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Perspectives

What the future looks like for OTT

In 2020, the over-the-top (OTT) landscape shifted greatly, ushering in a new era for subscription-based OTT video streaming services. New players like HBO Max, Disney+, and Peacock joined the scene. All the while, service providers like Netflix, Hulu, and Amazon Prime Video continued to dominate the market. 

So, what is next? OTT services are predicted to generate just over $158 billion in ad revenue by 2024. 

As OTT experiences these major growths and investments, it brings about some key advertising questions – What are the best practices for selling advertising in this emerging channel? Which channels have the best measurement? How is OTT different from linear TV? And, more. With that, MediaRadar hosted a virtual panel to explore these recent and upcoming changes in OTT, plus what the future holds for this type of advertising.

Los Angeles Times reporter Wendy Lee moderated the discussion. And panelists included Bill Condon of Xumo, Justin Gutschmidt of Premion, and Matt Graham of Acorn TV, as well as myself. Here is a recap of some of the key insights discussed. 

Ad innovation 

While TV advertising has been largely the same for decades, OTT platforms are changing the game, offering new ways for advertisers to get their messages across. Hulu, for example, has a choose‐your‐own‐adventure‐type ad option, allowing viewers to select which of multiple ad options they would like to watch. Hulu also uses interstitial and binge ad options, a format where viewers can watch all their ads at once so they don’t have to be interrupted later. 

After a lifetime of seeing TV ads presented in one way, these new, more creative ad options feel refreshing. They also help keep audiences engaged. With more of a change in what they’re watching, most people are much less likely to get bored. In fact, Hulu claims that the options provided by their platform lead to a 150% increase in brand recall.

Targeting 

OTT advertising offers many advantages to brands looking to get more for their money, as well as more views, more click‐throughs, and more sales, and provides opportunities to get a message in front of the right people at the right time. Leveraging the audience data that OTT channels provide, advertisers are able to produce highly targeted campaigns. They can segment audiences based on geographic location, demographics, preferred content, and much more. Advertisers can also capture impression data for guiding future ad buys.

By narrowing down an ad’s audience to include only those to whom it is relevant and applicable, brands drive awareness. They also save money by not showing ads to obvious dead ends. Audiences also appreciate not being shown ads that don’t apply to them.

Consolidation 

As OTT content becomes more popular, the industry is starting to consolidate. For example, Xumo was acquired by Comcast in February 2020. According to Bill Condon of Xumo, being tied to a larger company has boded well for them. 

“Right before the pandemic hit, we were doing well. But, being tied to a larger company has been really beneficial. I’d say there’s four key areas in terms of what has been helpful to Xumo,” Condon explained.

Condon shared that distribution, discoverability, content, and data were four primary benefits of the merger for Xumo. With Comcast’s help, Xumo now reaches a wider audience and is easier for potential audience members to find. It has also seen a large increase in the content acquisition budget, and has access to more data and data processing tools. Other companies are likely to undergo similar merges and find similar benefits, moving forward. 

The number of unique OTT providers will likely decrease, now that all of the major players have introduced their OTT platforms. The average OTT consumer is willing to pay for about 3.2 platforms. Past this threshold, they are willing to accept ad-supported OTT, which major leaders already offer (i.e. Peacock and HBO Max starting next year).

What’s Next? 

At MediaRadar we track what happens to our customers and, out of those 2,400 customers we track, there was more M&A activity last quarter than any single quarter in our ten years of doing this. As for the number of OTT platforms, this consolidation is a strong sign that the industry is maturing. As the platforms band together for various benefits, we will soon learn what else they can offer. 

With many big name players already on the scene, the future of OTT advertising will be interesting. As advertisers continue to capitalize on the benefits of OTT, it is only a matter of time before we begin seeing even more of its potential and profitability play out. 

Innovation | Perspectives

Streamlined streaming: How to improve newsroom efficiency

With a rapidly evolving digital media landscape, it’s not surprising that media companies — newsrooms in particular — have faced new challenges and new pressures. A significant decline in traditional broadcast and appointment-style viewership has coincided with an explosion in increasingly accessible digital and on-demand streaming. Technology has already radically altered many of the fundamental realities around content creation and consumption that newsrooms were built on.

Media professionals recognize the need to evolve to keep pace with these changes. But connecting with and retaining content consumers who now have a virtually unlimited range of options available to them is easier said than done. More importantly, finding efficient and cost-effective ways to produce, distribute, and monetize content can seem like a formidable hurdle. But it is possible, especially with new tools and platforms emerging that are designed to enable newsrooms and other traditional content creators to make the process better fit the realities of today.

