Around Halloween 2019, I was catching up on politics on a major news publisher’s site when an image in a 970X90 banner ad stopped me dead in my scrolling. I flashbacked to anatomically accurate depictions of female genitalia shown in junior high sex education class. Except this genitalia appeared to be sitting on top of a person’s neck.
This mask was graphic. But I could not look away or resist the urge to click. Yes, I took the risk that the same ad might follow me across the web for weeks. (Beware: the retargeting curse…)
“Full-head clam shell mask” blared the landing page title. A side angle revealed a harmless sea shell that someone was wearing atop of their head. Front and center, however? Female anatomy, and definitely an intentional resemblance.
At the risk of being called a prude, I can’t imagine most people would enjoy being subjected to a “clam shell mask” ad while perusing the news. And I know publisher revenue folks would be horrified if this image appeared in front of their audiences. I can just imagine the screams from the editorial team.
Out of publisher control
Brand safety conversations too often focus on advertiser concerns when publishers are trying to shield consumers from offensive or harmful creative. As this ad proved, a premium publisher was serving me a tasteless ad. Yet, my curiosity was piqued—how did this explicit mask end up in front of me? If that was targeted advertising, what ever did I do online to make an advertiser make me think I’d want to purchase that?
The ad had been served by a well-known retargeting firm, though I’d never visited the site in question. Investigation revealed the same site also sold a variety of guitar equipment, something for which I’m very much the target market. So I was most likely part of a lookalike pool .However, the advertiser or its DSP had been careless in selecting relevant creative.
Which brings up the conundrum—did the publisher have any control over the creative in that situation? Thanks to real-time bidding, no one on the revenue team had any clue that specific creative was going to give me nightmares.
Sure, advertisers can use the IAB Content Taxonomy to pre-declare ad content. But if you’re serving a huge amount of creative dynamically—like a clam shell head mask—are you really going to spell out what might offend the end user?
Publishers and supply-side platforms are forced to have a lot of faith that their upstream partners (DSPs and buying platforms). The assume they are looking out for their best interests and complying with their acceptable creative policies. All too often, that faith is unwarranted and unwanted creative sails through the programmatic pipes. Publisher reputation and user experience is damaged, but the ultimate victim is the end user.
Brand safety goes both ways
I thought about the clam shell mask when I was reading the new brand safety report from the Global Alliance for Responsible Media (GARM), a World Federation of Advertisers initiative. Analyzing content across seven major social media platforms including Facebook, Instagram, Twitter, and YouTube, GARM discovered that more than 80% of the 3.3 billion removed posts fell into the categories of Spam, Adult & Explicit Content, and Hate Speech & Acts of Aggression.
That’s certainly alarming, but it’s only one side of the coin. When the ad industry talks about brand safety, it’s accepted that we’re referring to advertiser concerns about offensive web content.
However, publishers are brands too. Also, keeping publisher brands safe from offensive advertising is also protecting consumers. This is particularly important when publishers monetize through the open programmatic marketplace. In this case, they have limited control over the kinds of creative that shows up on their sites. (E.g., disturbing clam shell masks!)
Categorically bad ads
Of the 1 million-plus sensitive creatives identified by The Media Trust, more than two-thirds were Adult and Provocative ads.
The Year in Sensitive Creative, a report from The Media Trust analyzed objectionable ads between March 2020 and February 2021. It reveals that nearly two thirds of the over 1 million creatives singled out were Adult (nudity, sex toys, adult entertainment) or Provocative (sexually suggestive content, profane language) ads. Other high risk categories include Alcohol and Political (big spike in inflammatory ads in October 2020). Another is Weapons, which has been on a disturbing incline since the November 2020 elections.
Bad creative goes beyond serving someone an ad with nudity or inflammatory subject matter. According to the report, nearly half of the ads related to coronavirus over this period were outright scams. These ranged from price-gouging on PPE to false or unverifiable claims about masks, air filters, and sanitizers. That isn’t just a risk to user experience. It’s also a safety concern for consumers being preyed upon by bad actors. On top of that, publishers face legal liability in heavily regulated categories such as Medical or Pharmaceutical.
Overall, scams made up 47% of all coronavirus-related creative, but during summer 2020, that share was closer to two-thirds, putting consumers at high risk.
Publishers have long been the last line of defense in protecting consumers from bad ads—particularly when it comes to malware and malvertising. DSPs and buying partners have shrugged off their responsibility in keeping consumers safe from objectionable ads and outright scams, all while watching revenue roll in.
Embracing responsibility
The good news is that many upstream partners like DSPs are starting to recognize the importance of complying with publisher creative policies. They are also realizing their responsibility in protecting consumers. Ensuring a high-quality ad experience is increasingly seen as good for business for buy-side platforms. So, they’re using AI-powered categorization systems to identify potentially offensive creative at scale.
The amount of creative violations detected in the second half of the period analyzed in “The Year in Sensitive Creative” was markedly lower than the first half. In particular, the amount of Adult creative has fallen 73% since November 2020. This suggests that advertisers either switched tactics or moved onto less stringent platforms.
But that’s still a problem. Too many unsavory AdTech providers are willing to look the other way on publisher brand safety. Leaving consumers vulnerable to offensive and manipulative ads should be unacceptable. This is particularly true given that technology to identify sensitive creatives at scale is readily available. It’s time all upstream AdTech companies are held accountable for the creatives they let loose in the programmatic ecosystem—such as disturbing full-head clam shell masks.
I’m afraid I can’t find the screenshot I took of that graphic mask… But trust me, you don’t want to see it.
The tectonic plates of the internet advertising economy shifted last week as Apple began to push out iOS 14.5 to over one billion devices worldwide. We’re also feeling frequent tremors as various proposals to address Google’s unilateral decision to ban all third-party cookies bubble-up in the industry lava. As we react to this industry tumult, it is important to keep one thing in mind: Pervasive user “tracking” has eroded the advertising opportunities of publishers large and small.
