Legacy Publishers Grapple with New Competition at CES

CES (formerly known as the Consumer Electronics Show) is a wonderland of new gadgets, technologies, and possibilities. For the past few years, its focus has been on concept cars with huge screens that can drive themselves while the passengers watch video, and connected home devices that use microprocessors and networks such as wireless, Bluetooth, and NFC (near field communications) to make themselves smart. The connectedness of all inanimate objects around you is called the Internet of Things. The ubiquitous robots seen at CES are also part of the IOT.

In the same way your automobile can inform you that it’s running low on fuel, the most advanced refrigerators can both alert you that you’re running low on milk. But unlike the car, appliances can now connect to your home digital assistant (Apple Home, Google Assistant, or Amazon’s Echo) to help you order more.  This year’s most unusual Internet of Things products included a smart breast pump for nursing mothers and a smart toothbrush with a video camera that takes pictures of the inside of your mouth that you can share with your dentist — or your mom if you’re a kid. Yes, many of these gadgets are silly, and that’s part of the fun of CES. See also “Hair Coach,” a smart hairbrush.

But others are going to evolve into platforms through which brands will be able to talk to consumers. The most obvious platform so far has been the connected car, because now that all cars have display screens built into their dashboards there’s an opportunity to think of the car as “publishing” content to its passengers, whether it be diagnostics or entertainment. And where there is publishing, there is also a marketing opportunity. To that end, Ford has partnered with Amazon to use the Alexa voice technology in its cars next year. Other automakers have chosen to partner with Apple for its Siri technology, or Android for Google Assistant.

The car as a platform is forced to use voice technology because of safety concerns. However, household appliances are not limited that way, and in the next few years they will also become publishers of a sort, delivering information about themselves to consumers and collecting consumer data in return.

In 2017, there will be many other new platforms we can consider as publishers, and those publishers will hope to monetize through advertising — but not in the old way. It’s been twenty years since publishing began to become digital, and it is almost shameful that we’re still for the most part serving up digital versions of the same formats we used in print and TV: 15 and 30 second spots, and display ads on pages. We’ve begun to evolve with native advertising, but that’s just in its most rudimentary phase.

A better example of what is to come in the future is Weiden+Kennedy’s effort to build a virtual cellular network for Verizon within a Minecraft game. The network allows players to make phone calls.  Call that a native ad, call it a sponsorship, call it a product placement, or whatever you wish; that’s how the market is headed and we need to spend time creating new formats to take advantage of the exciting new platforms. At last week’s CES, many brands and agencies were there simply to learn about new mixed reality techniques that can be used to talk to consumers.

At ZEDO, we’ve designated 2017 as a year of innovation for ourselves, as we begin to develop tools for our publisher and agency partners to reach consumers in new ways.

The Smart Hairbrush, one of the new IOT gadgets at this year's CES

The Smart Hairbrush, one of the new IOT gadgets at this year’s CES

 

2017 Will Bring Differences in IAB Ad Formats

Strap on your safety belts, digital advertising will be very different in 2017. The IAB is in the process of creating new formats for online ads, reflecting both the LEAN principles it introduced last year and new aspect ratios that take into account cross-device campaigns. The new formats are in response to the shift to mobile, the demand of brand marketers for cross-device integrated campaigns, and new technologies such as mixed, augmented, and virtual reality, which debuted this year and will take over the market in fall 2017 when Apple releases its rumored tenth anniversary iPhone.

One other change that is suggested by these guidelines: we’re not going for scale and reach in the future. We are going for precise targeting that can be measured for attribution. Even in branding, we’re after the right customer, not just random eyeballs.

The draft is open for public comment until Nov. 28 and can be downloaded here. ZEDO has worked with the Online Trust Association to comment on the draft from a privacy, security, and malware perspective.

