Earlier this year, VIX was acquired by Spanish-language content leader Univision. It was the culmination of a six-year journey, which started out as my effort to disrupt, well, Univision.
Around 2015, I stumbled upon the statistic that Latinos would soon represent 20% of the United States’ population. It spoke to me because my Texas roots meant that Hispanic media had always been a part of my world. Pretty soon, I had decided that my next media venture would be creating a mobile-focused streaming service for what appeared to be a drastically underserved U.S. Latino digital media audience.
By the time that our Pongalo service launched as a $5.99 per month subscription offering for U.S. Latinos, I had rounded-up digital rights to thousands of hours of Spanish-language content. I’d also assembled a group of shareholders and mentors who included some of the smartest people in media. That meant that the Pongalo team could tap into a deep bench of expertise from folks like former MTV Networks Vice Chairman, who has Puerto Rican roots, Herb Scannell, and former Univision digital chief Kevin Conroy.
Like all good success stories, we promptly fell on our face. But we learned. We learned that building a video streaming technology platform is not for the faint of heart. We learned to license not only U.S. content rights, but also long-term international rights. That’s because our eventual expansion across Latin America presented a massive opportunity. And we learned that we absolutely did not want to compete with deep-pocketed players like Apple, who were making noises about coming into the subscription streaming space.
We eventually added Discovery Communications veteran Rick Rodriguez to our team. And, after borrowing a bit from the early playbooks of TubiTV and Pluto, Pongalo quickly evolved into the free, ad-supported streaming space. When it did, every metric went through the roof. Despite our early stumbles, we had clearly found the right model.
The race to scale
By 2019, scale had become the name of the game in media. In a world where Disney needed to buy Fox to gain scale, even a dominant spot atop AVOD in the still-unproven Latino digital media market wasn’t part of the conversation. If Pongalo was ever to be acquired by a larger media organization (and I believed it should be), we needed scale.
So, about a year ago, we combined Pongalo’s streaming service with Rafael Urbina’s VIX. Rafael had built a powerful social media megaphone of almost 100 million Latino Facebook followers. He’d also put together a potent ad sales team of over 50 people stretched across two continents. By the time VIX was acquired by Univision in 2021, our streaming service offered more than 20,000 hours of content that entertained millions upon millions of Latinos each month.
Today, the VIX team, now under the leadership of new Univision CEO Wade Davis, also helps to manage PrendeTV, Univision’s recently launched free, premium ad-supported streaming service. And the results have been spectacular. Early indicators tell us that PrendeTV and VIX are finding eager, content-hungry audiences across platforms.
The still-untapped opportunities
Our success (so far) does beg the question, however, of why no major media company had previously built a standalone service that focused on the free streaming opportunity for U.S. Latinos.
To be fair, Latinos have traditionally been easy to overlook in favor of general population audiences, who have always seemed to capture all the oxygen in the front-page streaming stories. But in a day and age of always-improving data, we now know that that was foolish.
According to the 2020 LDC U.S. Latino GDP Report, if the economic contribution of U.S. Latinos was its own country, it would be the eighth largest in the world. That would exceed even Italy, Brazil, and South Korea. In fact, between 2017 and 2018, the U.S. Latino GDP’s growth exceeded that of non-Latinos in the U.S. by more than 4.5x. Yes, 4.5x! That would make it the single fastest-growing GDP in the world during that period.
With this immense opportunity in mind, media companies need to be thinking about how they can capture a share of these vast U.S. Latino revenues.
Keep moving
Mobile is one of those places. Latinos drastically over-index for having mobile devices, and those devices tend to be their primary connections to the internet. But many media companies seem solely focused on delivering connected TV experiences. And despite PrendeTV and VIX’s many successes, Latinos still remain underserved on mobile. And they will likely continue to be so until the industry can create media products that play by the unique rules of a mobile-first experience – mainly simplicity.
For instance, at one point, most major media companies continued to push TV Everywhere apps that required an engineering degree to authenticate. We were the first to remove registration entirely from the VIX app. That meant that we had to innovate clever ways to build data around our audience. But if the premise of AVOD is to show ads to as many people as possible, why put up barriers?
The payoff for media companies in targeting Latinos is data. The genius of Amazon comes down to, “Since you bought this, you might also like this.” And the opportunity around underserved Latinos and mobile is similar. It’s a treasure trove of data just waiting for companies that are willing to lean in – in-language and in-culture. That data translates into revenues.
Over my six years navigating Pongalo, then VIX, and now Univision, I have heard countless voices encouraging media companies to target Latinos because it creates more diversity in our audiences. Undoubtedly, that’s a true and powerful reason in and of itself. But, with that, you will also make more money. That’s a reason media companies can not only understand, but it’s one that they need to capitalize on.
Abut the Author
Rich Hull is Senior Vice President of Univision, and President of VIX, Univision’s recently acquired digital media subsidiary. As a digital and traditional media company founder, operator and investor, Rich has constantly led the innovation of new ways for delivering content and empowering diverse voices. Rich previously collaborated with DCN Editorial Director, Michelle Manafy, on their multi-award-winning book, Dancing With Digital Natives: Staying in Step With the Generation That’s Transforming the Way Business Is Done.
The demise of third-party cookies offers an opportunity for the digital advertising industry to rebuild on a better foundation. This is particularly true for publishers who are willing to leverage the right approaches and technologies to monetize their audiences and protect their data.
When Google announced its deprecation of third-party cookies in Chrome, advertising technology providers, industry consortia, and Google itself started to work on alternatives. The goal is to build solutions that ensure addressability without compromising privacy compliance.
Finding a valid alternative to the cookie is particularly important for publishers and ad tech platforms operating in the Open Web. Google and other Walled Gardens can count on billions of authenticated users to deliver personalized ads. However, the rest of the industry needs to find alternatives that enable them to address users efficiently to stay competitive.
Publishers can already see what a non-addressable internet looks like. In Safari, where third-party cookies are already blocked, media owners see their CPMs decrease by 50% as compared with Chrome.
Two popular approaches to identity
Today, there are two popular approaches to solving the identification challenge in the post-cookie world. One is based on cohorts and the other uses pseudonymous universal identifiers.
The cohort-based approach
Google has been working on its Privacy Sandbox. This collection of proposals is aimed at preventing individual user information from being shared with the ecosystem. The initiative focuses on local data processing. The goal is to provide technology platforms with APIs to collect aggregated data about user profiles, as well as aggregated campaign performance data. According to Google, the mission of the Privacy Sandbox project is to “Create a thriving web ecosystem that is respectful of users and private by default.”