Tech inventory takeover
Just over six years ago, nearly half of the impressions across DCN members’ websites and apps, including both video and display, were sold directly by the publisher. When we receive final 2020 numbers next month, we expect that number will have dipped below 20% for the first time. The driving force here is data.
Third-party adtech firms have a competitive data advantage because they are able to track users without their knowledge across the web and apps. This pervasive audience-targeting, combined with the scale and ease of buying through these large third parties, has significantly shifted sales channels away from publishers and into the arms of data aggregators.
Tech financial takeover
Shifting to a reliance on third parties to sell 80% of publisher impressions didn’t need to be bad. Unfortunately, it is. Very bad indeed.
A majority of these ads are purchased based on microtargeted audiences — often using Apple’s IDFA or third-party cookies as a proxy for real people. In this process, publishers’ apps and websites are treated as interchangeable commodities. These third parties, Google being the largest, extract data and detach it from the inventory. This allows audiences to be targeted elsewhere on the web at the cheapest price available. That’s why advertising purchased directly from a publisher is sold at 5x the rate of inventory purchased through these third-party channels. Publishers are able to monetize the value of their brand, content and user relationships when selling the ads rather than being repackaged into a nameless audience bundle.
Two big winners: the two biggest “trackers”
In the two largest sales channels (Facebook and Google), premium publishers’ inventory must also compete against the two firms’ own inventory, and an insurmountable data advantage.
Between 2015 and 2019, this data advantage allowed the “duopoly” to capture 86% of the incremental U.S. digital advertising growth. Last year, the trend continued with the two taking 87% of the digital advertising market growth in the U.S.
Industry, regulators and, most importantly, the public, have grown to understand the core of the two companies’ business models relies on unbridled data collection. The numbers below clearly back this up. The bar chart on the left shows the change in sales channels of U.S. digital advertising from 2015 to 2019 and the percentage of the growth (right pie chart) captured by only two companies in 2020.
The privacy and data protection scale is tipping
There is little debate that users overwhelmingly choose privacy over tracking when they are asked which they prefer. The most famous privacy law to date, Europe’s General Data Protection Regulation (GDPR), has yet to fully bare its teeth. However, it is grounded in clear purpose limitations that minimize tracking and other uses of data that fall outside consumer expectations without very specific consent.
This inspired the most significant privacy law in, not coincidentally, the most populous U.S. state: California. Its latest incarnation (CPRA), which allows users to opt-out of tracking, is set to go into effect next year. It has even spawned the Global Privacy Control (GPC) to make this a simpler process which the Attorney General has recently endorsed as legally enforceable.
Meanwhile, Apple’s restricted use of its universal identifier IDFA, which has long been used for tracking, in the latest push of its iOS. Apple now mandates, for the first time, that apps ask their users to make a choice: They need to either ask the app not to track them or give explicit consent to track them. Unfortunately, this can create collateral damage even when an identifier is only being used by a service provider to the publisher that the user values and trusts.
Early reads on the data are that well over 90% of the users choose not to be tracked. So, Facebook had good reason to predict an earthquake coming its way since it’s not a service provider — but is the poster child of distrust. I can’t endorse a podcast more highly to distill the implications of this battle between Apple and Facebook than NYT The Daily. They elegantly illustrate that this is a high-stakes global war. And it’s patently obvious you wouldn’t want to line up on the side of Facebook in a battle over privacy.
But won’t this hurt ad prices and only make Google and Facebook stronger?
The two key arguments against data protection like Apple’s update are that 1) it will hurt ad prices and 2) make the duopoly even stronger. Indeed, third-party inventory is worth a lot more when it is coupled with third-party data. Unsurprisingly, adtech-funded research likes to tout this.
However, that perspective only looks at prices for a narrow type of targeting. There are very few empirical studies that examine the full marketplace. And these tend to show only modest benefit to publishers from unbridled third-party data. Publishers that have leaned into their first-party data ahead of the market are in a position of strength going forward. And, as the bar gets raised across the industry, they should see the increase in value from other more acceptable forms of targeting. Blunt technical solutions that fail to understand the nuance and trust of the publisher pose a risk to this opportunity.
In terms of Google and Facebook getting stronger, remember that they already have an insurmountable data advantage and their business results back it up. Clearly, Facebook wouldn’t have run national ad campaigns against Apple (even — ironically — threatening an antitrust lawsuit), if Apple shutting down IDFA tracking would have actually helped Facebook.
And no one actually believes that the Facebook behemoth is the champion of small business. They claim that personalized ads are the lifeblood of small business advertising and that offering consumers the option to forgo tracking would limit these businesses’ ability to effectively reach customers. Apple, however, points out that users are welcome to opt-in to data collection, thereby enabling personalized advertising. And let’s face it: In a privacy first digital advertising environment, those with first party data and trusted relationships with audiences will still reach them.
However, Facebook’s data dominance isn’t based upon a clear exchange of data for services. In fact, U.K. regulators issued a report (figure 2.3, page 50) showing that more than 50% of Google and Facebook’s data is collected when people aren’t actually intending to use a Google or Facebook service. This is the very definition of the kind of unbridled “tracking” that is so damaging to trust and the digital advertising business. That’s a critical data point — and one these companies aren’t crowing about in national ad campaigns.
Ok, yes, both companies have a significant amount of first-party data. However, shifts towards privacy pose a significant challenge to keeping this data fresh and enriching their interest profiles. This is spelled out in their 10Ks every time they file. Additionally, antitrust lawsuits focused on their data practices, along with new regulations like the Digital Markets Act in Europe, are squarely directed at them. Soon, they will appropriately put heightened data limitations on these powerful “gatekeepers.”
What to do if you’re a premium publisher
These changes are happening with or without us. The timeline, like all tectonic shifts, is unpredictable but the aftermath will be significant. However, publishers who understand the possibilities, see the emerging white space, invest in their direct consumer relationships, and are forthright about user expectations will have an advantage. Risks lie in allowing large tech platforms and lawmakers to define the terms and conversations impacting premium publishers.
