Publishers with Strong Brands Increase Revenue

People will watch advertising in your app if you promise them something worthwhile. If the promise is important enough, they will “endure” ads to keep you in business, which is how it worked in the good old days of print and TV. However, if you break your promise, and lose trust, you have lost something from which it is nearly impossible to recover. That is how publishers should look at their sites — as brands that deliver on a specific promise strong enough that users will be willing to look at a few ads in exchange for what you deliver.

How do we know this? It’s been proven, at least on a small sample. This morning I was listening to a podcast celebrating the 20th anniversary of Kottke.org, a blogging site hosted and curated by Jason Kottke. It’s just a bunch of short written pieces, but one of them struck a chord with me. It’s about how  positioning changes the user experience.

There are three major mapping apps. Apple Maps, Google Maps, and Waze.  Of the three,  Waze promises fastest route times, although it often under delivers. Ironically, Apple Maps is most accurate in predicting its route times, and Google Maps actually gets you places the quickest. This was tested by a man named Artur Grabowski  in 120 trips over the course of 2017.

At the other extreme, Waze (Alphabet) makes money through ads when you use their app. What better way to get people to use your navigation app than by over-promising short trip times when no one takes the time to record data and realize that you under-deliver? If an unsuspecting user opens Apple Maps and sees a 34-minute route and compares that to 30-minutes in Waze, the deed is done. Now Waze has a life-long customer who doesn’t realize they’ve been hoodwinked and Waze can throw at them stupidly annoying ads.

Now I maintain that you can only position a product that under delivers for so long before users get the picture. I also maintain that you can only bargain with users to accept a few ads, not a page full of them.

It took us a long time, but the pendulum is swinging back to a focus on what the reader/viewer/visitor needs rather than what the advertiser needs. Advertisers will have to cooperate and stop demanding interstitials, popups, and other garbage that turns away visitors. They will also have to stop demanding data that they can use for retargeting. We are in different times now; we’ve tried a bunch of digital advertising techniques, and we know which ones fail.

As a publisher, your brand and your visitors are paramount. If your value proposition is strong enough to have lifelong relationships with customers, like the New Yorker, or Vogue, or the New York Times, you will eventually sort the financial issues out. But you can never do that if you sacrifice your brand to the needs of advertisers.

Whose Digital Identity Consortium will Win?

Companies in programmatic rely on their own cookies or device advertising IDs to anonymously identify audiences. Thus a consumer can receive many identifiers, resulting in data loss through fragmentation. This is how we got to the problem of a flood of data, yet decreased understanding of consumers, less effective targeting, frequency management, optimization, attribution, and a poor consumer experience.
As the digital advertising industry has matured and the criticisms have increased the ad tech portion of the ecosystem has been looking for a single identity solution. However, with the coming of GDPR and all the movement toward transparency and brand safety, this year ups the ante.
Digitrust was the first effort of the industry at a unified identity for consumers. In November, Rubicon wrote:

Cookies have ruled the ad industry since the early days of online browsing and shopping — helping media companies understand who their audiences were and what they were interested in, while making sure advertisers could deliver the most relevant messages. But the growth of programmatic and the mobile explosion have changed the industry dramatically, leading to a growing sense that cookies are no longer enough.

Across the industry, technology companies, advertisers, and publishers are all seeking an alternative to cookies — and there are a variety of solutions vying to be the go-to way we identify users and analyze their behavior moving forward. DigiTrust, the non-profit, independent ID consortium supported by companies like Rubicon Project, Dataxu and OpenX is one such option…

At the time, Rubicon decided to back Digitrust, but in the interim two other options have emerged.

The Trade Desk Cookie Sync

The Trade Desk has opened their cookie sync database to other organizations. The database is stored in their proprietary domain, and is in line with our existing implementation. However, this solution is only helpful to ZEDO if it is adopted by other players, and as yet there is no information on that.

Advertising Id Consortium
The third of these options is the Advertising ID Consortium, which takes a collaborative approach to solving these issues by providing: 
  • An open and standardized pool for cookie and device IDs.
  • The availability of people-based identifiers.
  • An omnichannel identity framework that adheres to privacy, security, and compliance requirements, industry standards, and best practices.

This is a solution similar to The Trade Desk’s, although headed by Liveramp and Appnexus. The problem with it is that everyone is trying to build Cross Domain Targeting Technology, and if this consortium takes off, Liveramp seizes the competitive advantage.

