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

 

Resolved: Go Deep, Go Niche, Go Real

This has been a year of self-reflection for the media and advertising industries. And trust us, it was long overdue.

A list of fake news stories from Buzzfeed that went viral last year showed most of them were not only about politics,  but revealed a deep media illiteracy that both fake news publishers and ad tech providers took advantage of.

BuzzFeed News used BuzzSumo to identify the top-performing Facebook content from 96 fake news websites, including the network of more than 40 sites exposed in a recent investigation. This list of English-language fake sites has been built up over the past two years of covering this topic, and was compared to this chart from the creators of Hoaxy to compile a more comprehensive list of pure fake news sites. Click here to view the top 50 hoaxes, and to see the list of fake news sites.

We won’t spend too much time on fake here other than to say advertisers have finally gotten hip to the fact that having their brand seen on some of these sites is counterproductive. Look for them to take some action this year, including more careful selection of vendors.

Fake news is the tip of an iceberg. Advertising thought it could just use the same metrics on digital that it used for years with TV and print, and that things would be just fine.

Not so. The historical metrics of advertising have been reach and frequency. Those were fine when  CPMs were high enough to make sure  both had natural limits. However, once advertising went digital, CPMs dropped, and amazing reach and frequency became possible. The number of global viewers of a digital video ad can be in the millions, or even the hundreds of millions. And because of relatively low prices for digital advertising, greater frequency became affordable.

All of this was exacerbated by Facebook, which purported to aggregate audiences and make better targeting possible. But look what has been the result: greater use of ad blockers by consumers bombarded by ads that may or may not be relevant to them, cost them money to view, and hog bandwidth resources, along with loss of power exerted by individual publishers with smaller, but more engaged audiences.

For the media industry to survive, it is going to have to re-think those metrics and be willing to pay for quality audiences, rather than just large audiences. Also, frequency caps are going to have to become more common.

Some publishers have already questions their deep involvement with Facebook, and what it will bring them in the future. And Facebook itself will begin to compete with publishers as it launches a monetization scheme for its live videos, which clearly mean a great deal to their product roadmap.

As usual, we continue to offer high quality publishers and outstanding customer service, breakthrough formats and technologies, and global ad serving and ad ops.

Happy New Year!

This year, resolve to go deep rather than broad, niche rather than general, and authentic rather than fake. You’ll win that way.

 

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.

 

Are We at Peak Facebook? (Part 2)

In last week’s post, we talked about how Facebook exists in a moment in time, and how its existence is ephemeral just like any other digital asset. This week, we will talk a little about whether Facebook is indeed the villain that publishers think it is. Many publishers bemoan the fact that Facebook has aggregated all their traffic and that their websites are lonely and unvisited, and their advertising revenues down. But we believe that publishers would be in just as much trouble without Facebook.

If you think about the last two decades of publishing, you will see that pointing the finger at Facebook is misguided. What changed the game for publishers wasn’t Facebook, it was the internet itself. Think about it: before the internet, people got their news from a newspaper, and that newspaper was local, drawing a local audience. Although USA Today purported to be a national newspaper, its circulation consisted mainly of tourists and business travelers who received it gratis in their hotels. The average American wasn’t even interested in national news, let alone international news.

Although TV opened up the audience for national and international news during the 70s, it did so with local affiliates of national networks. In short, much of advertising was still local, except for the major brand ads. Competition for audience was among the three affiliates in your city of the three big networks.

However, once the internet came along, every newspaper and TV station was immediately thrust into competition with every other newspaper and TV station in the world for both “eyeballs” and ad dollars. News became a true competitive business, because consumers could now get news from anywhere, and advertisers no longer had to buy only local audiences. They could buy international audiences, or niche audiences, or any audiences they wanted.

None — repeat none — of the formerly local publishers of news and information were structured for international competition. Even the big TV networks were slow to realize that they were not competing against two other networks each, but rather every source of news on the planet. And they spent the first five years of the internet’s existence pushing back at it, hoping it would go away. They never rethought their print strategy; they merely copied the newspaper on to the web.

But the advertisers figured it out before the publishers. The advertising dollars were slowly lost well before Facebook ever existed, first to Craigslist and then to online shopping. Newspapers were folding before Mark Zuckerberg got to Harvard. Legacy media infrastructures weren’t set up for the speed, diversity, and low-cost alternatives on the internet. And that’s where the ad wars were lost.

