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.

 

 

 

 

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.

 

 

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.

 

 

 

 

 

 

 

Mobile Video Monetization Strategies

Everyone in the industry is wondering  when mobile video will begin to be monetized properly (by which we mean in proportion to the time consumers spend watching it).As part of our work on the IAB Digital Video Committee, we attended a meeting  to learn what may be holding the industry back from getting the kind of ad rates for mobile video that it deserves. Three different issues emerged from the meeting: how publishers feel about available video formats (often unsuitable for mobile), the state of cross-device measurement (just getting started),  and the unfamiliarity of TV media buyers with the digital video environment.

You may already know that ZEDO pioneered a format called InArticle, which later was reinvented by Teads as “outstream video.” While this format has been highly successful for us, we know it is not for everyone, and we  heard two publisher panelists (Meredith and Weather Channel ) say that they will never run out stream because they don’t like the user experience on their sites. They talked about 15-second preroll as preferable, although they admit that most advertisers send them 30-second spots. These publishers are pushing back at agencies and brands who try to use existing TV creative, esp. 30-sec spots, on mobile  have pretty good statistics on completion rates, and they feel shorter is better. In fact, one attendee suggested five-second video, just to get the brand’s name in front of the audience without offending it.

Because there is a relative scarcity of pre-roll another format publishers are testing for video is mid-roll, Facebook is rolling these ads out right now to see how well they are accepted.

At ZEDO and ZINC, we are testing our own version of pre-roll, as well as a new format we call “polite Swipe Up.” Our objective with our formats, which achieve high visibility and engagement, is not to antagonize site visitors. In the Digital Video Committee, several publishers complained that group M’s demand that all Ads be 100% viewable means that they waste inventory and annoy viewers by upping the frequency of ads while trying to  achieve those viewability numbers.

The issue of cross-channel metrics also came up in the meeting, because marketers are only beginning to be able to follow consumers from device to device and from home to work. Before investing in digital video, they need more assurance that they are following the same customer from display to video to TV.

And then there is the “people problem.” TV media buyers often don’t buy digital video, or want to pay less for it, because they don’t know how to buy it. This is such an industry-wide problem that IAB is preparing a Digital Video Guide and a curriculum, and will hold workshops and classes to educate media buyers. The guide will be introduced during the Digital New Fronts, and the education programs will begin shortly thereafter.

 

 

 

 

Google Blocks Twice the Number of Bad Ads as A Year Ago

Despite the “moon shots” under development by its Alphabet decision, the Google organization still makes its living through advertising. According to its most recent earnings report, Google grew 8.3% this quarter, largely driven by search ads. However, the company is looking to mobile for new sources of ad revenue, and that’s not working quite as well (yet).  According to the Wall Street Journal, 

The search for new ad revenue comes with a downside: Users are seeing more ads, but advertisers are paying less for them. While ad clicks increased 36% in the quarter over a year ago, advertisers’ prices for those ads fell 15%. Both figures were the highest in at least three years.

The gap between the prevalence of ads and their prices was previously driven by the increasing share of mobile searches, because advertisers pay less for mobile-search ads than desktop ones. In the fourth quarter, the company attributed the gap to the growing share of YouTube ads, which generally earn less than ads shown above Google search results.

Google has also tried to preserve its reputation by culling out bad ads. Google said it blocked 1.7 billion bad ads in 2016, twice as many as in the previous year. That’s a pretty shocking comment on the state of ad fraud in our industry.

Ads that are misleading, inappropriate, promote misleading products or trick users into installing harmful software are generally deemed “bad,” Google said. The company also blacklisted ads that were once considered acceptable in 2015.

Payday loans that carry an annual interest rate higher than 36%, for example, were banned from appearing as Google search ads last year. The company was applauded for its move, as the measure was expected to cost Google millions in revenue. Yet digital loan sharks quickly adapted to Google’s newfound rule, as many loan companies now offer payday loans with an APR as high as 35.99%.

And there’s a new genre of “bad” ad called “tabloid cloakers.” Tabloid cloakers are misleading ads that feature “news” on their surface, but when clicked lead the reader to an unrelated selling message:

One example the company shared was about an ad showing Ellen DeGeneres and aliens. However, consumers who click on ads like this are taken to a site selling weight loss products, for example.

Google said it suspended 1,300 accounts for tabloid cloaking last year. In one sweep, the company took down 22 accounts that were responsible for displaying 20 million cloaker ads over a one-week period.

Can you imagine being Google and having to keep up with all these insidious trends?  And that’s before the company gets to dealing with fake news sites. We’re still a long way from a clean supply chain.

Trustworthy Accountability Group

The Trustworthy Accountability Group (TAG) has accomplished an incredible amount during its first year, including rolling out a TAG Registry, an Anti-Piracy Initiative, Certified Against Fraud, Certified Against Malware,  and updated Inventory Quality Guidelines. Now the work begins: to round up more participants. The early adopters are already on board: 127 companies are already TAG-Registered. To be registered, companies must complete a self-assessment and attest to having certain processes and procedures in place and a plan to keep them in place for the coming year. TAG Registered companies have been verified as legitimate participants in the digital advertising industry through a proprietary background check and review process powered by Dun & Bradstreet and approved by TAG. Once registered, companies are awarded a TAG-ID, a unique global identifier that they can share with partners and add  to their ads or the ad inventory they sell.

130 people, myself included, have completed Compliance Officer Training, and have been designated Compliance Officers for their companies.

I first became involved with the Trustworthy Accountability Group last January, when it held a meeting at the IAB Annual Leadership Conference. Because I’ve represented ZEDO for five years on several industry initiatives that fit our “high-road” approach to partnership with both advertisers and sellers, I attended the meeting and listened to the plans. I had no idea how fast they would move.