Be an educated adopter

Every platform makes big claims. All promise new efficiencies. Educate yourself and understand how to examine those claims with a critical eye. Make sure whatever path you choose, your digital content solution can efficiently develop content and create and deliver high quality viewing experiences in a way that is impactful, profitable, and sustainable. The right solution should answer important questions for you, including how to balance live and pre-recorded content, how to access and insert ads, and how to do all that in a streamlined and efficient manner.

Utilize automation

For organizations where a large majority of on-demand content originates from their live programming or other sources of traditional linear content, taking full advantage of digital streaming requires some level of automated prowess. The goal is to minimize the number of toolsets needed to be deployed throughout the process of generating digital streaming content.

Automation and “hands-free” production can yield new efficiencies, saving time and money on tools, resources, and manpower at a time when media companies are often dealing with tight margins and are already making tough ROI calculations. In that context, the ability to effectively automate the process of generating more digital content is enormously valuable. Automated tools and solutions make it possible to accelerate the digital production and distribution of your content without interrupting what you are already doing.

Lighten the workload

For media companies, creating content is just the first step. It is critically important to find ways to streamline the workflow required to efficiently edit, develop and distribute volumes of new content to digital audiences. Fortunately, new suites of tools are becoming available that can make that digital/online transition possible.

Keeping fresh content in front of viewers is difficult. Instead of relying on tools that require manual curation of playlists – and thus a person on staff dedicated to the role – consider a tool with capabilities to populate playlists automatically. This frees up staff to focus on the actual process of creating the content, rather than managing it. And the best tools on the market today also can lighten the load in other ways, from auto-clipping a newscast to the seamless transition between live and breaking news to prerecorded video.

Prioritize simplicity

At a time when some newsrooms have had to entirely reorganize to accommodate much more extensive digital production and distribution needs, simplicity is an appealing prospect. Which is why it makes sense to invest in tools meant to automate the ingestion of incoming content. Whether it’s aggregating content from multiple newsrooms or introducing content from other sources, bringing designated content from a range of different sources into the digital content ecosystem of target audiences is a way to lessen the load on your team and your resources, while still delivering compelling content.

Another important feature for streamlined simplicity is handling all of the technical heavy-lifting server-side, which makes it possible to have a simplified workflow and create a unified viewing experience across all digital platforms.

Embrace efficiency

As newsrooms evaluate and leverage tools and technology designed specifically to help them take that all-important step to expand the distribution of streaming monetizable content, it’s important to understand how efficiency translates into revenue. Monetization opportunities are all about scale. More content yields more viewers, which subsequently creates numerous opportunities for monetization. In other words, efficiency isn’t just helpful, it’s a prerequisite for sustainable profitability.

To take the next step forward, newsrooms will need to embrace tools and systems that allow them to quickly, efficiently and automatically update digital content. This includes graphic elements, closed captioning, and added metadata.

Engage viewers

Recognize the importance of the viewer experience. Manage your content with tools designed to connect content with viewers and help them understand critical context about what they are watching. Creating a better viewing experience also means letting consumers know when something is breaking news, and then returning them back to what they were originally tuned in to watch. It’s the feel of live content with dynamic elements that elevate the standard static viewing model into something more engaging.

Viewer expectations are skyrocketing. And media companies are wrestling with complex (and often costly) changes they feel like they need to make to meet those expectations. But charting a path forward in our new environment might be easier than many suspect. Streamlined content creation tools can not only make the digital transition successful for newsrooms and their operational needs; they can enhance the online viewing experience and boost bottom lines in the process.

About the author

David Hemingway is the Sr. Product Manager, New Ventures at Bitcentral, one of the video industry’s most trusted and innovative software providers.

Perspectives | Revenue

Do publishers stand a chance against the digital duopoly?

The word publisher can conjure up many different things to different people. Some old-schoolers picture The New York Times or Condé Nast, while younger generations may think of digital-first publishers like Refinery29 or consumer-generated outlets like Reddit. However, anyone working in media and advertising knows that two largest “publishers” need to be taken into account. Together Google and Facebook dominate the lion’s share of viewers and readership, and, of course, the revenue from advertisers chasing those people.

The duopoly, as they are known among buyers and sellers of media, have seen their numbers swell over the course of the still-ongoing pandemic. According to an Aug. 18 New York Times article:

“The traffic on these sites was immense before the pandemic, but daily visits increased sharply in March, when stay-at-home orders began, with Facebook up 15 percent and YouTube 10 percent, according to SimilarWeb, an online data provider. Facebook reported that the number of daily users of its services globally in June was 12 percent higher than a year earlier.”

