Programmatic advertising and its aggregation of inventory are often viewed as the key forces behind the commoditization of digital ad impressions. The shift to audience-centric media buying from earlier practices emphasizing context has left many questioning whether or not the environment surrounding advertising really matters. It is important that we examine what extent does quality drives advertising effectiveness.
Today’s release of comScore’s independent research, “The Halo Effect: How Advertising on Premium Publishers Drives Higher Ad Effectiveness” presents empirical findings that Digital Content Next member sites delivered significantly higher branding effectiveness results than other sites.* Importantly, the research finds that the primary driving force for the brand lift is the positive impact of the “halo effect” of the contextual environment in which an ad is seen. In other words: A good environment drives better ad campaign effectiveness. In fact, while some of the positive effect can be contributed to higher ad viewability and less invalid traffic on premium sites, comScore found that the most significant driver of increased effectiveness is the halo effect of appearing on premium sites. This “premium” designation is one that our own research has borne out as a distinguishing factor in other areas, such as the quality of ad inventory and the significantly lower bot traffic on DCN member sites.
What value does the halo factor have for marketers? Used properly, it can help a brand cut through the clutter and save money on marketing by using this momentum to operate effectively and efficiently throughout the marketing funnel, particularly in the brand consideration stage where the “halo” lift was 3x.
This is demonstrated by the research, which first compared the overall brand lift effectiveness of ads delivered on DCN members’ sites versus non-DCN premium publishers sites. DCN premium publisher sites significantly outperformed those on non-DCN sites—by 67% (0.89 brand lift vs. 0.53). Measuring brand lift answers some of the biggest questions marketers have such as are my ads influencing consumer behavior, are they influencing sales and to what degree. Knowing a campaign is 67% more effective in influencing consumer behavior and intent to purchase is a win-win situation giving marketers a lead in the marketplace.
comScore also identified ad effectiveness metrics in other parts of the marketing funnel. DCN publisher sites performed 32% better on top funnel metrics, which includes awareness, recall and message association (.56 brand lift vs. .42). The mid-funnel—where consumers have the potential to develop a stronger interest in your brand—performed more than three times as effective for DCN publisher sites with a 1.87 brand lift vs. 0.51. Premium publisher sites can influence the mid-funnel by 255% more effectiveness, a potential accelerator of brand sales. The lower and final part of the funnel includes purchase intent and share of consumer choice metrics. DCN premium publishers performed 9% better on the bottom-funnel metrics (.38 brand lift vs. .35).
comScore’s independent research provides a clear message that brands benefit from advertising on premium publisher sites. While the research found that premium publishers perform better across all phases of the marketing funnel, the value in driving mid-funnel metrics is especially important to convert awareness into positive brand consideration. So, while digital continues to create opportunities for targeting and increase opportunities for efficiencies, it is clear that placement within the context of quality environments provides a “halo effect” that drives ad effectiveness.
*This study was not commissioned by Digital Content Next (DCN) or any of its member companies. While the results were shared with DCN prior to publication, DCN did not have any influence over the design of the research or its findings.
When asked to name the biggest trend in digital, publishers responded with one word: video. According to The State of Digital Advertising for Publishers, a new report from Mixpo, this clearly presents both challenges and opportunities. The gap between advertiser demand for video ads and publisher supply of video inventory is notable. This seller’s market has made video a valuable ad product for publishers, but it has also created pressure to find new ways to deliver video and take full advantage of 2016’s video boom.
In April of 2016, Mixpo surveyed over 250 digital advertising professionals employed by U.S. publishers, and conducted personal interviews with 30 digital advertising executives in a variety of functions from eight of America’s leading media companies. The State of Digital Advertising for Publishers highlights the top ten trends that emerged from Mixpo’s research along with insights on how publishers can think about, and tackle, the most pressing issues in digital advertising.
While video is front of mind for respondents, Mixpo also found that programmatic has evolved from threat to revenue opportunity. In fact, for the majority of publishers interviewed, programmatically-powered audience extension is their fastest growing revenue source.
Attribution and measurement, along with viewability, top the list of publisher concerns followed by ad fraud and bots, the increase of mobile consumption and ad blocking.
Other key findings of their research include:
More than a third (36%) of publishers use or plan on using Facebook video ads, with 13.6% using or planning to use Instant Articles.
Publishers ranked pre-roll, interactive pre-roll and in-banner video as the digital ad formats with the highest perceived ROI.
Facebook Dominates: 50.2% of those surveyed have run video ad campaigns on Facebook, compared to only 31.1% on YouTube, 17% on Twitter, 13.2% on Instagram, and 1.7% on Snapchat.
Video Growing Beyond O&Os: In the past year, 61% of publishers have sold video ads as a part of their audience extension packages.
Mobile is still a challenge, but for new reasons: 48% of publishers are ‘very’ or ‘extremely’ concerned with the increase in mobile consumption, while device fragmentation was among the least disconcerting issues.
Ad blocking is a threat, but publishers are unsure of what to do: Nearly half of publishers (46%) said ad blocking is either “extremely” or “very”concerning, but on the long list of publisher concerns, ad blocking isn’t at the top.