The following IAB Tech Lab member companies were part of the working group that created this draft: Aarki Grey Advertising Sizmek ABC TV Network GroupM Spongecell AdCade Gruuv Interactive Startapp Adelphic, Inc. Havoc Sublime Skinz AdGear Technologies, Inc. Ipsos TapAd Ansible J. Walter Thompson U.S.A., Inc. Team AOL AOL Kargo The New York Times Company AOL Platforms Mashable The Walt Disney Company Beachfront Media MediaCom The Weather Company, an IBM Business Bloomberg Merkle Inc Undertone CBS Interactive Micro Cube Digital Limited Unity Technologies Celtra Microsoft Advertising Unruly Cox Media Group MING Utility & Entertainment Group USATODAY.com Cyber Ideas Monotype Vertebrae Dow Jones & Company (The Wall Street Journal) Flexitive Vibrant Media ESPN.com Ogilvy Xaxis Flashtalking PageFair Yahoo Flipboard PGA TOUR YieldMo Flite PointRoll Zillow Forbes Media R/GA Gannett Responsive Ads Google Saatchi & Saatchi NY .

Among many other changes, the new Dynamic Standards vary according to weather and geography, as well as demographics. Also, pixels are gone, replaced by aspect ratios, so the ads can be used across screens.

Developed by the IAB Tech Lab, the revised portfolio is based on HTML5 technology and comprised of flexible display ads, mobile ads, video ads, native ads, and introduces guidelines for new content experiences like virtual reality and social messaging ads.

The IAB also expects ads to contain emojis and stickers. Guaranteed will be user choice according to the LEAN Principles of lightweight, encrypted, AdChoice supported, and non-invasive advertising.

In some ways, getting rid of pixels will make it easier to create one piece of creative and deploy it across screens. Although we already support this capability, we’re in the process of getting absolutely every piece of this IAB guideline into our product roadmap so we’re ready for it when it comes. Because we are known for fundamentally better advertising, we want to continue to lead the market.

We Lead in Outstream for a Reason

S1The biggest complaint in the advertising industry as we drop further into Q4, its busiest season, is the lack of video inventory. Everybody wants to run video ads, because video completion rates are higher than the CTRs on banner ads. Especially on mobile, consumers seem to have more patience with video ads than display ads. However, when they speak about video inventory many brands still mean content on high-trafficked video sites like YouTube on which they can run pre-roll. There is indeed a scarcity of that.

However, pre-roll is not the best way to achieve results with video ads, as many other companies have already discovered. The unfortunately- named “outstream,” video ads on text sites are the best performers.

In this department, ZINC is the market leader, having been the first to market with this format.  We launched what we called inArticle video almost three years ago, before the term outstream even existed, and we also initiated the term “polite” for these ads, because they only came into view only when a reader scrolled down to them, and they were also easy to close or scroll past. As  a result of the precautions we take, our ads are not intrusive.

Not only that, we never have used auto-play sound, another reason we feel comfortable calling these ad formats “polite.”

We constantly win buys away from our competitors (and there aren’t many), because we get higher viewability scores with resulting higher rates for publishers. Even the competitors are asking us how we win so many good buys.

Here’s how: we have a better format, better technology, and a better premium publisher network. We have tested our viewability with third parties, and we’re at 93%. To be a market leader, you not only have to be a technology leader, you also have to be cognizant of consumer attitudes, and you have to run on only premium publishers. That’s us.

Yes, this is a self-serving post. Every once in a while we have to sneak one in, because not enough people know what we do.

 

 

The New Rules for Native Advertising

As a publisher, now do you avoid sullying your brand with the “slew of sewage” most editorial writers think comes with native advertising, and yet keep some of the revenue that flows from native for yourself?  For the Times, known for over a century as “the gray lady,” the reputational damage of going native could have been disastrous, and yet the category has grown so quickly that there’s no way not to participate if it wants to survive.

