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.

 

 

 

 

 

European Privacy Rules Should Not Kill Free Media

Randall Rothenberg, CEO of the Interactive Advertising Bureau, one of our largest digital media industry groups, is on the warpath again. This time he is afraid that a new proposed rule in the GDPR (General Data Privacy Regulation), which takes effect in May of next year, will eventually kill  the ad supported free media ecosystem that has been in place for the entire existence of newspapers.

Buried in pages of amendments to the European Union’s latest privacy proposal, the ePrivacy Regulation, members of the European Parliament recently recommended language that would strip European publishers of the right to monetize their content through advertising, eviscerating the basic business model that has supported journalism for more than 200 years. The new directive would require publishers to grant everyone access to their digital sites, even to users who block their ads, effectively creating a shoplifting entitlement for consumers of news, social media, email services, or entertainment.

The language specifically says

“No user shall be denied access to any [online service] or functionality, regardless of whether this service is remunerated or not, on grounds that he or she has not given his or her consent […] to the processing of personal information and/or the use of storage capabilities of his or her [device].”

In practice, it means this: The basic functionality of the internet, which is built on data exchanges between a user’s computer and publishers’ servers, can no longer be used for the delivery of advertising unless the consumer agrees to receive the ads – but the publisher must deliver content to that consumer regardless.

Rothenberg refers to this proposed regulation as about to enable behavior akin to shoplifting or turnstile-jumping. Moreover, he says that since 76% of internet media is supported by advertising, much of the world’s free media would inevitably disappear, leaving us essentially without all the freedom of the press that the internet enabled for the past twenty years.

Rothenberg is paid to advocated on behalf of the internet advertising business model, and we all realize that, but here is an exceptionally good point that he makes about mobile advertising and how its demise would affect democratic values:

The impact in the mobile environment, where the majority of mobile applications depend on advertising revenue to survive, would be just as devastating. With few consumers willing and able to pay the additional taxes, the majority of the online content they enjoy today could disappear forever – at exactly the time authoritarian governments around the world are attempting to seize more control of the news and entertainment media.

While some might argue that Rothenberg’s latest rant is overstated, we think  this is a very unusual period in the history of the world’s democracies, and it makes sense to advocate strongly for free, ad-supported media  –as long as it is not overly intrusive and provides value to consumers.  That’s the key point that Rothenberg forgets to make, but is never far from our minds. To earn consumers’ attention, we have to provide fundamentally better advertising. And that, paired with free media, can preserve the array of voices in the digital media landscape that contribute to the preservation of both human rights and democratic values.

 

Fixing the News Business (For Now)

Jeff Jarvis, former founding editor of Entertainment Weekly and creator of Buzz Machine, and now professor of Journalism at CUNY,  has written a very profound article on how to save newspapers. The article is relevant not only to newspapers, but also to any publication that seeks to maintain its life in the current digital environment. In this environment, there is competition for attention, and an almost infinite supply of news, both fake and real, and entertainment.

As an experienced partner to publishers (since 1999), we would like to recommend that they think about some of the points Jarvis makes in his article. He begins by setting the stage:

The burning house sits on the foundation of media’s old business model, which is built on volume: reach and frequency in mass media terms, unique users and clicks online. This house is doomed to commoditization as the abundance and competition the internet spawns drive the price of the scarcity we once controlled — media time and space — toward zero. Yet this is the model that still makes us our money and so, just to survive and perchance to invest in an alternative future and home, we must still feed that fire with cats, Kardashians, and every new trick we can find, from programmatic ads and so-called content-recommendation engines (which commoditize media yet further) to native advertising (which, when it fools our readers, only depletes the seed corn that is our trust and brand). We know where this ends: in ashes.

Well, we all know that. Now what do we do about it? Jarvis says we have to build our businesses on value over volume, and we must develop relationships that go deep into communities. And by communities he means not just localities, but affinity groups and other self-identifying niches and segments — perhaps parents, perhaps, transgender young adults, perhaps cancer patients. The key here is self-identifying.

This means not buying data, but developing our own — first party data that comes from talking to our current customers, subscribers, visitors, and finding out more of what they want. For some publishers, this is more difficult than it would seem. As publishers, we’re used to putting out content and assuming we can target the audience from outside. We can target, for instance, Hispanics. But Hispanics don’t necessarily define themselves as Hispanics; they have characteristics that cut across the obvious label.