I encourage publishers to lean into DCN to make sure we’re properly informed on your plans. We’re here to help you evaluate the risks and face unexpected challenges. DCN has technology supporters that are paving the way for publishers who need help. No doubt, there are elements of Apple’s move which can break core, and expected, functionality as they limit tracking.
Apple has used the definition of “tracking” developed years ago by a multistakeholder group, which included DCN and all sides of the industry. However, blunt technical enforcement always creates unintended consequences. We need to understand these issues so that we can help guide tech firms, lawmakers, and regulators to address consumer interests and the publishers who serve them day in and day out.
We feel the digital advertising landscape shifting. Yes, things will get broken. Some of those will not be missed, however. And, when the dust settles and we take stock of the reshaped landscape, we will see that the crumbling cookie and the fall of pervasive and invasive “tracking” will clear the way for our industry to build better solutions. These will be based upon quality experiences and transparent and in-context data collection. And this, in turn, will build a strong foundation for effective marketing and revenue that rewards companies that truly value their customers.
In business, sometimes incremental improvements are the right course of action. Small steps allow companies to maintain stability and balance while testing out new protocols and procedures. The advertising industry, however, can no longer take such an incremental approach. It’s time for a complete reimagining. After many years of gradual change, advertising is at a critical inflection point. It must enact a completely new and transformational strategy to restore the ecosystem and drive better business outcomes.
What will be the key to a successful reimagining? A clear vision that offers a view — not just of what could be — but of what should be. We must reframe past and pending changes from browsers, device manufacturers and regulators. They offer a massive opportunity to build a modern system that prioritizes consumer trust and transparency, gives publishers control, and delivers high performance for advertisers.
Remember: Consumers love transparent brands they can trust
First, we should recognize that a system that prioritizes people is one that reevaluates the whole experience, not just the moments when data and consent are collected. A study conducted by Microsoft Advertising, tells us 87% of consumers believe data privacy is a human right, not a privilege. Microsoft Advertising also conducted a series of research studies on the importance of trust to brand love and loyalty. The research showed that 85% of consumers will only consider a brand if they trust it. As trust in a brand increases, so does people’s expression of love for that brand, and their loyalty.
When consumers trust the intentions of advertisers and publishers, they are more willing to authenticate themselves. They will actively share their identity and provide other information, which can be used to deliver more value.
Building that trust requires a commitment to developing great customer experiences. This includes guiding language that clearly explains the value exchange. People must be allowed to signal both what they want and what they don’t want from a publisher or a brand. In the digital and mobile worlds, a strong CX capability that enables dynamic personalization serves as a more effective test for finding different ways to engage consumers and uncovering best practices for how and when to request authentication.
Avoid unsavory shortcuts when building new customer relationships
Consumers clearly want a say in how their data is collected and used. True innovators view consumer privacy as the foundation for building the future we all want. Publishers must embrace consumer control of their data and focus on delivering a trusted value exchange that delivers a great user experience. This way, we enable consumers to share their data and identity in exchange for valued content.
It’s time to debunk solutions that bypass direct consent. They are unlikely to stand the test of time. The practice of fingerprinting, for example, creates a synthetic ID in place of a cookie by aggregating signals not meant for creating identifiers. Yet again, such off-label data collection is not transparent to the consumer. Therefore, it can quickly erode consumer trust, resulting in serious reputational risk.
Take control of data to maximize revenue
Results don’t lie. Publishers that lean into the consumer value exchange authenticate more users. People who trust a publisher enough to provide an email or mobile number tend to be more engaged. The impact can be disproportionately valuable to publishers even with authentication rates as low as five, 10 or 30%.
Authenticated users consume more content on average. Therefore, they can deliver more page views. As just one example, the initial results of Microsoft Advertising and LiveRamp enabling brands to buy authenticated inventory show that Microsoft Advertising CPMs alone increased by over 40%.
This is not an either/or scenario. Even before cookies are officially deprecated, publishers can begin to attract more demand. They can also create multiple paths to stable revenue while still running traditional campaigns. This allows them to learn which strategies work best before they are forced to decide on one path or another. Publishers should layer in authentication capabilities now. This lets them use the next few months leading into this year’s holiday season to experiment with multiple, secure solutions that put them control. These experiments should be addressable, contextual, and cohort based. This will allow them to understand the value each approach can generate for their business.
Underscoring the importance of coalescing addressability and authentications, our collective goal should be to increase trust and accountability. We must first focus on authenticated experiences that deliver real value for consumers and marketers alike via permissioned data sets.
Publishers of all sizes need to be single-minded about maximizing their margins. The global ecosystem benefits when we have a diverse landscape of publishers who can cater to the broad and unique interests of individuals. They must also have flexibility and control over their revenue streams, without fear of pricing changes or other potential taxes.
With clarity of vision, our industry can ensure a win-win-win situation
Publishers must not become reliant on single solutions that come with additional expenses based on volume. They risk giving away yield they can’t invest back into their content or their user experience. The only way for advertising to thrive is when publishers have the power to alternate between effective monetization solutions. They must reduce dependence on any one, especially those with the power to squeeze those margins unpredictably. This is exemplified by the recent changes with IDFA. This seismic shift in inhibiting mobile in-app advertising will have far reaching implications, when 80% of app users may suddenly become unrecognizable to mobile publishers.
It is important to recognize the long-term, commercial impact of creating a more sustainable, healthy, and competitive web that works better for everyone. Prioritizing consumer trust and transparency is ethically the right thing to do. However, it turns out it helps the bottom line too —for publishers, advertisers, and their partners. And it’s impossible to overlook the tangible business impact and the halo effect this imparts on enhancing the holistic consumer experience. The fundamental shift toward a more trusted ecosystem is not an incremental approach, it’s a visionary one.
About the authors
Travis Clinger is the senior vice president of addressability and ecosystem at LiveRamp and serves as a IAB Tech Lab board member.
