How the Blockchain Might Help Advertising

The media industry is still a long way from realizing the dream of digital advertising: the ability to target customers and know whether the targeting or the messaging worked.  Although many metrics exist for measuring the effectiveness of digital ads, we still don’t now which ones are the best.
Wrap into that some industry specific problems like fraud and viewability, and you get a somewhat disturbing picture, one that makes brands reluctant to pour large dollars into digital. And yet, the largest demographic today is millennials, and they are digital natives. We’re just not going to reach them any other way than digital, and within digital, mobile, and within mobile, video.
So print is gone as a tool, as is desktop. Display is not far behind. The most promising forms of advertising today (and we say today because things change rapidly) are in-app ads, native ads, and incentivized ads.
At the same time these changes have been happening, the industry has been plagued with an epidemic of bots and click fraud. Because there isn’t much transparency during the online auction process through which ads are now bought and sold, advertisers have had problems finding out where  or even if their ads have appeared.
This has led to a new emphasis on contextual advertising: the ability to target ads based on where target customers might already be.
Blockchain might also help here, because blockchain transactions are both transparent and encrypted. Unfortunately, not enough is known about how blockchain could be used, so we’re just in the pilot stage. One problem with current blockchain implementations, such as those used in cryptocurrency, is the inability of today’s blockchains like Ethereum to handle transactions at the speed with which ads are currently served. We’re assuming this will be solved in the future, as it is a technology problem.
More important is the issue of customer experience. Taken by the ability to reach millions of people, advertisers decided they wanted to reach audiences “at scale” all the time, regardless of the wishes of those audiences. It has taken the better part of two decades for the industry to realize that — just like with print or TV–less is more. Loading up pages or streams with advertising has led to a boycott of advertising altogether by the 25% of consumers who run ad blockers.
In surveys of people who do run ad blockers, to them the most offensive part of digital advertising isn’t the actual ad, but the tracking of information and the sale of that information to third parties (data brokers). A common statement from about five years ago, “the value is in the data” overlooks how the provider of the data, the consumer, might feel about how her data is being used. This oversight has led to what Doc Searls calls the greatest consumer boycott in history — the boycott of digital advertising.
For consumers to trust advertising again, they have to be assured that their data will not be bought and sold against their will. This is the objective of the GDPR (General Data Protection Regulation). While the GDPR nominally applies only to Europe, because of the global possibilities that come with digital advertising it has engendered compliance in companies that are not headquartered in Europe but may have European customers, like Facebook and Amazon.
Ideally, data privacy will one day be coded into a blockchain that guarantees each consumer the right and ability to control her own data and decide when to make it available. Companies like Digi.Me are already giving consumers the ability to control and share data at will, and when the blockchain matures, we will finally have a totally trustworthy advertising ecosystem again.

 

 

IAB Rolls Out Blockchain Pilots

We’ve been around since before the dot com bust, which gives us the authority to predict the future (just kidding). But one thing we know, because it has been more a reality than a prediction in the past, is that the IAB under Randall Rothenberg is a powerful industry group that can drive change in our industry in the direction it chooses.

The last two big changes involved visibility metrics, and verification metrics. Now IAB Tech Lab is moving the industry in the direction of the block chain.

The blockchain, a technology that really isn’t new but became prominent when Bitcoin, a cryptocurrency built on its technology, briefly became a “store of value” last year. When we say store of value, we mean people began to invest in Bitcoin  the way they invest in gold or the stock market.

Although Bitcoin crashed, blockchain remains as an interesting option for the advertising industry because it is an “immutable, distributed ledger or record of transactions between a network of participants. The entries in the ledger are governed by pre-defined rules and validated by the network. The network can be public like bitcoin or private with only select participants.” IAB says there are benefits to the blockchain for advertising:

What are the benefits of blockchain in the media and advertising space?

  • Given the complex nature of the digital advertising supply chain, blockchain technology can offer greater efficiency, reliable and high-quality data.

  • Blockchains can create a more efficient medium by which two or more completely anonymous or semi-anonymous parties can complete various types of transactions potentially at a low cost.

  • Since blockchains are decentralized peer-to-peer networks, there is no single point of failure and no single access point for malicious hackers. Thus, it enhances safety and security for data.

  • This ability to keep a fully verifiable and immutable ledger or database that is available to all members of the blockchain provides a layer of trust and transparency that isn’t always available within media and advertising processes.