Note well that in each of these situations, we must shift from media-centric products — our newspaper, our content, our home page, our comments — to public-centric services: a place for people to come together with residents of their town; a place where seniors can find the right adult development for them; continuing alerts about developments in an issue a high-school parent cares about; a means of connecting with others who are concerned about filthy park to get it fixed; and so on. I am not talking about personalizing the serving of the content we already have (though that would be a good and necessary start). I am talking instead about building new products to serve specific constituencies in new ways.

And what do we do to solve this?

Start with advertising. At the most basic level, if you are making products and services that are more useful, engaging, relevant, and valuable to people, then you will get greater loyalty, engagement, and usage, and even under the old, CPM-based advertising business, you will have more ad inventory. More important, knowing about people’s interests and needs — at an individual level — will enable you to sell higher-value and highly targeted advertising.

The only way we can fight media’s commoditization at the hands of programmatic and retargeting advertising and the large platforms is by gathering our own first-party data. And the best way to gather that data is not by forcing our users to give it to us through registration, by inferring it through demographics, or by sneakily compiling data from privacy-pillaging services such as Acxiom.

This is your decision, publishers. What kind of publication do you want to be?

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.

 

 

 

 

Will Facebook Groups Hurt Publishers?

Publishers who have struggled to maintain revenues for years against the onslaught of Facebook’s command of the audience  now must face another example of how little the site truly cares about its publisher partners..

We have been saying for a long time that there something wrong with Facebook’s measurements in the light of our own experience. And now the advent of third-party metrics has revealed that some of Facebook’s video ads have as little as 20% viewability, which is only one aspect of the measurement corrections the site has had to make over the past six months.. That’s not  likely to change very soon, because Facebook does not prioritize publishers and never has. Nor, it seems does it prioritize brands, even though they pay the bills..

But Facebook has bigger problems than either publishers or brands. Now that the world has recognized it as a media company,  it has governments coming after it and users accusing it of spreading  fake news. It’s at once a publisher and a platform for publishers.  Like Google, whose motto may be “don’t be evil,” but who has recently been fined by the EU for another kind of evil,  Facebook has gotten too large to be seen favorably by everyone, and its management has to juggle a multitude of conflicting priorities.

To address what it believes is the biggest of those priorities, keeping users engaged and on the platform as much as possible, Facebook has rolled out a new strategy around groups. It is no longer enough in Mark Zuckerberg’s  eyes that the world be merely connected to friends and family, it must also be brought closer together. Taking his cue from some very large groups that formed around interests such as specific diseases or leisure activities, Zuckerberg first began  to talk about the value of groups.

Then in June Facebook held its first community summit and announced a change of mission. From USA Today

After a decade of promoting Facebook as a service that connects small groups of friends and family, Facebook is broadening its focus for the next decade to “give people the power to build community and bring the world closer together.”

The new mandate stems from Zuckerberg’s soul searching on how Facebook should evolve to help people pull together in divisive times.

Facebook was supposed to give people a sense of common humanity. Instead critics say Facebook has played a role in increasing polarization with the spread of fake news and reinforcement of filter bubbles during contentious elections in the U.S. and overseas.

This seems to further distance Facebook from its publisher partners as it seeks its own continued growth.  It also begs the question of how advertising will be served to users in groups. Making money has always been a necessary evil for Facebook, which has the attention in an economy based on attention.

Facebook, like any other company, has its own survival imperatives. Most premium publishers we know have already dedicated more resources to Instant Articles than they are getting back in revenue, and some already pulled back.

We would advise publishers to focus on their own audiences with quality content that is highly targeted and served on a well designed site that loads quickly. Depending on Facebook for driving traffic or increasing revenue is, as always, naive.

 

 

 

 

 

 

 

Facebook Offers Publishers Another Chance at a Haircut

One thing is for sure: Facebook’s domination of both audience and of digital advertising spend has caused one set of problems after the other for publishers. Essentially Facebook, which does not like to identify itself as a media company, is trying to find ways for visitors to stay in its app rather than clicking through to a publisher site. This has frightened publishers, for obvious reasons. In fact, it has frightened them so much that they have begun to see Facebook as a true competitor rather than just a distribution channel. Every time Facebook makes a change, which is often, publishers stand to lose more advertising dollars.

