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Advertising | Perspectives

Why brands are changing their tune about podcast advertising

Though it’s been around in some form for well over a decade, podcasting has sort of limped along in its evolution. Unlike other digital advertising manifestations – such as search or social media – which enjoyed meteoric rises, podcasting has sporadically entered and exited the consciousness of marketers since its inception. Today it accounts for only a sliver of the global advertising marketplace – around 1% of total spending.  

One explanation for advertisers’ hesitancy to embrace the podcast channel is due to straightforward herd behavior: You don’t get fired for buying ads from Google and Facebook. These digital marketing stalwarts emerged almost literally overnight in the late aughts, enjoyed glowing press coverage for a decade, and attracted tens of billions of dollars in advertising during their ascent.

The other is guilt by association. It’s well known that while online ad spending has grown (particularly for Facebook and Google), other channels – television, print, radio – have shrunk. And, for better or worse, podcasting has been lumped in with radio advertising. So, it lacked the shiny new appeal of its digital channel brethren in mobile, search, social and video.

On The Hunt For Alternatives

However, there is one aspect of the digital ecosystem that everyone can agree on, and that’s insanely rapid evolution. There’s a saying among digital media buyers that captures this spirit, and it’s only mildly hyperbolic: “a campaign that worked just fine before breakfast might fail miserably after lunch.”

Today’s advertising environment is, of course, dramatically different than it was a decade ago, or even a year ago. A combination of questionable management practices (see: privacy; see also: safety), absence of customer governance (see: Russia), and aggressive tactics (see: exorbitant prices) has some brands seeking out alternatives to the duopoly. And podcasts are going to be one of the beneficiaries of this shift in the coming years.

Why the Time is Right for Podcast Ads

Though not a one-size-fits-all kind of advertising channel, we’re advising brands to seriously consider adding podcasting to their media mix in a meaningful way, for one or more of a variety of reasons.

The Price Is Right

Due to the relatively low cost of entry and ongoing management, as well as the influx of deep pocketed players like Spotify and Luminary – which are spending hundreds of millions of dollars to shore up their podcasting capabilities and aggressively pursue market share – podcast advertising can be more cost effective than pricey online formats such as paid search or high-end social media. And attractive long-term deals are typically made available by aggressive players in the category. This makes podcasting easy to insert in planning conversations.

Ease of Implementation

Most podcast advertising involves a few lines of copy that is read by the host and/or an offer that might require an accompanying landing page. And that’s it. No pricey multimedia creative, or really any image-based assets are necessary. Indeed, for all but the earliest stage companies, these items are already in place.

The Future is Bright

From a certain vantage point, podcast advertising is, in fact, a “bright and shiny object.” Most prognosticators agree that both the volume of podcast listeners and their level of engagement will grow meaningfully over the next few years. However, while daunting and even prohibitive to some, the idea of getting in to a new channel as an early adopter is enticing to many brands.

The Duopoly Aren’t Dictating Terms

While it might seem trite, many brands are experiencing Google and Facebook fatigue. Though few can remove the duopoly from their media mix altogether anytime soon, the prospect of engaging with new and friendly outlets is enticing.

Be On The Lookout For Speedbumps, Not Obstacles

As with any new tactic, there are of course issues being worked out in the podcasting category. These include lack of widespread familiarity – necessitating executive education – a shortage of case studies, and the reality that most successful podcasting efforts to date have been part of a multichannel campaign. Also, in comparison to other online channels, the turnaround time on investments is typically longer, in part because podcast advertising is often used for general brand building. But the cost-benefit equation works in enough situations for the tactic to be considered in earnest by most advertisers, if not necessarily for every type of campaign.

A New Instrument, A New Tune

One explanation for the slow adoption of podcast advertising is that it has been historically lumped into the broad “offline” advertising category, which of course has been out of vogue for the past decade or more. And while podcasting doesn’t offer many of the bells and whistles we traditionally associate with digital advertising – like immediate response, easily identifiable last touch attribution, and aggressive acquisition – it’s unquestionably gaining momentum among advertisers. Its evolution in the coming years will almost certainly be unlike other online tactics that preceded it, which were pursued in stampede-like fashion, but it’s an interesting emerging tool in the digital advertiser’s toolkit, and worthy of a close look by most brands.  

About the Author

Tim Bourgeois (@ChiefDigOfficer) is a principal at East Coast Catalyst, a Boston-based advertising audit company.

Advertising | Perspectives

Malware and redirects: Publishers need to protect customers now more than ever

As the programmatic revolution reaches its potential, bad actors continue to find innovative ways to exploit the system. The technological advances to increase advertising efficiency are the same ones targeted by bad actors who are incentivized to move at a faster pace in order to keep their revenue streams flowing. The result is an endless scourge of malware and auto redirects that threaten the viability of the overall digital advertising supply chain and the relationship the industry has with the end consumer.

Programmatic provides a green field to bad actors, who consistently evolve their attacks, bypassing defenses and attacking publishers and their digital customers. Once thought the answer to publisher woes, malware blockers have proven to be a short-term fix. Unfortunately, malware incidents have almost doubled since the solution’s relatively recent introduction. Clearly, something has to change. That’s why smart publishers are calling in the experts and forming a joint task force between their Ad Ops and the IT/security teams to combat the problem together.

Bad ads aren’t your only problem

Digital ads are not the only security issue that publishers need to watch. Digital publisher businesses have diversified their revenue streams, evolving from advertising-only models to introduce subscription services and merchandise stores such as the ones hosted by most major news outlets, like The New York Times, NBC, and the The Washington Post. These new revenue channels introduce a new significant security risk for publishers due to the storing of personal data and credit card information.

