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Perspectives | Revenue

Digital ad sales up, newspapers too, but tv is another matter

For so long, the narrative on advertising spending has been a major shift toward digital, with print media bearing the brunt of the losses. But recent figures from the Standard Media Index (SMI), which monitors 80% of all U.S. spending mixed things up a bit with digital rising fast (up 29%), but newspapers also rising (up 18%) while TV ad spend slipped 4%.

The growth of digital advertising, at least, comes as no surprise. But newspapers had a rare bright spot in the report, and TV is showing some weakness.

Digital Gains
According to Shelleen Shum, an analyst with eMarketer, the value gained by digital spending doesn’t match the value being lost in traditional media. Television still wins when it comes to reaching a massive audience quickly, for example, and some advertisers may be wary about the accuracy of measuring and targeting digital advertising despite its rise. (eMarketer, for example, previously estimated that digital spending in North America would rise by 16.8% to reach $62.07 billion in 2015). Adding to that are concerns about fraudulent advertising on the web, as I’ve written about before.

Because digital advertising is often touted as more cost-effective, it also shakes up spending throughout the advertising world. “When advertisers shift budgets to digital media, they expect to save on their overall ad spending. Digital media thus has a deflationary effect on the broader ad market and can hurt the pricing power of traditional media,” the Wall Street Journal’s Nathalie Tadena wrote, citing feedback from the director of global forecasting at Magna Global.

Still, according to Magna Global’s research, digital media ad revenue will surpass that of television’s a year faster than predicted. It’ll become the biggest media category next year, generating $66 billion in revenue.

Newspapers and TV
Given the situation, traditional media can stay competitive by enhancing digital outputs. Newspapers’ ad growth suggests that consumers haven’t given up on them entirely even though circulation rates have been going down. SMI’s Jeff Fennessey told Media Life that newspaper print advertising was up 18% in September because “consumer electronics and entertainment both doubled their spend in the quarter, which really drove these exceptional results.” That even outperformed gains of 10% on the digital ad side for papers.

While the print bump is nice, newspapers know they need to continue to focus on developing digital audiences. Joan Shorenstein Fellow Matthew Hindman pointed out in a research paper for Harvard’s Shorenstein Center that if “faster load times lead to higher traffic”—which research consistently suggests — that’s an indicator of where there’s room to grow.

Barrett Golding, a fellow at the Donald W.  Reynolds Journalism Institute who ran a performance test on U.S. newspapers sites and visualized the sluggish load times, pointed out that many large news sites such as CNN have already invested in making sure their pages load quickly and effectively.

Television, meanwhile, hoped to attract big audiences and advertising with hit programs, football broadcasts and the presidential debates. But SMI found that it hasn’t happened yet, with the 4% overall drop in TV ad spending.

Even the upfront ad buys for TV, which kept prices high for some years, have finally lost their luster.

“The system has typically kept TV commercial prices high — even though advertisers feel they’re locking in discounts because they are buying in bulk,” Business Insider’s Lara O’Reilly wrote. With upfront spending having dropped by 10% in 2014-15, and television advertising purchased closer to the time of broadcast during the “scatter market” growing by 10%, that’s a signal that focusing on the scatter market — which tends to be cheaper — will become more important.

To be sure, just because digital advertising is rising more than any other type of media doesn’t mean that non-digital advertising, including television, is at a loss. Television’s staying power, in fact, comes from the fact it it can work digital advertising to its advantage. Online video is capturing much of the money being put into digital advertising, and television broadcasters and networks tend “to own the best premium video content,” as O’Reilly wrote.

In other words, it’s not necessarily about traditional versus digital advertising, but about how all media outlets can take advantage of multiple platforms—digital and traditional—to capture and hold gains.

Advertising | Perspectives | Revenue

Viewability problems spread to video ads on social

A funny thing happened on the way to social distribution domination. While publishers have started to test more and more original content on social platforms such as Facebook, YouTube and Snapchat, those platforms are still suffering from problems of viewability for ads—especially with video.