To this end, many premium publishers have already gone to a subscription model to increase revenue. The New York Times allows ten free articles a month. The Economist allows three free articles a week, and the Wall Street Journal has a hard paywall. This in addition to advertising.

Now Facebook has jumped on that bandwagon as well. Facebook is going to allow people to subscribe to publications through its app. The feature will roll out by year’s end.

Although publishers have asked for this since the advent of Instant Articles, the details of how it will work and how publishers will be paid are not clear:

There are a lot of details to be worked out, including what the model would look like, what subscriber data publishers would get and how the revenue would be distributed. Facebook has moved toward a metered model, and while nothing is final, the latest proposal involves a metered model where users could read up to 10 articles for free a month before being required to subscribe. Publishers would be able to decide if each article is subject to that meter, free or behind a hard paywall, according to people familiar with the discussions.

There’s another big question: how will readers subscribe? If it’s through Instant Articles, Facebook will have to convince publishers who have already bailed on it. The move comes after many publishers, seeing no value from Instant Articles, moved toward Google’s Amp pages. The New York Times bailed early in the year, and even smaller publishers do not push all their content through IA.

Of course subscriptions could be sold through the App Store and the Google Play store, although Apple takes a 30% cut of whatever is sold through its store. And you’d expect Facebook to want a cut as well, so…

One thing is certain. Publishers who aren’t on the ball and using every technique at their disposal to maximize revenue will once again take some sort of haircut. And they’ll be spending the summer figuring out how short that haircut will be.

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!

 

Context: The Most Important Mobile Ad Attribute

Publishers have had to have a mobile strategy for quite a while now, but in the past year many have realized they have to be mobile first, or even mobile only to meet their customers. This has required a new understanding of context — how to reach those customers, understand them, and offer them services that do not offend.

This requires an understanding of context: what devices and screens their users are on, the patterns of usage, which networks they’re on, what plans they’re on, and more. In human history no other devices has presented such challenges.

For most users, mobile means apps, especially for digital media consumption.

A study by cross-device identity and advertising platform provider Drawbridge found that in just six months, from August to December of 2016, the top 15 ad-supported iOS apps grew 32.5% in monthly unique users to nearly 137 million, while the top 15 ad-supported Android apps grew five percent to 606 million monthly uniques.

In 2016, for the first time, mobile surpassed desktop as a means of consuming digital media, and equally important was the growth in mobile advertising, which also surpassed desktop.

In mobile, context takes many forms. Creators have come to realize that mobile is a new surface, and that they can’t just re-package their old content, TV ads, or display ads. Mobile can tolerate special sized vertical video, swiping in multiple directions, and geolocation. It is far more interactive than the desktop, and therefore open to bigger challenges as well as opportunities.

Publishers must be able to know whether a visitor is viewing their content on the subway, standing in a store, walking, or just waiting to know what kind of ad that person would be willing to see. As Grapeshot points out,

In the mobile sphere, the content being consumed in the moment sends powerful signals as to the context of the person consuming and interacting with it.

Contextual understanding adds a layer beyond what audience data can provide. Knowing what media are being consumed signals a person’s current state of mind, their current preferences, even their level of engagement and degree of attention.

Correctly executed, contextual advertising puts brand messages where consumers will accept and even welcome them. It also protects brands from dreadful adjacencies, such as hate speech, porn, and terrorist propaganda.

A few years ago, a startup then named Proximic tried to sell the idea of brand safety to both advertisers and publishers. It had the capacity to scan over a hundred languages in real time to find brand safe locations for ads. No one seemed to care. The company was sold to ComScore, and is now called Activation, but now Grapeshot has come along,  and using similar machine learning algorithms to target suitable ad placements.  And on mobile, the suitability of placements has become far more important.

For example, since most of consumption activity takes place in apps, it is imperative to understand the context of apps into which messaging can appear safely without either compromising brand safety or interrupting a consumer intent on an experience. Page-level understanding of what’s inside apps is still in its infancy and the industry is still using workarounds developed by verification services like MOAT.

But these are tools for the post-bid environment, and the problem won’t be solved until we find a pre-bid solution.

 

 

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.