As senior director of global audience ads at Microsoft, Jeff Nienaber supports the native programmatic marketplace and video advertising business as well as data and identity assets.
Everyone seems to be focused on the “new” data strategies that publishers can deploy in a post-cookie world. The New York Times set the agenda with their news about phasing out third party data and introducing their own proprietary first-party audience segments. Vox Media and The Washington Post were fast followers in announcing their respective first-party data solutions.
Alas, not all publishers have an army of data scientists and technical specialists to figure this out for them. But that doesn’t mean there aren’t other opportunities to capitalize on in this new era. The often overlooked strategy to consider is demand path optimization (DPO). Here are a few reasons why DPO is an optimal solution.
More ≠ More
With programmatic advertising came the promise of a democratized ecosystem. Publishers big and small would gain access to a new array of ad spend. The reality, however, was (and still is) something very different. Publishers partnered with more and more ad tech providers promising unique access to premium demand. Initially, each new partner correlated to more revenue. So, publishers found themselves hooked up to dozens of partners. But then the revenue plateaued–or in some cases decreased–because more is not always more.
Despite the continually increasing investment in digital advertising by brands and ad agencies, it is not infinite. Enter DPO. The best way for publishers to ensure they are accessing truly unique and quality demand is to connect to it directly. This doesn’t mean doing away with the systems and efficiencies that come with programmatic advertising. It starts with assessing which partners are performing the best.
Last year, education publisher Chegg cut out all ad resellers and trimmed its supply-side platform partners that delivered less than 5% revenue. The result: a third fewer ad tech partners and no impact on performance. Chegg was able to achieve the same level of performance with fewer partners because they focused on quality not quantity.
Optimize the experience to optimize results
Another benefit of DPO is an improved user experience for publishers’ audiences.
With every additional ad tech partner integrated with a publisher’s ad server comes a tax on page loads. The longer it takes a page to load, the more likely users are to leave the site. But that’s not the only side effect of increased latency: auctions can timeout, ad slots can render irregularly or even go unsold.
Unsold ad slots became especially problematic for news sites during the last 15 months. A heightened focus on brand safety by advertisers reluctant to appear next Covid-19 and civil unrest content led to a drop off in fill rates.
While standard display ad slots may have gone unsold, there was an uptick in the adoption of integrated ad formats such as sponsored content. These formats not only offer premium, brand safe environments, since the ads render as unique editorial content, but also drive revenue. In fact, we’ve seen a 45%+ lift in revenue when publishers began using integrated ad formats such as sponsored articles. Publishers deploying integrated sponsored articles also saw an increased average in audiences’ time spent on page and reduced bounce rates.
Context > Cookies
Digital cookies have been crumbling almost since their invention, and the effectiveness of that data is not as impressive as many advertisers believe.
Publishers and their content have an innate value to their audiences. When advertisers don’t take that into account it not only undervalues publisher’s content, it undervalues the loyal audiences that they’ve built. Furthermore, with each degree of separation between publishers and advertisers, this innate value may not even be realized.
At Nativo, we started putting third-party data targeting to the test as compared to contextual targeting. Consistently we’ve seen contextual targeting meet or beat engagement performance as compared to third-party data targeted campaigns. In fact, looking over sponsored content campaigns from the last 30 days, we’ve seen a more than 2X improvement of engagement performance with contextual targeting versus third-party data.
For too long, advertisers have undervalued the importance and performance of contextual targeting. But times are changing.
Media research continues to prove that ad performance is better in premium content environments. From comScore’s 2016 research to more recent reports, World Media Group (WMG) and Integral Ad Science (IAS), findings show that it matters where advertising campaigns run. In fact, running ads on premium publisher sites substantially impacts advertising effectiveness.
ThinkPremiumDigital‘s new research, What’s so premium about premium digital?, further demonstrates the significant impact of content over ad perception. ThinkPremiumDigital partnered with MediaScience to conduct one of the biggest cross-platform ad effectiveness studies.
Their findings confirm that advertising in premium content is more effective than run of the internet and Facebook. The research includes two phases. Phase 1 examines advertising across 252 websites among 5,300 participants in Australia. Phase 2 will continue to explore ad effectiveness in social environments and include YouTube.
Measurement metrics
MediaScience’s research methodology is rooted in the fact that memory builds brands. It also confirms that memory pathways are more open to brand messages when people are consuming information and entertainment.
The analysis includes three stages of memory: encoding (recognition), storage (prompted recall) and retrieval (unprompted recall). Specifically, the research highlights premium digital’s ability to encode memories, which validates its power to build brands.
Encoding is processing incoming information so it can be entered in memory.
Storage is maintaining information in memory for a set amount of time.
Retrieval is accessing or recalling stored information from memory to use.
The brand lift metric represents a composite measure of:
awareness (of the brand, product, or offering);
attitude (opinion on quality, value and appeal);
recall (ability to remember);
favorability (likelihood to recommend); and
intent (likelihood to purchase).
Overall findings
Across display and short-form video content, premium environments deliver 2.4 times better recall. They deliver 1.6 times the brand lift of run-of-internet ads.
In terms of short-form video content, ads in premium environments offer 1.8 times better recall and 2.8 times the brand lift than short-form video on run of the internet.
They also deliver 1.8 times higher recall than Facebook video. It’s important to note that this research uses Facebook as a proxy for all social media. The research looks ad placement on the platform in aggregate, without any distinction of the content on Facebook, premium or not. Future research will include the impact of content brands on Facebook.
This study once again proves that advertising on high quality content sites drives higher brand attention and engagement for both display and video advertising. It recognizes the positive lift from the premium environments as a key driver of needed brand signals. The findings should be a loud wake-up call to marketers to place their advertise in quality and trusted media brands.
Right now, the digital advertising industry is in a frenzy over how it will adapt to new privacy restrictions that will inhibit marketers’ ability to serve targeted ads quickly and widely. Yes, the nature of digital advertising is changing. However, the direction it’s headed regarding ad quality is on a collision course with high quality user experience. Everything is on the line — including the bottom line.