Publishers are an even more tantalizing target for cybercrime groups, especially those behind large-scale malicious campaigns like Magecart, ShapeShifter-3PC, and ICEPick-3PC. Cybercriminals increasingly use the digital ad supply chain targeting payment pages to steal personal data and payment card information. Publishers trust that the payment processing vendor provides perfect security. However, time and again, these vendors are compromised, either through a direct hack, employee error, outdated code or misapplied patches. Even worse, when a breach happens, the customer will hold the publisher accountable. Headline grabbing news regarding major breaches in the past year focus on the brand, not the vendor. That makes sense since the brand has the relationship with the consumer.

Cybercrime groups zero in on vulnerabilities in third-party code in the digital environment to execute their attacks. Digital ads serve as delivery vehicles for third-party code. Publishers also rely on third-party code to optimize and monetize the user experience. Beyond ad-related platforms, the use of analytics, content delivery systems, video platforms, and widgets carry the risk of being compromised, exposing the website and its users to harm. One recent example is the havoc wreaked by the JuiceChecker malware, which utilized vulnerabilities in third-party code to enable smart malware delivery, which evaded multiple detection efforts including malware blockers.

Interdepartmental partnership

These complicated scenarios leave publishers with difficult choices. While using ads and other types of third-party code help to generate more revenue, they also expose them customer base to more vulnerable code, ready to be exploited by cybercriminals who know how to find and exploit weaknesses. Exposing customers to these threats have long-term consequences. Failure to strike an appropriate balance between revenue and security kills the user experience and creates situations where customers don’t return.

Clearly, a modified approach is necessary if the balance is to be struck correctly. This approach involves bringing product and IT/security teams into the ad/revenue operations fold. An interdepartmental culture is already being fostered by many publishers in order to stay on the right side of legislation such as the EU’s GDPR and California’s upcoming Consumer Privacy Protection Act.

The need for digital security expertise

Moving forward, advertising and revenue operations must work with both product and IT/security teams to review publishers’ existing vendor relationships and strategize how to drive revenue without sacrificing security. Internal security teams are experts in the latest threats and can help develop a comprehensive plan to protect the digital environment and deliver a better user experience.

The ability to successfully generate revenue through multiple revenue streams is important. It is up to the revenue teams to engage with the security experts within your organization to make sure the Internet remains a safe place for advertisers, businesses, and users alike.

About the Author

Steve Stup is responsible for developing and overseeing the revenue and product strategy at The Media Trust. Previously, he ran digital strategy as the General Manager at The Washington Post. In this capacity, he was pivotal in the publication’s digital transformation effort and served on the leadership team that helped position it as one of the most innovative digital publishers in the industry. He led teams responsible for driving product strategy, ad innovation, and revenue operations. Prior to that, he was in technology sales at Lexis Nexis, and other recognized brands. He received his MBA from The George Washington University and is an alum of Virginia Tech.

Advertising | Innovation | Revenue

CPM is old news: The business case for selling content differently

Of the millions pieces of content that are published online every day, only 10% are ever seen.

If that shockingly low statistic makes your heart sink, you’re certainly not alone. Publishers across the globe are fighting the increasingly difficult battle to get their articles in front of the right people – or even just real people. From fake ad impressions to the death of organic traffic, the digital maze that your content needs to navigate its way through before appearing on the newsfeeds of your target audience is becoming more and more complex.

This crowded, often disingenuous advertising landscape has brought the industry to something of a crossroads. Quality engagement is both publishers’ most valuable and scarcest commodity. It’s also more expensive to achieve than ever before. So how do publishers give advertisers more of what they want without spending themselves into the red to deliver it?

Perhaps the greatest obstacle to winning the fight for engagement is the CPM, or cost per thousand impressions, model. Only by tossing this outdated method of ad performance measurement out the window can the industry move forward. But what’s so bad about CPM, and what should be called upon to replace it?

Out With the Old…

The CPM model was created during a time when banner ads and impressions reigned supreme. Getting an impression on a banner ad only required a reader to open the webpage and view the ad for a second, which is fine when you’re raising awareness of a shoe sale or a flight deal. But it simply doesn’t work for content. Whether that content is an article, a video, or a social post, its power comes from engaging readers or viewers with a story for an extended period of time, during which they become aware of your values and develop a connection with a brand’s voice. Scrolling past a sponsored headline on your homepage just doesn’t deliver the same result.

The mass publisher shift towards branded content and content marketing arose out of a desire to forge more meaningful relationships with customers — and when was the last time you made a connection with someone in a second? For this reason, selling on impressions and praying you succeed doesn’t work. This model also doesn’t put value on the thing publishers are best at: crafting an engaging, powerful story. Content needs a new measurement (and pricing) strategy that better reflects its strengths and rewards publishers for their efforts.  

… And in With the New

If you’re seeking guaranteed, meaningful interactions with your stories, one possible solution could be the Cost Per Read (CPR) model. Where CPM measures split-second impressions better suited to display ads, CPR bundles the content with a number of high-quality reads, so advertisers know exactly what to expect.

The rapidly growing and evolving digital advertising landscape also demands a greater degree of flexibility and control over content. To cover the reach limitations of models like CPM, publishers often tack on things like banners, social posts, and e-newsletter mentions in order to drive engagement. These tactics (and their associated costs) can earn pushback from advertisers who want to see as many of their hard-earned dollars go towards content as possible. To better reflect this modern mindset, the CPR model focuses solely on drawing in quality views to a piece of content, making investing in branded content less risky and removing ambiguity around campaign deliverables.