Grouping users in cohorts may give the illusion of compliance because, arguably, you cannot individually address people. But this is not the real problem. This approach prevents publishers from engaging in a real conversation with people about the value exchange between their data and the services they receive. Moreover, it doesn’t offer transparency and control to consumers. They have no way of knowing in what group they have been added and why. They also lack the ability to remove themselves from a cohort.
The approach based on pseudonymous universal identifiers
The other method available is based on pseudonymous identifiers that are created when a user opts in to share some pieces of information with the publisher or authenticates on a website. This information can be used as a consistent identifier by all the websites that have collected and passed along the advertising value chain. Brands can use the ID to collect information, deliver messages and measure the performance of campaigns.
Pseudonymous identifiers can be created using different types of information and require users’ consent to comply with data protection regulations. When publishers can provide signals such as hashed email addresses or login IDs, these can be used to anchor consistent identifiers across the websites that have collected them.
Most of the time, email addresses and login IDs are not available. With this approach, probabilistic algorithms use passive identification signals, such as IP address and the device’s user agent string that are shared via the HTTP Protocol. This enables the ability to infer the uniqueness of a user across websites. This method can be particularly useful to address and monetize users that are not ready to authenticate yet but are willing to share some level of information with the website.
Why one approach is better than the other
Unlike the Privacy Sandbox, universal identifiers work in all browsers, not just Chrome. Thousands of publishers that are keen to monetize their cookie-less traffic on Safari today and in all browsers tomorrow have already adopted universal identifiers. Chrome’s Privacy Sandbox, on the other hand, is still a set of proposals at their infancy stage. And, so far, they’ve only been tested by Google.
So why would you sit still and wait for Google to develop and test its Privacy Sandbox when universal identifiers are already available and working? Even more so, why should publishers and the rest of the industry rely on an alternative that will further increase its dependency on the tech giant and, most likely, work on Chrome only?
By partnering with the right identity providers, publishers monetize cookie-less traffic in Safari today and prepare for the post-cookie world.
Choosing the right universal identifier
So, if you decide to try the universal identity approach, the first step is to choose which ones to use. As of today, there are over 25 different identifiers that publishers can test in preparation for the cookieless world. No publisher will have the bandwidth and resources to try them all. So, below are some questions and considerations that can help to select the most suitable options for testing.
Privacy and transparency
Does the identifier use privacy-by-design technologies to capture consumers’ data privacy preferences? And does it give consumers the option to opt-out in the future if they decide to revoke data processing access? Make sure that your identity solution provider can guarantee your users’ privacy protection and control over their data.
Data protection
What about your data? What mechanisms does the identity solution provider have in place to ensure the information that you’re sharing in the bid stream is only accessed by your authorized monetization partners? Data leakage was one of the main concerns with third-party cookies. Ensure that your identity partner can safeguard your and your users’ data.
Footprint and adoption
How many platforms have adopted the identifier? An identifier is useless if ad tech platforms are not using it. If you’re considering several identifiers, verify they have enough footprint to provide some results. Most user ID modules are available on Prebid. (See how many platforms have adopted each of them.)
Cross-domain linking methods
What methods does the identity solution provider use to link IDs across domains? Most of them use deterministic methods and are only able to link authenticated users. No matter how many logged in users and email addresses you have, you will always have unauthenticated users visiting your website. So why miss on the opportunity to monetize that audience if they are willing to be addressed through passive identification signals?
Prepare today to thrive tomorrow
There are only a few months left until cookies are deprecated by all browsers. If you haven’t started testing universal identity solutions yet, start now. You can already see what the cookie-less world looks like in Safari so use this to your advantage. Utilize Apple’s browser as your testing ground and work closely with your monetization partners to understand what solutions bring the best results and why.
Streaming video has long been synonymous with Netflix. However, ad-supported services (AVOD) has started growing in share. According to Nielsen, a third of U.S. streaming households use a AVOD service today, and that viewership is only going to continue to grow this year.
Amid this growth, it’s worth looking at what successful AVODs are doing to break through the noise and succeed. Who better to learn from than Hulu, one of the original AVOD platforms? Here are some things that set Hulu apart from the pack and that other streamers should pay attention to:
Hulu’s tiered structure
Streamers that launched in 2020 bet big on gaining subscribers. So, they gave their platform away for free or in bundled deals. However, we’ll soon start to see subscribers question whether they really need every service they’re subscribed to, especially as the pandemic comes to an end.
Platforms that offer tiered options, including a much cheaper or free ad-supported version, will emerge victorious. With an ad-supported model, consumers are less likely to cut a platform when reviewing their entertainment budget. Hulu is ahead of the pack as it already has a tiered model with an ad-supported offering at a mere $5.99 per month.
They make up the revenue because CTV is very attractive to advertisers today given its popularity among consumers. Hulu has been able to take advantage of this trend with major brands. Our platform found top advertisers on Hulu during February 2021 include DraftKings, Samsung, Mercari Mobile App, Verizon, Kia, Taco Bell, T-Mobile, TurboTax, HelloFresh and Geico.
Hulu’s innovative partnerships
It’s not just the tiered model that set Hulu up for success, Hulu has also made a number of strategic and competitive partnerships to take on other streaming giants. Of note, in 2019, Disney acquired 21st Century Fox, which included the 30% stake Fox had in Hulu, giving them a 60% stake. This meant investment in original programming increased significantly.
Taking advantage of the rise in audio streaming, in 2018, Hulu and Spotify announced a bundling partnership that gave users a discounted rate to two very popular platforms. Finally, earlier this year, Hulu entered an agreement with ViacomCBS (rebranded to Paramount+) to include continued carriage in the live TV service of CBS broadcast stations. This also includes CBS Sports Network, Pop TV, Smithsonian Channel, and the CW, as well as continued distribution of Showtime as an add-on.
Hulu as a linear TV substitute
Network partnerships are key for making customers happy. One of the most critical factors of these partnerships is the turnaround time for linear television shows appearing on Hulu. This all depends on what network the show is from, and what type of subscription the customer has.
For example, Fox, ABC, ABC Family, and ABC News shows will generally be available the day after broadcast on Hulu, otherwise they are only available eight days after broadcast online. For a cord-cutting country, this is an invaluable value add. It is worth noting that this is separate from the live TV programming that the platform (which launched in May 2016). Even if the viewer doesn’t subscribe to Live TV, they will have access to new shows the day after they first air.