Competition among the major players may prevent any single solution from gaining enough traction to “win.” That would be painful for those of us who would then have to implement three different solutions.

 

Building a Brand: For Publishers

All publishers will not survive the latest onslaught of Facebook changes and GDPR compliance. At least not with an advertising model. But should they? The combination of an almost limitless content  supply of sometimes questionable quality, the “Amazon effect” on brands, and the intolerance of consumers for slow-loading pages and interruptive ads will cause a Darwinian contraction among publishers.

The internet saw the rise of almost countless niche publications, each one fighting for ad dollars. That led to a proliferation of targeted ads, which in turn led to the need to collect personally identifiable information. The fact that 65% of companies weren’t ready to comply with GDPR shows how complicated the ecosystem has become.

That number includes brands and publishers. The brands have already taken steps. P&G cut its ad spend last year by $200 million, and said its reach was 10% greater. It will take more steps this year. In related news, WPP lost 15% since last year.

What will happen? Only the fittest will survive.

We think a combination of things will move the ecosystem forward, including the decline of publications who bet the farm on Facebook to get traffic, as Little Things did, the introduction of more transparency in the media buying system, and a diversified revenue stream will keep the best publications in business.

Mixed revenue streams have already begun to keep the largest publications, such as the New York Times and the Washington Post afloat. Some sites (The Information and Stratechery) do well by subscription alone, although the subscription model won’t scale across the entire industry because there are a limited number of sites to which any one human can subscribe.

That’s why after all is said and done, advertising will remain the best way for keeping content free, and those sites who design for the new ad formats recommended by the Coalition for Better Ads and IAB will see less competition for ad dollars and probably higher CPMS. The new site designs will be cleaner, pages will be faster loading, and desired content will be easier to read — all of which should have already happened.

The internet presented a temptation to put too many ads on too many sites, resulting in the digital equivalent of a swap meet and what we are seeing is a natural fallback of the market from excess to normalization. A market with too much merchandise is just as difficult to shop in as one with too little.

This is not very different from what happened to the cryptocurrency space lately as Bitcoin’s price fell from $19,000 to $11,000.

Bitcoin is a good analogy here, both because the regulators are coming both for digital media and for cryptocurrency, and because its price did not fall to nothing, just like advertising won’t go away. What we are seeing in advertising, as in blockchain, is the adoption of new technology inducing a hype cycle, and the market coming off the hype cycle into something more normal.

The quality publishers will still succeed, most supported by advertising. Publishers, just try to keep the flight to quality in mind. We’re here to help.

P&G Acts on its Promise to Clean Up Supply Chain

Well, P&G has done it — exactly as Chief Brand Officer Mark Pritchard promised a year ago it would.  The consumer giant cut the number of agencies it works with from 6000 to 2500 and next year will cut that number in half again. According to Chairman and Chief Executive David Taylor, the company has found and eliminated as much as 20% media waste and still increased its reach 10%. Somebody woke up the hibernating bear and it was hungry for change.

For years some of us in the industry have been simultaneously laughing and crying about waste and fraud in digital advertising. No one seemed to care. But all of a sudden the KPIs for everyone from media buyers to middlemen seem to have changed, and everyone’s serious about cleaning up the waste.

P&G is just one example of changes in the media industry that will come about in the coming years. The hammer has now come down on fraud, wielded by the only people who ever could swing it with enough power, the brands that pay the bills.

Now what’s going to happen next? Taylor already told a Consumer Industry Analyst Group that P&G is taking more of its media buying inside, and it will do that “through private marketplace deals with media companies, and precision media buying fueled by data and digital technology.” So much for waste.

What does this mean for the online publishing ecosystem?

For the ad agencies and trading desks it probably means a round of layoffs and belt tightening as many of them lose a big piece of business. For brands, it means some broad shoulders to stand on as they demand greater transparency and more attention to brand safety.  In other related news, Unilever’s CMO, Keith Weed, threatened at the IAB Annual Leadership Summit that it would pull its advertising from Facebook and Google if the platforms don’t curb hate speech and controversy.

For ZEDO it means increased focus on our core mission, which has always been to help our publisher partners to monetize their inventory more completely and at hight rates. For the past three or four years, we have been operating as a private platform that joins publishers who have premium content with big brands in a secure buying environment. We have made certain that any transaction within our control is transparent, viewable, and brand safe.

It seems like the industry is coming our way.