How the Death of Organic Traffic Killed the CPM

CPR also puts publishers back in the driver’s seat in terms of amplification. Organic traffic has been rapidly declining since 2014. And when Facebook swung its metaphorical axe down upon the News Feed in 2018, it seemed as though the industry would never recover. Publishers had spent years honing their Facebook promotion skills and building a larger, more dedicated audience through the platform, only to have that effort made to feel pointless. Reaching the same readers they used to reach suddenly cost significantly more, making content amplification a loss-leader for many sites.

But it doesn’t have to be. Business models like CPR allow publishers to charge a premium on amplification. That’s because advertisers want to leverage a publisher’s brand and audience to reach as many people as possible. From a profitability standpoint, it also creates an opportunity to generate more revenue on additional earned reads. As long as you’re confident in your story and your amplification skills, you can earn incremental revenue for every new person reached.

Additionally, CPR allows you to grow site traffic on someone else’s dime, because the cost of the social amplification used to drive traffic to branded content is factored into the pre-set cost per read. This wider readership closely aligns with your own target audience, meaning you can connect with new readers who may someday become a loyal part of your audience.

Digital advertising is an innovative, fleet-footed industry that demands a great deal of adaptability from publishers, brands and agencies alike. In the tug-of-war over audience engagement, you’ll want the business model that favors quality attention over cursory impressions on your side.

Advertising | Perspectives | Revenue

The threat to CPGs creates advertising opportunities for publishers

Packaged goods are typically the biggest spenders in advertising. Not only is a CPG company’s brand and product mix massive, but the competitive threats from e-commerce and direct-to-consumer brands are significant and growing. The competition has taken a toll. In the last two years, CPG sales have declined. As a result, marketers are spending billions on advertising to safeguard their market share and stay top-of-mind among consumers.

For publishers, however, the competitive marketing environment has created a substantial revenue growth opportunity. CPGs are notorious TV spenders, but they also spend considerably on print and online. For publishers to compete for those dollars, it’s important for them to know these CPGs as well as possible.

CPG Ad Intelligence

With that in mind, here’s an advertising-intelligence snapshot of three of the biggest CPG advertisers – according to annual revenue from 2018 – based on MediaRadar data.

Nestle SA – Nestle is the top CPG by revenue, with nearly $90 billion on the year. But it only grew by 0.4%. Still, in North America, the brand spends nearly $640 million on ads. According to our data, Nestle invests in premium ad units, and it advertised on over 250 different media properties in the last year across multiple formats. For publishers, this could mean opportunities with digital video, native and other premium formats. Nestle launched and advertised 90 new products in the past 12 months. There are nearly 125 people on file in marketing roles at Nestle, as well as over 50at their agencies. This offers a lot of targets for publishers.

Procter & Gamble – P&G’s sales declined in 2018, down nearly half a percentage point. Still, the company brought in more than $65 billion in sales. The company’s marketing budget has been slashed by hundreds of millions in certain areas in an effort to adapt to the sales outlook with cuts of $200 million alone in digital). Still, even with a contraction, the company is one of the world’s most prolific marketers, pouring more than $7 billion in advertising globally. Like Nestle, our data finds that P&G invests in premium ad units on over more than 250 properties. They launched slightly fewer products, though, with “just” 83 in the last year. P&G’s marketing team is comparable to Nestle’s, with over 125 people in marketing roles, according to our data. We’ve also identified nearly 130 agency people who work on P&G business. Perhaps that speaks to chief brand officer Marc Pritchard’s push for agency streamlining and transparency.

PepsiCo – PepsiCo beat out Unilever in sales with $63 billion total on the year. The company is one of the few CPGs to see some sales growth, with an uplift of 1.2%. Everything from Frito-Lay snacks to its beverage portfolio have helped the company rise above some of the stagnation experienced by its peers. In terms of where PepsiCo is advertising, the numbers were fairly similar to those for Nestle and P&G. All three prefer high-impact inventory and spend on hundreds of media channels. But PepsiCo only launched and advertised 17 new products in the past 12 months. That seemed to benefit their sales (a more focused approach, possibly). However, it likely doesn’t help publishers who would benefit from the company’s need to promote more new products. Additionally, PepsiCo has the smallest overall marketing team, with almost 100 people on file in marketing roles and over 50 at their agencies.

As CPGs come under threat, they will consolidate some of their marketing spend. However, overall, these companies continue to be massive sources of revenue for publishers. A careful analysis of their growth and marketing strategies – investing in premium formats, new product launches and more – can help publishers unlock more value from existing relationships or even build new ones.

Advertising | Perspectives

Improving viewability creates new opportunities for premium publishers

The calendar has flipped to a new year. Strategies formulated in are being put into action. CES has wrapped in Las Vegas. Gaudy digital advertising forecasts have been delivered by prognosticators. And advertisers are jumping up-and-down and complaining about fraud, brand safety, transparency, and viewability.

Actually, not so fast on that last point.

Favorable reports issues by several analyst groups – some of which have a vested interest in marketplace chaos and inefficiency – suggest progress is being made on thorny issues that have plagued the digital advertising category for years. Specifically, there appears to be improvement in the area of viewability, which is considered a bellwether metric by many in the business. One report by Integral Ad Science’s found that overall desktop display ad viewability rate across buy types was 60% in H1 2018, up from 55% in H2 2017.

Clearly, there’s a long way to go to get the issue under control. It’s widely acknowledged that billions of dollars will continue to be wasted this year, the market appears to be stabilizing. Marc Pritchard, the  Chief Brand Officer at Procter & Gamble – and unofficial industry spokesperson for all things related to digital advertising problems – summed up the state of affairs neatly at CES this week when he described the situation as “largely finished with round one.”

Double-Edged Sword For Publishers

This market trend has a few different implications for publishers specifically, especially as more granular aspects of the trend are examined.