In the age of rich data, publishers stick to basic metrics: Nearly 54% of publishers surveyed work with at least four ad tech vendors, and 5% work with more than 16, making consolidated metrics difficult.
In today’s ad environment, where consumers can skip, block, dodge, and flee ads to their heart’s content, we are seeing a flight to quality. In other words, since people don’t have to pay attention to ads anymore, brands are cranking up quality to get people to choose to watch their ads. Speaking to Ad Age at Cannes last month, Procter & Gamble Global Brand Officer Marc Pritchard said of their advertising, “We’re trying to turn down the noise and turn up the quality, which gives you a better chance of success.”
This movement was highly evident during the second quarter, in which our top Breakthrough ads were voluntarily watched on YouTube to the combined tune of 45 million views.
We saw highly emotional ads centered on moms and dads, with a dash of Olympic passion, rise to the top of our list of ads with the greatest Breakthrough capacity. Within our broad set of metrics, the components of Likeabilty and Attention form the Breakthrough dimension. Though Breakthrough is not always the primary objective of an ad, in today’s ad blocking environment, it’s crucial for brands to deliver engaging content that people will watch and share.
Top Breakthrough Ads of Q2, 2016
Out of nearly 1,950 television and digital ads tested by Ace Metrix this quarter, Gillette’s “This Father’s Day, Go Ask Dad” demonstrated the highest Breakthrough, which is remarkable considering the ad is 2:36 long (read more about this ad here.) With nearly 6.3 million YouTube views since early June, the success of Gillette’s ad, created by Grey New York, drives home the point that people will choose to watch high-quality branded content that makes them feel something.
Gillette parent company, Procter & Gamble, is next on the list with their inspirational tribute to the moms behind Olympic athletes, “Thank You, Mom – Strong” (read more about this ad, created by Wieden + Kennedy, here.) Similar to Gillette’s ad, “Strong” received high scores in Relevance, as well as Attention and Likeability. Unilever brand Dove also delivered a relatable ad with their annual heartfelt tribute to Dads, “Caring Makes My Dad, My Hero.” The minute-long spot, created by The Marketing Arm, showcases real father-child moments taken from online footage. Both of these CPG brands are leading the charge in connecting with consumers through intensely emotional ads.
The Emotional Word Clouds (or Emo Clouds) below help gauge the level of emotional connection respondents have with the top four Breakthrough ads by using words directly from their comments. These word clouds demonstrate that it is intense emotion that can truly connect and be relevant to consumers. Words like “touching”, “heartwarming”, and “moving” are seen in high doses. Emo Clouds, a key piece of the puzzle for understanding how to produce predictably great creative, will be launching in the Ace Metrix UI later this month.
We’ve also seen brands have great success connecting through the use of humor. Apple’s “Time – Behind the Scenes” broke through delighting viewers with humorous Cookie Monster and Siri interaction (read more about this TBWA\Media Arts Lab created ad here.) Similarly, Johnsonville broke through with their employee-created, with help from agency Droga5, spot “Jeff and His Forest Friends by Jeff” (read more about Johnsonville’s campaign here.) The Emo Clouds below show how well using humor as a vehicle worked for both brands.
A common theme represented by three of the top 10 ads was that of home and all that homes symbolize. Lowe’s (#6 on the Top 10 list) three-minute ad “House Love”, created by BBDO New York, tells the story of two homes and their young residents falling in love (read more here.) In Zappos’ (#7 on the list) tearjerker ad “Box Home” a boy builds a home for a homeless man with various materials, including Zappos boxes. Viewers used words including “beautiful”, “sad”, and “powerful” to describe the story. Zappos collaborated with creative collective Variable to develop the 1:49 ad. Coldwell Banker’s “This is Home” uses a catchy song set to user-generated content depicting scenes of happy moments big and small that make a house a home. The upbeat minute-long spot, created by Siltanen & Partners, evoked words like “sentimental”, “uplifting”, and “adorable.”
Half of the ads on the top ten list were digital-only ads, with nine out of ten 60 seconds or longer, giving brands enough time to fully tell a story and connect with viewers. It’s clear that this is one recommended path to success, and that more brands should seek emotional means to break through and create a memorable bond that consumers will enjoy and share.
Congratulations to all of the brands and their creative agencies on our list, as well as to those who produced outstanding Breakthrough ads this quarter that fell outside of our Top 10.
Miriam Tremelling serves as senior marketing manager at Ace Metrix where she is responsible for developing compelling stories that articulate Ace Metrix’s value proposition. Prior to joining Ace Metrix, Miriam worked at Conversant, Twelvefold Media and CBS Interactive.
Check out Ace Metrix’s complete list of Breakthrough ads for Q2, with links to watch them in their entirety.
Consumers pay more attention to advertising on televisions than advertising viewed across other screens according to a new report Evaluating Engagement & Recall by Platform. Nielsen and the Council of Research Excellence hired independent researcher Hub Entertainment Research to measure how people watch television.
In the study, consumers viewed the same five shows “Bones,” “Family Guy,” “The Big Bang Theory,” “Survivor” and “Family Feud” with identical ad loads across TV, computers, smartphones and tablets. Interestingly, 62% of TV viewers reported they were able to recall half or more advertisers compared to viewers of tablet (47%), smartphone (46%) and computer (45%). In contrast, program engagement did not register notable differences by platform.