 

 

Instream, Outstream We All Like Video Stream

A little more than four years ago, ZEDO had a global product development meeting to come up with ideas for mobile video. At the time, things were just shifting to mobile, and the ad dollars weren’t quite there yet. The customers, however, were spending more and more time on mobile devices, and the future could be clearly predicted by publishers, who were seeing more and more or their traffic come from smart phones and tablets. Our partner, The Economist, had asked us for a way to run video ads on text pages.

The conversation in the room at that meeting quickly moved around to the differences between phones and tablets, and what consumers would “tolerate” on a device they wore on their person all day. Somehow, the phone seemed a radical departure from any other online device because of this intimate connection with its user.

Our product team showed some of us in marketing an ad unit they were calling “In Article video” because it was a large video ad format that could be shown on a text-based site, and it was a complete departure from the only available video ad format at the time, which was pre-roll. There was a shortage of available pre-roll, and marketers were searching for other places to use their existing TV creative.We thought the format was very effective, and would drive user engagement, because at the time users were just beginning their love affair with video on the phone.Mobile video was still something of a novelty.

We decided at that meeting to call our offering “In Article Video,” because it ran in the article, appearing only when the user scrolled down to see it. When we tested it, the viewability of the unit was over 70%.  We knew we had found the answer to filling advertisers’ need for something beyond pre-roll.

In the first year, we sold this format as In Article, but then the industry began to call it outstream, and soon we had at least one copycat who popularized the name “Outstream.” While this made no sense to us as a name, we had no choice but to adopt it.

One of the claims we have always made about Instream/Outstream video formats is that they are a form of “native,” meaning they don’t take the viewer away from the mobile stream of news or articles she is already reading. However, the industry decided to make it difficult for us with that definition as well: native can now also mean branded or sponsored content. Native has come to mean advertorial, and nothing to do with format or feed.

I’ll take a minute to argue here that every time the industry chooses a confusing term for an ad format, it makes that format more difficult to gain adoption. We have had to deal with the confusion around Outstream and then the confusion around the meaning of native, and we believe that has held back the adoption of both ideas.

The good news is that 77% of marketers have not hear of either Outstream or Instream video, so we’ve got a large addressable market to go after next year with our publisher partners.

 

 

Native and Mobile Ads Draw High CPMs

The advertising landscape continues to shift. This time the news appears to be good for the publishers. MediaRadar’s newest study on advertising trends in 2016 and Q1 2017, which came out at the beginning of the summer, revealed that high CPM ad placements are on the rise (whew!), especially if they’re mobile or native; niche and enthusiast sites still flourish in print (along with regional titles,) and native ad placements have grown 74% in Q1 year over year.

Native ad formats have grown the most and command the highest CPMs. While many forms of native advertising are still frowned on,  the demand for native has nearly tripled since 2015. That’s partly because native ad formats typically escape ad blockers, but also because consumers don’t mind reading or viewing something that’s truly informational and isn’t interruptive. Native ads are predominantly  brand ads, and the further good news is that digital advertising has finally arrived at a point where it’s not all remnant inventory, performance ads, and low CPMs. This will allow digital advertising to be effective at points nearer the top of the funnel.(If there is still a funnel at all). For now, native seems to outperform more traditional ad units.

As for print advertising, it still hasn’t gone away, although spend did decline 8% year over year. While general interest titles are languishing, niche and regional publications appear to be on the rise. And many advertisers have begun to target smaller volumes of engaged users over sheer reach.

This seems counterintuitive to us, but we’ve observed it ourselves: programmatic buying has declined. In fact it’s down 12%, and we think it’s because media planners are tired of not knowing where their ads are going to be seen. Brand safety is one of the problems, and the other is viewability.  Viewability is the new currency for advertisers and it’s tough to track viewability accurately with programmatic buying. Brands really need to buy programmatically, however, because it’s far less effortful, especially for large buys. We think the market will settle somewhere around programmatic direct, which allows far more control than simple programmatic.

If the current market trends continue, publishers should see increases in revenues, brands should see growing effectiveness of ad spend, and consumers should be less annoyed by formats that offer little else than interruption.

 

 

 

 

 

How to Make User Experience Better on Digital Sites

Ad blocking is not the end of the world for ad-supported digital content. In fact, it’s just forcing all of us to do better. It’s as if we received an industry-wide wakeup call while there was smoke but not yet an outright fire.