These new and legacy ad quality-related brand safety challenges are poised to have an outsized impact on publisher revenue in 2021. Over the course of the past year, low ad quality has proved to have drastic effects on user churn, brand reputation, and revenue. Across the ecosystem, ad inventory is flooded with offensive, deceptive, off-brand, and malicious forms of advertising. In fact, 85% of publishers reported seeing increased or constant levels of low-quality advertising in the last year. The most common types of low-quality ads are: poor creative or creative not to spec, auto-redirects, inappropriate formats and inappropriate ad content.
Further, 89% of publishers report that they encounter deceptive ads coming through demand channels on weekly basis. And a fifth of publisher’s report that they’ve lost advertising revenue and/or paid subscribers as a result of deceptive ads. With that’s said, one of the core challenges of programmatic advertising is the lack of control of sites’ user experience.
Experience matters
When a publisher processes thousands of bids per second, unwanted ads will inevitably slip through. And as publishers move away from cookies, they must enact stronger quality control measures to ensure they’re never serving ads off brand ads that kill user experience. This negative association with the publisher weakens their market value. It also makes it difficult for them to attract high-quality, more valuable advertising. Nearly half (47%) of all advertisers say that they avoid working with certain publishers due to the high number of low-quality ads on the publisher’s website. Brands do not want to be associated with, let alone do business with, publishers that serve bad ads. And publishers lose revenue because of them.
Yes, losing cookies poses an enormous business challenge. Without cookies, they’ll have to alter their business models and put hyper focus on user experience to maintain steady revenue. That adjustment should include a pivot to higher-quality advertising, to root out unwanted ads and strengthen relationships with their users. Unfortunately, common ad quality practices often over block or leave money on the table. Nearly half (49%) of publishers often inadvertently block safe ads as they’re racing to keep out bad actors. There’s an obvious need for publishers to be able to fine tune tactics for blocking low-quality ads.
Precise and premium
The solution is to avoid automated blunt blocking solutions which block safe ads, thus reducing legitimate revenue streams. For digital publishers operating in an open marketplace, a precise solution is an important asset to protect readers and brands alike.
In essence, a better ad experience, means a better user experience. A better experience means more engaged users, and higher engagement means the publisher’s ad inventory is even more valuable. Fueling this flywheel is premium advertising from trusted, vetted providers.
Buying and selling large amounts of media has never been easier. However, the most successful publishers will prioritize quality to maintain a quality user experience. The trick is to ensure that your partners reinforce the integrity of your site.
Last year was a whirlwind ride in ad land. Publishers navigated through a tumultuous period of reduced ad spend, axed campaigns, and overzealous keyword blocking. However, 2021 brings with it a new and arguably more significant challenge: the deprecation of third-party cookies and other universal identifiers.
But don’t listen to the nay-sayers as they opine the prospect of a doomed ad ecosystem. Instead, know this: The impending changes to online advertising, while no doubt disruptive, present incredible opportunities for advertisers and publishers alike. Publishers and content creators possess troves of first party data. Given their direct relationships with audiences, they may be in the best position possible.
Publishers: Seize your moment
Eliminating third-party cookies and other universal identifiers alters the dynamics of the digital advertising market. The “cookie-free” world aims to serve the needs and wants of consumers first and foremost. Consumers will set the terms for digital advertising. This marks a fundamental change from what we’ve been used to.
Publishers currently have the strongest and clearest connection to consumers through their large networks of audiences. As the market makes its shift away from universal IDs, we can expect to see many brands and advertisers work more closely with publishing partners. But this additional leverage doesn’t mean publishers can get away with business as usual. Innovation is crucial. For publishers to establish staying power, they’ll need a sophisticated first-party data strategy that’s proactive and meets the needs of today’s advertisers.
Diversification is key
As the digital advertising industry moves beyond personal identifiers, diversification will be key to success. A single-point, silver-bullet solution to replace cookies or MAIDs isn’t what anyone’s calling for. It’s unlikely that such a solution will exist given the ubiquity and heavily embedded infrastructure we rely on today.
Rather, the answer will more likely involve a diversified portfolio of solutions and approaches to data-driven targeting and measurement. The fundamentals for sound data strategy won’t change, though. In the “cookie-free” world, publishers will still need to:
Preserve customer experiences and deliver heightened value to visitors
Support advertisers in reaching the right people with the right message at the right time
Optimize yield through diversified approaches to inventory packaging
Strategic shifts
However, changes to data strategy will center around three core areas. Publishers will need to maximize data to build stronger advertiser relationships, leverage context-based technology to increase understanding of one’s inventory and commit to measurement that extends beyond baseline metrics.
Publishers must:
1. Maximize the value of your greatest assets: Harness the power of data and enrich the understanding of your customers.
As premium publishers move towards a subscription model and first-party data becomes critical, we expect to see the shift to gather as much known first-party data as possible. Many will leverage new subscription models in order to do that. The new data will primarily reveal demographics and online behavior restricted to a publisher site portfolio. However, publishers will need to enrich that data to get a 360-degree view of their audience to better sell inventory.
2. Learn how contextual intelligence drives value.
There are myriad signals on a page. Sentiment, for example, reveals the tone and context of an article. Understanding this context (and doing so at scale) will play a more integral role in ad targeting as cookies disappear.
ID-free technology such as contextual intelligence maintains an acute focus on content and consumer mindset. This allows intelligent publishers to curate inventory packages, based on high value content, which their advertisers seek.
Tapping into reader sentiment will be of particular interest to both advertisers and publishers. Research shows the value of emotionally connected customers. They buy, visit, and pay attention at higher rates compared to people who don’t share the same emotional connections. As context gets more advanced, expect to see this area explored with great interest from both advertisers and publishers as they aim to create detailed views into the content interests and subsequent consumption behaviors of their audiences.
