The New Fronts Felt Different This Year

The new emphasis on brand safety has done more to change the digital media landscape than anything since the rise of programmatic. It is incumbent on everyone who buys media to know where they’re buying, and on publishers to make sure a brand ad doesn’t appear in an inappropriate place, even though everything is done by algorithms. We predict that the push for brand safety will make random reach less important, and will ultimately give advertisers more knowledge of what they’ve paid for.

Already Chase has cut its buys from 400,000 sites to 5,000 (without seeing a difference in results) and Sir Martin Sorrell’s salary has been cut by a third. Not to put too fine a point on it, the days where ad exchanges could support porn, fake news, and hate sites by selling blind buys to young media buyers whose KPIs were based on numbers of impressions are over. Programmatic be damned, everyone is going to have to know their inventory on the sell side, and agencies are going to have to know what they’ve bought on behalf of a client.

This year’s digital New Fronts, according to Ad Age, were all about safety, rather than sexy. Instead of glitzy parties there was substance, and everyone will be remembering the brand revolts against YouTube and Breitbart. Ad Age’s prediction:

Even if the YouTube brand revolt isn’t explicitly mentioned, everyone from Hulu to PopSugar will take the opportunity to assure marketers that their content is high-caliber and brand-safe. Many are likely to also stress transparency, verification, third-party audits and viewability. 

Conde Nast will send a message to the industry that it needs to trade on brand safety, said Jim Norton, president of revenue and chief business officer, adding that the business has gotten away from that principle.

So many different issues plague the digital advertising industry that it’s difficult to decide what it should fix first.

There is the issue of platform control by Google and Facebook, and the struggle of smaller publishers, even the Wall Street Journal and the New York Times, to support themselves off what is left.

Then there are the issues of fraud and malvertising, and the industry’s efforts to clean up the supply chain.

And we haven’t yet talked about the unwillingness of Millennials to watch ads, or on the other hand pay for content on the web.

Follow that by the downloading of ad blockers by 25% of the population, and the rolling out of new privacy rules in the EU,

As for metrics?  The industry is still trying to decide what the best metrics are for mobile advertising, especially for mobile video.

No wonder WPP has decided to cut expenses, especially for Cannes, and to leave Sir Martin with the paltry salary of $62 million this year.

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.

 

 

 

 

Quality Print Design Could Help Publishers Succeed Online

The backlash is upon us. Publishers who have misjudged the online market will have more problems in the coming months if they don’t figure out a way to trade useless scale for more targeted reach, because the flight to quality continues for advertisers. While that means more niche and less reach, it provides an amazing opportunity for quality publishers with great design who might not have mattered in the past. It also provides the utmost in brand safety. Publishers aimed at Millennials, who are the biggest users of ad blockers, have begun to try new approaches toward reaching their audiences.

This week we got a look at a new publication launched through crowdfunding. It’s called Racquet, and it appeals to the tennis industry. You don’t have to be a tennis player, just someone who likes the tennis lifestyle.

Here’s what the media kit says:

With a target age range of 25-50, Racquet is a lifestyle brand primed to attract an engaged readership who wants quality in all their lifestyle choices—travel, entertainment, food & drink, accessories, design and more. These are influencers, who move and think globally, value the experiential and carefully curate their consumption—from what’s in their Netflix queue to what’s on their coffee table. Our readers might never pick up a tennis racquet, but they love the style and culture of the sport, and look to us to guide them towards what will make them more cultured, stylish and informed.

At the front of the first issue is a list of “founders,” who contributed to getting the magazine off the ground. This in itself is different. Also different is the look of the print copy. The design is stunning. Each issue is designed to be a collectible.There are perhaps a half dozen ads in the entire print copy. And the print run is 5000, distributed worldwide. That’s not many, so if this company plans to monetize, they’ll have to go beyond print.

Online, the main revenue stream is merchandise for now. Here’s where the unique combination of online-offline becomes more interesting. As an advertiser, you might want to sponsor a podcast, or add your brand to an issue of the magazine that is actually printed, but sold online afterward as a printed copy. Back issues of Racquet, for example are $15.00. This is a different and exciting cross-channel promotion opportunity, and we see it as having great potential for luxury brands.

The ad formats will have to be different from what is usually sold through programmatic, although we predict that eventually the magazine’s site will itself have a limited number of appropriate ads. If it is going to scale, it must. But doing it slowly and carefully, and keeping the product special, may prove to be a differentiator.

 

 

 

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.