Let’s look at the statistics: The Media Rating Council and the Interactive Advertising Bureau suggests a video ad is viewable when at least half of the ad’s pixels are visible on a screen for at least two consecutive seconds. An April study by Google found the average viewability of video ads across the web (not taking YouTube into account) was 54%. When considering video ads on YouTube, that figure jumped to 91% across different devices and apps — and video ads were significantly more viewable on mobile and tablet as opposed to desktop. Non-viewable ads, meanwhile, were either scrolled off the screen or abandoned in less than two seconds.

Short Attention Span on Snapchat
Yet just because ads might be more viewable on mobile than on desktop doesn’t discount the anxiety surrounding their worth. A recent article on Digiday found a full 70% of Snapchat’s mostly millennial audience had moved on from an ad after only three seconds. Given Snapchat currently charges brands for video ads that are viewed for even less than a second, it’s not only raised discussion on the definition on viewability, but also the relative value of these ads for brands.

“Snapchat is using this measurement that just seems off from what brands and clients want and where the rest of the industry is going,” a digital marketing insider with knowledge of Snapchat’s ad model told Garrett Sloane of Digiday. “If an ad is on the screen for less than a second, it’s hard to imagine it made an impression.”

Despite the ongoing debate on the impact of technology giants becoming the gatekeepers for brands and publishers, the platforms will have to work more closely with these parties if they are all going to have long-term, stable ad revenues. Twitter, for example, offers six-second pre-roll ads. Facebook also “teaches brands how to capture attention within three seconds, using muted auto-play videos, which people can scroll right past,” Sloane wrote in Digiday.

Third-Party Verification?
Some companies are demanding third-party tools be used to evaluate which advertisements are actually being seen, to help ensure the accuracy of the information and maintain higher viewability. Complaints from Uniliver and Kelloggs are suspected to be behind YouTube’s announcement to use third-party tools instead of its own in-house measuring tool, Active View.

But this also has its negative consequences. Facebook, for instance, has argued that “third-party verification view tags often slow down consumer experience and don’t always report views consistently,” and has hinted that these third-party verification tools could compromise valuable user data. And Facebook — whose log-in can track which desktop or mobile devices people use — has access to the consumer data that is so crucial to advertisers. That data is difficult for most publishers to obtain otherwise, and generally harder to determine on mobile, because the varying size of different gadgets require different kinds of advertising.

Maintaining a quality user experience versus earning revenue from advertising seems to be the trade-off that’s happening on social platforms. Snapchat, for instance, maintains brands won’t be charged if viewers skip an ad entirely. But it  also offers its users the chance to skip any advertisement they wish.

These are early days for video ads on social platforms, so there could be more standards among the major players in the near future. That could go a long way toward addressing viewability issues. Snapchat videos, for instance, take up the entire screen (so eyes can’t wander), and also use the vertical video format which leads to higher view rates.

Or publishers and brands could also try another route to better viewability: better ads, and even native ads that are creative enough for people to play through and share without skipping in disgust.

Advertising | Perspectives | Revenue

Is Programmatic Part of a Winning Strategy?

There is always a sense of inevitability when it comes to robots and automation. Of course, factories are automated and these days, robot write basic news stories. We expect some kind of self-driving car to hit the road in the not-so-distant future. But what about online ad sales? Should that process be completely automated or is there still a need for one-on-one custom attention for each sale?

While the trend among larger publishers has been toward more programmatic ad sales, it was recently  reported that some are bucking the trend.  As the Wall Street Journal’s Mike Shields wrote, Vox, Mic and Refinery29 — “the much hyped cadre of venture-backed, web-born, and millennially-inclined publishers,” are largely shunning programatic ads. Perhaps the most firm stance against it has come from Mic’s chief executive, Chris Altchek, who said the site doesn’t use any programmatic advertising at all. Whereas Vox has actually made moves toward embracing programmatic, albeit carefully.

The backlash against programmatic and ad tech is based upon the sentiment that it degrades the user experience. When prominent publishers need multiple ad tech providers to accomplish different tasks, that “mass of tech” slows the speed at which web pages load. Frustrated users then do what seems to be a logical solution: install an ad blocker. And to some publishers, that makes it seem a lot like ad technology companies drive a publisher’s profits away. The fact is that each media outlet needs to carefully consider the potential revenue programmatic can generate versus the possible lost advertising as a result of poor user experience.