  • While blockchain will not cure all of ad tech’s problems, it can be beneficial in situations where there is censorship and both sides of the supply chain (i.e. publisher and advertiser) are disadvantaged by not having access to that information.

Here’s what is being tried, according to CMO Australia:

Members actively involved in the IAB program include FusionSeven, Kochava Labs, Lucidity and MetaX, with each piloting emerging blockchain-based offerings with supply chain partners including advertisers, agencies, DSPs, exchanges, publishers and technology vendors.

 

As an example, IAB said Lucidity’s ‘Layer 2’ infrastructure protocol is being used in a pilot to verify ad impressions and improve programmatic supply chain transparency through a decentralised, shared and unbreakable shared ledger. This will be followed by other pilots looking into fee transparency, digital publisher signatures and audience verification.

Another company not involved in the IAB Tech Lab’s group is Brave, creators of the browser that pays publications through its own cryptocurrency, the Brave Attention Token (BAT).

There’s almost no way that the blockchain will turn out to be completely useless to advertising, since  the entire purpose of Ethereum’s technology was to create smart contracts. However, unless it can scale in speed, you won’t see it in ad tech any time soon to do things like serve up ad calls.

Context Becomes More Important in Flight to Quality

After content, context is now king. One of the reasons Facebook and Google advertising  have captured so much of the digital ad market is that they, especially Google, are able to target ads according to keywords. AdSense and Facebook use different methodologies, but they’re both known for their precise targeting. They have glaring weaknesses, however, especially as more and more digital advertising is video.

With video ads it is still a major problem is that so many ads run without context, even though they may be closely “targeted” to a demographic or a geography. They still run without context, because we don’t quite have the tools yet –nor the will– to provide video context totally programmatically.  Especially on YouTube there are many instances where we’re increasingly seeing pre-roll and mid-roll that has nothing to do with what the audience is actually wanting to see. This is not a plea for the old TV practices of selling sweetened cereal to youthful audiences, but a heads up to brands who care about “delighting” rather than alienating their customers.

A golden age is coming for contextual advertising, as a result of two things: 1) the realization on the part of brands that they’re threatened by Amazon and other services, and 2) the propensity of younger audiences to require corporations to reveal their values. To encourage brand loyalty, marketers will have to do what they should have been doing all along: buying travel ads on travel sites. sports ads on sports sites.

If you throw in the effects of GDPR, as a potential third motivator, we believe it is becoming increasingly important to brands to understand where their ads are appearing, as well as who the publications’s audience is. If I’m looking to fix my truck and I’m about to watch a video about suspension problems, I might be a millennial  in the midwest and white, but ads for sports, hot dogs, or video games are merely an interruption. Let me just watch how this guy replaces his front suspension so I can do the same thing to my truck.

What if I could see an ad for the right car parts,  for local mechanics, or even for new trucks? This is called contextual advertising, and back in the day when more ads were sold direct, as a media buyer I could be sure I was getting  that kind of context. As an advertiser, that would give me much greater potential ROI. It would also fix that feeling most consumers have that they’d just as soon skip the irrelevant ad as soon as possible.

We’re making an appeal to the digital ad industry to think before buying and selling ads programmatically without context. One of the reasons consumers no longer tolerate advertising its its lack of relevance to the moment they are in. And that doesn’t have to be the case. With all the tools we have at our disposal — artificial intelligence, mounds of first party data, and great programmatic services, there’s no reason why we can’t do better. Both publishers and consumers deserve that.

Good Advertising Still Works

Joshua Topolsky, founder and CEO of “The Outline,” has decided to go against the prevailing trend of paywalls and subscriptions. Because many publications are afraid of what will happen to their advertising dollars as a result of GDPR and the trend toward ad blockers, they’ve all gone like sheep to the subscription model over the past year or so. But we’ve written before in these pages that there is an upper limit on the subscription model, which is bounded by the reader’s time and income. Even wealthy people do not want to spend all their money on subscriptions.

So Topolsky, who is also a co-founder of “The Verge” and previously worked at “Engadget” as editor, raised $5 million to launch an ad-supported site, but one that is very different than other publications in its space.  He wanted a site that people actually read, with ads that actually worked. It’s a little like Back to the Future. In exchange, he gave up an emphasis on scale. “To be big would be simple,” Topolsky told Peter Kafka on the Recode Media podcast, “it’s very easy to get traffic. I could write a bunch of Avengers Infinity War posts, and get all the traffic I want.”