So the Times jumped awkwardly into native, and now its agency had $35 million in revenue last year, and will create 100 campaigns this year. Yet, the Times does not have the feel or the reputation of Buzzfeed, whose branded content is often offensive to more sophisticated audiences. Its native content is still recognizable as being from the Times.

Here are some good tips that the New York Times has learned from experience that can be applied by other publishers.

1)First, if you establish an in-house creative unit to produce branded content that will run in your publication, give it a separate name: the Times’ unit is called T Brand Studio, and calls itself an agency.

2)Next, begin with an innovative campaign to run in the publication that showcases both the agency’s and the publication’s multimedia capabilities. In the case of the Times, a campaign for Netflix won over some of the wary Times newsroom occupants.

3)Match the quality of the branded content with the quality of the editorial content.

4)Bear in mind that advertisers don’t necessarily need publishers to get reach anymore, but if you have high levels of engagement from your readers, you can sell your advertising for higher prices.  Reach is going out of style in favor of engagement. The Times’ subscription model promotes reader engagement, and that helps the ad sales, too.

5)Do things that Facebook cannot do. Scale and data are Facebook’s purview, but narrow targeting is best at a publication.

6)Programmatic, video, and content-based ads are growth pillars, and display is not. Focus on the areas that grow. Mixed reality could come next.

7)Raise the bar on innovation in accordance with the specific KPI for the brand. What kind of NBDB (Never Been Done Before) campaign, will get the CMO on the cover of AdAge? Those are the kinds of KPIs brands come to an agency with.

8) Raise the bar on quality to match that of your publication.

9) Label it properly so if visitors choose to engage with it they know that they’re engaging with.

10) If a brand asks for creative that can be run elsewhere, you’ve hit the jackpot. You are then a fully-functioning agency, and can be an actual profit center.

 

 

 

For Mobile App Ads, Innovative Formats Work Better

The mobile app development industry is alive and well, according to an inMobi survey from earlier in the year, and despite the roller coaster ride in advertising, it’s still the most popular way for developers to monetize their inventory. However, the average developer worldwide makes almost nothing on a single app, and only 15% have crossed the 1000 download threshhold. If this is true, why do people continue to develop apps?

We think developers can do better, but they have to use some more innovative formats.

App development is a young industry, and most of the people in it have been doing it for less than four years. Only a third of app developers have been in the industry for three years. Most of the mobile app dev firms are small, and many are making apps for other businesses, rather than trying to monetize their own apps. In fact, 47% of mobile app developers are solo-preneurs. Many of them told inMobi that they were developing apps for fun, rather than for fortune. No wonder games and entertainment constitute over 70% of the apps developed. And no wonder they are not as savvy about advertising as they need to be.

When you get up to 1-3 apps in either the Play Store or the IOS App Store, if you play your cards correctly, revenue can increase. It probably isn’t surprising to find that 42% of the respondents had 1-3 apps in the Google Play store, while only 28% had apps in IOS. In the US, we often forget that Apple is such a small piece of the global overall device market, because it has an outsized influence locally. Android is also a better place to learn how to develop an app than IOS.

Making money is the biggest issue for application developers, as it is for all web publishers. 55% of developers make $1000 per month, and monthly average mobile app revenue globally is under $6K. There’s new research that shows a decline in app downloads around the world, and the average phone user interacts daily with no more than a dozen apps.The average monthly per-app revenue is in the range of $5k to $11k depending on the platform. Windows Phone is the highest money-maker at $11.4k per month per app, although it is only used by 21% of developers. North American developers lead in both downloads and revenue over both APAC and Europe.

Advertising is the most bankable app business revenue model;  7 out of 10 app developers use mobile advertising to monetize their apps currently and 18% of them plan to use mobile advertising in future. Used correctly, it can generate good revenue, but we believe too many developers are naive about advertising and choose either the wrong ad network or the wrong ad formats.