Viewers also reported that TV (89%) offered the most positive viewing experience, followed by tablet (63%), computer (54%) and phone (43%). Further, viewers paid the most attention to advertising on television (29%) compared to 23% for smartphones, 20% for computers and 17% for tablets.
Additionally, the study found that multi-tasking negatively impacts ad recall but not program plot recall. Importantly marketers need to understand drivers of engagement across platforms as well as those specific to their targeted demo. Identifying drivers and assigning value to each platform will better align expectations with campaign effectiveness.
We’ve seen it so many times before: A new ad format catches people’s eyes, they pay attention and wonder what it is. Then they go back to ignoring it. It’s happened before with rich media ads, interstitials and so many others. Now it’s time for “out-stream” video ads that show up on web or mobile pages, within text, and just start playing.
The format sells itself as less invasive than pre-roll or mid-roll video ads, guarantees 100% viewability, and promises to be much more scalable than existing offerings. They only play when the user scrolls to the portion of the website where the advertising is embedded and lingers on that area for a specific amount of time. It seems like the ads work better than other video ads for now, but how long will that last?
Teads and Virool lead the charge With the demand for online video ads rising, yet a dearth inventory available with most publishers, ad-tech startups Virool and Teads have established themselves as pioneers in out-stream advertising. “Both companies have similar sales models,” the Wall Street Journal’s Mike Shields reported. “They sell ads to marketers directly and share revenue with publishers, or they allow publishers to sell the ads themselves, collecting a few dollars for each ad that gets delivered. Ad buyers can also buy these ads via automated software.”
Teads has raised $50 million in venture capital since it was founded in 2011 and reported 2015 revenue of $150 million. Virool raised $6.62 million in seed funding, and $12 million in its recent Series A financing. Collectively, their clients include top web publishers such as the Washington Post, Le Monde, USA Today and Mashable.
“Traditional publishers still have massive audiences flocking to their articles,” Sonja Kristiansen, Virool’s head of publisher development, told the Journal. “So what we are doing is unlocking video real estate on those pages.” She said that publishers are selling these out-stream ads at rates similar to in-stream ads on YouTube and Hulu — “$20 to $45 per thousand consumers reached.”
Beating other mobile ads Virool ads are also reportedly garnering ad rates “four times higher than typical mobile ads and 10 times higher than desktop ads,” Shields reported.
In-stream advertising on social media has already conditioned users to expect these sorts of ads, its proponents say, though out-stream advertising is not the same thing. “What I do not consider to be out-stream are placements within a feed—so Facebook, Instagram and BuzzFeed,” said Mark Book, VP of Digitas Studios. “I would consider this to be pure native in-feed advertising.”
And users engage with out-stream ads differently than they do ads on social streams, according to a recent study by Teads. Among its findings? Fifty percent of users surveyed scroll more on social media feeds and take in more content, but engage less with ads. Yet “23% of users were more likely to read content within premium articles than in social feeds,” as Adweek’s Marty Swant reported. Furthermore, “users spent 24% more time watching video ads within premium content on websites than they did watching video ads in social feeds.”
A problem fitting in But all is not rosy with out-stream advertising. Making these ads fit organically with its surrounding content is a challenge. Ensuring consumers don’t find these ads annoying is also an issue — no one likes video ads that take up a lot of bandwith, for instance. And since these ads play without sound at first, it’ll also take some convincing to gauge their value compared to other video ads.
Although certain alliances in the past year point to the growth of out-stream advertising — Rubicon Project has partnered with Virool, for example, and AppNexus has connected with Teads — some suspect that programmatic scaling will lead to bundles that include banner and pre-roll advertising anyway.
Still, both agencies and publishing professionals are optimistic. Seventy-seven percent of agencies worldwide, 70% of advertisers and 69% of media and publishing professionals have said that out-stream video ads will be important to the future of their advertising portfolios, according to a 2015 report from eMarketer.
Teads has also announced a new accreditation program for media buyers so they know the ins and outs of out-stream advertising. If marketers and publishers make sure they’re following their own insights and not just those of companies looking to champion out-stream, it’s safe to say it has a prominent place in the business — for now.
Teads has released new eye-tracking insights that show the impact of various content environments on the performance of mobile advertising. The study found that advertising placed in premium editorial articles increases consumers’ purchase intent by 27%. They also found that when users are on premium publisher sites, their scroll rate slows down, thus building a slower, more concentrated experience, driving a higher chance of attracting attention to engaging advertising.
Key takeaways:
Premium content drives highest engagement.
Native video ads within premium content are more likely to be viewed.
Longer exposure on skippable pre-roll doesn’t guarantee stronger ad impact.
In-article native video ads put the user first and drive the most campaign impact.
In-article native video ads resonate even more with millennials.
Teads also made recommendations for mobile video ad optimization:
Advertise within premium content to drive increased viewership and to extend average dwell time.
Leverage in-article native video to drive increases purchase intent.
Consider using formats outside of pre-roll, which doesn’t guarantee a quality view.
Use in-article native video to impact younger consumers.