For example, while publisher-direct advertising continues to outperform programmatic across most categories, the performance gap is closing.  Programmatic made a bigger improvement during the time period. That’s an angle that will be celebrated by the duopoly (Google, Facebook) and big media agencies alike (agencies generally prefer programmatic because of its ability to scale).

On the other hand, the display advertising category hasn’t had much positive news to share in recent years – if any at all, with FBI probes and such dominating headlines. And these overall improvements help the sales pitch for everyone competing in the sector. Display advertising remains a relatively new and oft-misunderstood channel, and these developments will resonate with increasingly skeptical media buyers (and, as importantly, their financial backers).

Publishers’ Marching Orders

In the wake of recent news and developments, publishers have myriad opportunities for consideration in the wake of improving market conditions.

Start Spreading The News

Media buyers are overwhelmed with pitches from all directions: Google has stepped up its outreach efforts. Companies sprout up daily with new ways to execute online advertising. And their clients (internal and external) are constantly demanding increased ROI on ad spend. “In spite of all the talk of how ‘easy’ it is to advertise online and the incredible level of investment in the marketing automation sector, I’ve never see the ad business as complex or noisy as it is today,” says Karen Moked, vice president of marketing at Digilant, a programmatic ad company. As a result, reaching media buyers through the haze of activity swirling around them isn’t easy, but getting to them and helping them understand how viewability is evolving and the increasing role it can play in their operations in light of improving effectiveness is critical, for obvious reasons.

Minimize Friction in the Buying Process

Perhaps the biggest obstacle publishers have to engaging with advertisers is the fact that their customer experiences are not always optimized. In fact, it can be downright difficult for consumers to purchase some publishers’ ad products. New market developments such as increased viewability can be used as a talking to point to help jump start internal discussions around how to streamline the customer buying process. Given that most publishers can’t invest hundreds of millions of dollars into the automated systems that Google and Facebook have in place, some creativity is required.

Performance Close the Loop with Compelling Reports

Media buyers spend half their time planning and executing programs, and the other half creating reports. Publishers are well-served by providing post-campaign analysis and reporting support in two ways. First, it helps advertisers understand the performance of their investments, and premium publishers have a great story to tell around engagement and audience quality. Second, when done effectively, performance reports it helps streamline the buyer’s workflow, which is always a welcomed offering, and by extension positions the publisher favorably for the next campaign.

Opportunity is Knocking

For the first time in recent memory, the digital advertising community is headed into a new year demonstrating optimism about its state-of-affairs, specifically in relation to pressing issues related to viewability, fraud and brand safety. This environment should translate to attractive new opportunities for top-tier publishers. This is not just because a rising tide lifts all boats, but also because of the group’s differentiated value propositions vis-à-vis the duopoly’s. Realizing new successes is by no means a foregone conclusion and will require savvy execution, but 2019 is poised to offer favorable conditions for high-end publishers.

About the Author

Tim Bourgeois (@ChiefDigOfficer) is a principal at East Coast Catalyst, a Boston-based digital media audit company.

Advertising | Perspectives | Revenue | Video

How OTT will be sold in 2019 and beyond

OTT content is now viewed more on TV screens (connected TVs or CTVs) than smartphones. From an advertising perspective, that means larger and more valuable video. Large digital video (greater than 400 pixels wide) has always translated to higher value. However, the biggest determining factor of worth is determined by how its sold: direct or programmatic.

By and large, connected TV (CTV) inventory is sold at a higher value than digital video. In the world of video advertising, the television screen represents the pinnacle of value. With it comes the notion of a captivated audience in their living room, and true scarcity of time and inventory.

Like Cable TV, the OTT video landscape viewed on CTV and other connected devices is highly concentrated across the “Big 4.”  The largest amount of monetizable minutes reside on Hulu and YouTube, along with Netflix (which remains ad free together with Amazon Prime Video—for now). The remaining three out of ten minutes in OTT are spent with high quality publishers and broadcasters, such as TV network brands. These create a direct sale value of twenty-something CPMs. These prices are in close proximity to traditional/linear TV rates.

The price of programmatic

As of now, publishers and virtual Multichannel Video Programming Distributor (vMVPDs), including established providers like Dish and startup vMVPDs, sell a predominate amount of OTT ad inventory programmatically, most often through private marketplaces (PMPs). Here, the average price point is in the teens, with CPMs maxing out in the mid-range of around $15.

There are a few reasons media brands are leaning toward programmatic rather than direct sales. For starters, many organizations lack direct sales teams. Furthermore, OTT is nascent. Thus, the industry needs to contend with tracking on a household level where it is getting harder to obtain IP addresses to map out connected devices. Then there’s the international reality of GDPR, which classifies IP addresses as personally-identifiable information (PII).

All in all, it’s harder to correlate traffic from OTT ads. It is also difficult to measure viewability with server-side ad insertion (SSAI), which stitches ads into content streams, especially when sold programmatically. And then there’s the issue of fraud. A quarter of all CTV impressions this year were fraudulent (never seen) according to Pixalate.

The contentious issue of fraud among broader tracking issues are keeping programmatic pricing weighed down. Where, with the employment of programmatic monetization the most a publisher can expect to optimize CPM rates is by 10-15% above the current average programmatic video price point keeping overall value in the teens CPM.

Direct sales proposition

However, by selling directly, a publisher can more than double ROI to 30-40% or higher price points above $20 CPM. These price points are well above the possible rate optimization that can be made accessible through programmatic means.

So, looking ahead to 2019 with the continuing expansion of OTT traffic and monetization opportunity, it is a good time to reconsider selling directly. This means assembling or training existing digital sales teams to sell your emerging OTT inventory, which is worth its weight in video gold. In a premium video medium with true scarcity, the future will be directly sold.