Facebook is just the latest in a series of hints to publishers that they can’t run their businesses as they formerly ran them, that they can’t blame an outside force for their failure to adapt quickly enough, and that they have to re-think their value propositions constantly to see if their visitors still find them worth the time. Because the new resources in short supply are audience and attention, not news sources. The internet flipped the publishing business on its head, and Facebook is only the most recent messenger.

Are we at Peak Facebook? (Part 1)

Last spring we wrote about Facebook’s plans to develop Messenger into a platform on which it will sell ads. This naturally raises questions about the future for other publishers.  Not to be too much of a Pollyanna about this, we think “this too shall pass.”

Why? Because Facebook exists in a moment in time, just like any other medium. As of now, it appears to have aggregated not only the content of 1.5 billion global individual users, but that of many of the major publishers through its Instant Articles initiative. According to received economic theory, this places all the profits in the hands of the aggregator.

However, look back a scant fifty years ago, and people thought the same about newspapers. All the “news that’s fit to print” was aggregated in the newspaper, so that’s where the ads went, and  with them the profits.

We believe Facebook faces two problems going forward — problems that should give niche publishers some hope.

First, Facebook ads are truly useful in only a small percentage of cases. For performance advertising, it does not work well at all. Advertisers can spend large amounts of money accumulating “likes” without have those convert into sales. Yet Facebook ads, because of their reach, are becoming more expensive. They’re no longer an experiment; they require just the right kind of integrated, cross-channel campaign.

And for business to business, Facebook doesn’t work at all. It’s a platform that begins and ends as a consumer brand and intends to remain that way.

Second, advertising on Facebook is by nature interruptive. When people come to Facebook, they aren’t coming to shop; that’s for Amazon and EBay. They’re coming to catch up with their friends. That makes it very simple for a brand to alienate their customers by reaching out to them at inopportune times, which is why companies like Everlane plan only to use Messenger for customer service. We do not seek advertising on  Facebook, and it is very difficult to make Facebook ads contextual. In the kind of data-driven environment we live in now, where ROI can be measured, small publishers with niche markets will perform better.

And here’s a bonus reason not to go “all in” on Facebook: it is already ten years old. The speed with which technology and consumer tastes change nowadays means we are probably at Peak Facebook, and the next latest and greatest thing, perhaps Medium, perhaps Snapchat, — who really knows? — may gradually siphon off the Facebook audience in the way Facebook has siphoned off audience from Yahoo.

It’s best not to put all your eggs in one basket.

DigiTrust Universal Identity for Consumers is Here

All morning we’ve been listening to a webinar on  TAG, Ad-IDD, Time-based Metrics, and DigiTrust presented by IAB. By far the most interesting new development in the industry to us, is DigiTrust  a new 501c6 that is trying to fix identity and tracking problems for digital ads.

Many publishers have been concerned about the number of third party requests to their sites. They know those requests make the consumer experience poor.

So DigiTrust has come along to standardize the identifiers for consumers. Digitrust is a cloud service that  will offer a DigiTrust ID, and a DigiTrust consent stored in a 1st party cookie accessible by third parties. As a standardized ID for all, with DigiTrust, everybody uses the same ID for the consumer.  It’s just a common language they use with their partners, giving every party proof of consent, which is already necessary in Canada and Europe and may become essential in the US soon.

It eliminates the need for pixel syncs, makes pages load faster, levels the playing field between open web and walled gardens. Publishers need to start with putting a script that sets the identifier, establishes ID and consent, and can be passed through to all their suppliers. This standardized ID makes it possible to eliminate all the other Javascript calls and provides a level of control for the publisher. If you close down Javascript access, you benefit the entire ecosystem.

How it works: the consumer views a site with DigiTrust Javascript on any browser, JS then checks if a token and consent exist, and if not a consent notice is shown to the consumer via a window shade. Any subsequent page navigation is then directed through Digitrust ID. Digitrust stores no data, and empowers NO party with incremental data. It’s just a way to identify consumers once.

DigiTrust is aiming for for 100% consumer notice and consent and all Digitrust platforms and publishers must be part of a self-regulatory program (like TAG).

Publishers pay nothing. Platforms pay. Membership fees are one-time non recurring, with monthly API subscription fees for a decryption key. The more people involved, the more cost is spread among members.