In our world of eye-popping stats, John Herrman recently shared a new one from a Morgan Stanley analyst that shakes the wobbly legs of the digital media industry in this New York Times column: “In the first quarter of 2016, 85 cents of every new dollar spent in online advertising will go to Google or Facebook.” Industry sources quickly tried to discredit this number as way too high even though for years many, including DCN, have noted overall market consolidation with this IAB/PWC report tracking the top ten’s growth from 70% to now 75% of the market.
But 85% to only these two companies?
Well, last week, IAB/PWC also released its quarterly U.S. advertising report, which was quickly followed by a “groundhog day” press release from the IAB, the industry trade group for the advertising sector, announcing the rapid rise of digital ad revenue. The Report notes that first quarter U.S. internet ad revenues hit a record-setting high after the highest growth in four years hitting a “21% rise over the same time period in 2015.” We don’t dispute this number. We just think it’s important to highlight that only two IAB members are benefitting from this increasingly lopsided ecosystem.
Using Facebook and Google’s public earnings, it’s very simple to back into the math. The table below illustrates the estimated U.S. ad revenue growth for Google, Facebook and what I affectionately like to call “Everyone Else.” These calculations show nearly 90% of the growth going to the two companies. If you’re in the “Everyone Else” group, you’re competing for $300 million of the $2.7 billion in Q1 growth.
Stop and let that sink in for a minute.
It seems the only other ways money is being made in the digital advertising ecosystem is through:
Intermediaries who capture 55% of the supply chain according to IAB research on the “Ad Tech Tax” that marketers are funding;
Fraud, which according to the ANA, results in more than $7 Billion per year being dislocated; and
Other shenanigans, which the ANA reported on last week in its groundbreaking Transparency Report.
And whether we like it or not, no discussion of ad revenue is complete without factoring in ad blocking. I want to once again applaud the IAB for bringing together its members last week to discuss user experience issues in light of ad blocking. I was pleased to be able to listen through the entire day and appreciated that most of the agenda was filled with DCN’s premium publisher members. Because DCN’s members depend on trusted and direct relationships with consumers and advertisers, our members are often closest to the value exchange with the consumer and to the impact from the installation of ad blockers across the web.
Senior strategy executive Mark Frost of Strategic Ink, opened the event by sharing the key findings from a recent IAB, 4As and ANA workshop. Most important was the self-awareness about the failures of ad tech, retargeting and unbridled data collection that often doesn’t serve the consumer. As we’ve written many times, the fact that digital advertising consistently ranks as the least trusted form of advertising speaks volumes. And, it is interesting in light of the revelation that Google and Facebook have a near-monopoly on digital advertising, that a recent report from Wells Fargo Securities and Optimal showed that consumers trust Google and Facebook least of all with their data.
This brings me to my final point. Princeton released research last month showing that Google and Facebook together account for all of the top ten third-party data collectors across the web. The impressively-credentialed researchers Arvind Narayanan and Steven Englehardt wrote, “In fact, Google, Facebook, and [their increasingly poor cousin, my words] Twitter are the only third-party entities present on more than 10% of sites.” It’s worth noting that Twitter is the only one of these three companies to publicly honor Do Not Track.
Google alone owns all of the top five third-party domains across the top one million websites. In the words of Harvard Business School Association Professor Ben Edelman, “No other firm engages in even a fraction of this tracking.” Importantly, his comment came in a filing of concern about the FCC opening up the set-top box business. While there are consumer merits to the FCC’s position, there is also significant concern we’ll be lowering the privacy bar so that Google and others can spoil another ecosystem with tracking and copyright issues. And this at a time when all bars need to be raised to protect consumers and the content they often enjoy for “free”— that is, at the cost of their time spent viewing advertising.
All of this information is vital to understanding the dynamics around data ownership and ad blocking — two complex issues which will impact our ability to evolve and improve the web we want as an industry. Facebook, due to its closed platform, and Google, due its dominance in browsers, ad tech, search and advertising, will have a large seat at nearly any industry or regulatory table discussing critical issues. So we urge the industry to keep your eyes wide open. Lax rules around data collection and use and incomplete solutions to ad blocking may very well play into their hands as they angle to swallow up that last 10%.
Notes and References
1Google 2016 1st Quarter Earnings Report – estimated based on reported total U.S. revenues x 90% (percentage of Google revenues represented by advertising).
The media environment still presents numerous growth opportunities despite the competitive marketplace and the struggle for consumer attention. Importantly, PwC’s Annual Global Entertainment and Media Outlook Report projects the U.S. media and entertainment revenue will increase and account for $632 billion, or 29.4% of the worldwide total of over $2.1 trillion. Further, the entertainment and media revenues are expected to grow at a compound rate (CAGR) of 4.4% from $1.7 trillion in 2015 to $2.1 trillion in 2020. In order to provide this forecast for 2016 to 2020, PwC analyzed historical and projection data for advertising and consumer spending in 13 major industry segments across 54 countries.
U.S. highlights:
Internet advertising in the U.S. continues as the largest market in internet advertising revenue, projected to grow from $59.6 billion in 2015 to $93.5 billion by 2020 with a 9.4% CAGR. Important to note, internet advertising ($75.3 billion) is expected to surpass broadcast TV advertising ($70.4 billion) in 2017.