By the end of the year, TAG had released a suite of anti-Malware tools, including “Best Practices for Scanning Creative for Malware,” a glossary of terms that establishes a reference of malvertising types, and a Malware Threat Sharing Hub, where certified companies can join a trustworthy collaborative network that qualifies and tracks malicious ads.

The Certified Against Fraud program, which was the last to roll out,  is open to participation by buyers, direct sellers and intermediaries across the digital advertising ecosystem.  Requirements to achieve the TAG “Certified Against Fraud” Seal differ according to a company’s role in the supply chain.  These requirements are outlined in details in the Certified Against Fraud Guidelines.

Companies that are shown to abide by the Certified Against Fraud Guidelines receive the “Certified Against Fraud” Seal and can use the seal to publicly communicate their commitment to combatting fraudulent non-human traffic in the digital advertising supply chain.

When the group sent out its press release earlier this year on the first hundred companies to get registered, it reiterated its pledge to create industry transformation at scale. It was formed in response to multiple accusations by news sources and participants of lack of transparency. With TAG, the industry hopes to prove that it can regulate itself.

Germany’s BVDW Advocates for Transparency

In Europe, Germany is known as the country with the strictest privacy concerns. So it is no surprise that a Dusseldorf-based industry association has come up with a code of conduct for marketers, publishers, DSPs, SSPs, and data providers  that will bring some transparency to the programmatic market..

The Bundesverband Digitale Wirtschaft (BVDW) eV is a leading German advocacy group for companies  with digital business models, or who are part of the digital value chain. Anchored by member companies from various segments of the Internet industry,  it can provide a holistic view of the German digital economy and act as a spokesperson for the market. It’s a source of important information, facts and data for both those in the industry and those wishing to learn about it.

BVDW is committed to making the efficiency and benefits of digital services – content, services and technologies – transparent and thus promoting their use in the overall economy, society and administration.  Using the pillars of market development, market intelligence and market regulation, BVDW bundles leading digital know-how  to help shape a positive development of  what is now considered a leading growth sector in the German economy. However, as a central body of the digital economy, the organization also provides standards and binding guidelines for industry players for market transparency.

Over forty companies, including Adform, Appnexus, DataXu, Mediamath and Teads have signed the new agreement. Companies that are not members of the organization  can also sign, and signing companies are required to adhere to the code of conduct.

Companies that call themselves full stack providers will also be required to adhere to the standards, which stress transparency, safety and quality.

The aim of BVDW’s standards effort is to make programmatic more efficient and useful to German marketers and publishers by creating a controlled system. Germany is probably hoping to avoid the problems that surfaced  in the US, which deployed programmatic advertising without sufficient transparency, and caused many marketers problems, such as discovering their brands displayed in non brand-safe environments. Other issues like scanty metrics for determining ROI caused online advertising prices for programmatic to remain low years after they should have risen consistent with the number of consumers moving online.

We suspect that the focus group that created the code of conduct will have to continue studying the more complicated issues involved in programmatic, such as header bidding and programmatic TV:

The code of conduct is a first step to provide new impetus for the development of programmatic in Germany, says Julian Simons, deputy chairman of the BVDW’s focus group on programmatic advertising: “In a highly dynamic area such as programmatic, we cannot just establish rules within the market and then sit back. This continues to be a process of development, which will take current developments into account.”

One large looming problem is the absence of both Facebook and Google, said to control 75% of global ad spend, as signatories to the compact.

 

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: A Different Year

Because we’ve been watching the industry since before the turn of the century — yes, we were founded in 1999 –we find it amusing to see people try to predict what’s going to happen in ad tech, despite the fast moves that upend the predictions year after year. 2017 will be no different, but we’re going to throw our ideas out there anyway.

  1. Facebook will find itself in greater trouble than ever after a year of disillusioning metrics for publishers and de-prioritization of their content. Analysts have said that the rise of “fake news” sites on Facebook corresponded with when the company tweaked its newsfeed algorithms to favor user-generated content over that from professional publishers. User-generated content turned out to be hundreds of sites generated by Macedonian teens who now are empowered to think they may have influenced the American election.
  2. Advertisers will thus re-think the percentage of ad spend they allot to Facebook, and spend more dollars on sites they know are premium and are still destinations for their targeted buyers.
  3. A confluence of changing ideas and necessity brought about by the percentage of people using ad blockers will re-define reach and scale, making the definitions more about reaching the “right” customer, and not just about reaching someone who will find the ads offensive or irrelevant and turn her ad blocker on again.
  4. Digital video CPMs will continue to rise, because video is the only way to reach viewers on mobile, especially on non-video sites. Outstream video will continue to outperform the market, and ZINC’s innovation suite will continue to outperform its competitors.
  5. More venture funded ad tech companies will run out of money without having found a business model that adds value to either the advertiser or the publisher, and they will be forced to either shut down or be acquired as revenue becomes the major source of expansion funding.
  6. The ad industry in Europe will be quietly preparing to leave London as new data privacy guidelines and the Brexit create business challenges that make staying in the UK more difficult and expensive.
  7. The nascent mobile advertising industry in Africa will grow faster than almost any other reason except perhaps southeast Asia, because of the rapid deployment of inexpensive smartphones.
  8. Snapchat’s IPO will cause a flurry of interest on the part of advertisers until they realize it has pivoted to be a camera company. Brands will experiment with it and not be able to prove ROI for a long time, if ever.
  9. Digital video advertising will finally get its due as a great way to do targeted branding campaigns.