Push for Branded Content
“Once you get to a certain size as a publisher, in order for ad tech to make sense it has got to move the needle,” said Scott Grimes, the chief executive of the media publisher Woven Digital. “Just an incremental thousand bucks is just not worth it.”

Instead of relying on ad technology, newer web publishers are looking more to create branded content specifically for their sites. BuzzFeed has been the ring-leader of this trend. Vox, meanwhile, has Chorus for Advertisers, which uses its Chorus insights platform to enable brands to create and distribute the kind of content that works with Vox’s editorial voice.

But Vox Media’s vice president of global revenue and partnerships, Mike Hadgis, admitted this is just one stream of advertising revenue. “Native advertising/branded content, premium editorial, custom high-impact units, video, mobile, social…are all important solutions for our marketing partners and give us a well-rounded portfolio of advertising revenue,” he told Capital New York.

Difficult to Change the Trajectory
But it’s hard to say if a few holdouts will really slow programmatic’s march toward a permanent niche in the industry. Industry insiders speculate that the whims of a few publishers can’t change the general trajectory of the ad technology landscape even if they might have some influence. What they have that other publishers do not is venture capital, which gives them the financial leverage to take such a position on advertising.

Seth Rogin, chief revenue officer at Mashable, told the WSJ that being anti-programmatic is another way of saying one doesn’t understand programmatic. “You start to sound like the old uncle who complained that they’d never go on Twitter.”

And the overall numbers back him up: Programmatic advertising comprised 20% of all Internet advertising revenues last year, worth $49.5 billion, according IAB’s first-ever report on programmatic revenues. That said, ad tech revenues represented approximately 55% of the programmatic revenue pie in 2014 with approximately 45% of programmatic revenue finding its way to publishers.

However, whether you consider programmatic ads as useful and necessary or think that that programmatic is going to take away from the experience of a site, the important thing to remember is that a tool is only useful when it’s used the right way. The trick, then, is to figure out just the “right way” to leverage ad automation so that it supports your site and pleases your audience.

 

Innovation | Revenue

Bon Appétit and Epicurious Cater to Marketers and Consumers with Buy Ingredients Button

With its unique perspective on food as part of an overall lifestyle – “life through the lens of food,” – it makes sense that the team at Bon Appétit is always on the lookout for innovative ways to cater to its customers’ needs and evolving expectations. Epicurious, its sister site, is no stranger to digital innovation—with its popular app and ever-expanding range of interactive tools and video content. Together, these brands make-up Condé Nast’s Food Innovation Group, which was formed a year ago to offer advertisers both brand equity and scale.

popcartThe group’s latest move supports both of these objectives. Visitors to the Bon Appétit and Epicurious sites who find a recipe they’d like to prepare can now hit a “buy ingredients button” that integrates with popular grocery delivery services to simplify their shopping. Condé Nast partnered with Popcart—which works with a number of grocery delivery services such as FreshDirect, Peapod, and Roche Brothers—to automatically generate shopping lists based on a recipe’s ingredient list, and then have them delivered directly to your door.

According to Eric Johnson, Associate Publisher, Bon Appétit & Epicurious, The Food Innovation Group, this solution was an obvious fit for fans of Bon Appétit and Epicurious, who are busy parents and professionals with an increasing expectation for one-click solutions that deliver what they need with a minimum investment of valuable time. “The brands that are gaining the biggest traction in the market are solving for consumer problems,” says Johnson.

This extension of its digital offering was a “no-brainer” from a conceptual standpoint according to Johnson who says that the editorial and business sides of the team all saw the appeal right away. The trick, however, was in finding the best partner that could enable the broadest cross-section of its audience to leverage the shopping tool. At launch, Popcart service is concentrated on the East Coast, Illinois and Wisconsin. However the company is shooting for nationwide reach as more retailers offer delivery services. And, given that the online grocery business is predicted to reach $18 billion in revenue in the next few years, Johnson says that Condé Nast wanted have an early foothold in this market.