Content is hugely important on streaming channels. As we see other streaming services launch, it’s important to note the differences in content. For example, Netflix is known for offering the widest selection of movies. Hulu offers a larger collection of current-season TV shows and a smaller selection of movies. This means different viewership and advertisers know it. A full 60% of Hulu advertisers are not advertising on any other ad-supported OTT platforms. These stats tell us that Hulu’s advertisers are unique and that they find value in Hulu’s audience.
As the pandemic comes to an end and people head back into offices and social activities, now is the time for streamers to open an ad-supported tier, develop strong partnerships and differentiate their content offerings. Despite the change in the time spent at home coming soon, we predict that AVOD platforms like Hulu will only grow in popularity as a channel for marketers to reach engaged audiences. The lessons that Hulu can teach new streamers at this time are priceless.
Privacy regulations and browser updates are restricting the use of personal identifiers and customer data gathered via third-party cookies. Needless to say, this is causing no little disruption to the way the digital advertising industry works today.
To prepare for this privacy-focused future, publishers will need consent-based audience data. Brands will have to adapt the way they target and measure campaigns, and identity solutions. And technology providers will need to solve these challenges as updates continue to roll in.
As data deprecation continues — and the deadline for the removal of third-party cookies in Chrome draws near — we partnered with Forrester to research how brands and publishers are preparing. The project surveyed 100 advertisers and 100 publishers in the US and UK. We asked about their current data strategies, with Forrester providing analysis on the future of customer data in advertising and how the industry can realign itself successfully. It shows that within the oncoming threats, there are opportunities for publishers and brands who have access to first-party data.
Privacy regulations are a concern, but solutions are underway
Data deprecation is an ongoing issue. New regulations and frequent browser changes, including the recent announcement from Google banning alternative identifiers in the bidstream, are creating a certain amount of chaos. These changes will dramatically change the way people are targeted on the web. And brands are feeling the impact.
The Forrester research shows that 73% of brand respondents are very concerned about increasing privacy regulations. And 69% are concerned or very concerned with the restriction of third-party cookies in major browsers. However, despite this high level of concern 41% of brands are still relying “mostly or exclusively on third-party data” to target their audiences.
Brands know they need to take privacy seriously. But time is running out to reduce their use of third-party data and test first-party data strategies. Some work has begun, 36% of brands say they are starting to explore accessing publishers’ first-party data. They are also starting to move away from relying on third-party data. Yet, more advertisers need to look at alternative ways of targeting. They should work closely with publishers to incorporate their first-party data.
There’s an opportunity for publishers to partner with advertisers
Publishers are working hard to build-out their data monetization capabilities. They’re keen to supplement their subscription and ad revenue through advertiser partnerships. The research shows that 95% of publishers surveyed have started building their first-party data monetization strategies. However, only 28% are ready now with an established, implemented strategy.
Identity and tracking individual across the internet — knowing their every move — isn’t the only route to understanding consumers. Publishers understand their audiences and are building cohorts — a group of users that share some common attributes or behaviors — from their first-party data insights. This will give publishers an opportunity to build direct relationships with buyers, as publisher cohorts are privacy-safe. They allow advertisers to continue to target and reach audiences post-cookie, across platforms.
Publishers are primed to take action. Half of those surveyed believe increasing privacy restrictions will allow them to work more closely with advertisers. Access to consented, granular data on their audiences will strengthen their advertiser relationships, especially as first-party data becomes even more valuable to brands.
But convincing brands to test, trial and book campaigns with this cohort-based audience data is vital for this closer partnership model to succeed.
Publishers must proactively showcase the power of their first-party data
In order for brands to wean themselves off third-party data, they need scalable, relevant audiences. They also need partners that can help them reach those audiences across all buying platforms.
Brands should look to publisher cohorts to test first-party data campaigns. They need to be open minded about how they can reach new audiences as the industry rebuilds itself for the future. While publishers have gained significant ground in establishing their strategies, brands will need to find trusted partners. Publishers that are proactive about collecting their first-party data and sharing their work with brands are the ones that will benefit most.
Instead of replicating the old ways, publishers and brands should see this as a chance to build deeper relationships and prepare for buying via cohorts that don’t identify and track people as individuals. It’s time to embrace a future based on first-party data.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove, interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company.
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
Header bidding has become an essential component of most publishers’ ad monetization strategies, enabling better inventory fill rates and higher revenue. It allows publishers to receive bids from multiple trading partners at the same time. Contrast this to the traditional ‘waterfall’ method of trading, in which inventory is passed to ad networks sequentially.
Five critical metrics
Header bidding is a success story because it improves on what came before. But that doesn’t mean it is optimized to drive the best possible results for each publisher. The following five metrics can help publishers evaluate the health of their header setup. They will also provide insight into how they can use this information to further increase revenues.
1. Page Load Speed (the time it takes to fully display the content on a page)
Header integrations can be client-side or server-side. (Very simply, client-side header bidding sees all the auction-related activity takes place on the user’s browser, while in server-side bidding this happens on a standalone ‘auction’ server.)
As a general rule, client-side increases the audience match rate. (This, in turn, increases CPMs and monetization potential). But it also increases page latency. Server side reduces latency. However, this is at the expense of the match rate. When it comes to selecting which ad stack to go live with, publishers are forced to choose between prioritizing revenue and maintaining the user experience.
For most publishers, a combined approach that leverages both client and server-side setups is optimal, but it needs to be fine-tuned regularly. Ideally a publisher will have an A/B testing framework that moves client-side partners to server-side one-by-one, testing the efficacy in both locations (client versus server). By measuring for revenue, CPMs, page performance, viewability, and bidder timeouts between the test and control groups for the integration locations, the publisher can find the optimal balance to ensure maximum revenue.
For example, an SSP might have a tendency to time out in a particular region when it is called directly from the browser. A successful combined approach might see the publisher permanently move this SSP from client to server side in this specific geolocation. A/B testing, which can be carried out by the publisher or a partner, will show revenue remaining the same and the page latency being reduced. Using this technique with MediaGrid partners, we’ve seen load times reduced by up to 50% and viewability increase by more than 10%.
2. Timeout Rate (how often bidders fail to return ad auction bids within the publisher time limit)
When a bidder fails to return a bid within the timeout limit specified by the publisher, the bid is said to have “timed out.” The timeout rate indicates how often a bidder fails to return a valid bid response within the required time period (i.e. while the page is waiting for it) compared to how often it achieves this. When viewed alongside the bid rate and win rate, timeout rate can help publishers understand the opportunity cost of retaining a particular bidder. Bidders with a consistently high timeout rate harm the site’s user experience and the publisher’s revenue-generating ability.