How can any other publisher begin to compete with such dominance? In short, the answer is: don’t. At least you shouldn’t try to compete with them at their game. Instead, create your own value in ways they cannot.

Competition

Opportunity abounds for publishers that have a clear content mission and a strong ad offering. Given the steady rise in time spent on mobile devices across all age and income groups—and advertisers’ need to be where their potential customers are—the smart publisher can offer a few things the giants cannot. These include quality curated content, a less-cluttered ad environment, and a greater degree of brand safety.

The two massive walled gardens suffer from their own size, in that the millions of advertisers on those platforms don’t stand out in any way. Facebook alone is estimated to have something approaching 9 million advertisers alone. That’s a staggering number relative to any other media company or platform. How can any advertiser stand out in such a crowd?

That’s why I argue that other publishers, from digitally native Vox Media to traditional Hearst should take heart, knowing their smaller audiences generate something those giants can’t. One particularly successful area of digital publishing, gaming, also plays by its own rules—but more on that later.

Quality matters

First off, publishers outside of Google and Facebook spend millions of dollars to generate high quality, curated original content. That differs enormously from the user-generated content found on duopoly platforms, which is completely unpredictable. Your quality content sets you apart, and attracts engaged, relevant users, which is the starting point for monetization.

Secondly, advertisers at independent publishers appear in more brand-safe environments. Concern over brand safety online originated with advertisers appearing adjacent to violent content. Likewise, the biggest social platform is encountering resistance from some parts to its in-stream video, which aims to compete with YouTube. Brand safety is particularly important for advertisers in our current viral-moment society, where slips can lead to severe reputational damage.

Standout opportunities

Finally, and most importantly, advertisers have a chance to be more memorable when working with media companies rather than platforms. Customization opportunities are a big part of that, as publishers can design proprietary ad experiences and opportunities.

Think interactive, choice-driven ads like Ogury’s Video Chooser, which allows the user to select the brand ad they want to see, which drives a 300% uplift in memorability. Publishers may offer splashy takeovers, custom formats,  and otherly highly viewable offerings. The brand benefits from facing less competitor clutter, and ads stand out. Users don’t just see them. They notice them.

One area of mobile publishing that is seemingly impervious to the heft of the digital duopoly—and plays completely by its own rules—is gaming. Why is that? For one, it amasses gigantic and demographically diverse audiences, while time spent in-game keeps growing year after year.

For another, the oddity of the mobile gaming world is its acceptance of corporate cannibalism. Most advertisers in gaming are other games, which try to eat away at each game’s audience. Gaming publishers offer advertisers something totally unique: full screen ad opportunities that are seamlessly embedded into games at logical moments in the experiences, like between levels. These ads have 100% share of voice and unmatched viewability, proving that small publishers can offer something the big guys can’t, by playing up their niche.

My ultimate message to publishers is: don’t give up. Stick to what you do best. You can succeed in your niche, even while the walled gardens try to rake in the rest. One day you may even eat into their share.

Perspectives

DCN’s must reads: week of November 19, 2020

Here are some of the best media stories our team has read so far this week:

Featured Post | Perspectives

Alexa, can I trust this news service?

No, not that Alexa. Many years before Amazon hatched the infamous brain inside of their smart devices, there was another Alexa on the Internet. The original Alexa started as a 1990s plug-in for web browsers before it was acquired by, oddly enough, Amazon in 1999.

After acquisition, OG Alexa evolved into a simple web traffic service that, because it was free, was often cited by academics who lacked access to pricier (and better) alternatives. Those who were around in the early days of the world wild web may have forgotten about the Alexa Site Rankings — I certainly did. And it is safe to assume that you would never guess that today, this service influences global news on what is arguably the most controversial, if popular, platform: Facebook.  

In 2014, I noticed that Alexa Site Rankings resurfaced in an industry advertising report that evaluated premium publisher experiences. I questioned how the researchers determined which sites were “premium” (they also called them “respected sites.”) I discovered they used Alexa Site Rankings as the proxy, effectively substituting popularity for quality. They also didn’t take into account that the list included porn and piracy sites which, while certainly popular, aren’t known for quality. All of this raised significant concerns about the findings, which I outlined on Re/Code, “False Advertising: When Lazy Headlines Undermine Great Research. Let’s not confuse clicks with respect.”  