A combination of better ad formats and different KPIs for advertisers can save the current situation from getting worse, and can even repair the damage already done. ZEDO is always working on behalf of publisher partners to find ways to monetize and protect the viability of free digital content. We have representatives at the major industry groups, and a constant stream of input into industry developments.

For example, a recent Digiday webinar we attended on publishers and ad blockers shared the emerging best practices of premium publishers, which are really all over the place as they struggle to keep ahead of industry changes.  These publishers make frequent changes and perform lots of A/B testing to find out how to respond to consumer demand.

There is general agreement that asking consumers to turn off ad blockers only works a small percentage of the time. And charging for content only works in the case of very high value financial information.

But here is the good news: several publishers have simply used a technology to turn ads on for consumers who have installed ad blockers, and their page views have not gone down. They only turn on a small number of ads, and they’re careful how the place the ads and they try to serve ads that are truly engaging. This has told them that consumers often install ad blockers and forget they’ve done it, and don’t mind when the ads return. As long as the ads are not overwhelming. Further research has demonstrated that when people install ad blockers they do it to avoid tracking and slow page load times rather than to avoid ads per se.

We think that programmatic came in too quickly, making it too easy for publishers to stuff their sites with ads that cheapened the user experience. And users, who couldn’t get through a slow-loading site loaded with ads, bailed in droves, either by not visiting the site again or by installing ad blockers or both.

This is easy to fix. Don’t measure the old outdated stuff: how many ads served, how many ads seen. Measure engagement, which may be more difficult, but will ultimately produce the right rewards. We know we’ve ruined display advertising, so let’s not overuse video either. And let’s not think that all digital advertising is for direct sales; let’s make sure our sites are places where advertisers can place a brand ad and receive value. A smaller number of ads in engaging formats,  strategically placed and served to the right customers, can co-exist quite nicely with ad blockers.

 

 

 

 

If You Care About Security, Come to ZEDO

We have taken security very seriously lately on the ZEDO ad server. In fact, we have three major concerns for our customers and partners:

  1. resisting all the fraud, malware, and piracy problems that have plagued the industry since it began, and offering our customers a clean supply chain.
  2. Making sure our technologies load quickly and do not slow page load times for publisher partners
  3. Ascertaining the brand safety of the sites where our ZINC ads appear.

Every month we roll out technical updates that contribute to these goals.

This month:  for page load times, we are migrating to Gecko ad tags, to allow our publishers to run two of our innovative formats simultaneously .  Gecko is an ad serving tag that is designed to have seamless capability to serve different formats and innovations.  It can be configured to serve one or more ad formats per page view, such as a standard 300×250, a 728×90 InView panorama and an InArticle video for one tag call.

For brand safety, we have partnered with AmplifyReach.  We have started the process of categorizing Page URLs of various sites from our inventory pool into first level IAB categories. We also store brand safety score for each URL as identified by AmplifyReach.  We are learning every day how to make our inventory safer for advertisers.

We have added the capability to monetize secure sites. We saw that a number of publishers from our inventory pool going secure had increased lately, and if we get a request from a secure site, we send a secure flag in the BID request to all the DSPs. Because non-secure scripts cannot run on secure sites (the browser returns an error) this flag is important. By passing this flag DSPs know that they have to send down secure Ad Code if they bid and win.

We continue fighting the good fight to protect advertisers while increasing revenue for publishers. This has become a very complex endeavor, but advertisers are cutting the number of sites they will appear on and publishers have begun enforcing greater security as well. Vendors who cannot bring adequate security and brand safety to the table will be cut from both premium inventory and ads from quality brands.

For years we have been predicting that things in the digital advertising industry will improve so everybody gets better results, and we think this year it is finally happening. This will be good to everybody. The premium publishers will make more money, and the advertisers will get better results.

 

 

 

 

Let Us Help You With Video Header Bidding

Two years ago, header bidding was a hack. Because we like to be a technology innovator, we started offering it as soon as we understood the way to make it work. We were asked for it by our customers, albeit only by a few at first.

Here’s why header bidding works. In the ad serving world, most advertisers want guaranteed impressions and most publishers want decent prices for their inventory. But DFP, by conducting real time auctions with cascading prices,  simply drove prices down, which meant that advertisers might have paid less, but were not guaranteed their impressions either.

When a consumer visits a site, she’s a valuable commodity to an advertiser. So she’s served the best ads first: the ones that are bought direct.  That’s because the ad server brings those up first, because they’re the ads the brand has paid the highest price for in exchange for a guarantee they’ll be seen.