Historically, publishers grouped all ads on a page and sent them to demand partners in a single request, with one universal timeout. While this reduces page latency, it also increases the likelihood of timeouts and may also reduce the fill rate and user experience.
A better way to manage timeout rates is to group ads based on page position (above the fold, below the fold for example). Then, send these in separate requests to demand partners, with different timeout windows. By tracking timeouts, a publisher can see the time frames in which partners respond. Those with shorter response times can be grouped in ad calls for above the fold inventory. Partners with longer response times can be placed in a second ad group lower down on the page.
The slowest partner may still be a strong revenue generator for below the fold slots, even if they do not bring anything incremental to the table for above the fold inventory. Using this approach, rather than a single request one, we’ve seen 10% higher CPMs and a 20% increase in bid rates.
3. Fill Rate (impressions served versus requests received)
Google Ad Manager (GAM) has traditionally prioritized direct sold campaigns. This means they will be served before line items that have been assigned a lower priority (even if the lower priority items have higher CPMs). These lower priority programmatic ads will get fewer opportunities to compete in auctions. This can adversely affect a publisher’s fill rate, and therefore revenue.
Publishers can achieve higher fill rates within their header bidding integrations by rethinking how they set line item priorities within GAM. This can be particularly important during periods when media buyers are looking to spend budgets (at the end of a quarter or the financial year, for example).
Traditionally, line items are set up in descending priority tiers: Sponsorship, Standard, Network, Price Priority, and House as the lowest with header bidding scoped to run only as Price Priority line items. However, this setup is far from ideal since high CPM header bids are unable to compete with direct sold campaigns.
To correct this, publishers should start by identifying the CPM threshold where the header bidding fill rate of the line item stops growing proportionally to the price tier. (Note, this is data that can be obtained from GAM reports or the SSP’s bid density reports, which include both impressions and bids).
Using this value, publishers can change a line item’s GAM priority tier from Price Priority (which is where header bidding lines are historically placed) to Sponsorship or Standard. This will increase its priority. It will, therefore, increase opportunities to complete in auctions. Based on analysis carried out for our publishers, the CPM threshold tends to be between $15 and $20. Publishers can create higher priority line items for open exchange bids above the CPM threshold value ($20 for example) and let them compete with direct sold inventory.
Uplift can be measured by tracking CPM and spend per line item priority type (Sponsorship, Standard, Network, etc) on a daily/weekly basis. We’ve doubled fill rates when header bidding lines greater than $20 CPM (or the respective monetary value for that publisher) are set at Sponsorship / top Standard priority.
4. VAST Impression Rate (video ad impressions versus bids)
The IAB VAST specification aims to ensure that video ads run in the way a publisher wants, regardless of which website and device they are being shown on. But the high number of technical integrations increases the likelihood of a VAST error in the time between the advertiser winning the auction and the ad being served. Our experience shows that, across the board, 13% of video supply results in errors and no revenue.
Monitoring the VAST impression rate lets publishers know whether video ads are playing. Then, it helps them to mitigate errors if they are not. Setting up a VAST waterfall combines video ads sequentially to ensure an ad is always shown (by having a fall-back VAST ad unit pre-prepared in case a failure results in the first unit not running). Publishers hesitant about investing in VAST waterfall development work may want to encourage their SSPs to support this technology as it also positively affects the video impression rates. MediaGrid partners utilizing this technique have seen 14% increases in VAST impression rates.
5. Downstream Match Rate (match rate between DSPs and requests from the publisher)
With no direct end-user relationships (and therefore no first-party data), SSPs and DSPs rely on cookie matching to “sync” the users that are common to all trading partners. The cookie sync determines a match rate, i.e. the percentage of shared known users. This usually averages 50-80% between each downstream participant. With higher match rates, publishers can command more advertising revenue.
Cookie syncs are often performed “downstream” in the media trading chain (publishers to SSPs, SSPs to DSPs, DSPs to brands). Unfortunately, the reduction in match rate between downstream trading partners (that are not directly connected to the publisher) is compounded at each step. This can result in a loss of revenue for the publisher.
For example, the typical match rate that a publisher has with a connected SSP is 70%. If that SSP has a 60% match rate with a DSP, the overall publisher to DSP match rate is only 42% (i.e. 60% of the SSP-to-publisher 70% match rate). From the DSP’s perspective, it may make sense to only bid on the matched 42% of inventory coming from the publisher, saving on hardware costs by not listening to the unmatched traffic.
Historically, publishers only deploy syncs with partnered SSPs, increasing the user matching with the SSPs. This however also has the side-effect of allowing the SSP to control matching with all other downstream partners. This may not be the best way to achieve the highest match rates. An alternative approach is to include a direct sync with the downstream DSP partners in addition to the SSPs, increasing the match rates with media buyers.
By syncing data between the publisher and every downstream trading partner, such as its top trading DSPs, the publisher can match user data directly with the DSP, improving the match rate and revenue with those key trading partners. Publishers on the MediaGrid using this approach have seen downstream match rates increase almost threefold, with revenue following a similar path.
Measurement for success
When looking to create an optimal header bidding setup, publishers should track as many health metrics as they can. Improving just one of them can increase revenue considerably. And because these metrics can make such a large impact on their business, publishers should not be shy about asking their SSP partners for input, data access, or support.
Armed with more data and solid benchmarks, publishers should create an on-going testing program that regularly and intelligently experiments with the header setup to find the optimal balance for maximum yield (which will change over time).
In early March, Google announced that it was committing to its FLoC method of targeting and would not support alternative identifiers in any of its adtech products. The industry had a small, and understandable, panic attack.
Don’t worry. This is good news. There are still a lot of alternatives available for each use case. Alternatives include cohorts, contextual, authenticated identity, and probabilistic identity.
Cohorts
FLoC (Federated Learning of Cohorts) is technically the addition of a semantic classifier to the Chrome browser. It will scrape page content and URL data and qualify users into small segment groups based on their navigation history. Everyone’s still being tracked, but now only by Google.
It’s a pretty blatant data land grab. Google is using the specious legal argument that if a consumer browses the Internet with Google Chrome, all of the data collected while they browse is the first-party data of Google. Publishers, marketers, and most importantly users of the internet should take a careful look at what Google is doing.
Critical questions:
Is the algorithm that builds these cohorts going to be open to publishers and partners for investigation?
How exactly will Google decide what cohorts to qualify users in? And how can we be sure they won’t be the cohorts that make Google the most money?
How will Google differentiate between valuable and less valuable scraped content?
If one company controls the advertising of, the discovery of, the navigation of, and the monetization of the internet, how is this not an antitrust issue?