While increasing its utility to end users is a focus of the Food Innovation Group, Johnson says this offering also allows the division to create new opportunities for advertisers. In addition to providing highly-relevant advertising placement, the new “buy ingredients” feature offers two marketing opportunities: When a reader adds recipe ingredients to their cart, “First in Cart” partners are made the default brand for a given ingredient. For example, if a recipe calls for mayonnaise, Hellman’s (a launch partner) would be the default choice, though consumers have the ability to edit their cart to eliminate or substitute any ingredients. The second marketing opportunity is “May We Suggest,” which recommends items that would complement a given recipe, such as launch partner Stacy’s Pita Chips to accompany a spicy hummus recipe.

Other than the process of finding the right solution for fulfillment, Johnson says that implementing the “buy ingredients” button was fairly straightforward only taking the tech team about 4-6 weeks to implement on both sites. However the process also involved some editorial mapping to suggest substitutions for products that participating retailers might not stock.

Editorial participation and buy-in will be essential as Johnson emphasizes the need to maintain consumer trust—and reliance on—these Condé Nast food brands. Johnson says that with the positive influence of executive director Eric Gillin, who he describes as the perfect blend of content and technological expertise, the teams at Bon Appétit and Epicurious have been inspired to increase their focus on innovation that serves consumers throughout the entire purchase funnel from exploration and inspiration and how-to all the way to the shopping cart. Next up: pre-built complete holiday meal planning tools, which can scale to number of guests and include the shopping functionality.

And Johnson is looking forward to the continued collaborations from Condé Nast’s Food Innovation Group. “We’re always looking for ways we can engage consumers. Providing a service, solving for a challenge—these things only help reinforce us as a brand you are going to seek out because we are a trusted resource.”

Revenue

The Secret to Harvard Business Review’s Subscription Success: Its Customers

Want people to pay for your content? It’s simple: Get to know their needs, and create content experiences that meet them. That may sound simple but as Harvard Business Review’s (HBR) success shows, it takes a lot of work to get it right.

Josh Macht, Harvard Business Review Group Publisher, describes their process as an on-going conversation with customers. These days, that means finding multiple ways to interact with not only HBR’s 285,500 paying subscribers, but also the 5 million people in its database. These interactions take place through live events, in-depth querying of the 19k members of its advisory group, and a significant investment in analytics. Macht says HBR has become “increasingly scientific with data and analytics on the backend” but that all of these approaches in tandem are what provides them with the ability to design products users not only want—but are willing to pay for.

Vice President of Marketing Sarah McConville describes it as a Venn diagram where the ideal subscription offer is conceived of at the intersection of content, format and audience. “Obviously, it all starts with producing high quality content that our readers find valuable and we are always thinking about how we can continue to stay on the cutting edge of business research and thought,” she says. McConville also points out the many ways that HBR has expanded their format over the past five years—from its redesigned website, to a magazine redesign that’s in the works, as well as its print and ebooks, digital tools and events. Emphasizing the role that audience understanding plays in the company’s subscription strategy, she also notes HBR’s “significant investment in understanding our readers through audience research, website and social behavior analytics, and targeted discrete research.”

HBRvisuallibrary_1The clearest example of both the product development and subscription strategy emerging from this process is HBR’s Visual Library, which made its official debut in June. It allows paid subscribers to access a continually expanding collection of HBR’s charts, infographics, and fully customizable slide decks. The product came about after customer research revealed how many users rely on HBR information for their own presentations and the value of making that process easier for them. Both the research and new offering have paid off: On the day the Visual Library was announced (via its 5-million strong database), it became the second most trafficked page on the site, almost immediately triggering renewals by a slew of previous subscribers who had not yet re-upped. And the Visual Library generated more than buzz and renewals; it brought in new subscribers at an increased subscription price.

“What we’re trying to do is not take the approach of ‘add more, pay more,’” says McConville. “Instead, we try to find the right combination of elements that justifies a higher price.” She points out that as the print-to-digital migration has evolved, we’ve seen readers go from a wiliness to pay for, say, a tablet edition in addition to print to “merging the value of digital and print together.” To charge a premium, she says today’s content consumers demand more than format, they need tools that allow them to leverage the content in ways that “save them time and gives them confidence.”