For example, banner ads and interstitials are still preferred by app developers despite the the fact that consumers do not like them. Response to banners has gone down steadily, and interstitials are under pressure from consumers who now have the capacity to run ad blockers on mobile. Video, however, has taken off, and video advertising such as our inArticle format, works well. Our SwipeUp for mobile, an innovative new format we came up with this year, has also taken off.

If you are an app developer, it’s worth talking to a platform that knows how best to connect you with advertisers who can get you the revenue you desire.

 

 

New Opportunities for Digital Publishers

If you sit around listening to some industry insiders whine, you’d think there’s no hope for the digital media business. However, people continue to be attracted to it as a business and as a calling, and if you look at the numbers, many publications aren’t doing badly. Even Gawker, forced into bankruptcy and out of business by Peter Thiel’s lawsuits, says its business was up 7 or 8% this year. Business, said beleaguered Nick Denton, is good. Gawker.com may be gone, but its 6 sister sites are doing fine under Univision. Other niche publications, like Thrillist, are also doing well.

According to Thrillist founder and VC Ben Lerer, who appeared on the Digiday podcast, there are many short term threats facing digital content companies. The keyword here is short term, which is how Lerer looks at ad blocking, the decline of effective display advertising, and the hegemony of Facebook. He swipes those common industry concerns away with a flick of the wrist, preferring to focus on what he calls “the massive change in distribution” that has happened because of online media, which he thinks is already making some people rich even as others suffer.

It’s like the 1980s when cable TV first started, he says. Cable TV allowed finer audience targeting than network TV, and provided gigantic opportunities for content creators who understood the needs of their niche audiences.

“The pipes are different,” he said. “It’s not as clean and easy a story, but it’s similar to where there was a large handful of companies that figured out how to make content for those pipes, there’s now an opportunity to make content for these new distributed pipes. The traditional TV companies, who you’d think would be are fundamentally not built to be the guys who win today because of the sheer infrastructure they’ve built to do something that’s not what they need to do in the future. It’s created an opportunity for a new breed of media company. There’s no question there’s a decline coming to television. Those companies are not built for shrinking.”

Lerer thinks the greatest changes in digital media aren’t coming on the publisher side, but on the agency side, where traditional agencies have built a cost structure based on shooting expensive 30-second spots for TV that will now be replaced by native ads on mobile. Those ads will be made by the publishers themselves, perhaps using their existing editorial staffs or through in-house agencies operating with a Chinese wall.

Lerer is not the only publisher who thinks good content will win the new distribution game, whether on Facebook, Snapchat or a publishers’ own site. Brian Lam, founder of tech review site “The Wirecutter” and former writer for Wired says that media companies without a mission will crash and burn.

Of his proposed expansion into the fashion vertical, Lam says “we’re not going to do it because it’s a business opportunity. We’re going to do it because we think we can be helpful, and there’s also a business opportunity. The business serves what we’re trying to build.”

SwipeUp is a Window into the New ZEDO

Our new SwipeUp mobile web format has begun to roll out in test campaigns. The ZINC team is selling it, and the ads are running on our premium publisher network.  It’s pretty ingenious, and because its so innovative it generates more than the usual engagement from mobile phone readers. When a user opens a web page that runs this ad, the ad tag loads on first touch. When the advertiser tag response is received, or after an interval that can be determined, 20% of the ad swipes up from the bottom of the page. The ad moves up or down on the next swipe, and the user can either engage with the ad or swipe out of it. Most significant, the user is always in control; the ad never “takes over” the page. (SwipeUp does, however, expand to fill the screen.)

These attributes have become very important as the industry tries to restore the trust of the consumer after the Wild West of desktop display advertising, which alienated such a large portion of the population, especially the all-important Millennials, that a fair number of them have opted to block ads entirely, especially on mobile.

Now the industry can keep investing in more and more sophisticated technology to block the blockers, but that would ultimately be self-defeating, because the users will just begin to despise all of us, advertisers and publishers. It’s much better to do what we’ve been trying to do: separate ourselves from fraudulent traffic, beef up our security, and be the change we want to see in the industry.