Are cohorts privacy safe and are there controls for the consumer? Why, for example, has the Hague flagged FLoC as potentially non-GDPR compliant?
If it’s neither privacy-compliant, nor competitive, nor pro-publisher, then what’s FLoC’s value to the industry?
Contextual targeting
Contextual has gained a lot of traction in recent months. There are some that think contextual targeting is a privacy carte blanche. The truth is a little more complicated. Contextual does not require user consent as long it’s scoped to a single page of content.
However, as soon the context of more than one page is combined, even in session, even on a single publisher’s site, it becomes tracking. Thus, it carries the same legal burden of consent as any other tracking method. Further, without cookies, device IDs or other third-party identifiers, contextual has obvious struggles. These include precision, scale, frequency capping and, most importantly, measurement, which is critical to attract spend from advertisers.
Our recent survey of publishers and advertisers found more than 69% of U.S. publishers are bullish on contextual targeting as a replacement for audience targeting. However, 66% of advertisers disagree. That’s a big enough divide to question placing all bets on context.
Authenticated identity (deterministic)
Authenticated, or deterministic, identity requires the user to provide a known piece of personally identifiable information, such as an email address. To obtain that email address, publishers, data providers, and brands ask consumers to log-in or register to a site/app to access free content, deals, or other services.
There are a lot of worthwhile pros here. Because it can be tied to a person, it’s a highly accurate solution and great for targeting and measurement. Additionally, user consent is easy to track, which allays privacy concerns.
However, how much of the web requires logging in? Early estimates expect the authenticated web to capture 10-20% of users. Scale is a real issue. Some publishers have a clear advantage in the authenticated lane. The vast majority of publishers will struggle to drive authentication, while others have built their value around free and open content. Without deep technical and monetary resources to draw on, authentication could be a game-over for many.
Non-authenticated identity (probabilistic)
To capture the rest of the 80% of the open web, publishers can use non-authenticated identity. This is better known as probabilistic ID. The tech behind the probabilistic method assigns a cluster of devices and browser signals to an ID that can be moved via established pipes into activation channels. Publicly available, IAB-approved signals can include IP address, time stamp, or browser user agent.
Probabilistic identity is the perfect complement to deterministic identity. Probabilistic is data minimized with no email, home address, or phone number required. It scores points for consumer privacy and ensuring that no brute force attack on an encrypted ID can reveal an email or a phone number.
Unfortunately, probabilistic identity is also widely misunderstood in the industry. While it does rely on IP address, some misconstrue it as fingerprinting. In fact, probabilistic identity has no more or less privacy burden then multi-page contextual targeting that leverages a first-party cookie. IAB Europe Transparency and Consent Framework 2.0 stipulates that “with consent, vendors can create an identifier using data collected automatically from a device for specific characteristics, e.g., IP address.”
Certainly, it’s up to you to pick the best solution for your business. That said, it always makes sense to diversify your toolset to capture the most revenue possible. It’s too early to tell which tools will perform best for which marketers. So, having all of them at your disposal allows you to work with more brands.
Publishers and advertisers need to be proactive about engaging with their potential customers where they are. And where they are, regardless of age or income group, is consuming content on mobile devices. Advertising is normally viewed as the currency used to view content. But if the ad experience isn’t positive for the consumer, they may choose not to buy in.
Whether it’s through differentiated ad units, frequency caps, or less intrusive delivery, the advertising experience needs to enhance the content, not lessen its impact by competing with it. The increase in time consumers now spend online can be seen as a boon. However, in the wake of last year, it means they’re bringing more expectations – and more uncertainties – about what they interact with. The savvy publisher can offer what others cannot: quality curated content, editorial standards, a less-cluttered ad environment and a greater degree of premium brand safety.
I spoke with Kelly Andresen, president of sales development at Gannett, to hear about the challenges they faced in an unprecedented year. We talked about where they still found opportunities for growth and where they are placing their bets in 2021 and beyond.
Kelly Andresen, president of sales development at Gannett
What are the challenges you are currently facing as a digital publisher? How have those challenges changed during the course of the pandemic?
Kelly Andresen: For years, news and media companies like Gannett have been very focused on advertiser-led revenue. Of course that’s still very important to us. But one of the things we’re focused on right now is putting more emphasis on growing our subscription business.
We have some aggressive goals to reach by 2025. So now we’re figuring out how that looks on the B2C side, growing subscriptions to our news products and other content we publish. On our B2B side we’re looking at building subscriptions directly with our advertising and marketing partners. The challenge is building solutions that really meet everyone’s needs.
Consumption habits have changed significantly in the last year. How have readership trends changed across devices? How has this shifted your thinking for next year?
KA: Content consumption in general has moved to mobile. That’s not a new trend, but it was certainly accelerated by Covid-19. The total amount of screen time and the amount of time people spend interacting with content have both increased. That’s a great thing for a publisher. However, we need to remain conscious of the demand and need for truthful, trusted content.
In addition to the pandemic there was a lot of political and social unrest last year, and consumers thirsted for content they could rely on. As we all work to transition out of survival mode, we know that for us to thrive as a news organization we need a laser focus on what our customers and other partners need during this time. That’s been a driving force behind our thinking for the year to come: to grow subscriptions by helping the local communities we serve find trusted content.
The last 18 months have brought significant changes to privacy with Google sunsetting Cookies, Apple doing away with IDFA, and stricter laws like CPRA. Publishers are now faced with an identity conundrum. What are you doing to rebuild the identity structure?
KA: There’s an opportunity with these changes for publishers to take back ownership of that audience relationship without using an intermediary. By providing more transparency we can build our own zero-party and first-party data in a way that provides people the choice about how, when and where they share their information within our ecosystem.
I think the larger question as an industry is then, how do we put all the pieces together? Is there an opportunity to share data and if so, what does that look like? We want to not only provide amazing content but also ensure people feel they’re in a safe and trusted environment. The goal then becomes educating the public so they can make informed choices and we can build a better experience together.
When it comes to identity, should the industry as a whole spend time re-evaluating the value exchange between publishers and advertisers? How will this benefit —or hurt — publishers?
KA: This is an opportunity to take a less-than-optimal model and transform it into something where everybody benefits. Consumers opt in to share their information. Publishers share information with advertising partners. And advertising evolves from the early online days of pushing out a message and instead takes that data to create an experience that consumers value.
I think we can build something unique as long as we focus on maintaining that trusted environment and that transparency, and think about what’s effective beyond ad impression opportunities. There are a lot of unanswered questions. That means there’s a lot to explore and chances to innovate and test for the future.
