviously isn’t in serious trouble, the numbers led Ben to contemplate the fact that while Google has totally captured the search advertising business, search represents a scant 10% ($50 billion), of the $545 billion total online ad spend this year. And in the future, it might represent far less.

Where is the rest of that big spend going?  It’s going to brand advertising (through various media like TV and social), the kind of advertising Google taught us to disdain. Google has told us for a decade that we should value only direct response or performance ads. The result is the ridiculous metric of CTRs, which in no way represent the consumer’s entire response to an ad.

Especially on a mobile device.

On mobile, brand advertising is making a comeback.

…over the last few years a new type of advertising has emerged: native advertising. I’ve already made my defense of native advertising here, but just to be clear, I classify any sort of “in-stream” advertising as native advertising. Thus, for a news site, native advertising is advertising in article format; for Twitter, native advertising is a promoted tweet; for Facebook, native advertising is ads in your news feed; for Pinterest (a future giant) a promoted pin. These sorts of ads are proving to be massively more effective and engaging than banner advertisements – as they should be! In every medium (except, arguably, newspapers, which had geographic monopolies) native advertising is the norm simply because it’s more effective for advertisers and a better experience for users.

Thompson goes on to argue that TV commercials are mostly for brand advertising, as are jingles and magazine ads.

And all those are coming to mobile, in large part as digital video. All those brand advertising dollars from TV, flowing to mobile, has already caused the industry to examine potential new metrics for measuring an ad’s effectiveness, such as engagement (time spent with the ad) and video completion rates.

There’s no guarantee that Google will be able to win at this new game. Native advertising, and brand advertising in general, requires immersive content, and the social streams and Tier 1 publishers have most of that. As do some startups like Buzzfeed.

On the other hand, that’s not to say that Google will not continue to be profitable. Thompson compares it to IBM and Microsoft, each of which is still alive and profitable, although not the industry leader it was in the past. He says Google will not get “disrupted,” so much as it will get “eclipsed.”

 

TV Execs Minimize Video Threat, but…

Big numbers have been released by comScore about the growing number of online videos served by both Facebook and YouTube. Between the two sites, they delivered more than 24 billion views in August alone. To get down to the specifics. comScore’s executive chairman said that Facebook had delivered a billion, yes that’s billion, more video views than YouTube, and Facebook itself announced in September that it was delivering a billion views a day. Welcome to Q4 and the potential for massive advertising spend.

What do those big numbers mean for the advertising industry? Well, if you listen to the networks, not much.

In a June 2014 report, RBC Capital Markets analyst David Bank stated “the online video market poses little threat to the traditional network TV ecosystem.”  To highlight the drastic contrast between the two markets, Banks asserted the advertising value of an entire week of YouTube viewership is equivalent to that of a single, first-run episode of CBS sitcom “The Big Bang Theory.”

“Is ‘The Big Bang Theory’ a big show? Yes,” said Bank. “Does its scale threaten the fabric of the rest of the TV advertising ecosystem? We do not think so.”

A “Big Bang” viewer sits through around eight minutes of advertising, while a YouTube viewer is exposed to far shorter, less frequent pre-roll ads, some of which can be skipped. Moreover, Bank noted, only around 16 percent of ad minutes in online video run against premium content, and roughly half of that inventory is available on properties owned by major media companies like CBS or ABC.

So more and longer ads make TV superior, even when run against mediocre content? But how engaged is the TV viewer vs. the video viewer?  Video viewers may be exposed to fewer ads, but they can’t fast forward through as much advertising as TV viewers can since the advent of time-shifted viewing. Morevoer, Facebook serves autoplay video ads, although some users dislike that because they almost HAVE to view them. Does that produce positive engagement with a brand? We’d say it depends on the brand. The jury’s still out on the overall effect.

But here are better ways to serve video advertising than just pre-roll on two sites. For one thing, we believe video ads can be cut loose from pre-roll and served on non-video sites where they can run in the middle of content a visitor is already reading. Our inArticle format does not run auto-play sound, so we’re  courteous to a reading visitor. But we don’t let the visitor forget either, because we leave a 1×1 copy of the ad at the bottom of the page, so if a visitor wants to read all the way through the content and return to the ad, she can.