Advertising | Featured Post | Perspectives

With ad dominance comes great responsibility for Amazon

Move over duopoly because the time has come to furrow your brow about the “triopoly.” Many marketers and publishers have grown tired of the dominance of Google and Facebook in the digital advertising space. Now they can add Amazon to the list of dominant tech rivals. eMarketer now predicts that Amazon will hit $4.6 billion in U.S. ad revenues for a 4.15% share of the digital ad pie this year. And its growth rate of 400%+ per year will get it to a 15% share by 2020.

You’ve probably notices that Amazon has sponsored search ads all over its e-commerce pages, enticing consumers to buy relevant products. However, it’s offering much more than that, from video ads to traditional TV ads to ads on its cardboard delivery boxes. The only problem is that it competes with its own advertisers by selling Amazon brand products alongside merchant listings. And more recently it went too far by promoting sponsored items in baby registries.

In short, if Amazon is going to be the third wheel on the triopoly tricycle, it can expect withering scrutiny from the media, marketers and eventually regulators if it doesn’t play fair.

So many ways to dominate

How did Amazon sneak up on us to become such a dominant ad player? By boring us to death. Those little sponsored links on product pages? How quaint. A sponsored related product, or a banner ad on a Kindle? Yawn. This is the same way that Amazon itself has dominated the world thanks to… cloud servers for your website or business. The engine for Amazon’s profits has long been Amazon Web Services, not its e-commerce business.

This sleight of hand works just as well in the ad business. While you were considering how they would deliver your packages via drones, Amazon was bulking up on advertising through its self-service system, placing sponsored items all over its pages. And then finally, in the sleepy days after Thanksgiving, while the country still was drowsy from tryptophan, the Wall Street Journal trumpeted that Amazon had arrived, “with little fanfare” as a new advertising behemoth.

Helpfully, the WSJ pointed out all the ways that Amazon was going to dominate in advertising. According to a Cowen & Co. survey of ad buyers, 29% buy sponsored product ads, 21% buy video ads on IMDB and Amazon.com, and 13% buy good old display ads. But there’s been more, with “The Minions” movie buying ads on delivery boxes, and a yogurt company paying to include instructions in Amazon Pantry boxes on how kids could build rockets and airplanes out of those boxes. Cute.

And the content play too

While those sponsored links followed the time-honored tradition of Google becoming a dominant ad player with its own AdWords offering way back when, Amazon is ready to spread its wings too. The video ads referenced above could explode if and when Amazon launches a rumored free ad-supproted Free Dive video service for users of its Fire TV devices.

While there is no advertising on its Prime Video service, Amazon has become a major player in content by spending $5 billion this year, according to a JPMorgan analyst. That’s less than the $8 billion that Netflix shelled out, but more than typical TV broadcast networks. And Amazon does serve TV-style ads into its streams of NFL Thursday Night Football games – as well as Premier League soccer games.

And that might grow as well if Amazon is successful in its bid for the 22 regional sports networks that Disney is selling as part of its buyout of 21st Century Fox properties. That type of marquee purchase (which includes the New York Yankees’ YES Network) might finally open the floodgates for tech giants to get into sports programming and break the final blockade for cord-cutters.

Missteps and conflicts

But what might stall Amazon in that pursuit is what might stall the company in its overall ad ambitions: creating too many conflicts of interest. Would Disney really want to sell the regional sports networks to Amazon, a company that is trying to eat its lunch in streaming content? And how many retailers will continue to feature their content on Amazon, and pay Amazon for sponsored slots, when they are being squeezed out by Amazon’s own retail brands?

You can hear the frustration in the story of Jason Boyce, CEO of Dazadi, a home recreation retailer that has to pay for placement on Amazon. “They get all the prime real estate [for their brands]. It’s unfair,” Boyce told the Journal, but “we have to be on Amazon.”

Even more unfair are the sponsored links Amazon runs in private baby registries, with a tiny gray “sponsored” tag. The sponsored items were not chosen by the parents-to-be and led some confused friends and family to buy those items, upsetting everyone involved. After a Wall Street Journal story about the practice, Amazon said it was phasing them out.

And that’s where the rubber meets the road for Amazon as it moves stronger into the digital ad business, with one of its HQ2 offices right outside Manhattan, the epicenter of advertising. If it wants the power of being a digital content and ad player, it will have to come clean on its ambitions and compete fairly or users will tune out. And let’s face it: If the U.S. Congress, FTC and other regulators won’t do their job to keep the tech giant in line, we can expect the EU to come down harder.

Advertising | Industry-Research | Perspectives

Navigating the social media advertising paradox

There are two opposing views on social media that are impacting digital marketing decisions:

  1. Audience attention on social platforms offers a strong advertising environment (good for marketers).
  2. Consumer distrust of social platforms’ data and privacy practices detracts from their effectiveness (bad for advertisers).

Marketers and media executives discuss the social media advertising paradox ad nauseum in meetings, forums, and conference panels. Still, a whole lot of advertising dollars are being invested on Facebook regardless of its lack of transparency, data sharing, and stories of the company’s mismanagement and mishandling of data. In fact, Facebook’s Q3 2018 earnings cited a 33% year-over-year increase in advertising revenue while user growth remains stagnant in its larger markets.

Streetbees’ new research report, Re-positioning, reflects on this dichotomy. A full 86% of respondents follow brands on social media and 73% agree that a social media presence is necessary for brands to be successful. This research ranks Facebook as number one among consumers 25 and older for following brands (86%). Thus, the findings showcase Facebook as a positive environment for advertising placement.

Yet the research also finds that one-third of consumers in the US and India, Facebook’s two largest markets, do not trust the social network to keep their data safe. Further, nearly all users surveyed (98%) state that they continue to use Facebook even though they do not trust the service to protect their personal data. Yes, the paradox, a platform of users that do not trust its environment.