What are you doing to re-imagine the way you nurture the coveted publishers-reader relationship when it comes to advertising experiences, devices and targeting?
KA: The focus has to be on the overall experience. Now that we’re asking our audience for their data, we have to deliver something that makes sense and makes it worth their while. There should always be a choice around data, but I think we have more work to do for that choice to work in our favor.
We’ve conditioned our audience to consume content in one area and see ads in another area when we need to look at how to be beneficial to the overall content experience. And that extends to technology and knowing that people are consuming in different places on different devices. How do we encourage people to seek out and spend more time with a specific outlet because it’s a good experience for them?
Let’s talk about brand safety. What does brand safety mean for publishers now? How has the conversation around safety and suitability changed during the pandemic?
The story is no longer about “click here and buy my product,” it’s about how a brand is helping individuals, communities, society as a whole, move forward. It’s also broadening beyond immediate health and safety concerns to create a top-of-mind support system, reminding consumers that when they’re ready, brands will be waiting to accommodate them. I suspect this approach will continue, but only as long as it’s still viewed as a partnership.
What advice would you give to publishers looking to withstand the lure of the walled gardens and compete with that model?
KA: I think this is something that all of us are thinking about and trying to innovate around. What can we do to continue to focus on that trusted experience and then how do we build scale together? I think there are opportunities for brands to work together again.
For example, we recently announced our partnership with McClatchy, one of the other very large U.S. newspaper publishers. Even though we’re in the same space, we’re coming together to build something that pushes our own standards and brings more value to publishers, advertisers, and audiences. We actively have national advertisers telling us they want to be more relevant. They want to speak to a local audience in a trusted space. I think the fact that they want to help shape that consumer experience with us is perhaps an early example of things to come.
What new — or carryover — challenges and opportunities will 2021 bring for the digital publisher industry?
KA: First, there isn’t one leader in the privacy space. So, this is a great opportunity for trusted brands to come together and develop a new standard. Second, the new normal will probably not look like 2019 or 2020. In this next iteration, how do we remain relevant and provide an experience that people are truly seeking out in the 10, 12, 14+ hours they’re spending in front of screens or subscribing to audio streaming or other services?
Our current situation is pushing publishers to think about their audience in a much different way – not in a vacuum where it’s enough that they come to consume our content – more of a holistic view of how we can be even better and complementary to the other things our audience is consuming.
KA: As a publisher in the news category we know sometimes the news is not positive. In the past, brands often told us they didn’t want their messages to appear in the news category. But those kinds of blanket refusals are changing. I spoke earlier about changes in consumption, and how we’re all looking for trusted sources to help make sense of the world we’re in today. Brands and advertisers now recognize the audience demand for news and information content. We saw a large increase in advertisers aligning with social justice messaging in a way we didn’t see prior to the pandemic.
Announced earlier this month, the discovery of the “SneakyTerra” fraud scheme showed how an organized instance of fraud could impact more than 2 million devices a day. If left unprotected, this scheme alone could cost the industry over $5 million a month in ad spend. As the digital advertising industry grows, attacks like these show how fraudsters are evolving to take advantage of emerging technologies and supply chain complexity.
Some may consider fraud to be a buy-side problem. However, the truth is that this pervasive issue threatens the stability of the ad-supported ecosystem. And it takes millions of dollars away from trusted publishers in the process.
Recently, DoubleVerify surveyed 300 executives in the digital media sector. We asked digital publishers and supply-side platforms about challenges they have faced in the industry (particularly amid the 2020 Covid-19 pandemic). Publishers stated that “the ability to proactively identify and troubleshoot impression-level fraud issues” was one of their biggest concerns moving forward. Fortunately, there are several steps publishers can take to prevent the downstream effects of fraud from negatively impacting their revenue.
Stay informed
The World Federation of Advertisers estimated that by 2025, ad fraud will be a nearly $50 billion industry. With that much at stake, fraudsters are constantly evolving to work around measures that publishers have taken to quell their impact.
An example of this is ads.txt, a common method for publishers to increase transparency by declaring who is authorized to sell their inventory. While this practice accomplishes its goal of reducing fraud, it quickly became a target for a more advanced scheme. In 2018, fraudsters designed a bot network to take advantage of the ads.txt framework in order to commit fraud that would not trigger ads.txt violations.
This demonstrates that no single strategy against fraud will act as a silver bullet. Publishers need to stay vigilant and informed (alongside the rest of the industry) in order to keep a lid on fraud.
Develop transparency and best practices
The more shrouded the supply chain becomes in ad tech, the more gaps open up for fraudsters to exploit. Publishers can implement policies that provide a clear picture of where ad spend is directed to make it easier to diagnose and eliminate potential fraud. These policies have to put supply chain transparency at the forefront because it reduces places for fraud to hide.
In addition to a transparency-first approach, publishers have the ability to implement a few best practices into their anti-fraud strategy. These include:
Proactively looking at inventory on ad exchanges to monitor for misrepresentation.
Ethically sourcing ad traffic to prevent sources that benefit from fraudulent activity.
Establishing baseline metrics and campaign expectations so that you notice irregularities caused by fraudulent faster.
Despite fraud continuing to have a measurable impact on advertiser and publisher performance, there is not a clear road map for anti-fraud strategies. Even if there were, those strategies often expose themselves to new opportunities for fraudulent activity. Publisher operations must remain nimble to combat this evolving threat.
Bridge the buy-sell divide
Fraudsters eat up thousands of opportunities for publishers to monetize inventory by posing as publishers. (Yet they operate with no obligation to create legitimate content.) To make matters worse, the presence of fraudsters in programmatic marketplaces often force trusted sellers to lower prices in order to compete with fraudulent inventory that appears to be high quality.
These second-order effects show how complex the fight on fraud can become. They also know that brands and publishers alone aren’t equipped to snuff it out. By working with third parties that bring buyers and sellers together through verification metrics that measure fraudulent traffic, publishers can prove the quality of their inventory, protect their reputation and give fraudsters fewer openings to exploit.
Fraud negatively impacts publishers by diverting key ad dollars away from premium inventory. This erodes the trust that needs to exist between buyers and sellers. However – with the right tools and strategic approach – the industry can reduce the impact of fraud and it can divert misplaced ad spend back to trusted content providers.
Last January, Google announced the end of third-party cookies by 2022. The industry went into a frenzy.
All the while, Google forged ahead quietly on its own. Occasionally, it would pop up to say, yes, we really are going to stop supporting third-party cookies and no, the pandemic hasn’t changed our plan.