Mobile has been a key driver of digital advertising revenue comprising 34.7% or $20.7 billion in 2015 of U.S. total internet revenue. PwC projects mobile video advertising revenue will grow from $3.5 billion in 2015 to $13.3 billion in 2020 for an increase of 30.3% CAGR.
Video on Demand (VOD) and over-the-top services (OTT) will drive TV and video revenue from $121.4 billion to $124.2 billion in 2020 (0.5% CAGR). In addition, TV advertising revenue is expected to rise from $69.9 billion to $81.7 billion in 2020 (3.2%CAGR).
Continued declines are anticipated for newspaper publishing, declines of 2.9% CAGR by 2020. Further publisher consolidations are expected. As well, magazine publishing revenue is not expected to decline but register a fractional increase, from $30.5 billion in 2015 to $30.7 billion in 2020. In addition, radio is predicted to increase from $21.4 billion to $23.1 billion in 2020 (1.6% CAGR).
Virtual reality devices and games will be the impetus for rising video games revenue from $17.0 billion to $20.3 billion by 2020 (3.6% CAGR). Virtual reality devices and games will be the impetus for rising video games revenue from $17.0 billion to $20.3 billion by 2020 (3.6% CAGR).
Overall, PwC projects that consumers will look for less expensive content bundles, streaming offers and less commercial interruptions. As a result, consumers’ share of time for ad-supported media will not increase. For advertisers and content providers, this means a detailed examination of the consumer experience to identify drivers of engagement and understand their impact on time spent and their influence on advertising effectiveness.
We live in a visual world. To make a story or campaign compelling, visuals or video are absolutely essential. In fact, it is commonly cited that the brain processes images 60,000 times faster than text. People are captivated by short, instant bursts of content—even content that disappears after a few seconds like Snapchat.
Platforms like Pandora and Vine offer bite-sized video content with homegrown, organic videos that go viral in a matter of days. Recently, Pepsi announced a collection of five-second ads designed to to gratify millennials. Pepsi plans to make 100 different ads for TV and digital this summer to promote their new emoji-themed bottles. And YouTube will soon show 6-second “Bumper” ads before videos, which cannot be skipped.
The market for online video has evolved immensely. When online video first launched, brands re-purposed existing 30 & 60-second TV commercials. The ads looked more clunky, required click-to-start, and didn’t assimilate with the surrounding content.
Instant gratification has become the norm—with advertisers and publishers adapting to meet the consumption behavior of today’s shortened attention span. Video ads are easier than ever to consume with the broad installation and access to broadband on desktop and mobile. Shorter videos ads have higher viewability and completion rates since the content is near instant. In effect, shorter ads may be more successful since consumers are more likely to watch the ads and remember the advertiser.
Today, online video ads are custom-created for each channel, the ads auto-play and compete for attention with a surplus of surrounding ads. Eighty-five percent of online video ads are un-skippable. MediaRadar found that almost all of the video ads (98%) that run less than 10 seconds are un-skippable.
According to MediaRadar data, there were over 1,100 new video advertisers in Q1 2016 alone who didn’t place ads in 2015. Online video is a key driver in digital ad spend with $9.6 billion predicted ad spend for 2016. In 2015, $1.5 billion dollars shifted from linear TV to digital. And yet there remains ample opportunity to grow. Only 10% of TV advertisers bought online video ads in Q1 2016.
Publishers are constantly innovating and introducing new products or ad offerings too. From premium page takeovers to YouTube’s new Breakout Videos that will highlight the fastest-growing videos as an indicator of viral potential.
Todd Krizelman is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.
Each year, analyst Mary Meeker — a partner at the Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers — releases her massive Internet Trends report, with businesses scurrying to take advantage of her insights into what’s hot and what’s not. This year, Meeker released the report while at the Code Conference, for maximum high-level impact. There’s a lot to chew on, but here are the most important trends for content creators and online publishers.
Google, Facebook Dominate; Mobile Undersold While U.S. Internet advertising is growing, Google and Facebook remain the dominant platforms for selling advertising on the Internet. The two platforms collectively control a 76% share of the growth in U.S. online advertising, Meeker noted, using numbers from last year’s IAB/PwC Advertising Report. All others besides Google and Facebook saw growth of 13% in online ads in 2015.
On another front, advertising growth has yet to actually reach its full potential because marketers aren’t spending enough on mobile. As Wired’s Davey Alba wrote, “They’re still committing too many of their dollars to so-called legacy media.” As such, the $22 billion that is spent on mobile advertising in the U.S. is a tiny amount of what it should be, according to Meeker’s report. Indeed, only 12% of all advertising right now is mobile. While this presents a boon for content created or optimized for mobile, it’s also a huge risk and concern for traditional media players, as Larry Downes wrote in the Washington Post.
One big hurdle for mobile is the rise of ad-blocking. Four hundred and twenty million people around the world are now using some form of ad blocking software on their mobile phones, according to PageFair. When looking at the reasoning behind the rise of ad blocking, including privacy concerns, the onus is on publishers and marketers. They must not only appeal to consumer behaviors, but also to their aesthetics and feelings of what good advertising should be. Advertising on Snapchat, for example, is in part successful because it’s short, sweet and integrated into the platform seamlessly so that it’s part of the user’s natural experience. (And it’s outside the realm of ad-blocking.)