Popularity contested  

Fast forward to October 2020 and what (seemed to be) the peak of U.S. election hysteria and concerns over election and information integrity. I read a brilliant report by Alex Hern at The Guardian that examined a controversy around Facebook’s fact-checking process and found some startling surprises – including that Facebook is using the same dubious popularity data from the Alexa Site Rankings as a proxy for trust.  Hern’s analysis relies on sections of leaked Facebook content moderation guidelines including this (emphasis mine): 

Stories can be “enqueued” for Facebook’s third-party factcheckers in one of two ways: either by being flagged by an AI, or by being manually added by one of the factcheckers themselves. 

Facebook’s AI looks for signals “including feedback from the community and disbelief comments” to automatically predict which posts might contain misinformation. “Predicted content is temporarily (for seven days) soft demoted in feed (at 50% strength) and enqueued to fact check product for review by [third-party factcheckers],” the document says.

But some posts are not automatically demoted. Sites in the “Alexa 5K” list, “which includes content in the top 5,000 most popular internet sites”, are supposed to keep their distribution high, “under the assumption these are unlikely to be spreading misinformation”. 

Wait. What? Indeed, it looks like Facebook gives a “fast pass” to any site on the Alexa 5k Site Rankings.

Integrity, please 

In 2016, I wrote to Facebook CEO Mark Zuckerberg pleading for him to show actual leadership by inspiring a “moonshot” to address a growing information integrity crisis on his platform, asking him to use brands, not popularity or engagement, as proxies for trust.  

Soon after, Facebook created its own “News Page Index” to maintain a list of trusted news organizations that could be used to surface additional context, exempt the press from rules applied to political advertisers and source stories for its News tab. Yes, there was some controversy in that Facebook included Breitbart on its list. But that was Facebook’s decision to make, not ours. Welcome to responsibility, Facebook.  Kevin Roose, a brilliant technology columnist at The New York Times, has spent years documenting the effects of social media platforms. Recently, he has drawn significant attention with his daily list of the top ten news posts on Facebook. The pages appearing in his list are often sites that are popular beyond belief. They also clearly show the drawbacks in relying on engagement metrics. 

Misinformation  

By using the Alexa Site Rankings as its benchmark, Facebook provides these sites with the digital equivalent of an airport TSA Precheck under the assumption they “are unlikely to be spreading misinformation” (Facebook’s words, not mine) by being on the Alexa 5k. This is a list which includes Zerohedge, Infowars, PJ Media, Gateway Pundit, the Palmer Report, and Russia Today. If you are unfamiliar with these sites, they’re generally considered to be flush with misinformation and disinformation (Russia Today is even funded by the Kremlin.) This isn’t partisan, it cuts down both extremes where there’s often a common intent to deceive.  

Do you know what sites don’t get this same Alexa 5k benefit of the doubt that they’re not spreading misinformation? The websites for the newspapers of record for nearly every local market in America, from the Portland Oregonian to the Lexington Herald-Leader to the Kenosha News to the Philadelphia Inquirer.  

These news desks are full of journalists from cities large and small, from red states and blue states, and who have been on the streets over the last six months covering justice in America. Yet, their information isn’t given the same benefits as some of the most toxic sites on the web. Instead, they are presumed guilty and put into a long line for fact-checking whenever Facebook’s AI determines a story may be problematic. For years, The Knight Foundation has found that, among news sources, local news is the most trusted. So, this isn’t a rational or responsible decision by Facebook. 

Outsourced responsibility 

There have been many important reports on how Facebook outsources content moderation in order to separate itself from decision-making. Casey Newton at The Verge has been recognized for shining the light in this area, work that even led to a major Facebook settlement. Now, it appears that Facebook may also be outsourcing the criteria for its automated decision-making to the Alexa Site Rankings to determine whether a news site is trustworthy. 

By choosing “popularity” rather than Facebook’s internal decision making, Facebook doesn’t disrupt its business need to drive engagement. It also avoids political backlash for favoring a particular ideology; conservative sites are every bit as popular and engaging, as Roose’s reporting demonstrates. And, finally, Facebook outsources liability for maintaining its list.  

I’ve put these concerns to Facebook’s leadership asking for clarity or a correction. But, three weeks later and: crickets. Earlier this week, Twitter CEO Jack Dorsey testified to the powerful Senate Judiciary Committee that algorithmic amplification has a profound impact. We agree. The largest news platform in the world reaches nearly 3 billion people and we don’t know how or why it makes these decisions. We all deserve better. 

With great power, comes great responsibility. Facebook is a monopoly with the power to limit choice for consumers and advertisers. Now we know that this platform, where half of Americans consume news, uses a vetting process that equates clicks with quality, that devalues many of the most trusted newspapers and gives a fast pass to sites that serve Facebook’s priorities – engagement and popularity. If that’s the case, the public should know about it so they can decide if that’s where they want to put their precious time and attention.