It wasn’t until last this past January that Google fully reappeared announcing its plan to start publicly testing Privacy Sandbox. This included some associated privacy controls, and early performance results for FLoC, or “Federated Learning of Cohorts,” which allows ad targeting at large groups of users based on common interests. And just a few weeks ago, they affirmed that they would not adopt new tracking tech after phasing out third-cookies. Their claim: It’s no longer necessary to “track individual consumers across the web to get the performance benefits of digital advertising.”
The end of ad tech?
Another frenzy ensued. First reactions predicted the end of non-platform ad tech. And many companies saw their stocks drop. But then, by the second day after the announcement, some observers started pointing out that Google hadn’t actually done much besides make it clear (yet again) that support for third-party cookies will end this year. They also stated that they aren’t going to adopt a solution like Unified ID 2.0, which The Trade Desk, Prebid.org, and IAB are lining up behind.
That wasn’t the only announcement of note in the past few weeks. IAB Tech Lab released draft guidelines for advertising identifiers like Unified ID 2.0, LiveRamp, ID5, etc. The Trade Desk announced the start of beta testing for Unified ID 2.0, with advertisers being able to transact on impressions using the tech. And just a week after Google’s identity announcement, the company published another blog post with initial details of a plan to extend publishers’ first-party “Publisher Provided Identifiers” (PPIDs) from private marketplace deals to open auction.
Pointing out that the ad landscape is confusing and in flux for publishers is a bit of an understatement. And that’s without mentioning Apple’s moves on tracking consent and IDFA. Let’s try to clarify things a bit.
Prepare to have options
Between Google, Apple, and the “open web” ad tech players, there seem to be at least three different approaches publishers will need to test and adapt to:
Google’s FLoC, which might (or might not) become an industry standard;
Apple’s strict app tracking rules and Safari ITP limits; and
Unified ID 2.0 or whatever other standard emerges from the IAB TechLab working group, assuming that either regulators or the browsers don’t block those cookie replacement solutions.
Publishers and advertisers alike have fought an increasingly brutal battle against the walled gardens. Chatter has abounded that the cookieless future could tip things in their favor. Google’s latest announcement actually runs counter to that theory. Their publicly confirmed focus on Privacy Sandbox means, in the words of Magnite CTO Tom Kershaw, that Google will “actually use the same tools as the rest of the industry.” The end result could be a peaceful coexistence of the Chrome solution, user logins and publisher first-party segments. And that would mean choice for publishers, advertisers, and consumers alike.
Focus on first-party data and identity
While there’s an element of self-interest, it does seem clear that Google is developing solutions to make it possible for publishers to activate first-party data. These include non-PII user IDs in the Google ad ecosystem. Of course Google relies heavily on first-party data and known user identities in YouTube, Search, Gmail, and its other properties. So, limiting publishers’ ability would be hypocritical. It would also be risky at a moment when the company is under antitrust investigations in more than one country. However, from a publisher perspective, this is further reinforcement of the need to focus on first-party data and identity.
Start your transition now
In some ways, we’ve been our own worst enemies in the run-up to third-party cookie deprecation. Many publishers and advertisers have awaited Google’s next move as if we were pawns in a drawn-out chess game instead of coming up with a plan and starting to execute on it. Let’s not so quickly forget that where third-party data offered efficiency, it often lacked effectiveness, due to uncertainty of where it comes from and, therefore, its accuracy.
Six steps for transitioning away from third-party cookies
There are six areas you need to cover as you begin your shift away from third-party data:
1. A minimum amount of zero-party data
It’s not just about first-party data. Zero-party data — the data that users volunteer to you via other explicit data-capture tactics like registration forms — will be just as important. You need a certain amount of data to generate effective lookalike segments. To do that, it’s necessary to start targeting some segment of your audience and guiding them to register and provide their data with incentives such as the ability to access locked content.
2. Tools for storing and managing consent
Whether it’s a data-management platform, a customer-data platform or a consent-management platform, figure out now where you will store all of this data and consent.
3. Audience segmentation tools
You need audience segmentation tools to create subsets of your users. This can be based on like characteristics extracted from zero- and first-party data. They can also leverage lookalike modeling to produce larger audience pools.
4. Collect data at the right moment
Collecting more data over time requires thinking through the right moment in the customer journey to ask for it. At each stage, aim to understand how to move users deeper into the funnel with the right offers that will net you more data to round out your customer profile.
5. Vet identity partners
You need one of these to replace cookie-matching and activate all that zero- and first-party data you will collect. Be sure that you vet their offerings to see which identifier could work best for your business.
6. Start testing solutions now
As Travis Clinger, SVP, Addressability and Ecosystem at LiveRamp, said in our recent Piano Academy event: you don’t want to get caught trying to apply new technologies and strategies in the middle of the Q4 holiday season. It’s worth testing different solutions, including identifiers and different data- or consent-management platforms, now.
We’ll be sure to hear more from Google publicly throughout the year. It will remain important to read successive announcements with a critical eye. We’ll need to remain focused on the steps required to prepare for third-party cookie deprecation now (as opposed to needless panicking). And remember you have a whole industry navigating this transition with you as we move towards a new era of privacy-first personalization.
Last year we warned about the imminent approach of a new consent economy, born out of privacy regulations, that would completely reshape the ad tech ecosystem publishers have used to develop their monetization strategies. To no surprise, it has arrived with consent and first-party data as the new currency. The consumer now has a seat at the table and the ecosystem is experiencing a total rebuild of itself as we speak.
Now that the consumer has a louder voice, and with regulation forcing the issue, the major tech titans are at war with one another to emerge as the frontrunner in establishing privacy enablement. Each one is making attempts to change the game by leveraging their technology to align with the calls for privacy from regulators and consumers alike. Certainly, these concerns are legitimate. However, the outsized influence they have in the space allows them to take a favorable position. In particular, they can corral everyone in their ecosystems into their new privacy sandboxes.
Apple’s sandbox
Applying Apple’s rules within their ecosystem isn’t new. They were making moves around privacy long before the other tech giants. Publishers felt the loss in monetization when Apple began blocking third-party cookies in Safari. With Apple’s eyes now aimed squarely on the Identifier for Advertisers (IDFA) and strict adherence to the terms of use around it, publishers must adapt to yet another rule change and monetization threat. By controlling a large percentage of a premium market, Apple has the power to make rules everyone will be forced to follow.