Macht recognizes that, given the media industry’s increasing concern over the volatility of the advertising market, a wide range of publications are considering subscription offerings. However he also identifies a significant hurdle standing in the way of their success: “Though they say they want to get into the subscription business, they are still in the ad business. A dual focus is really difficult to support.” Unfortunately, many of the underlying requirements in driving the views necessary to support an ad-supported model run counter to those of developing a robust subscription business.

Macht knows firsthand how challenging these internal cultural shifts can be, pointing out that “way back when I first joined, we needed to open up the funnel, but the DNA of the organization was ‘we sell everything so we can’t give it away.’ But we didn’t have a pulse on the web.”  Years later HBR is flourishing online both at its site, which boasts 5 million visitors a month, and through its 6 million social media fans and followers. This year’s new website design was accompanied by a redesigned freemium model. Now anonymous users can access five free articles a month, and if they register—making them a more highly addressable audience—they can access up to 15. HBR has also opened up the site content and toolset to those registered users for July and August, which has already doubled the daily average of people registering.

Then the process of getting to know these recently registered people to subscribe begins in earnest. And that, as Macht and McConville will affirm, is not just about conversion, it’s about an ongoing conversation.

Revenue

Interview with Robbie Kellman Baxter—author of The Membership Economy

A decade ago, DCN’s Editorial Director, Michelle Manafy, wrote an article about American Express’s campaigns around membership and how they used the concept of “membership” to create a clear value proposition. Having coined the business term “Membership Economy,” Robbie Kellman Baxter found a kindred spirit in Michelle. And, during a recent conversation, the two covered a broad range of topics, some of which we hope will be useful to the members of our community. Here are a few highlights from that discussion:

Please define “the membership economy” and describe how it differs from the sorts of subscription models used by the media for decades:

The Membership Economy is a massive new trend that is transforming virtually every major business sector, including media. It’s about access over ownership, relationships over transactions and community with multidirectional communication as more important than one-way push communication.

Subscriptions are a pricing decision; Membership is about the mindset of the organization.

Describe “the forever transaction” and “lifetime customer”:

7stepmembershipIn the Membership Economy, the transaction is the starting line, not the finish line, and it’s a forever transaction. What we mean by this is that at the moment a customer conducts the initial transaction with an organization, their plan is to stay forever, or at least until that organization no longer provides the promised value or that value is no longer needed. Organizations often focus on lifetime customer value, but they should be focusing on lifetime value to the customer, instead of just the lifetime value of the customer.

The question is, what is your promise to your customers? If they are looking to you as a source of news, for example, the promise is much bigger than “a daily newspaper”. It could be access to an event featuring a foreign correspondent, or a bundle for arts lovers that includes a subscription to Spotify, or the ability to share thoughts about specific trending topics with fellow readers. The idea is to focus on the mission as more important than the products.

With the “commoditization” of media, how can the concept of membership offer new insights/ models that media companies can apply to stand out, attract and retain customers?

In Membership businesses, specific products and services often become commoditized over time. Organizations need to expect this to happen and be prepared to continue to evolve to keep ahead. What can be protected today is tomorrow’s commodity. For example, professional associations have long provided directories as a key value. Today, LinkedIn makes nearly all professional directories commodities. Newspapers used to have access to the very expensive and relatively rare channel for distribution—printing presses and delivery guys. Now, with the internet, distribution is no longer the differentiator it once was. Organizations need to constantly re-evalute how to provide differentiated value to their members that can’t be accessed elsewhere.

For example, Pandora offers a unique experience for music discovery and enjoyment, but also invests in building a community among members, through its live town halls, logo-swag and culture committed to personalized responses to outreach by any member.

Where does “free” fit into the membership economy?

Not every organization should provide free stuff, but every organization should consider how free fits into their business model. Free can include both free trials, which are generally a “complete taste” of the offering for a finite period of time, as well as freemium, which is a free subscription, usually to a limited experience.

There are three reasons that free can make sense for an organization:

  1. When free drives awareness and trial (typically what media companies do—such as the New York Times’ free articles before hitting paywall)
  2. When there’s a network effect, meaning that each new free member drives value for each existing paying member (such as LinkedIn)
  3. When a viral effect, meaning free members become channels for new paying members (such as the situation in the early days of Hotmail, when free email users sent emails to people who later became paying subscribers)

There are some cases where none of these benefits accrue, so free isn’t always good, but it’s always worth considering.