Perspectives

The next step in engaging audiences: personalized news content delivery

Legacy news outlets have traditionally tried to be all things to all people. They’ve broadly served up content in a shotgun approach that has them competing in increasingly crowded spaces. Unfortunately, this had led to increasingly diminishing returns.

Especially considering the consolidation of ownership of newspaper chains and TV networks, many media websites serve the same stories. With little differentiation, there’s little incentive for audiences to choose one over the other.

The lesson that media outlets could learn from the marketing world is to offer greater personalization of experiences in serving up content. Personalization, backed by quality customer data, isn’t the future. It’s the now in a rapidly accelerating digital world.

Opportunities since Covid

Research has shown that online audiences have been voracious for content since the onset of the Covid-19 pandemic. News publishers have not only seen a rise in online audiences, but a rise in subscriptions – and less churn.

That doesn’t necessarily equate to increased revenue, though. Newspapers and magazines are still hemorrhaging dollars. However, an investment in transformative digital experiences could be the key to drive growth.

According to McKinsey, the digital transformation has only accelerated since the start of the pandemic. And it’s the companies ready for big strategic change that have the best chance at thriving.

What personalization could look like

Marketers use data and analytics to understand their buyers and buyer journeys and to personalize digital experiences to inspire brand loyalty. News media websites could be doing the same thing.

Many media websites are already asking users to create accounts to read stories, whether or not they’re behind paywalls. These sites ask users to subscribe to email newsletters about a wide range of topics like cooking, politics, sports, or news of the day. And along the way, they collect information about these users and their interests.

However, instead of asking users to sign up for a newsletter, media companies could use marketing tools and technology like intent data. This would provide them with information about a visitor. Then, with the right platform, it would allow AI-driven personalization using a content hub.

Users could see personalized homepages with content tailored to their interests. These would feature key spaces reserved for breaking and important news that would always be included.

Five tips for driving engagement

Some tips for putting a personalization strategy in place include:

  • Know your audience: This is where quality data is critical. You have to thoroughly understand who you’re targeting and what they care about for personalization to be effective.
  • Define clear objectives: Understand what you really want from personalization. Do you want to drive engagement with your content? Sell more ads? Make sure your goals are clear and measurable.
  • Have a data and privacy strategy: Know what kind of data you’ll be collecting, where you’ll be collecting it from, and how you’ll be using it about your visitors. Set rules about data use and privacy and communicate clear expectations to your visitors.
  • Don’t be overly creepy: There can be a temptation to over-personalize, but that can make your audience feel “watched” and drive them away. A good tactic can be to use their preferences to populate a content block with stories labeled something like “Other readers enjoy.” That gives them the targeted content they want to see without rotating to over-personalization.
  • Start small, see what works, scale fast: Know what metrics you’ll track so that you can quickly pivot.

Some tools for success

Personalization will be successful when based upon a thorough, data-driven understanding of the target audience. Again, media outlets can learn from techniques used by marketing and customer experience leaders to gain a deep understanding of how to engage with audiences.

  • Research-based journey maps can illuminate the touchpoints your audience has with your digital channels and how you can meet their needs at each stage of their journey.
  • High-quality data paired with a customer data platform can give you a 360-degree view of your customer, their behaviors, and their intent.
  • You can segment your audience, and track and measure their site visits, which will help define the success of personalization strategy.

However, most important to the success of a personalization strategy will be depth and breadth of content that is relevant to your audience’s needs and journey.

Stay on mission

News websites can adopt marketing techniques and methodologies for delivering and personalizing content. At the same time, they can remain true to their core mission of reporting and delivering the facts without bias.

Analytics can drive personalization of how stories might appear in something like a “suggested stories” widget. That said, they shouldn’t necessarily drive decisions about what stories get covered. The important news of the day remains the important news of the day. City council meetings still need to be covered. As the Washington Post eloquently describes on its masthead: “Democracy Dies in Darkness.”

However, by better engaging audiences through personalization, media outlets may find an opportunity to capitalize on ongoing digital transformation and appetite for content that has accelerated during the pandemic. Those willing to make the investment in personalization have an opportunity to grow and thrive.

The information provided in articles are suggestions only and based on best practices. Dun & Bradstreet is not liable for the outcome or results of specific programs or tactics. Please contact an attorney or tax professional if you are in need of legal or tax advice. 