If DSPs believe IDFA is the only and best buying signal, publishers and suppliers will need to prepare to support it to comply with advertiser demand and ensure inventory is eligible for DSPs to bid on. Yes, publishers can still monetize without the IDFA signal. But if a buyer wants to transact utilizing IDFA vs. a publisher’s own first-party data signal, what choice does a publisher really have?
Google’s sandbox
Google, on the other hand, seemed to hope to ride out the waves of conversation around privacy and didn’t eliminate third-party cookies right away. When it became clear the issue was gaining traction and that regulation loomed, they introduced their own sandbox. Through the introduction of the Federated Learning of Cohorts (FLoC), Google is essentially proposing privacy policy that ends up favoring their ecosystem more than it already has given their existing ad tech stack dominance around the globe.
With Chrome currently accounting for 46% of browser share and Android accounting for 40% of the mobile operating system market share in the U.S., publishers will find themselves forced to play along yet again to a rule change that they had little influence in formulating. As of this writing, Google will be the one defining the FLoC cohorts (their version of IDFA) and allowing publishers the opportunity to feed their data into the respective cohorts. Peculiarly, they will be the only player able to do cross-site tracking and attribution, leaving publishers with little influence on garnering their fair share.
As a result of these big tech players calling the shots and the rest of the industry trying to figure out how to play in this new world, other players have also begun building sandboxes. For example, The Trade Desk is working with independent industry organization Prebid.org to introduce a Unified ID 2.0 and Magnite introducing a PARROT proposal. Globally, there are many other ID initiatives also in development as the entire industry tries to figure out how to thrive in these new sandboxes.
Build your sandcastle
As with any change made by big tech, it is in the best interests of publishers to adopt an agnostic view in attempting to evolve strategies for each respective sandbox. Regardless of which sandbox you’re playing in, you must build and fortify your own sandcastle.
The first step in doing so is to remember that big tech needs the publisher in this equation. Why? Because the publisher is the one collecting user consent and in control of the first-party data, which are the key components of trade in this consent economy. This is why it’s critical to defend data at all costs and only use it as leverage for garnering a fair share of the transaction with advertisers.
Creativity rules
With third-party cookies dead and gone, advertisers will still seek to trade around audience and context. With publisher first-party data the most critical and stable component to monetization, developing strategies for understanding and monetizing audiences in a cookieless world remains a priority.
Publishers will need to leverage new offerings to provide advertiser options in scenarios of consented and non-consented traffic. For example, non-consented traffic can be supplemented by semantic data points or other valuable, non-identifiers. Industry inflection provides an opportunity for publishers and advertisers to come together to discuss how to best reach and speak to the consumer via varying deal types or placements.
Despite the flux around the ecosystem’s evolution, there’s no time to waste in beginning to build your castle to ensure you’re getting your fair share. By remaining engaged and being protective of your data and your partners, you can begin to lay a foundation for establishing your place in the sandbox. As the topic depends on the outcome of future decisions, it’s important to stay informed on its evolution and to ensure your castle is strong enough to withstand any future headwinds.
Among the many changes witnessed in 2020, cookie deprecation has sparked conversation throughout the industry. Technological shifts, driven by browsers, alongside increased privacy legislation combine to create new challenges for advertisers looking to reach specific audiences. As a result, IAS found that 49% of industry experts surveyed in our 2021 Industry Pulse Report listed third-party cookie deprecation as the top challenge for the upcoming year.
The implications for advertisers have been widely listed: targeting, measurement, and attribution will all be affected. But what does it mean for publishers? And how will it shape relationships with advertisers and ad tech vendors?
How did we get here?
While browsers are undoubtedly driving the pace of cookie deprecation, consumer concerns about privacy and data collection also play a role. Last year, IAS found that 88% of consumers are aware that websites and apps collect and share their data for advertising purposes. And, unaspiringly, this finding coincides with increasing global privacy legislation. Between cookie deprecation and legal requirements, the industry is witnessing a seismic shift in how digital ads will reach consumer audiences.
What are the implications?
The bad news is obvious: Third-party cookie deprecation challenges current methods of audience targeting, attribution, cross-channel targeting, and measurement. However, that doesn’t mean third-party cookies provide the best method for reaching consumers.
Third-party cookies are not only limited to web environments, but they also have device and household limitations. In other words, third-party cookies don’t necessarily have a one-to-one relationship to actual consumers. Therefore, it can’t represent a precise “identity.” The good news? Knowing this, third-party cookie deprecation presents the industry with an opportunity to find something better. For publishers, the shift creates an opening to regain control over the value of their media and how they provide it.
How do publishers play a role?
In the short term, publishers can help advertisers leverage current technology that bypasses the use of third-party cookies. By proactively responding to the shifting environment and enabling the use of existing, developing solutions, publishers can establish themselves as partners to advertisers in this new era of digital advertising.
Verify that inventory is viewable, brand safe, and fraud free
Publishers should take time to review their inventory and assess for viewability, brand risk, and fraud. Ensuring that ads have the opportunity to be seen by real people, in brand suitable environments will remain the first step for advertisers looking to connect with consumers. By proactively evaluating content, publishers will be positioning themselves as partners to advertisers in the evolving digital landscape.
Work with a partner to optimize advertiser KPIs
Verification companies can provide more than reporting capabilities. Publishers should consider partnering with a verification provider that delivers solutions which automatically optimize their inventory toward advertiser KPIs.
Unlock value with contextual targeting
As the industry seeks alternatives for audience targeting and identity resolution, contextual targeting is experiencing an innovation renaissance. Industry innovators have been revisiting the technology, improving it, and creating new, exciting solutions to propel targeting tactics forward.
Publishers who package their inventory with content in mind will have an advantage in building relationships with advertisers shifting toward contextual methods. Additionally, publishers can work with verification partners that pre-screen pages and develop curated pre-bid segments to ensure they’re helping brands target the right environments for their audiences.
What about the longer term?
In the long run, the future of identity resolution will require advertisers to work directly with trusted partners across the entire ecosystem. While there is unlikely to be a single silver bullet solution, publishers should be considering the consumer, what devices they’re using, and how to marry various identifiers to create a robust understanding of their user.
All aspects, from email addresses in an effort to build Pseudonymous Deterministic Authenticated Identification, to latitudinal and longitudinal coordinates, to CTV IDs should be considered when thinking about working with brands to identify consumers. With direct access to first party data, publishers have intimate knowledge of their consumer base. This will allow them to help advertisers start to piece together identity in the absence of third-party cookies.
As cookie deprecation approaches, publishers should expect brands to become more reliant on their data and content expertise. However, despite the challenges ahead, publishers hold the key to establishing themselves as trusted partners in this rapidly changing ecosystem.