Although that has meant a re-alignment in our customer base on the publisher side, we can now be certain that there aren’t any more adult sites in our network, nor any malware on our platform. We are moving to a completely premium network. Many other industry partners have done the same, being proactive to stop the erosion of trust that peaked last year.

On the ZINC side, our Innovation Suite, led by our inArticle video format, and accompanied by inView, is landing us better and better campaigns, and we’re up over 300% year over year in revenue. We’re being used by every agency trading desk, and many major brands.

We’re building a trust network for the supply side to reach the demand side, and for the demand side to get greater ROI on its campaigns. It’s a pretty exciting time for us, almost like a rebirth into a different position in the industry. It will take a while for people to grasp how much we have evolved, but expect some further innovation from us this year.

 

 

 

Computers Enter the Living Room — by Phone

We saw our first prediction of computers coming to the living room at the Consumer Electronics Show in 1996. Microsoft and Intel thought that the way to get the PC into every home was to make it a media server, and they collaborated on Windows Media Center on Pentium chip boxes. The vision: everyone would have a computer in the living room hooked up to the big screen, and that’s how we would view media in the future.

That vision was roundly resisted by ordinary people who saw the beige and gray PC boxes and towers as too ugly for the living room. And besides, computers were still much slower than the TV, which came on instantly and never crashed.

Nearly 20 years later, that vision has totally skipped the living room and  morphed into “TV anywhere,” a state in which viewers watch TV in the living room, all right, but it is increasingly being cast from mobile phones and tablets via Chromecast or Airplay. Being near a big screen isn’t essential to viewing content, and if we turn on the TV at all it’s often just to take images off our phones and look at them on a larger screen. We don’t care about TV schedules, nor do we think of the TV as the source of our only content. Increasingly, people are  watching TV either time-shifted or with the TV serving as a dumb display for the content from the mobile phone.

Much of today’s TV watching is “Over the Top,” streamed from online by people who have never connected to cable or satellite in the first place or who have “cut the cord.” This creates an interesting conundrum for advertisers. If viewers fast forward through ads using a DVR or watch something else on a mobile device while the ads play, what does this mean for TV advertising, which was for many years the most effective way to reach people?

About five years ago we predicted that rich media advertising could make online advertising as effective as TV advertising, and we set out to develop the products to do that. Admittedly we haven’t been alone, but if you think about it, our “outstream” format (which we had named inArticle before the industry landed on the term “outstream”) and our high impact formats have been instrumental in moving ad dollars from TV to online and now to mobile.

So in this season of making predictions, we think it’s safe to predict that with all the emphasis on data and metrics accompanying the shift from TV to mobile, we will soon be completely convinced by data that video advertising beats TV for marketers.

 

 

 

Ten Top Trends in Digital Advertising for 2016

It’s fun at the end of every year to predict what will happen the following year, especially in an industry so prone to change as the online media industry. But this year, because consumers have announced that they’ll have a say in next year’s trends by turning on their ad blockers, some upcoming changes are less difficult to predict correctly than usual.  Assuming the publishing industry isn’t suicidal, for example:

1)publishers will take seriously the wishes of consumers to have less intrusive advertising by planning more native content campaigns with brands and selling fewer display ads at higher CPMS;

2)the creative department (or agency) will assume more importance than it has had in the past decade, because media buyers are coming to the conclusion that it’s not only a numbers game — it really matters what message is delivered to which customers. The most sophisticated brands are doing very customized creative based on information gleaned from their own databases so customers don’t receive irrelevant ads. Example: if you live in Florida, you won’t get the ad about how the car handles in ice and snow; you’ll get the one about its powerful air conditioning system;

3)Brands will expend more energy and money producing content consumers might actually want to watch and engage with, rather than just buying impressions for reach and frequency.  In fact, frequency caps will probably go down, as advertisers strive not to irritate consumers, and reach will be deeper, and not as wide;