Perspectives

To understand where the cookie is headed, let’s look at its history

Note: This is the first article in a two-part series.

Almost a year ago, Google announced that Chrome would sunset support for third-party cookies by the end of 2021. These days, the discussion of the replacement technologies for “life after cookies” dominates the digital media industry press. The IAB’s Project Rearc, Google via its Privacy Sandbox, and multiple companies (including BritePool) have all developed or pledged to create technologies that will power advertising in the cookieless future.

To develop a perspective on third-party cookies and what should replace them, this is a deep dive into the cookie’s history.

Cookies came from a virtual shopping cart

The cookie was created in June 1994 by Lou Montulli. He was a programmer working at what would become Netscape Communications Corp., best known for its once-dominant web browser. Montulli was working on an e-commerce app for Netscape client MCI, which had effectively asked for a virtual shopping cart (a novel idea at the time).

Montulli and his team devised a way for the Netscape browser to place small files on a website visitors’ computer that tracked what each visitor did on that site. This allowed the telecom giant to avoid placing the data on its servers.

Grand ambitions with inherent problems

In a 2001 interview with The New York Times, Montulli said that he designed cookies to be a flexible tool, with the potential to be “a next-generation communications system.” He said, ”We wanted people to be able to use it for other uses” besides shopping carts. That included ”things we hadn’t thought about.”

In April 1995, a working group was established to propose a set of standards for cookie usage. David M. Kristol, a scientist at Bell Laboratories, led the group. But the longer the group collaborated, the greater its concerns about how cookies might invade consumer privacy.

Original restrictions to protect consumer privacy

According to the Times, the engineers developing cookies sought to avoid “a privacy nightmare” by deciding “not [to] identify web users by name” and rejecting “an idea for creating a single ID number that a person’s browser would use in all Web explorations.” Montulli said, “We didn’t want cookies to be used as a general tracking mechanism.” Instead, protocols required that sites assign a unique ID number to a visitor’s computer, one that could only be read by the issuing site or a sister web property.

At the time, the ability for companies to circumvent this restriction was foreseeable. A Dutch member of the 1995 working group, scientist Koen Holtman, warned that companies could, by agreement, place cookies across a network of related sites. Those cookies would be able to track user activities at multiple sites across the web.

Advertising co-opted the cookie

Holtman proved prescient as companies began working to do what he predicted. Soon DoubleClick, Engage, and others were serving banner ads across thousands of websites, using a shared cookie that allowed the issuing company to recognize a visitor wherever he or she went on the web. This innovation allowed these companies to control users’ ads as they moved from one site to another.

In 1996, to potentially provide privacy protection, Netscape and Microsoft both altered their browsers to distinguish “cookies coming directly from the site being viewed from third-party cookies.” This initiative proved meaningless, as consumer browsers automatically accepted third-party cookies by default.

In 1997, in a last-ditch effort to protect consumer privacy, Kristol’s working group tried to thwart the use of cookies for advertising tracking, recommending that browsers automatically block third-party cookies. This effort failed as Netscape and Microsoft’s Internet Explorer embraced these so-called third-party cookies despite Montulli’s protests.

Montulli described the advent and ascendance of third-party cookies, for advertising tracking, as a surprise. ”That’s the one ‘gotcha’ we had,” he told The New York Times.

Similarly, Lawrence Lessig, a Standard Law School professor and leading expert on the Internet and public policy, made this observation: “Before cookies, the web was essentially private. After cookies, the web becomes a space capable of extraordinary monitoring.”

Lessons for today

This brief history suggests two takeaways for managing the next quarter-century of web advertising:

First, while most of the critical technologies for web operations reflect several generations of development, the cookie, a 1990’s technology, has remained the fulcrum for Web advertising delivery. In essence, outdated technology is now central to managing over $300 billion in global annual spending on digital advertising.

Second, the initial development of cookies raised privacy concerns, which led developers to deploy safeguards. Subsequently, ad management firms circumvented these restrictions. Hence, it was inevitable that the unchecked and unregulated expansion of web advertising would invade consumer privacy.

Next (Part II): Privacy Ascendant and Life After Cookies
About the author

Bruce Judson is Vice President of Communications at BritePool. His 1996 book, NetMarketing (Random House/Wolff), was a sleeper bestseller which accurately anticipated the rise of the web as a powerful vehicle for the direct sale and marketing of products and services.