His point is that most sites are optimized to go for clicks, so even a site like NorthJersey.com will have those Avengers stories, even though they have nothing to do with NorthJersey and attract the wrong traffic. Then advertisers on those sites are disappointed, because their ads don’t work. “Bad traffic is easy. “What is difficult is to get the right people to the right story. There’s a higher value to that.”

What happens when Topolsky goes to the advertising world and tells them “I don’t have big traffic, I have smart traffic” when the usual advertisers are looking for reach?

In his opinion, advertisers have realized that what has been sold to them as the magic solution –i.e. big audiences on Facebook and Google–bought programmatically, has now been exposed as less than ideal for a multitude of reasons. While there is still a scale play for people like Buzzfeed, “The Outline” strives to differentiate itself on engagement. As an example, Topolsky says his site gets more views on custom content than sites with four times the amount of traffic. He has also said in the past that his click through rates are 25% higher than the industry standard.

“Not every advertiser will advertise with us, but some good ones will. Smart brands who want to speak to audiences directly, like Cadillac and MacAllan like us.” The custom content gets seen and is engaged with partly because it is more visible (there are fewer ads) and because it’s smart. Also Topolsky targets his stories carefully to his audience, mostly urban, mostly Millennial, mostly well off.

MacAllan used “The Outline” to tell its brand story for a $300 a bottle scotch. There are only a few million people who will pay that much for a bottle of alcohol, and niche products work for niche sites.

“The Outline” has just closed an up round for its niche site, and that’s a signal that investors think things are going well. “What we’re doing is not normal for sure,” Topolsky admits.”But it’s working. People are interested in advertising with us. We’re the twelve seat cool restaurant, not the chain, and that’s the long term plan.”

Hulu to Allow Ad-Supported Downloads

Last week’s post, “Advertising isn’t Going Anywhere,”  was written a couple of days before Hulu revealed at its NewFront presentation that it was going to allow downloads, and they’d be ad-supported for all of the Hulu users who are on the free plan. My main point was that people can only afford a limited number of subscriptions — far fewer than they’d want. So it’s great for the consumer in several ways that an aggregator like Hulu will have downloading with the ads remaining in the downloads. Hulu has 20 million subscribers, most of whom are on their ad supported plan.

Hulu had a lot of updates at its NewFront/Upfront presentation this morning, but among the most interesting for me was that Hulu will offer downloading of its content, but with ads included. Since the vast majority of Hulu’s 20 million+ subscribers are on the ad-supported plan, this means Hulu is going to be breaking some new ground in downloading, relative to its ad-free SVOD peers Netflix and Amazon, both of which have been offering downloading for a while.

Hulu has lagged its peers by not enabling downloading, but its new feature, whose specific launch date was only identified as “during the 2018-2019 upfront season,” will differentiate itself immediately by having ads included. As we all know, Netflix and Amazon have sucked an enormous amount of ad-supported viewing hours out of the ecosystem, with downloading on these services becoming a bigger contributor. By including ads, Hulu directly addresses this, allowing advertisers to at last follow viewers into their offline viewing experiences. Hulu’s light load of ads, which are unskippable, only enhances the value proposition to advertisers….

Given the rise of ad-free SVOD, more advertisers will struggle to reach their millennial audience targets with 100% brand safety and viewability, making Hulu a prime option. Hulu has also been very smart about scooping up rights to popular library content to augment its still limited (though rapidly expanding) slate of originals, led of course by “The Handmaid’s Tale” which was renewed for season 3.

So if you want to download and view Hulu content, the only way you can do it without ads is to pay for the highest level of subscription, which is Hulu with No Commercials. This is going to create a problem for millennials, who are big Hulu watchers and do not like to sit through ads or pay for subscriptions.  I think it’s a safe bet that, unless the ads become terribly onerous, the convenience of being able to watch such a large variety of popular shows on demand will outweigh the indignity of sitting through an ad. This is a recommendation for the ad industry: don’t kill the goose that lays the golden eggs. If this works, we may see other sites introducing ad supported downloads as well.