Could you provide a couple of examples of “membership” strategies from other industries that could be applied to today’s digital media industry:

  • Expanding benefits to include access to unique events—Caesar’s Entertainment often invites their most profitable members to meet Celine Dion, Elton John and other stars as they prepare for their nightly shows.
  • Using segmentation and persona generation to identify pockets of customers that are pushing the envelope of their usage and willingness to pay, to inspire new offerings and subscription categories. For example, American Express continues to release different types of cards. All cards promise to “have your back” but after many years of moving upmarket, from green to gold to platinum to black, they are now introducing debit cards targeting the underbanked community.
  • Investing in building high value relationships among key members of the audience—relationships can never be commoditized. For example, “Million Dollar™ Consultant” Alan Weiss provides his subscribers with access to an online community in which members share stories and advice with one another. While this community is free to members, it serves an important function for Alan, keeping a large group of former clients active and engaged in his community, and willing to listen to new offers and promotions.

As with any industry, it is important to be aware of what your peers (or competition) are doing, but it is also important to keep an eye on what others are doing and how it can be applied to your business. Once, memberships were only for clubs or organizations like Digital Content Next, right? Today, the concept of membership can be applied to any number of industries or offerings to create genuine value to customers and profitable experiences across the board.

 

TheMembershipEconomyRobbie Kellman Baxter created the business term “Membership Economy” and recently published the book The Membership Economy: Find Your Superusers, Master the Forever Transaction and Build Recurring Revenue.

Baxter is the founder of Peninsula Strategies LLC, a strategy consulting firm. The Peninsula Strategies website is www.peninsulastrategies.com. Her clients have included large organizations like Netflix, SurveyMonkey and Yahoo!, as well as smaller venture-backed startups. Over the course of her career, Robbie has worked in or consulted to clients in more than twenty industries.

Before starting Peninsula Strategies in 2001, Robbie served as a New York City Urban Fellow, a consultant at Booz Allen & Hamilton, and a Silicon Valley product marketer. She has an AB from Harvard College and an MBA from the Stanford Graduate School of Business.

Innovation | Revenue | Video

Passion Play: Lifetime Launches Movie Classics Subscription Service

Boasting classics like Sexting in Suburbia, Flowers in the Attic, and Mother May I Sleep With Danger, it is an understatement to say that Lifetime has a passionate fan base. With an increasing number of networks experimenting with standalone digital services, A+E has deliberately taken a different route with the debut of its Lifetime Movie Club subscription video service—one that aims for the heart of their ardent audience.

“We view the Lifetime Movie Club as complementary to our Lifetime channel,” says Evan Silverman, SVP of Digital Media at A+E Networks. While the network has no plans to disrupt its existing relationships with television providers and distributors, Silverman points out that “A+E Networks has been very aggressive in delivering on a lot of different platforms,” which include iOS and Android apps, Apple TV, Roku and Amazon Fire. The network takes pride “in finding new ways to deliver our long form content to audiences.”

FlowersInTheAtticWith its latest digital move—their first direct-to-consumer subscription service—A+E will offer subscribers access to a rotating library of Lifetime movies without commercial interruptions for $3.99 a month. The app features more than 30 movies about four new titles cycled in on a weekly basis. Silverman says that the decision to cap the number of movies enables A+E to maintain its flexibility in using its library in other environments. In fact, the Lifetime Movie Club idea arose as a way to leverage the depths of the Lifetime movie library.

But that was definitely not the only reason. “When we were thinking about what subscription product to launch we wanted to find a library of content that had a passionate audience,” Silverman says. And the Lifetime audience fit the bill. He describes them as a truly devoted group of fans who will be willing to pay to watch the classics they love. And given that the monthly price is about that of buying a single movie through iTunes, Silverman believes that Lifetime’s loyal fans will ante up for access.