Perspectives

DCN’s must reads: week of November 12, 2020

Here are some of the best media stories our team has read so far this week:

Marketing | Perspectives | Revenue

Why product is the best subscriber-retention strategy

The subscription model is not new, but it has taken on a new significance. Over the past seven years, revenue for all subscription companies – from software to healthcare – grew by 321% on average. In the case of apps, this positive trend was bolstered by a 32% year-over-year increase in the number of users who sign up for a subscription after installing an app. 

Fast forward, and publishers report a massive bump in subscriptions and a surge in audience interest since the coronavirus outbreak. In just one week, subscription technology platform Piano observed that subscriptions across the European newspapers in its network increased by 267%. From Condé Nast and The New York Times to Disney and Viacom, subscriptions are big business for the media. 

However, these record increases may be short-lived. Already aggregate data from subscription technology platforms shows monthly subscription rates for digital news has declined from 3x the average (over the previous 12 months) in March to 2.4x in April. Growth rates, despite signs of slowing, still outpace pre-pandemic rates by a healthy margin. But there are other developments publishers need to watch. 

“News fatigue is [also] setting in, and the short-term and long-term economic impact of the crisis is likely to be profound,” warns the Reuters Digital News Report 2020. It combines insights about digital news consumption and the survey results of 80,000 online news consumers in 40 markets to highlight the factors “likely to accelerate long-term structural changes towards a more digital, more mobile, and more platform-dominated media environment.” 

Move to a retention-first model

As advertising budgets are slashed and a recession looms, content companies have two choices. They can persuade more people to pay directly or they can find ways to keep their existing subscribers. 

It’s not a toss-up. Seminal research reminds us that it can cost five to 25 times more to attract a new customer than retain an existing one. The Financial Times sums it up in cost savings. Drawing from internal research, the FT concludes that “it is four to five times cheaper to retain an existing user than to acquire a new one.” 

The task of keeping customers active and interested turns up the pressure on media companies to adopt a retention-first mindset. That starts with understanding who your customers are and then investigating the “why” of what motivates your audiences to interact with your content and keep coming back. That is where marketers need a retention framework that will allow them to develop a more nuanced view of customer engagement and stop churn before it starts. (I’ve written here on DCN about a new Engagement Pyramid model, also known as AIC. But you should choose the model that is right for your company and your audience.)

To help companies as they architect strategies to cash in on the “corona bump” and maintain robust subscriber numbers, I draw from two standout interviews with retention marketers and app publishers  featured on Retention Masterclass, the video podcast series I co-host with fellow Forbes Senior Writer John Koetsier.

Build a “radically superior” product 

Marketers who want consumers to commit to a recurring cost need to offer a product worth paying for in the first place. But they should also be prepared to “burn some boats” to get there. This was the advice offered by Nick Hobbs, an ex-Google manager who is driving a phase change in thinking around how to design and grow a subscription news product. Today he is the founder and CEO of Brief, a news app aimed at GenZ and Millennials and doubling its subscriber base every month. He told Retention Masterclass this growth is fueled by his determination to build a “radically superior” product. 

“It can’t be the same product with a new coat of paint,” Hobbs says. It also can’t be a product that is a little bit better than the rest. “It has to be fundamentally a completely different experience that’s vastly superior to what came before it.” 

One terrific example of a company taking this approach is Spotify, which does more than distribute music tracks. They offer an emotional soundtrack that delivers what audiences want and need. More importantly, Spotify has built a business model on access, not ownership. “Gen Z doesn’t want to buy things anymore,” Hobbs explains. “They want access and they want services.” 

Accordingly, Brief is a customized news service produced by human journalists and algorithms. Rather than offering audiences endless news to scroll, or a lot of options to personalize their feed, Brief focuses on curation. “Instead of trying to feed you more content, we’re trying to give you less.” The takeaway: When “product is the new marketing,” enabling a better experience is essential to achieve high subscriber numbers and strong retention rates.

Keep it fresh with “situational” communications 

Push notifications are growing up. And content companies are getting smarter about ways to deliver them. I’ve written that organizations, including ABC News, get high marks for strategies that use push and other communications channels to power personalized news experiences. 

However, while push notifications can be incredibly useful, they can also be noisy. Christian Eckhardt, CEO and co-founder of full-stack mobile marketing and tech consultancy Customlytics, called out companies for using push to alert users of every mundane activity. It’s a practice sure to backfire, Eckhardt told Retention Masterclass.

Push is part of product

Companies have to shift from attempting personalized push (which no company has mastered) to delivering more “situational” communications, Eckhardt says. This approach to communications is shaped by real-time analytics to “continuously improve the messaging, determine what is working and do more of it.” 