We’ve also got a Tier 1 network at your disposal, so if you want to buy video ads and you can’t find enough pre-roll to scale your campaign, our ZINC high impact formats could be perfect for you.

Shifts in Viewing: Video Consumption Up, TV Down

How appropriate that Nielsen’s new Cross-Platform Report is called “Shifts in Viewing.” You would have to be insensate not to know that people are consuming  more digital video. We know it because our video content publishers are seeing rapid upticks in traffic. In summary, the report says that although TV viewing has declined, most sharply among young people, not only has digital video viewing gone up, but the total time people spend interacting with has increased. Therefore, as Nielsen says charitably, we should not look at this shift as a game with winners and losers, but instead as an opportunity for everybody. Opportunity indeed. This must be what newspapers were told when news moved online twenty years ago. I’m not sure the opportunity here is for TV stations as much as it is for advertisers, who now have a solid new channel, mobile video, through which to reach those customers who have disconnected from TV. And according to Experian Marketing Services, that number is now 7.6 million households — up 44% in the past four years. But not having TV reception doesn’t faze them. fact, year over year among the younger 18-34 demo media consumption has grown four percent overall, two percent among Hispanics, eight percent among Blacks, and ten percent among Asians.  That’s because the young are looking at TV-like programming on their phones and tablets..  Nielsen says, “We are seeing year over year overall growth in digital use of sixteen percent among persons 18-34 with fifty-three percent growth in digital video viewing. ” But the truth is that not only the young are increasing the amount of video they consume online. Fast growth is also reflected in the 35-49 group, and the 50-64 demographic is surprisingly the fastest growing group of digital video consumers. Digital video consumption in this group  increaed 60%. TV viewing is down in every age group. And we look for that trend to continue, because this report shows that the highest increase in number of hours spent consuming video are spent on either time-shifted TV or mobile phones. Once the time-shift pattern was established, it became only a matter of time before video shifted online, and especially to the smart phone. As a culture, we’ve made a shift and we won’t be going back. Indeed, as phone screens get bigger, we expect video viewing on mobile phones to increase even faster.

Programmatic Spend Reveals Greater Planning

Programmatic advertising has outgrown its original reputation as a place to pick up cheap remnant inventory at the last minute. As brands and agencies try to meet consumers where they are, they are finding the need to look across the media landscape for the same customer on a number of different devices and on a variety of platforms.The consumer has become, quite literally, a moving target, and there is simply no other way to build scalable campaigns without the automation and reach programmatic can offer . Although the retail and CPG industries have been in the forefront of this movement, they’re followed closely by travel, telecom, and financial services — all fields in which competition is fierce.

As a concomitant, the RTB environment has grown to include much more than simple display advertising. You can buy pretty much any kind of advertising in real time now, even video. From January through April 2014, display advertising remained fairly constant, but all other data-driven marketing channels grew, according to Turn’s Advertising Intelligence Index. Across all the channels, the competitive advertisers are beginning to plan in advance and stabilize at higher levels of spend.

Turns study reported a decrease in the volatility of spend, as well as growth in the number of dollars spent. This information reveals that marketers are planning in advance for cross-platform campaigns, rather than operating through trial and error and merely reacting. Once marketers recognize that they have to  leverage data and approach planning with a new appreciation for cross-channel impact, smoother spend is a natural consequence.

Compared to the same period in 20o13, Turn saw far less budget allocated at the end of traditional marketing quarters this year—advertisers are planning programmatic strategies in advance and are preparing better for seasonal patterns and variations in the marketplace.

It’s about time marketers approached their media buys more strategically, and thought more about how to execute programmatic campaigns for maximum audience effect across channels. More marketers are entering every channel, in every industry, leading to stiffer competition for available inventory. They are getting smarter about harnessing data and targeting spending to find customers across the media landscape. The degree of volatility still varies across channels, but Turn says mobile, social, and video are all converging toward the stable, consistently high level of competition that we’ve seen in the display market for some time now.

If you’re not already running a cross-channel integrated marketing campaign, leveraging audience data and your own customer data, you’ve lost your advantage in the programmatic market.

What is the ZEDO Exchange?

