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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.

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.

New comScore Report Underscores Viewability Metric

The new report from comScore, ”The Digital Future in Focus 2013,″ had some surprising numbers about how fast the digital media market is growing.

A staggering 5.3 trillion display ad impressions were delivered in the U.S. throughout 2012, with Q4 seeing the most at 1.4 trillion – up 6 percent from the previous year. Closing out the year with the greatest number of impressions delivered were advertisers belonging to the Online Media, Retail, and Finance categories, led by InterActiveCorp, Netflix and State Farm Group.

The top ten advertisers online were AT&T with 104.8 billion ad impressions in 2012. Microsoft, which debuted Windows 8 and the Surface tablet this year with 47.4 billion impressions, rose several spots from 2011. Experian Interactive ranked third with 45.1 billion impressions. Newcomers to the display ad leaderboard included State Farm (35.7 billion impressions), Weight Watchers (34.2 billion impressions), Walt Disney Company (27.0 billion impressions) and Procter & Gamble (26.7 billion impressions).
In addition to the big advertisers, the election in Q4 turned digital media into the same battleground we saw on television. The Romney campaign delivered more than a billion display ads, while Obama, who began advertising earlier, peaked at 2.5 billion.

And along with the growth of programmatic buying, 2012 also saw the the proliferation of non-standard ad units, especially for tablets and mobile devices.

The following two things stood out in comScore’s research.
1) “The U.S. online video market also shows signs of maturing from a consumption standpoint, but monetization is picking up steam …., while traditional media players are finding success with carrying TV commercial content. With the demand for high-impact video advertising exceeding the available inventory, look for the online video market to continue its strong monetization momentum – particularly as targeting improves.”
2) comScore research also showed that “an average of 3 in 10 ads are never rendered in-view, leading to significant waste, weaker campaign performance and a glut of poor-performing inventory that imbalances the supply-and-demand equation and depresses CPMs.”

ZEDO High impact formats address both of these key points raised by comScore. We define High Impact Formats as a way for the advertiser to give us standard creative (728×90, 300×250, 160×600 or a TV commercial) for ZEDO to serve on the page.

ZEDO’s Full Screen TV Ads address the first key point in comScore research; they are a way to run TV commercials on high quality brand-safe content sites.

This format is not just a small pre-roll format and not confined to the very limited over-priced inventory associated with brand-safe pre-roll. Instead ZEDO serves the ads on the best sites and they are viewed full screen by the viewer – just like TV. The advertisers love this: easy to buy (just send the TV commercial video file), brand safe sites, lower cost and higher reach than pre-roll and it plays full screen.

ZEDO’s InView format addresses the second point in the comScore research. Simply put we guarantee 99% viewability. Brand advertisers love this – and buy as much as they can get.