 

 

 

 

 

 

 

Everyone Wants to Be An Agency

If you go to an ad industry conference, you will hear speaker after speaker talk about how the agency model is in jeopardy, and how agencies are doomed by brands who are taking media buying in house, refusing to pay commissions and fees, and building their own DMPs.

So how come everybody but agencies wants to be an agency? It all started with Buzzfeed, which developed one of the first in-house agencies to develop branded content and unique ad formats for its advertisers. Now many of the premium publishers have decided to capture more of their “rightful” ad revenue by creating in-house ad production and ad operations agencies. They also argue that they know what kinds of ads appeal to their particular visitors.

Advertisers have also taken many agency functions in house, believing that they can buy efficiently through programmatic platforms, manage and mine their own data by building their own DMPs, and develop their own branded content.

And last, but not least, there are the large consulting firms, who have been gradually turning themselves into agencies. PWC Interactive says it can advance brands through lead acquisition and retargeting, search and display advertising, performance optimization, and digital program design and management. In other words, outsource your marketing program to us.

KPMG bought Cynergy, and now talks about omni-channel engagement and increasing brand loyalty. And the most far-reaching program, at Deloitte Digital, is the equivalent of a $1.5 billion ad agency. Deloitte Digital has 6000 employees worldwide, and can provide everything from strategy to logistics to agency services. McKinsey has an agency arm, and Accenture also has an interactive agency.

The one place where agencies have a real edge is in their traditional niche: creative. Only agencies know how to hire and manage creatives, and how to develop and present campaigns. These are right brain activities, and the consulting firms are populated by left brain people. The publishers, too, are unfamiliar with creative, although in theory they know how to develop great content.

It’s instructive to watch each of the three contenders — brand, publisher, and consulting firm –vie for the functions that belonged to agencies. We think agencies lost the battled when they decided to base their selling propositions on metrics rather than creativity. The best ads are the ones we remember, and they probably won’t be created by publishers, brands themselves, or consulting firms.

Actually, in the future, they may well be created by consumers.

 

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.

 

 

 

 

Legacy Media Adopting New Models

Time Magazine is one of the legacy names in the media business. But like all  media, it is struggling to adapt to new business models. In a Wall Street Journal podcast interview, Jen Wong, COO of Time, discussed her opportunity to grow the Time subscription business as well as some of its forays into new business models. The most interesting area of the podcast for our offerings is Wong’s assertion that her offerings can now compete against Facebook and Google in the ability to provide brands and agencies cross-device attribution.

Even in an age of difficulty for traditional publications, Time still has 30,000,000 subscribers — about the same number as Netflix. It has also built up the infrastructure to sell magazines from its own database of current and former subscribers. The company expects to grow its business using that consumer marketing infrastructure. And Time also owns The Foundry, its content marketing arm. Content marketing, one of the hottest topics in media, is an area many newer publications, like Buzzfeed, are also getting into, because there is an almost insatiable demand on the part of brands for appropriate content.Wong predicted that the branded content market would double to $9 billion by 2018, and that her company would have a substantial segment of it. Foundry both creates  content and operates websites on behalf of brands, and even now it’s the fastest growing segment of Time’s business, growing about 2x year over year.

However, Time is in the same position as most legacy media: while it is branching out in new directions, three quarters of its revenue still comes from print advertising, which is an endangered source. That’s the conundrum for the established media companies: how much to invest in new platforms that have not demonstrated the capacity to monetize as well as their former businesses.

Still, Time considers native, which is now 20% of revenue, a needle-moving bet for digital, along with people-based targeting and video.

People-based targeting is a euphemism for the ability to target a user with device attribution — finding the same user on mobile and desktop. This is Facebook’s strong suit because of the size of its dataset, but Time has now acquired Viant and Adelphic to compete in this arena. With these acquisitions, specific targets can be found on the web, and then can be attributed across channels in a manner similar to what Facebook offers. In Wong’s view, agencies are looking for alternatives to Facebook and Google, and unlike most publishers, Time does have people-based data which would seem to be a major advantage, especially if the metrics Time provides to agencies prove more accurate than Facebook’s.

In video, Time has a pre-roll business that is growing, and has launched an OTT services as well. In addition to the Time subscriber base,  Viant brought 1.2 billion profiles, and 700,000,000 device IDs in the US, and into that database Time contributed its own 100 million expired and 30 million active subscribers. To make it simpler for agencies to transact against that data in an era of programmatic advertising,  the company even developed its own DSP — although Wong said she would not advise other publishers to try to do this if they didn’t have as much data.

Data is the area in which publishers now must compete against Facebook and Google.