Facebook: friend or foe?

Streetbees’ consumer findings are analogous to advertising practices on the platform. Both consumers and marketers alike continue to use Facebook regardless of the mounting distrust of the platform. In October, Fortune exposed that Facebook inflated its video metrics for how long users were watching video content by up to 900%. Despite a steady stream of Facebook mea culpas, advertisers continue to purchase advertising on the platform.

The research also suggests that Facebook needs to focus on user retention. Younger audiences show limited interest in Facebook and older users’ attention appears to be waning. Only one in five of those under the age of 25 think Facebook is the “coolest” social platform. And when it comes to consumers reasons for quitting social media, the top two responses include “boredom” (51%) and “my friends stopped using” (22%). Eight percent also quit due to data concerns. As Facebook confronts user fatigue, growth in daily active user is significantly slow.

As social media challenges continue to emerge, advertisers need to hold platforms accountable. Short-term media strategies will not lead to marketplace sustainability. Audience attention is a critical commodity in the advertising paradigm and continued reliance on distrusted environments will undoubtedly harm the long-term success of the digital advertising model.

Advertising | Perspectives

The Google monopoly that no one Is talking about

Most publishers are well aware of the control that Google has long wielded over the digital advertising industry, ever since Google’s acquisition of the now-rebranded DoubleClick back in 2008. The damages caused by Google’s anticompetitive effects are difficult to quantify. However, one of the most concrete manifestations of Google’s monopoly lies in the rise of header bidding — which is literally a hack that the industry has devised to circumvent Google’s powerful position in auctions.

With header bidding, rival exchanges like AppNexus worked with publishers to increase competition for their ads — competition that was previously suppressed by Google. The higher yield that publishers have seen by implementing header bidding represents the quantifiable damages of Google’s hegemony.

The rise in header bidding was heralded as a win for publishers when it came to taking back some control for themselves. Unfortunately, header bidding represented merely a temporary victory. And, ironically, the latency that header bidding introduced may be the leverage Google will use to deliver its next blow against publisher independence. Unless publishers do something about it, that is.

Innovation Stifled, Control Lost

Google’s acquisition of DoubleClick set the stage for its monopoly in the realm of digital advertising. In order to maintain control over each ad impression, Google set up two moats around this business: It made ad serving a low- to no-cost proposition, and it ultimately tightly coupled the use of its ad server and Google’s AdX demand. The ability to even consider adoption of another ad-serving platform was virtually eliminated for the majority of online publishers, which could not afford to lose a steady stream of AdX revenue.

OK, so Google gave publishers a free ad-serving tool and a revenue stream to go along with it. What’s the problem?

The problem, as with all monopolies, is that Google gained an inordinate amount of control. In this case, that control is wielded over the independent publishing landscape. Google’s power stifles innovation and restricts publishers’ options for controlling their own destiny.

Google’s “Solutions” Represent More Control Over Publishers

Prior to header bidding, publishers loaded third-party JavaScript tags in a very slow waterfall after loading DoubleClick. With header bidding, third-party bids arrive beforehand and compete against other line items inside DFP. Unfortunately, this hack of implementing bidding outside of the ad server slows down publisher sites, introducing more latency on top of an already not-so-fast DFP.

Many in the industry (like Amazon) are championing server-side bidding as the antidote to header bidding’s latency. But there are problems: Server-side bidding — no matter whose solution — isn’t a comprehensive cure for header bidding’s latency. It still represents a slow two-step process: retrieving the bid and calling the ad server.

Google’s “answer to header bidding” is Exchange Bidding, which integrates the auction and ad serving so the two-step process is eliminated. This truly is a solution from a technology standpoint, but Exchange Bidding puts publishers right back under Google’s thumb.

Forward-looking publishers are skeptical of Exchange Bidding, as they should be. But they face a tough choice: Give in to Google and forfeit control. Or don’t give in and risk Google seizing control under the guise of solving the site latency problems for them. That’s because Google’s monopoly empire also includes Chrome and search. Google can and will enforce ad format and latency rules in Chrome and press its search monopoly on publishers via Accelerated Mobile Pages (AMP). Via Chrome and AMP, Google has the tools to keep tweaking its approach until it becomes just good enough and easy enough to drive capitulation among publishers. Over the long term, it’s a no-win situation.

Time to Put Up or Shut Up

Publishers must not give up the ground they’ve gained in breaking with Google through header bidding. But to keep moving forward, they must solve for user experience issues caused by the site latency they’ve introduced in a way that decreases their reliance on Google.

Publishers must seek and place value in alternative solutions. No longer can they embrace every potential cure that Google offers for their ills no matter how much easier that path may appear to be. Publishers must solve their user experience problems on their own — before Google steps in and solves them for them, again at the expense of publisher independence. There are alternatives, and there are paths forward that don’t rely on putting all of a publisher’s eggs in the Google basket.

It’s time for publishers to take control of their own destinies, once and for all.

Advertising | Perspectives | Revenue

The next frontier in digital ad fraud: local markets

Digital advertising fraud continues to be an industry-wide problem. Estimates of dollars lost to fraud range from $6 billion to $16 billion annually. Much of the conversation has been on preventing fraud in open ad exchanges on a national level. But digital ad fraud can affect anyone who buys and sells digital advertising, including local and national publishers and advertisers.

With local markets becoming a target, the ad fraud crisis might seem to be spiraling out of control. But there is hope. The war on ad fraud is winnable. National and local marketers have the power to steer their budgets toward legitimate websites with human audiences. But how do we get there?

Here we unravel this often confusing and complicated topic to uncover how ad fraud is affecting local markets and what publishers can do to minimize its impact.

Why local markets?