Furthermore, brand safety, suitability, and sentiment-based decision making opens up publishers to more curated, bespoke solutions. This will more accurately value their supply and subsequently make addressable media more valuable. Plus, contextual advancements across a variety of formats, coupled with new and more data-informed approaches to context, will create additional opportunities for advertisers to reach people in an anonymous capacity. Sky’s the limit for the future of contextual.
3. Find out how analytics and insights matter more than ever.
Among the adtech lessons of 2020—media moves fast. Measurement must keep pace during critical times. It must also operate across all channels and platforms to ensure a comprehensive view of success and uncover areas for optimization.
We can also expect a greater focus on analytics with limited reliance on personal identifiers. Publishers will want to prove that their sites are safe for advertising. They’ll need viewable inventory that features low invalid traffic (IVT). They will also want to provide rich insights to show the best creative performance, media attention across multi-format content (such as video, CTV or streaming audio, eSports, desktop, and mobile).
A portfolio approach for the future
We cannot overstate the importance of looking ahead, beyond universal IDs. Digital advertising exists to evolve, and businesses need to adapt. The change to identity unquestionably baffles the best of us. However, some may mistakenly invest in only one solution when we’re certain another shift will closely follow. The nature of this business requires more forethought and imagination, especially now. By widening the array of solutions and ap
Research findings show that ad delivery optimization can often skew the exposed audience by gender or race. Specifically, research found that Facebook algorithms used to optimize a target audience discriminated in its delivery of job advertisements. New research, Auditing for Discrimination in Algorithms Delivering Job Ads, expands on this work to present an auditing methodology for gender bias in audience qualifications.
The auditing methodology analyzes the delivery skew of the algorithmic optimization. Further, it detects if the skew is due to ad targeting qualifications or the platforms optimization learning process. Importantly, if offers insight into social platforms’ black box algorithmic systems.
Methodology
Proprietary ad platforms, algorithms, and data make it difficult to audit Facebook and LinkedIn. To overcome this, researchers created an external auditing process. Facebook’s and LinkedIn’s custom audience feature allows advertisers to build audience targets on the platforms. This offers the ability to infer the gender of the ad recipients for platforms that do not provide post-delivery statistics.
The authors, Basileal Imana, Aleksandra Korolova, and John Heidemann, registered as advertisers on both Facebook and LinkedIn. They ran ads for real employment opportunities on both platforms and audited the results.
Audit criteria
To test for a bias in the algorithmic choices of the platforms, a set of ads run to compare audience delivery. Each set of ads must be similar in audience requirements. This permits the audience delivery to equally qualify (or not) audience members to each of the ads with a consistent assessment.
The set of ads must also exhibit a true bias in the real-world. A comparison of the delivered audience with an actual audience bias offers an important point of comparison. Real-life bias and non-bias factors are constantly informing the algorithms in a platform’s continuous learning process. Therefore, if there is a significant skew in the platform’s audience delivery, it likely stems from the optimization process. In other words, the system overrides the requested audience requirements to supply its preferred optimized audience.
Test ads
The researcher’s setup three tests to compare audience delivery. They include pairs of ads for delivery drivers, sales associates, and software engineers. The ads ran on both LinkedIn and Facebook. Campaign goals were exactly the same and included conversion (clicks), to maximize the number of job applicants and reach, to increase the audience exposure.
The first test included ads for delivery drivers for Domino’s and Instacart, both with identical job requirements. Note that, in practice, Domino’s has a higher male composition of drivers while Instacart has a higher female composition.
Audit results
The test results show evidence of a statistically significant gender skew in audience delivery on Facebook but not on LinkedIn. Facebook’s audience delivery is in line with the actual male skew of Domino’s, even though the campaign requested a gender-balanced audience. Facebook’s algorithmic optimization trained on real-life data adjusted the campaign’s audience delivery.
This unique research offers a new auditing methodology to detect bias audience delivery on social platforms. It offers insight into how ad platform algorithms adjust for platform objectives and override the advertiser’s requirements.
Further, testing on Facebook and LinkedIn demonstrates that the methodology is applicable to multiple platforms and that not all social platforms produce biased results. Importantly, this research offers an auditing solution to protect marketers from unwanted biases baked into social platforms black box algorithmic systems.
Recently, when I was reading an article in the The Wall Street Journal about our industry, it became apparent to me that web publishers, who spend millions of dollars every year creating highly engaging content, are clearly not being rewarded for developing that content. The very survival of our greatest media brands is in question. Yet the Triopoly of Facebook, Google and Amazon has captured 90% of all digital ad spend in the USA in 2020. Think about that. The remainder of the players in the digital media ecosystem compete for just 10% of the advertising revenue. Imagine what those percentages might be in 2021, 2022, 2023 and beyond?
To put this in perspective: What percentage of US digital ad spending did the Triopoly capture in 2018?
A. 53% B. 48.6% C. 66.8% D. 78%
How about 2019? What percentage of the US digital ad spending did the Triopoly capture in 2019?
A. 63% B. 58.6% C. 80% D. 68%
If you answered C for both questions, you are right. The Triopoly took 66.8% in 2018, 80% in 2019, and 90% in 2020. This is a pretty disconcerting trend if you are a publisher. However, it is equally consequential for readers as well as society as a whole.
So, what are the majority of web publishers doing about this? How exactly are they trying to stop this train from crushing them, or at least slowing it so that next year it’s not capturing 92% or 95% or 98%?
Stop complaining and act
The answer is they are doing not much more than complaining about it. Many (if not most) senior publishing executives will tell you the answers are direct revenue from consumers (subscriptions, memberships, etc.). Seems reasonable until you consider that most of it is already available for free from the competition.
Unfortunately, most publishers are not The New York Times, The Wall Street Journal, or The Economist. Therefore, subscription revenues are unlikely to replace the loss of the billions of dollars of advertising revenue that enables most publications to survive and grow.
And what exactly does the Triopoly have that web publishers don’t have? Well, that’s a long and somewhat complicated answer but let’s take a look.