So far, 60+ ad tech platforms have indicated interest,  with 20 already paying the fees. There are also 50+ premium publishers involved. But because of the holidays, deployments are not expected to happen until Q1. For information, contact Jordan @digitru.st Digitrust

2017 Will Bring Differences in IAB Ad Formats

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

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

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

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

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

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

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

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

Facebook Metrics Show Danger of Buying in Walled Gardens

Nothing says more about the danger of buying only from walled gardens than Facebook’s recent admission that people were not watching as much video on the social network as it had  reported. The average video on Facebook was counted as “viewed” after as little as three seconds, but Facebook didn’t calculate in the number of people who don’t watch video on the site at all.

Facebook apparently made a division error of the kind any normal human could make,

Instead of dividing the total time spent watching a video by the total number of people who watched that video, Facebook’s metric reflected the total time spent watching divided by the number of views the video had generated. With Facebook counting views at three seconds, that meant anyone who had seen just a glimpse of the video was not getting represented in the metric. In fact, Facebook told advertisers that its metric was off by 60 to 80 percent, according to The [Wall Street] Journal.

Advertisers seemed not to care, revealing they they don’t buy on time watched, but on either 10-second views or completed views. In this case. Facebook’s being wrong didn’t seem to cost advertisers money. But they should care, because it turns out 80% of Facebook users don’t watch video at all. Brands looking to shift large budgets from TV to digital video can’t do that safely until the know what their return on investment will be similar. It would be more advantageous if buyers spent more with independent publishers, who are closer to their audiences. Facebook’s audience is simply too large to count properly, and too uncommitted to give good results.

Most independent publishers are forced to accept some kind of third party verification of their views, but Facebook does not use third party vendors; it does its own analytics internally. After this admission, self-attestation will not work anymore for Facebook. It must allow in the same third party vendors, ComScore, Nielsen, or someone else, that the rest of the publishing world uses to tell its story.

For publishers, this inflation of the video watching time is worrisome at best, because most publishers felt they had to pay ball with Facebook and when the platform put its emphasis on video, publishers scrambled to provide video content. But all these publisher resources would be wasted if no one were watching. Because of the way advertisers pay, they can afford to wait and see if their ads work. Content publishers have no such luxury. Once they throw money at an expensive initiative like video, they would like to be sure they’re getting paid.

It will be a while until all this sorts itself out, and we figure out whether mobile video deserves the dollars being pulled out of trusty old TV.

 

The New Rules for Native Advertising

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

IAB: Independent Publishers Can Compete Against Facebook

Randall Rothenberg, CEO of IAB, is getting more and more outspoken in his comments about the state of digital advertising, especially since the ANA’s second report and guidelines were issued. Rothenberg blames most of the industry’s problems on brand marketers who value price over performance.  He says marketers still don’t have the in-house expertise to understand the new landscape, and urges them to get tech savvy right away. His theory is that marketers who are out of step with the new advertising environment have bought or subscribed  to ad tech software that has denigrated the user experience to the point where visitors are using available tools to deal with unwelcome intrusions. The marketing is no longer correctly targeted, and the buys are made for price rather than for true relevance to the consumer.

He also thinks that non-savvy marketers need to quit subscribing to the meme that Facebook and Google have most of the audience and that they are the only “safe” buy.

“One of the reasons you’re seeing a reliance on a handful of players is they’re seeking safe havens. Back in the old days nobody got fired for buying IBM. Now nobody got fired for buying Google and Facebook.”

He also says that marketers are also to blame for ad fraud and lack of ROI because for years they have looked the other way.

“It’s either a willful shirking of their responsibility to understand the work of their vendors and their vendors’ vendors, or it’s a wink-wink, nudge-nudge to offload responsibility in their quest for ever-lower prices.”

Rothenberg feels that individual publishers can compete effectively against Google and Facebook by gaining absolute knowledge of their audiences from the standpoint of both data and content development. While Google and Facebook have large audiences, they have less information about niche audiences, and that’s where independent publishers have an edge. He likens this period in the advertising industry to the time when three networks had all the dollars, just before the cable industry came to power.

We have always insisted that the power of publishers with niche audiences will continue to grow, if they market their sites correctly, using Facebook only as a tool.  The growth of new sites like Thrillist or Mic, run by savvy internet marketers, who have either used Facebook to drive traffic to their own sites, or who have built communities around their audiences, is instructive. And so are the biker sites, pet sites, travel sites where communities of users make great audiences for the right brands.