Fraudsters go where the money is. This year in the U.S., mobile ad spending is expected to surpass television advertising. Pair this influx of money with a platform where anti-malware and ad fraud detection is immature or non-existent, and mobile advertising platforms and local markets become prime targets for ad fraud.

How does local ad fraud happen?

Bad actors exploit one of the strengths of local markets: local audiences. Recent research from BIA/Kelsey estimates that out of $76 billion in local ad spending, almost $3 billion is lost to geotargeting ad fraud annually. Marketers want to reach their audiences on their mobile devices when they are in specific locations. Fraudsters take advantage of the appeal of geotargeted advertising by faking a device’s location. This means ads run on “devices” that declare GPS coordinates, but that data can be easily faked, allowing fraudsters to steal from locally targeted ad budgets.

Dr. Augustine Fou, cybersecurity and ad fraud researcher, in partnership with BIA/Kelsey, conducted an experiment that compared mobile ad performance in programmatic campaigns targeting Houston during a hurricane and arbitrary market with a very targeted audience: Butte-Bozeman, Montana.

The ad campaigns specifying these two geographic areas were successfully executed by the programmatic exchanges, but the results were not logical. For example, 100 percent of the ads were loaded on Android devices and all ad impressions were generated at 5 a.m. Houston time and 4 a.m. Bozeman time. These findings, among others, show that the app usage in these campaigns did not follow the patterns of typical human behavior and were the result of fraudulent activity.

This initial test was expanded to include the geotargeting of 16 DMAs through programmatic media buying. While there were variations in the levels of fraud between DMAs, the results showed similar rates of ad fraud (shown in dark red on the following chart) throughout all 16 markets.

“Local publishers have real audiences—the people who live and work in the communities and consume the content they create,” explained Fou. “Marketers need to understand the risks of ad fraud in geotargeted campaigns and consider spending their ad budgets directly with local publishers to avoid those risks.”

What can publishers do?

Legitimate local publishers work hard to create quality content that attracts real human audiences. Publishers who can prove that they have quality, human audiences will be the winners as marketers look to reward those who proactively combat fraud.

Knowledge is power. As more money is spent to reach local audiences, publishers must pay attention to how ad fraud is occurring in their markets and demonstrate that their sites are safe places for advertisers. Understanding how ad fraud occurs and explaining to marketers the issues that make them vulnerable is an important first step, but more action must be taken.

Here are a few steps publishers can take to bring us closer to minimizing ad fraud in the buying/selling process:
1. Follow Best Practices

Know your business practices for monetizing your site, sourcing traffic and choosing vendors, and educate your staff on best practices. Steps to providing transparency include implementing Ads.txt and having a third-party audit.

2. Use Accredited Vendors

Implement tech to prohibit ads from being served to known bots.

3. Actively Manage Media Monetization

Dedicate staff to review traffic patterns and sources.

4. Understand Traffic Sources

Revisit and scrutinize current traffic sourcing practices.

If you want to learn more about what you can do to help, download the AAM white paper Three Truths to Confront the Digital Ad Fraud Crisis. By looking deeper into ad fraud and how transactions take place within the ecosystem, it’s clear that ad fraud – on both national and local levels – is conquerable.

Advertising | Featured Post | Perspectives

5 big takeaways from the NewFronts West

The Upfronts in New York were always about making big advertising deals before the TV season kicked off. Then came the NewFronts, which focused on digital offerings and innovative formats. Now comes the NewFronts West, an extension of the NewFronts that took place in Los Angeles this month, and which have evolved even further from the original Upfronts. Gone was the talk of making big ad deals. In its place was discussion of new platforms, new formats, and new ways to reach younger audiences with influencers, podcasts and, of course, online video.

In short, the personality and networking surrounding this event fits in perfectly with the ethos of Silicon Valley and Hollywood, the major West Coast hubs that have insinuated themselves into the ad market like never before.

Here are five big takeaways from the inaugural edition of the NewFronts West:

1. Big Ad Deals Take a Back Seat to Relationships and Emerging Models

Closing major ad sales was hardly the focus at this event. One reason is was that  it took place outside of the traditional media buying season. Also, because there was a mix of digital-only and legacy media publishers, it offered a chance for all parties to stand out with new types of offerings.

In fact, it was the kind of space  where people new to the game could come in and introduce themselves. And it was a chance to think less about traditional models of advertising and more about emerging prototypes that are just beginning to gain traction, like branded content, custom sponsorships and opportunities for publishers within Instagram’s IGTV. These avenues are especially interesting to advertising execs as ad-free platforms take hold and audiences become more and more fragmented.

Even the New York Times, one of the more well-known heavy hitters at the event, saw the NewFronts West less as a space to close deals and more as a brand marketing opportunity to talk to people about how the Times works with advertisers. In this way, the event was much more future-focused. The hope, it seemed, was that building relationships now would reap benefits down the line.

2. Podcasts Are Not Slowing Down

Podcasts have exploded over the past few years, with nearly every publisher producing some or at least considering them. But after BuzzFeed and Slate’s Panoply cut back on offerings, it was easy to think that perhaps the hype had gone too far. Judging by the NewFronts West, those cutbacks might only be a hiccup.

The Los Angeles Times, Gallery Media Group and Ellen Digital all announced new podcasts. The L.A Times announced new podcasts about a drag racer, “Big Willie,” and a reporter’s search for a hospital patient called “Room 20,” following in the footsteps of its popular “Dirty John” podcast co-produced with Wondery.

Podcasts have always been favored for the intimacy that voice offers, but a compelling host is also arguably the best brand influencer for an audience. With 92% of consumers leaning toward product recommendations, according to a FameBit presentation, podcasts are a more personal way for hosts to promote products.