So: Is push related to mobile CRM or marketing? “If done right,” Eckhardt explains, “it’s probably more part of product than it is of marketing.”  Ultimately, push is a great asset for driving retention and engagement. Harness analytics to customize messaging to the situation in which users find themselves in your product.

Product-first marketing

What my conversations with Hobbs and Eckhardt demonstrate is that whether you are looking to add subscribers or retain them, the power of the product can not be underestimated. And, as we see that retention needs to be top of mind in any subscription model. And, again, product takes the front seat. 

The explosive growth of subscriptions for content online and in-app is a clear confirmation that users are willing to pay a monthly fee provided the value exchange is on the money. These days, a me-too product may help you attract new subscribers. But it’s the ability to offer a consistently excellent experience – informed by analytics and customized to audience activity – that builds relationships to last.

Perspectives

OTT subscriber acquisition strategies for a new reality

Amidst the gloom of a global pandemic, the rapid growth of OTT subscriptions has sounded a rare positive note: it is estimated that global revenues for the sector will grow by an unprecedented 55% in 2020, according to Videomind.

Traditional pay-TV and broadcast subscriptions are falling away, particularly in the U.S. Therefore, it would be easy to reach the conclusion that Covid-19 stay-at-home orders have accelerated our arrival at the tipping point where on demand and OTT become the dominant models for video entertainment consumption.

The truth, however, is that the road ahead for OTT brands in an increasingly crowded and competitive market remains uncertain and fraught with challenges. Some of which come in the form of:

  • Unknown post-lockdown churn with continual changing global circumstances
  • Potential slowing of subscriber growth as the world returns to a sense of normal
  • Raised expectations in line with what customers have grown accustomed
  • Change as the only constant, with the ability to adapt quickly to meet continuously shifting needs

Opportunity from uncertainty

The net result is that subscriber acquisition is likely to be more important than ever in 2021. And the fact is that subscribers themselves will represent a more demanding, constantly moving target.

Our recent OTT playbook explores the opportunities for OTT brands to experiment and innovate at every stage of the subscriber acquisition journey. To succeed, brands need the ability to innovate, experiment and adapt quickly. This capacity has long been held back by everything from a lack of customer insight and inflexible business models to monolithic technology platforms that set limits on the pace of innovation.

However, that is starting to change.

Broad customer insight

No-one yet knows whether the pandemic-era spike in new subscribers will be temporary or convert into long term loyal customers. Subscriber growth– be it short or long term – offers clear financial benefits. However, it also offers something potentially more valuable and enduring: insight. 

It seems that recent subscribers were drawn from every section of society, not just the traditional heartland of the 18-35s. In fact, some of the most significant growth was among older age groups, with around a third (32%) of 55-64-year olds and 15% of over-65s using subscription streaming services, according to Ofcom.

What’s more, it would be a mistake to assume those demographic changes are entirely transient. Research from EY found that 19% of households agreeing that the pandemic has irrevocably changed their viewing habits.

As a result, OTT brands could attract and engage a much broader cross section of society, accompanied by diverse needs and behaviors. So, success will depend on understanding and adapting to a broader set of demands.

The good news, for those brands able to convert data into action, is that subscriber growth during 2020 has provided the basis for hugely valuable customer data. Interrogating that data, to understand customer needs and behaviors can be the basis for multi-faceted, adaptable and, above all, effective subscriber acquisition strategies.

Agile, flexible subscriber management

The brands best poised to act on that insight, and the ability to keep pace with a constantly moving subscriber sweet spot, will have a significant advantage. The scale of that advantage will depend how far along the digital transformation journey they have traveled.

Those still wrestling with monolithic legacy systems will struggle to keep pace with change. Siloed data will hamper customer insight. And complex systems requiring technical resource will limit the ability to innovate, adapt and experiment in response to change.

On the other hand, a new breed of fully integrated cloud subscriber management platforms will provide forward thinking brands with all the flexibility and agility they need – and at lower cost. These will allow OTT brands to innovate and experiment in every aspect of the subscriber acquisition journey. This will take hours rather than months, without the need for technical skills. These factors offer a critical competitive advantage in the months and years to come, as we all adapt to a new reality.

Experiment and innovate

In the post-pandemic world, there can be no standing still. OTT brands will need to constantly experiment and innovate in every element of the subscriber acquisition journey in response to diverse customer needs and rapidly changing behaviors, coupled with a demand for greater flexibility and choice.

Perspectives

DCN’s must reads: week of November 5, 2020

Here are some of the best media stories our team has read so far this week:

Perspectives

DCN’s must reads: week of October 29, 2020

Here are some of the best media stories our team has read so far this week:

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