Messaging and Visual Communication Rising Among Millennials and Generation Z, visual communication is king. As Recode’s Noah Kulwin pointed out, “People worldwide shared almost twice as many photos in 2015 as they did in 2014, and almost half of that happened on a service owned by Facebook.”
And whether it’s a photo, video or live-stream — such as Candace Payne’s viral Facebook Live video trying on a Chewbacca mask — advertisers can very much take advantage of the sharability of visual communications. Take the Candance Payne example, as Larry Downes wrote in the Washington Post: She mentioned Kohl’s department store twice in her video — and that video was viewed more than 150 million times in one day. In turn, the company’s app leaped to the top of the charts in the iOS App Store. If user-generated video can redefine advertising in such a way, expect more videos with branded content.
And when it comes to messaging apps, that means commerce communication is officially entering the fold. “Messaging apps are continuously becoming the second home screen,” Meeker said during her presentation. If the best way to connect with Millennials — now representing 27% of the population, with a spending power that’s going to rise — is on messenging apps, then that’s the natural destination for advertisers. The rise of voice-recognition software on these apps also means that the commercial applications can’t be ignored. Perhaps dictating the purchase of a product via speech on a messaging app may not be far off.
Global Internet Growth is Slowing — Except for India Global Internet growth is slowing, except for India, where user growth is actually accelerating at 40%. India has now surpassed the U.S. to become the second most connected population after China. With more Indians purchasing mobile phones — which will be the entry point for the majority of Indians accessing the Internet — the potential for publishers and advertisers in this space is huge.
India then serves as an interesting case study through which marketers can better understand how to target new Internet users. As Meeker discussed during her presentation, new Internet users are becoming increasingly harder to find because they come from poorer, developing countries, where the cost of a smartphone is a significant portion of a person’s income. The cost of a smartphone in India is relatively low compared to other countries, however, so it would behoove advertisers to capitalize on this market potential.
One in three podcast listeners expect to increase their podcast consumption over the next six months, following a similar increase in their behavior in the past six months. The results were revealed as part of comScore’s first study dedicated to podcasting, commissioned by audio on-demand network Wondery.
Significantly, among all forms of advertising on mobile devices, podcasts create the highest improvement in perception. And among all forms of digital advertising, podcast ads are considered the least intrusive.
Key findings include:
Over two-thirds of online Americans aged 18-49 are aware of podcasting and nearly one in five listen to podcasts at least once a month.
Incidence of podcast listening is highest among males aged 18-34, at 30%, who spend an average of more than 11 hours per month listening.
About half of podcast consumption is done via mobile devices.
Podcast listeners like the educational and entertainment value of the experience, and report an increase in positive emotions after listening to an episode.
Two-thirds of podcast listeners say they have engaged in various research and/or purchase related behaviors as a result of advertising exposure from podcasts.
More than half of non-podcast listeners say they would be interested in listening if they knew where and how to find podcast episodes.
The study was commissioned between March and April of 2016 among over 2,000 respondents in the US aged 18-49. Full results are available upon request at wondery.com/contact-us.
New York Times President and CEO, Mark Thompson addressed the IAB Ad Blocking Summit, held June 6, 2016 in New York City. In his talk, An Update from The New York Times on Its Approach to Ad Blocking, Thompson took a hard look at the factors contributing to the rise of ad blocking and urged the entire industry to take responsibility for fostering a climate in which digital advertising degrades the user experience and fuels the adoption of ad blockers. Through the lens of The New York Times experience, Thompson provided insights into productive and proactive steps that digital content companies – and the entire industry – can take to address ad blocking.
Below is the full text of the talk he delivered:
Mark Thompson, President & Chief Executive Officer, The New York Times Company
Thanks Randall [Randall Rothenberg. President and CEO of the IAB].
I want to make five points this morning. The first is that we have to clean up our own act as an industry.
To a significant extent, the root cause of digital ad-blocking is digital ads and the way many websites deploy them on their sites.
Too many ads. Intrusive and distracting ads. Ads which slow page-load to a crawl, or are slow to load in and of themselves. Boring and uncreative ads, which no user can possibly enjoy viewing. ‘Relevance’ –if it means endlessly retargeting users with ads for something they searched for and bought or lost interest in weeks ago. The pervasive and indiscriminate tracking and sharing of user data.
We’re not all equally guilty. At The New York Times, we’ve kept the number of display ads on the page low. We’ve worked hard with our advertising partners to develop campaigns that are creative and compelling. We’ve developed new units and ideas – like Flex Frames which we launched last year as Mobile Moments on smartphone and which we’ll extend to all platforms this September.
But we shouldn’t kid ourselves. If a user installs an ad-blocker because of unacceptable ad experiences somewhere else then, guilty or not, we still face the challenge of persuading them to uninstall it or, more plausibly, to whitelist us so that their ad blocker allows our ads to load. Our first task as an industry is get rid of the bad experiences which make that whole tricky process necessary.