4)Autoplay video with the audio turned on will probably go away, as will non-skippable preroll and other formats that irritate consumers such as pop- unders and interstitials. Advertising that blocks content from a site visitor will also go away;

5)Millennials and IT professionals, the most tech savvy segments of the online audience, will have to be reached with native advertising, in-app advertising, and direct mail, because these consumers are the heaviest users of ad blockers and will probably not willingly turn them off once they’re on;

6) As a result, native formats and contextual targeting will be the “new new thing,” which means the one thing that can’t go away is data. Both publishers and brands should invest heavily in their own databases, because trackers are also being blocked along with ads. Cookies have fallen out of favor;

7)As an industry, we shot ourselves in the foot over the past five years seeking scale, scale, scale. That meant we made many more consumers angry than those whose needs we satisfied. In 2016,  in order to wean consumers off their ad blockers, we’re going to have to make the user experience of the mobile web  better.  By better, we mean faster page load times for mobile browsing, which means using technologies like Google’s new AMP framework. It means buying ads on premium sites that have reduced their inventory to make their pages deliver a better user experience, and paying more per CPM. And it means reaching more of the RIGHT people, although fewer people overall;

8) In 2016, we will probably see a true supply and demand market, in which the supply is no longer infinite as advertisers refuse to pay for traffic generated by bots and publishers streamline their pages. Group M’s dictum that it will only pay for ads in which the experience is initiated by the user and the “chosen” ad is 100% in view, 50% completed, with the audio on for the entire time will take hold. This is a tough standard to meet, but MediaCom’s Steve Carbone argues that anything less than 100% viewable in any other medium would be considered a “make good.”

9) Ad exchanges will continue to struggle as agencies leave them for private marketplaces.

10) A plethora of working groups and industry committees will be convened to flesh out the new standards.

Happy Holidays and Happy Ever-changing New Year.

 

For Mobile Apps, Video is the Only Viable Format

Given the problems most mobile app developers have getting their apps noticed in the App stores, it’s no wonder that they are trying to figure out other ways to monetize than advertising. More likely than not, they’re considering a form of m-commerce. Even Snapchat, which certainly has a large enough user base to draw the big advertisers, is experimenting with charging people to re-play a snap.

Much of mobile advertising up to now has been display-based download advertising — trying to get a user to download a specific app. With this formula for monetization through  advertising, the more popular apps would help the newbies get found, and the newbies would be a revenue stream for the big boys. But now, because of a shift from apps with lots of features to “thin” apps, combined with limited screen real estate, there’s just not much room for mobile advertising, and it isn’t working particularly well. If my futurist friends are correct, apps will continue to be thin for a while, driven by smart watches and Apple’s new tvOS, which doesn’t download an app to the set top box until it is needed.

The need to find alternative means of making money is why most of the chat apps already make it possible for you to send someone money, make a VOIP call, order food, or get customer service from a merchant right inside the app. Apps like WeChat and Facebook Messenger are already about taking transaction fees from commerce streams. And this despite the fact that Facebook turns out to be the company that has done the best at figuring out mobile: 78% of its ad revenues came from mobile this year, and its revenues are up.

The big companies are at different stages in figuring this out. Foursquare and Facebook split their apps last year, and are now re-inflating their new offerings with more tightly integrated  features. Amazon, however, is a little behind this power curve: today alone I had to download Amazon Prime Now to get 1-hour deliver, and another app, Amazon video, to stream the pilot episode of a TV show.

It’s difficult to see how brands are going to capitalize on this new app strategy, unless they’re Facebook, Google, Amazon or TenCent.

Fortunately, most of this doom and gloom for mobile applies only to display. Video ads, inserted in stream, are still highly effective and well-tolerated. In fact, apps that are not video services will have to adopt formats like our inArticle, whose usage grows exponentially month over month, just to stay in the ball game.