 

 

 

 

 

 

 

 

 

 

 

 

Will Numbers and Scale Give Way to Value?

We’ve noticed a movement lately away from scale,  the high volume content strategy of major publishers. While they thought they needed to publish more stories to gain more readers, they’ve now overwhelmed those readers in a deluge of content, some of it not worth viewing. They then run ads against all that content, further inconveniencing visitors. This is the model of The Huffington Post, which recently modernized its platform to let anyone contribute without moderation. We predict this will be a strategic mistake for Huffpo. This is the old way: publish as many stories as you can, reblog as much as you can, aggregate the rest, and use Outbrain and Taboola.

Quite frankly, this “more is better” strategy has buried the good stories in the crap.

A few new publications have decided to do it differently. We’re written about Josh Topolsky’s new publication, The Outline, on the ZINC blog.  The Outline strives to run fewer, better ads against longer form content that is edgy, but not trivial. The new Bill Simmons site, The Ringer, publishers around two dozen stories a day, and The Information, Jessica Lessin’s subscription site, publishers just two.   The hope is that by publishing fewer, better stories, these publishers will draw more actual engagement. That certainly seems to be true in the case of The Information, which doesn’t accept ads and has about 10,000 subscribers paying $399 a year. It also has active commenters from among its subscribers, and a Slack backchannel on which readers can talk to reporters.

Of the ad-supported sites, fewer ads and deeper niches will win over time. This will be good for all ends of the ecosystem, because publishers who have scarce inventory that is actually desirable can charge more for it. And advertisers, even if they buy programmatically, will have a better understanding of the audience they’re buying.

Which brings us to a point we’ve made repeatedly. Scale was a bad strategy for digital advertising. From the first, the infinite supply of content drove ad prices down and made it impossible to price the premium sites, or the desirable content, higher than everything else. That in turn led to the emphasis on click bait and viral content. And to ads that generated poor ROI.

An exception to this has been video advertising, which provides a better return because it is more expensive to produce and therefore there’s less of it. It’s the good old law of supply and demand: when there is less of something, its price always goes up.

Now that publishers realize that more is not necessarily better, it is time to educate advertisers. What will help? The growing perception that fake news and non-brand safe sites should not be part of anyone’s marketing program.

 

Brand Ads Work

It is not necessary to stalk a tiny audience to get results. Brand advertising, with good creative and a high degree of creative works even better, without offending viewers. We believe publishers should encourage their advertisers to offer better creative, which will then pull people to their sites as less comfortable techniques never will. Publishers need to get in a partnership with their ad partners, agencies need to stress creative, and the ad industry as an entirety ought to move back to brand advertising.

Although this year’s SuperBowl game was indeed worth watching in its own right, several people have commented in our social media feeds that they “teared up” during SuperBowl ads, specifically the Coca Cola ad. When was the last time you heard somebody mention an emotional reaction to an ad?

The NYT summary of the ads revealed how powerful they can be:

• Coca-Cola and Airbnb were seen as making political statements on Sunday with ads that touched on immigration and diversity.

• People were searching Google for ads from Budweiser and 84 Lumber and those starring Justin Timberlake and Justin Bieber.

• Fox and the N.F.L. have been trying to avoid overtly political ads, with Fox deeming one commercial “too controversial” last month for featuring a border wall — but that’s tough to do in today’s environment.

We cannot repeat this often enough. It isn’t advertising per se that people try to block. It’s ads that have no relevance to their lives.

SuperBowl ads are not finely targeted. They are simply targeted to the audience watching the SuperBowl, or even to an audience that doesn’t care much about the game, but cares about the sheer creativity invested in the ads, and will go find them online. The best example of that was the 84 Lumber ad. Who had heard of 84 Lumber before yesterday? And who would run a performance ad for a construction company?

But that’s not what 84 Lumber did. The company had three goals for the ad: One was to generate awareness, the second was to position 84 Lumber as an employer of choice, and the third  was to attract talent  to fill the number of positions 84 Lumber has open over the course of the year, its chairman and CEO said. The ad turned out to be more political after President Trump passed the immigration ban, and its ending had to be altered because Fox wouldn’t run the original, but the altered ad functioned as intended.

Let’s call this a cross-channel promotion, since SuperBowl ads can now be viewed outside the game itself. The ad was viewed 4,000,000 times on YouTube before the game, and the company’s site received 6,000,000 requests in the hour after the ad ran. The site was swamped. The ad accomplished its objectives, because now everybody knows who 84 Lumber is and what it stands for.