3. Vice Media’s Brand Safety Splash

While there have been a lot of efforts around promoting brand safety for advertisers, Vice Media made a big splash at the NewFronts West by countering widespread use of keyword blocking by pushing a more contextual approach from Oracle Data Cloud.

Vice executives released the findings of an 18-month long study abut keyword blacklists, which are meant to flag potentially objectionable content for advertisers. Turns out they place LGBTQIA-related keywords high on the list, including “gay,” “transgender” and “bisexual.” The study also found that the keywords “Asian,” “Muslim,” and “interracial” also appear at the top of these blacklists.

For a media brand that prides itself on diverse and inclusive programming (as its executives said), Vice’s announcement made a big statement. Vice then said it would be testing Oracle Data Cloud’s contextual brand safety solution, which offers deeper analysis and scores content based on its storytelling context. They also called for other publishers to follow suit. Now we’ll have to see if Oracle Data Cloud stands up to its reputation.

4. Advertisers Will Have to Work Harder to Reach Audiences

Part of why the West Coast’s approach to the NewFronts is so attractive is that advertisers have realized they have to work much harder to secure the attention of their audiences. Thus, they’re more willing to try new platforms and experiment with techniques that are still nascent like Alexa skills, brand-sponsored podcasts or e-commerce enabled videos. Platforms like Netflix and HBO have made commercial-free viewing experiences de rigeur, and readers on the internet can also easily block ads they don’t want to see.

What to do? Create advertising that consumers can’t not pay attention to is the answer. Advertising executives are anticipating that the traditional model of advertising will evaporate sooner rather than later. So, they’re trying to stay ahead of the curve for their own survival and efficiency. That’s a no-brainer. Having influencers on IGTV or other social platforms pitching products for them has become one way to do that.

5. Snapchat Pushes More Scripted Shows

As Facebook has struggled with battles against misinformation (and lost data), Snapchat continues to move forward with its own programming. At NewFronts West, the L.A.-based social app announced a host of new serialized, scripted shows for the launch of what it’s calling Snapchat Originals. It feels a little bit like Netflix’s foray into originals, except the projects will be shot in a vertical format and feature six-second unstoppable ads. It’s definitely a big endeavor, and one to watch – even if it means that other tech giants may want to, ahem, copy this strategy as well (looking at you, IGTV).

The bottom line coming out of this year’s NewFronts West is that it’s much more important to be strategic about new advertising models and partnerships than it is to partner with name-brand entities and existing prototypes. While tried-and-true advertising formats may sound good in theory and work for the time being, they may not be viable in the future. This event gave publishers a chance to zero in on those emerging ideas. If an event like the NewFronts West can continue to present itself as the more future-forward alternative to the East Coast’s spring NewFronts — and reiterate the fact that not all agencies and ad shops are in New York — it has the chance to develop an even larger following for future shows.

Advertising | Perspectives

Instagram vs. YouTube: Who will win the digital ad war?

YouTube is currently the most popular platform for video content. So, it’s no surprise that when Instagram released IGTV, its stand-alone app for long-form vertical video, everyone’s first reaction was to compare the two. And YouTube pretty much always came out on top.

However, in the past year, YouTube has been under fire for brand safety issues. In fact, there was a point when 250 brands stopped advertising on YouTube at the same time in order to protect their assets and brand image. To date, many advertisers still believe that YouTube has done a poor job of preventing its advertisers’ brand safety issues, even though they have gotten better at the response.

This led us to host a panel discussion on October 4th to ponder a key question: With YouTube in its most vulnerable state, and given its ongoing brand safety concerns, is it IGTV’s time to steal advertisers away?

The discussion, entitled “Instagram TV vs. YouTube: Who Will Win the War?”, was moderated by Kerry Flynn of Digiday. The panel  consisted of five advertising experts: Kaydee Bridges, VP of Digital & SM Strategy at Goldman Sachs, Elijah Harris, VP, and Head of SM, US at Reprise Digital, Noah Mallin, Managing Partner at Wavemaker North America, Brittany Richter, VP and Head of SM, US at iProspect, and myself.

The discussion offered three key takeaways:

1. YouTube still wins the popular vote.

The majority of panelists agreed that brands interested in video content should be on YouTube rather than Instagram’s IGTV. They pointed out YouTube’s benefits: It’s cheaper, long-form content performs better on YouTube, and it’s better for sharing. Elizabeth Richter, iProspect’s Head of U.S. Social Media, offered a different point of view, arguing that Instagram may work for some brands: “If a brand is struggling with their messaging, or just getting started, Instagram’s IGTV is best because they can experiment with different brand messages and see how consumers respond,” she commented.

2. Instagram’s IGTV is transforming and expanding in promising ways.

For Elijah Harris of Reprise Digital, the early IGTV experience was underwhelming. Its focus was to share long-form content from those he followed on Instagram – something he didn’t enjoy. However, Harris added that the platform currently offers more opportunities worth exploring, raising his confidence in its potential for the future.

3. Instagram’s IGTV isn’t quite ready to compete with the big boys.

Elijah Harris suggested that, if it wants to compete with YouTube, IGTV needs meta tags and better discoverability. To go up against Snapchat, he added, it needs curated content and multi-channel network (MCN) participation.

Noah Mallin of Wavemaker believes that, to compete with Snapchat, IGTV needs “breakout content,” even suggesting that it might fill the void left by the demise of Vine. (“I’m still mourning it,” he confessed). Mallin added that YouTube is “stuck in desktop mode” and must quickly adapt for mobile users.

The consensus was clear. IGTV wants to be the most popular platform for video content. However, it still has a lot of growing up to do. Perhaps Instagram will take note of our panel discussion, and we’ll see a more mature IGTV before we know it.

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