If the consumer stays long enough on the site, she exhausts the “frequency cap” (the number of times the advertiser wants her to see the same ad), and then she starts to see ads bought at auction (RTB) where many more advertisers bid to serve an ad. That produces a cascade of dropping prices for the publisher’s inventory, commonly known as a waterfall.

After a while, people learned that this system really benefitted neither the advertiser nor the publisher. So the hack was to devise an auction outside the ad server in the header of the page. It loads before anything else on the page. The publisher now has control of how much he can charge for your visit. That first impression can be the most expensive for the advertiser, but it is guaranteed.

Publishers who use it have reported 30-60% increased revenue.  For the advertiser, it means the ability to get first look at every single impression, which wasn’t possible otherwise. Advertisers were, in essence, buying blind. Now, whether they win the impression depends on how much they are willing to pay.

This has been a boon for prices in digital advertising altogether. Advertisers who buy through RTB are now on an equal footing with those who buy direct.

Because of the revenue benefits publishers are realizing from header bidding and the premium inventory now available to advertisers even through automated buys, programmatic advertising is finally coming into its own as a potential route to build a brand, and is able to shake off the reputation of being a low-quality, direct-response channel.  Many premium publishers, who only wanted to sell direct before as a way of preserving the value of their inventory are now feeling comfortable moving to programmatic buying. It didn’t take long to see the benefits of better prices combined with more streamlined workflow.

Now, header bidding is almost a standard in the industry.  We thought it might be, and that’s why we developed the methodology for doing it before everyone else.  We even know how to do video header bidding, which most people are still dreaming about!

 

Publishers Survive Multiple Challenges

We’re always looking at ways publishers have found to monetize their content in this brave new world. This week, with summer already under way and advertising models still under scrutiny, we’ve looked at a number of different “solutions,” none of which could be called a category killer.

For example, Medium founder Ev Williams, who also co-founded Twitter and Blogger, has been funding the company on investor money (his own and that of friends), but had begun an effort to sell ads when he abruptly pivoted and began to sell “memberships.”

The trouble with the internet, Mr. Williams says, is that it rewards extremes. Say you’re driving down the road and see a car crash. Of course you look. Everyone looks. The internet interprets behavior like this to mean everyone is asking for car crashes, so it tries to supply them. His goal is to break this pattern. “If I learn that every time I drive down this road I’m going to see more and more car crashes,” he says, “I’m going to take a different road.”

Williams decided that the different road for Medium would be premium content for people who pay $5.00 per month. This effort has been characterized as “underwhelming” in a recent NY Times article.

Jessica Lessin, the former Wall Street Journal reporter who founded The Information, borrowed her business model from the Wall Street Journal and went even further: Lessin sells subscriptions and allows no advertising. While she has grown rather nicely,  her model involves a high enough annual subscription price that she cannot scale. Also, she’s in a vertical that people will pay for: financial information.

The only scalable new media models for big brand buyers who want scale seem to be Buzzfeed and Vox, two very different publishers. Vox does aim to compete with Google and Facebook, with a slightly different philosophy: It has 8 different vertical sites, including SBNation, Vox.com, The Verge, Recode.net, and Eater. The company is trying to build big audiences in all of those big verticals, and remains committed to distributed platforms.  To accomplish this, Vox relies on advertising, but the conversation about advertising always starts with content supplemented by native ads or branded content, rather than the “ads first, news hole with what’s left” methods of the past.

Vox is shifting to programmatic, which it views as a means to an end, a mechanism through which brands can execute at scale — not just as a remnant, low CPM business. Although many VC-backed media companies, including Buzzfeed, don’t do programmatic (yet), Vox simply views the automation platform as a way brands can buy what they want.

“Our media becomes no less valuable because it’s sold programmatically, ” says Vox VP for Revenue Operations Ryan Pauley. “In fact, it becomes more valuable; that’s how we’ve approached it.” To increase distribution for marketers, Pauley and his team created Concert, a partnership among NBCU, Conde Nast, and Vox, which leverages the ad tech Vox has created across a premium set of inventory. All three sales forces are then selling the same custom ad products. That’s how marketers can get to scale without driving the CPMs into the basement.

Advertising remains the only way to achieve scale for now, but tomorrow’s advertising industry is evolving to look very different from that of the past.