Advertising isn’t Going Anywhere

Lately almost every quality publisher is experimenting with paywalls and subscription services.  They are now viewed as a panacea against the need to handle consumer data, and a hedge against the increasing use of ad blockers.

Of course subscriptions to newspapers and magazines were available back in the days of print, too. So why did print publications also run advertising?

One simple reason: subscriptions cannot support most publishers, unless they are in a niche category without a competitor. The Information, a technology business publication aimed at wealthy investors, falls into this category. But most publications do not. Even the Wall Street Journal, the leading financial publication and one that many people WILL pay for, cannot get by  on subscription revenue alone. Nor can the leading news sites like the New York Times and the Washington Post  support themselves solely by instituting paywalls.

Why not? Because the average middle class consumer, who has been reached in the past through advertising, cannot afford to subscribe to everything she needs to read, see, and hear. We live in the Information Age, and very few of us can afford to ignore the need to stay abreast of a very rapidly changing world.

She’d like to get the national and world news from a reliable source, so she visits the New York Times. But finding it too biased, she must also often visit the Washington Post.  Neither of them covers news from her hometown, so she reads her local news site. And since she’s a homeowner, she reads a lifestyle publication. Or a fashion magazine. Or Consumer Reports.

To save money, she cut the cord on cable TV a year ago, so for entertainment she relies on Amazon Prime video and Netflix. But some shows are only on Hulu. Her husband subscribes to ESPN. He’s also a reader of Bloomberg and Wired, and they just instituted paywalls, too.

And then there’s Spotify.

At the end of the year, she and her husband look at their iTunes bill and their credit card bills and realize that they have spent over $2000 on subscriptions to both video and text sites. They blew right through their budget. So they decide to cancel their subscriptions to save money.

Eventually they trade off the need for privacy and gravitate to sites where they can get news and entertainment free, just by tolerating a few ads. In the mean time, publications that have instituted paywalls find that they are experiencing a great deal of churn among their subscribers, leading to unpredictable revenue projections. Despite their paywalls, they must also run some, although perhaps not quite as many, ads.

And that’s how the great paywall experiment plays itself out. Advertising isn’t going anywhere.

 

 

 

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.

 

Does Advertising Really Need so Much Tracking?

Our old friend Doc Searls is taking another step toward putting readers in charge of their data and taking on the use of too much consumer tracking. In a prototype edition of the reborn Linux Journal, he is going ask readers to indicate what they want in their advertising:

We believe the only cure is code that gives publishers ways to do exactly what readers want, which is not to bare their necks to adtech’s fangs every time they visit a website.

We’re doing that by reversing the way terms of use work. Instead of readers always agreeing to publishers’ terms, publishers will agree to readers’ terms. The first of these will say something like this:

That appeared on a whiteboard one day when we were talking about terms readers proffer to publishers. Let’s call it #DoNotByte. Like others of its kind, #DoNotByte will live at Customer Commons, which will do for personal terms what Creative Commons does for personal copyright.

Publishers and advertisers can both accept that term, because it’s exactly what advertising has always been in the offline world, as well as in the too-few parts of the online world where advertising sponsors publishers without getting too personal with readers.

Notice he is not anti-advertising as a business model. He is for restoring advertising to what it used to be — brand advertising. He refers to data-driven advertising as “junk mail.”

He theorizes that we’ve (publishers) lost a lot here by putting data collection in the driver’s seat:

By now you’re probably wondering how adtech has come to displace real advertising online. As I put it in “Separating Advertising’s Wheat and Chaff”, “Madison Avenue fell asleep, direct response marketing ate its brain, and it woke up as an alien replica of itself.” That happened because Madison Avenue, like the rest of big business, developed a big appetite for “big data”, starting in the late 2000s. (I unpack this history in my EOF column in the November 2015 issue of Linux Journal.)

Madison Avenue also forgot what brands are and how they actually work. After a decade-long trial by a jury that included approximately everybody on Earth with an internet connection, the verdict is in: after a $trillion or more has been spent on adtech, no new brand has been created by adtech; nor has the reputation of an existing brand been enhanced by adtech. Instead adtech does damage to a brand every time it places that brand’s ad next to fake news or on a crappy publisher’s website.

Yes, Doc is a friend of ZEDO.  But he is also a terrific writer, and you owe it to yourself as a publisher or a member of our ecosystem to read what he has to say in Linux Journal.

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.