A better mousetrap
Essentially, they have built an easy to access and toll-free on-ramp to every publisher’s unique content. Thus, they’ve eliminated the need to invest in the time-consuming and expensive process of creating that content themselves. What’s more, they have the ability to capitalize on their audience engagement in this content (that they neither created nor own). They offer high value and effective ad impressions to target specific audiences.
Now let’s pretend for a second that you sell fly fishing gear…
Google serves the ad to fly fisherman searching for gear
Facebook serves the ad to fly fisherman or those who appear to be
Amazon connects with fly fishermen via targeted ads and keyword search
In each case they have the ability to deliver a high value advertising environment that delivers proven ROI. In short, they get rewarded for their access to the content the user wants at scale.
Make your audience king
What, dear reader does the publisher have? They will say “we have unique content.” I respectfully and reluctantly say, BS. Many sites have content that is largely undifferentiated from that of other publishers. Even if some publishers actually do have unique content, they are not rewarded for the millions of dollars they invest to create that content as a result of the painful efficiency of programmatic advertising and RTB.
Truth is that the programmatic buying machine doesn’t reward publishers for better content. It simply seeks the most cost-efficient way to deliver advertising to the targeted audience. The algorithms don’t really care if they find their prospects at Bloomberg, The Wall Street Journal, or Fandom. In the programmatic world the target audience is king.
So, it’s very easy to see why the Triopoly has racked up 90% of the ad spend. Remember the Facebook boycott last summer? How long did that last? Advertisers ran back to Facebook because they have built a proverbial better mousetrap that consistently delivers a measurable ROI. The result? Facebook’s numbers are off the charts (as usual) and so are Google’s and Amazon’s.
My question is: What have we allowed to happen to our beloved and irreplaceable publishing community? Every year market share erodes, now 10%, in 5 years what? It’s time to stop that steady drip, drip, drip. These are desperate times for our industry and the survival of our cherished media will require bold action. If the audience truly is king then let us all capitalize on the engagement and commitment of our collective audiences and stop fighting with our sisters and brothers for the ever-dwindling market share. To paraphrase Pogo, “We have met the enemy, and he ain’t us!”
An immodest proposal
I am hereby issuing a clarion call for web publishers to stop competing among themselves. Your peers are not your opponents. They are your colleagues. Now is the time to band together and develop a consortium that can rival the Triopoly with the scale and the ability to provide unique ad solutions. It’s time for publishers to receive their just rewards for creating premium content. Yes, this has been tried (mostly without success) before, as discussed in this recent Digiday piece.
Yet, the concept is sound. And the time is upon us to act boldly and massively. Three or four or a dozen like-minded publishers will not make the difference necessary to turn the tide. A broad industry initiative led by an organization as credible as Digital Content Next and with support from its members and affiliated technology partners is what is called for. We are committed to make this happen. Who else is in? Let’s not wait a moment longer.
About the author
Bruce Brandfon is Chief Media Officer of Duration Media. Prior to that he was EVP of Webspectator, and before that VP and Managing Director at Publicitas. Before joining Publicitas, Bruce was VP and Publisher of Scientific American. He has also held leadership positions at The Philadelphia Media Network, Newsweek, and Time Inc. Bruce is Director of the Board of Advisors at Planet Forward, and an Adjunct Professor of Media Studies at Westchester Community College.
The demise of third-party cookies offers an opportunity for the digital advertising industry to rebuild on a better foundation. This is particularly true for publishers who are willing to leverage the right approaches and technologies to monetize their audiences and protect their data.
When Google announced its deprecation of third-party cookies in Chrome, advertising technology providers, industry consortia, and Google itself started to work on alternatives. The goal is to build solutions that ensure addressability without compromising privacy compliance.
Finding a valid alternative to the cookie is particularly important for publishers and ad tech platforms operating in the Open Web. Google and other Walled Gardens can count on billions of authenticated users to deliver personalized ads. However, the rest of the industry needs to find alternatives that enable them to address users efficiently to stay competitive.
Publishers can already see what a non-addressable internet looks like. In Safari, where third-party cookies are already blocked, media owners see their CPMs decrease by 50% as compared with Chrome.
Two popular approaches to identity
Today, there are two popular approaches to solving the identification challenge in the post-cookie world. One is based on cohorts and the other uses pseudonymous universal identifiers.
The cohort-based approach
Google has been working on its Privacy Sandbox. This collection of proposals is aimed at preventing individual user information from being shared with the ecosystem. The initiative focuses on local data processing. The goal is to provide technology platforms with APIs to collect aggregated data about user profiles, as well as aggregated campaign performance data. According to Google, the mission of the Privacy Sandbox project is to “Create a thriving web ecosystem that is respectful of users and private by default.”
Grouping users in cohorts may give the illusion of compliance because, arguably, you cannot individually address people. But this is not the real problem. This approach prevents publishers from engaging in a real conversation with people about the value exchange between their data and the services they receive. Moreover, it doesn’t offer transparency and control to consumers. They have no way of knowing in what group they have been added and why. They also lack the ability to remove themselves from a cohort.
The approach based on pseudonymous universal identifiers
The other method available is based on pseudonymous identifiers that are created when a user opts in to share some pieces of information with the publisher or authenticates on a website. This information can be used as a consistent identifier by all the websites that have collected and passed along the advertising value chain. Brands can use the ID to collect information, deliver messages and measure the performance of campaigns.
Pseudonymous identifiers can be created using different types of information and require users’ consent to comply with data protection regulations. When publishers can provide signals such as hashed email addresses or login IDs, these can be used to anchor consistent identifiers across the websites that have collected them.
Most of the time, email addresses and login IDs are not available. With this approach, probabilistic algorithms use passive identification signals, such as IP address and the device’s user agent string that are shared via the HTTP Protocol. This enables the ability to infer the uniqueness of a user across websites. This method can be particularly useful to address and monetize users that are not ready to authenticate yet but are willing to share some level of information with the website.