And our second is to develop and promote digital advertising whose originality and quality engages and delights users and, because of that, also delivers real results for advertisers.
In a world of phones and feeds, marketers need to think like programmers rather than as traditional advertisers, not trying to steal attention which is directed at something else, but offering consumers content which actually has value to them, in the right context and user-experience.
Our branded content business at The Times is all about that – creating and distributing high quality programming for marketers. It didn’t exist in 2013. It delivered more than $13m of revenue in 2014, and $34 million in 2015. We expect it to grow very substantially again in 2016.
For us, branded content does not mean fake journalism trying to pass itself off as genuine newsroom output. It’s work like the animated virtual reality film we made for GE for the launch of our VR app and the distribution of a million Google cardboards. High quality content well worth consuming in its own right.
And it’s not just about branded content; we’re also focusing quite a bit of energy on making display advertising better. Fewer, faster ads, delivered at the pace of mobile and more compelling at the point of discovery, where the user first sees the ad. Clearly labeled but an integral part of the main news feed, on both the phone and the desktop. Bigger, punchier units that provide a better canvas for creativity.
Third, we must do a much better job of explaining our business model – and the connection between advertising revenue and high quality content – to our users.
Let me talk about The New York Times first, then turn to digital publishing as a whole.
At The Times we have two big revenue streams in both print and digital: subscription and advertising. In print, where we make around $1 billion of revenue a year, the proportion is currently about 60/40, with $600 million coming from home delivery subscription and newsstand sales, and $400 million from print advertising. In digital, at present it’s more or less 50/50.
Our digital news subscription business is the largest and most successful in the world and it’s still growing rapidly. In the first quarter of 2016, we added 67,000 net new subscriptions – that’s more than we did in any of the three previous years. Our model is accelerating, in other words.
But delivering national and international journalism to the quality to which The Times aspires and our users expect means massive investment. We believe we can grow our digital subscription business until we have many times the current number of subscription relationships, which across print, digital, news and crosswords stands at around two and a half million. We do not believe that we will ever be able to sustain Times journalism or The New York Times as a flourishing business without an advertising business of real scale.
We need to spell this out clearly to our users. The journalism they enjoy costs real money and needs to be paid for. Advertising is a vital part of the revenue mix.
Everyone knows and accepts that physical newspapers cost money to produce and that someone who steals a copy of a newspaper from a newsstand is a thief. That’s not a word I’d use of those who install ad blockers – the Internet has left many people with the erroneous impression that digital high quality content doesn’t cost anything to produce – but there are some awkward facts to be faced.
If you consume great journalism without making any contribution towards paying for the journalists and the editors and photographers and videographers and graphics artists and engineers, and if enough people follow your example, that journalism will either be diluted or restricted to the relatively small number of people who have the willingness and ability to buy a subscription. And not just you but everyone will be impoverished as a result.
We want our journalism to be widely available and for non-subscribers as well as subscribers to be able to sample large amounts of it. Of the around 110 million people who come to us each month, more than 107 million are not subscribers. If ad blocking becomes ubiquitous, that kind of free reach will no longer make economic sense.
We believe in the civic value of our journalism and we want it to be widely read across America and the world, but not if that undermines our ability to continue to produce it.
No one who refuses to contribute to the creation of high quality journalism has the right to consume it. We are not there yet but, if we judge that it will strengthen the long-term prospects of that journalism to prevent non-subscribers who employ ad blockers and refuse to whitelist us from reading it, we’ll do it.
But if this is a real issue for us, consider those publishers who do not have a digital subscription model and who are entirely reliant on digital advertising, to replace falling print revenues in the case of legacy companies, and for the whole of their revenue in the case of digital ones.
I don’t need to tell anyone here that digital advertising is going through a wider disruption with the astonishingly rapid switch of consumption to smartphone, the decline of standard web rotational display, the power of the major social and search platforms and so on. My friend Shane Smith talked recently about a likely bloodbath among advertising-dependent publishers this year. I’m British and I find the word ‘bloodbath’ a shade melodramatic – especially from a Canadian – but I agree with Shane’s analysis.
This is why proportionate but meaningful industry-wide action on ad blocking is so important.
So put my first three points together and think of them as a potential new agreement between publishers and users. We have a responsibility to work with advertisers to deliver rich, enjoyable, valuable ad experiences, and to use and pass on data about their visits to our sites fairly and transparently. They have a responsibility to contribute to the economic sustainability of quality content creation.
In the end, free riding will not just damage us and the wider public realm. It will damage them.
Let’s now turn to my fourth point, which is a practical one. There is early but encouraging evidence that a significant proportion of users will respond to clear messaging about ad blocking and the threat it poses to quality content.
And that point is grounded in a basic idea that has become a requirement of digital business: when you empower your customers by providing them with choice, good things can happen.
Over the past few months, as part of a wider program of experiments and surveys, we’ve tested both dismissible and undismissible messages about ad blocking. Both sets of messages sought to explain to users who had installed an ad blocker the connection between advertising revenue and the journalism they wanted to consume.
With the dismissible messages, the user could click and close the message and go on to read the story they had come to The Times for in the first place. undismissible messages prevented users who got them from reading the journalism at all, unless they agreed to whitelist us in their ad blocker.