While  publisher-side ad serving was our core business  since our founding in 1999, the part of our business that has been growing most quickly for the past year has been the ZEDO Ad Exchange, our simple, scalable way to  manage both advertisers and publishers conducting business in display banners, videos, mobile, high impact formats and smart programmatic integrations. ZEDO Exchange allows Demand Side Platforms access to the premium high-quality display and video inventory of our premium publisher network.

For advertisers, the ZEDO Ad Exchange offers the best click-through rate in the industry, along with the best of all worlds — instant pricing and availability of ad inventory on newspaper web sites. We’re different from other exchanges and ad networks, because the only ad inventory we offer is avails from our high quality publisher network, which consists of premium brands you already know and trust who are integral parts of local communities and national conversations.

We’re both innovative and smart about the way we run this network: we not only offer high impact formats, but also make sure that the advertiser gets viewable impression where they count — on premium sites.

On the publisher side, ZEDO Exchange is designed to make sure that all  publishers that use ZEDO for ad serving get a fair price for their inventory. This is one of the reasons we do not work on the RevShare or CPC model. We only work on a flat CPM model with our publishers. ZEDO Exchange will pick up inventory only if we meet the agreed CPM. We can also sell impressions to multiple RTB buyers and get maximum CPM from the highest bidder. (ZEDO’s Supply Side Platform (SSP) is Open RTB 2.0 compliant.)

Our Demand Side Platform (DSP) is a single, unified platform from which to manage all aspects of a campaign using a single account (Display Banners, Videos, HIFs, RTB & Mobile). Since all the publishers are linked in one master account, this provides media buyers with maximum efficiency.

Publishers may opt in simply by clicking the “Join ZEDO Exchange” link on their reporting and trafficking UI, or they can give us a heads up via email. After opting in, integration with ZEDO Exchange is very simple. ZEDO has built a smart back-end linking process that makes sure  publishers do not have to spend time trafficking tags or tracking campaigns. Everything is done automatically, and ZEDO Exchange reports will be displayed directly under the Reports section of the Publisher’s ZEDO account.

 

Nielsen Highlights Audience Shift

Nielsen’s 2014 Advertising and Audiences Report, available as a free download, highlights the complexity of reaching an audience that is fragmenting and changing. While this report still sees TV as garnering the largest share of advertising dollars, the growth in TV advertising is slowing down, and the prices for TV spots are declining with the difficulty of reaching the audience on many different platforms, most of them mobile.

TV as spend has grown only 3% over the last year, and the cost of a single 30-second spot has dropped $1000 over the past five years. Where will the money be going? To a diverse marketing mix that will probably change every year until marketers figure out exactly where the consumer would like to see their messages.

And that’s a new kind of consumer. After years of watching the Baby Boomers age in America and Europe, a new population is emerging; it is younger, more racially and culturally diverse, and more tech savvy. It is also global by definition, since so much TV is time-shifted and streamed.  Even people sitting on the couch watching the familiar TV set are different: 86% of smart phone owners are using a second screen while watching TV, and they are increasingly seeing mobile ads rather than those on TV. Media planners are adapting with cross-platform campaigns. But how do we measure which parts of those campaigns are effective? Nielsen says,

As accountability from the largest global advertisers is becoming 
increasingly important, marketers and media planners seek ways to 
optimize advertising efforts in a way that yields return on investment 
through measurable, quantifiable results that align directly with overall 
business objectives. While massive amounts of data are available, 
sorting through it all in a straightforward, easy-to-understand way that 
provides specific, ad-performance based insights is the true challenge.

Right. There’s data enough to drown a media planner, but which numbers matter?

It’s still an open question how best to measure these kinds of campaigns, but we’re moving with our customers toward something that makes them feel they are getting the ROI they deserve. For ZEDO and ZINC customers, the metric for our video ads  is now Cost Per Complete View, something we can easily track and provide to the advertiser on our network, and something advertisers care about. Our advertisers are definitely  concerned with unduplicated Reach across platforms, but as Nielsen adds, “Resonance,”  and “Reaction,”  — sometimes translated as engagement. If someone likes a video ad enough to finish watching it, the ad is almost certainly viewable, contains the right message, and carries that message with powerful creative. When you put an ad like that into a high impact format like InArticle, where it has the potential to reach a text reader,  you have what it takes to catch the attention of a premium mobile consumer.