Why one approach is better than the other
Unlike the Privacy Sandbox, universal identifiers work in all browsers, not just Chrome. Thousands of publishers that are keen to monetize their cookie-less traffic on Safari today and in all browsers tomorrow have already adopted universal identifiers. Chrome’s Privacy Sandbox, on the other hand, is still a set of proposals at their infancy stage. And, so far, they’ve only been tested by Google.
So why would you sit still and wait for Google to develop and test its Privacy Sandbox when universal identifiers are already available and working? Even more so, why should publishers and the rest of the industry rely on an alternative that will further increase its dependency on the tech giant and, most likely, work on Chrome only?
By partnering with the right identity providers, publishers monetize cookie-less traffic in Safari today and prepare for the post-cookie world.
Choosing the right universal identifier
So, if you decide to try the universal identity approach, the first step is to choose which ones to use. As of today, there are over 25 different identifiers that publishers can test in preparation for the cookieless world. No publisher will have the bandwidth and resources to try them all. So, below are some questions and considerations that can help to select the most suitable options for testing.
Privacy and transparency
Does the identifier use privacy-by-design technologies to capture consumers’ data privacy preferences? And does it give consumers the option to opt-out in the future if they decide to revoke data processing access? Make sure that your identity solution provider can guarantee your users’ privacy protection and control over their data.
Data protection
What about your data? What mechanisms does the identity solution provider have in place to ensure the information that you’re sharing in the bid stream is only accessed by your authorized monetization partners? Data leakage was one of the main concerns with third-party cookies. Ensure that your identity partner can safeguard your and your users’ data.
Footprint and adoption
How many platforms have adopted the identifier? An identifier is useless if ad tech platforms are not using it. If you’re considering several identifiers, verify they have enough footprint to provide some results. Most user ID modules are available on Prebid. (See how many platforms have adopted each of them.)
Cross-domain linking methods
What methods does the identity solution provider use to link IDs across domains? Most of them use deterministic methods and are only able to link authenticated users. No matter how many logged in users and email addresses you have, you will always have unauthenticated users visiting your website. So why miss on the opportunity to monetize that audience if they are willing to be addressed through passive identification signals?
Prepare today to thrive tomorrow
There are only a few months left until cookies are deprecated by all browsers. If you haven’t started testing universal identity solutions yet, start now. You can already see what the cookie-less world looks like in Safari so use this to your advantage. Utilize Apple’s browser as your testing ground and work closely with your monetization partners to understand what solutions bring the best results and why.
Privacy regulations and browser updates are restricting the use of personal identifiers and customer data gathered via third-party cookies. Needless to say, this is causing no little disruption to the way the digital advertising industry works today.
To prepare for this privacy-focused future, publishers will need consent-based audience data. Brands will have to adapt the way they target and measure campaigns, and identity solutions. And technology providers will need to solve these challenges as updates continue to roll in.
As data deprecation continues — and the deadline for the removal of third-party cookies in Chrome draws near — we partnered with Forrester to research how brands and publishers are preparing. The project surveyed 100 advertisers and 100 publishers in the US and UK. We asked about their current data strategies, with Forrester providing analysis on the future of customer data in advertising and how the industry can realign itself successfully. It shows that within the oncoming threats, there are opportunities for publishers and brands who have access to first-party data.
Privacy regulations are a concern, but solutions are underway
Data deprecation is an ongoing issue. New regulations and frequent browser changes, including the recent announcement from Google banning alternative identifiers in the bidstream, are creating a certain amount of chaos. These changes will dramatically change the way people are targeted on the web. And brands are feeling the impact.
The Forrester research shows that 73% of brand respondents are very concerned about increasing privacy regulations. And 69% are concerned or very concerned with the restriction of third-party cookies in major browsers. However, despite this high level of concern 41% of brands are still relying “mostly or exclusively on third-party data” to target their audiences.
Brands know they need to take privacy seriously. But time is running out to reduce their use of third-party data and test first-party data strategies. Some work has begun, 36% of brands say they are starting to explore accessing publishers’ first-party data. They are also starting to move away from relying on third-party data. Yet, more advertisers need to look at alternative ways of targeting. They should work closely with publishers to incorporate their first-party data.
There’s an opportunity for publishers to partner with advertisers
Publishers are working hard to build-out their data monetization capabilities. They’re keen to supplement their subscription and ad revenue through advertiser partnerships. The research shows that 95% of publishers surveyed have started building their first-party data monetization strategies. However, only 28% are ready now with an established, implemented strategy.
Identity and tracking individual across the internet — knowing their every move — isn’t the only route to understanding consumers. Publishers understand their audiences and are building cohorts — a group of users that share some common attributes or behaviors — from their first-party data insights. This will give publishers an opportunity to build direct relationships with buyers, as publisher cohorts are privacy-safe. They allow advertisers to continue to target and reach audiences post-cookie, across platforms.
Publishers are primed to take action. Half of those surveyed believe increasing privacy restrictions will allow them to work more closely with advertisers. Access to consented, granular data on their audiences will strengthen their advertiser relationships, especially as first-party data becomes even more valuable to brands.
But convincing brands to test, trial and book campaigns with this cohort-based audience data is vital for this closer partnership model to succeed.
Publishers must proactively showcase the power of their first-party data
In order for brands to wean themselves off third-party data, they need scalable, relevant audiences. They also need partners that can help them reach those audiences across all buying platforms.
Brands should look to publisher cohorts to test first-party data campaigns. They need to be open minded about how they can reach new audiences as the industry rebuilds itself for the future. While publishers have gained significant ground in establishing their strategies, brands will need to find trusted partners. Publishers that are proactive about collecting their first-party data and sharing their work with brands are the ones that will benefit most.
Instead of replicating the old ways, publishers and brands should see this as a chance to build deeper relationships and prepare for buying via cohorts that don’t identify and track people as individuals. It’s time to embrace a future based on first-party data.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove, interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company.
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