We tested both dismissible and undismissible messages with non-subscribers. You won’t be surprised to hear that, at least in these limited tests, undismissible messages were much more effective than dismissible ones. Indeed, more than 40% of those who encountered the undismissible message agreed to whitelist The Times.
Times subscribers are already making a significant contribution to the funding of our journalism, so we think of them very differently. We did not put undismissible messages in front of these valued paying customers. But we did try dismissible messages – and no fewer than 30% of the ad blocker-using subscribers we tested agreed to whitelist The New York Times.
We’re still testing and analyzing, but even at this early stage we have confidence that – if we decide to move in this direction – we will be able to convince many of those who use ad blockers to whitelist us so that ads still load on The New York Times site. It may be that, in both cases, the percentages of those agreeing to whitelist would grow over time – though we also recognize that some ad blocking non-subscribers, who are repeatedly confronted with such messages but who are unwilling to whitelist, might give up using our site altogether.
That would be a pity, but neither they nor we can have it both ways. It’s not fair to continue to consume something you’re not prepared to support in any way. As for us, in principle we don’t want to stop anyone from sampling Times journalism, but we also have to accept that someone who won’t subscribe or look at ads doesn’t help us succeed in any way at all.
But we do want to offer all of our users as much choice as we can, and we recognize that there are some users – both subscribers and current non-subscribers – who would prefer to have an ad-free experience.
So we are also exploring the possibility of offering a higher tier digital subscription offer which would allow users to enjoy Times journalism without seeing advertisements, while still making a fair contribution towards its creation.
My fifth and final point is that – although we recognize some of the frustrations that have led users to adopt ad blockers – there are technologies and practices associating with ad blocking which are unfair and deceptive. We intend to push back against them and we want to encourage the rest of the industry to do the same.
We are particularly troubled by the business model of some of the largest ad blockers who whitelist advertising in return for payment, thus effectively requiring digital publishers to pay in order to receive advertisements to their own users – including advertisements which are, by anyone’s definition, non-invasive.
The largest entity engaged in this practice is the private limited company Eyeo, which owns both the leading desktop ad blocker, Adblock Plus, and the so-called Acceptable Ads whitelist, which seeks a 30% of revenue from any firm that generates more than 10 million unblocked ad impressions a month as a result of appearing on its whitelist.
This is a manifestly unsavory business practice. Ad blockers often portray themselves as an answer to unsatisfactory digital advertising experiences. But Eyeo wasn’t founded by concerned citizens. It was founded by a digital ad veteran and represents the most cynical, most money-grasping end of the old unreformed digital ad business. We need to expose Eyeo, Adblock Plus and the Acceptable Ads whitelist, so that the public can see them for what they are.
Unlike most of the other ad blockers in the marketplace, Eyeo is not attempting to limit tagging to protect privacy – they permit trackers to pay to be included in their Acceptable Ads programs.
Eyeo’s secondary line of business has been to license the “Acceptable Ads” whitelist to other ad blockers, including some smaller mobile ad blockers. The second largest ad blocker, Ad Block, which was sold in October to and unknown buyer, also uses Eyeo’s Acceptable Ads list.
We want to encourage other publishers and counterparts throughout the industry, and the organizations which represent us, to be trenchant in publicly confronting ad blockers who engage in these coercive and misleading business practices. Recently, we have joined with other publishers in the NAA in filing a complaint with the FTC to investigate certain deceptive practices of ad blockers.
It is not just publishers who are vulnerable to these trade practices, and we encourage our partners across the industry to seek out opportunities to oppose them.
Five points then:
We have to clean up our own act as an industry.
We must develop digital advertising which is valuable and a pleasure to consume.
We must make sure our users understand the link between ad revenue and high quality content.
There is evidence that many users will respond to the right messages about ad blocking.
We must fight the unacceptable and deceptive business practices associated with some ad blockers.
Ad blocking is undeniably a challenge – I wouldn’t have said what I have this morning if it wasn’t – but let me finish by putting it into perspective.
We’re still certain that digital advertising will play a critical and positive role in our future success. As you’ve heard, we’re pivoting our ad business towards less intrusive, leaner, inline display; branded content; bold new smartphone executions, video, virtual reality and other kinds of visual storytelling. We believe that right now we’re offering our users the best digital advertising experiences in the history of digital publishing.
We’re already seeing tangible results – revenue from smartphone advertising, for instance, grew 149% year over year in the first quarter of the year – but the best is still to come.
So let’s take firm action on ad blocking. But let’s also unlock the full creative and economic potential of our ability to bring great content, great users and great creative advertisers together. Thank you.
Viewers also reported that TV (89%) offered the most positive viewing experience, followed by tablet (63%), computer (54%) and phone (43%). Further, viewers paid the most attention to advertising on television (29%) compared to 23% for smartphones, 20% for computers and 17% for tablets.
Additionally, the study found that multi-tasking negatively impacts ad recall but not program plot recall. Importantly marketers need to understand drivers of engagement across platforms as well as those specific to their targeted demo. Identifying drivers and assigning value to each platform will better align expectations with campaign effectiveness.