A+E plans to continue to explore a range of models to distribute its content including a recent move to become part of the Dish Sling TV offering and exploration of other subscription products with its networks. “We’re open to models that make financial sense and serve our viewers well,” says Silverman. And while we may see similar offerings that “leverage library content to super-serve fans,” the additions to its digital offerings are intended to complement and round out the company’s range of offerings. “We’re not trying to blow up the television industry.”

Advertising | Perspectives | Revenue

4 Tips for Improving Programmatic CPM

The premise that the rise of automated buying and selling through programmatic technology would have a negative impact on a publisher’s’ ability to increase—or even maintain—their CPM rates is continuing to erode. Many were surprised to learn that the 2013-2014 CPM trend for social, mobile and display across programmatic ad platforms was one of growth, not decline.

PulsePointfigureAs the click declines from its position as the metric of prominence, contextual data, viewability and high impact opportunities for engagement have become increasingly valued and sought after by brands. Today, marketers increasingly realize that “you get what you pay for” but they expect that price tag to come with the same scale and efficiency programmatic technology delivers. So how can publishers use data and technology to command premium pricing for the premium experiences brands want—and consumers expect?

Here are four strategies publishers can adopt to not simply survive, but thrive, in a programmatic world.

  1. Make your audience and contextual site data available and visible to buyers. Move beyond offering standard cookie-reliant targeting with contextual technology. Real-time, page-level contextualization of your content increases the likelihood that a person sees an ad that’s relevant to them—delighting your audiences and the buyers who want to reach them. Contextual analysis at the page-level will enable you to offer audience segments interested in that content at greater scale, beyond 1st party and 3rd party cookie pools. Contextual data can help increase yield and revenue by showing the value of inventory buyers would normally overlook.
  1. Upgrade your site to support more advanced ad functionality and cross-screen delivery. Large-format, high-impact ad sizes are designed to help brands get their ads noticed and have been shown to improve interaction rates, increase time spent and improve brand recall. The IAB recently released research showing that consumers find Rising Star ads more engaging and more informative than standard units. This makes them especially valuable to brands, who tend to bid higher on these formats. With an estimated 60% of web traffic coming from mobile, it goes without saying that your site should be mobile optimized. It’s worth spending the time and money to upgrade your site internally, or many technology partners can help you integrate new ad formats and optimize for mobile experiences quickly and easily.
  1. Understand how much of your content is viewable—and make sure you can deliver against it. Viewability is moving from “nice-to-have” to “must-have” in a buyers mind. Make sure you know how much of your inventory is viewable and provide transparent reporting against that number to clients. Publishers who can offer a pricing model that incorporates viewability (e.g vCPM) will emerge the winners, as brands will pay a premium for guaranteed viewable inventory. An easy way to get started is to ask your monetization partners if they have viewability-tracking and reporting tools to layer on your current offering—some even offer this as a value-add service.
  1. Adopt a “test and learn” approach to programmatic partners. Don’t accept the status quo from your current monetization partners. As the programmatic landscape matures, earlier pain points of integrating new technology partners are starting to subside as onboarding and operational processes have become standardized. There’s no such thing as a “one size fits all” programmatic partner, so don’t be afraid to test multiple providers concurrently to compare performance; leverage the real-time nature of programmatic to find the right solution that will help ensure a premium for your unique audience and content.

This isn’t the first time publishers have been forced to evolve alongside major industry change, and it most certainly won’t be the last. By 2018, more than 80% of display ad dollars will be transacted programmatically. Publishers that adapt to this new way of doing business and embrace the innovation it spurs will be the ones to reap the benefits.

Darline Jean is the Chief Operating Officer for PulsePoint, responsible for shaping product strategy focused on enhancing the company’s premium programmatic and content marketing solutions. Before joining PulsePoint, Darline was President and Chief Executive Officer of The About Group where she was responsible for the strategic direction of the business unit of The New York Times Company that includes About.com, CalorieCount.com and ConsumerSearch.com. During her tenure as President and CEO, she significantly increased the company’s revenue and led the sale of About.com from The New York Times Company to IAC in 2013. Darline has also held the title of Chief Operating Officer of About.com and Senior Vice President, Chief Financial Officer of the About Group.

Prior to The About Group, Darline held various financial leadership positions with Thomson Media, a division of Thomson Financial. She began her career with Saatchi & Saatchi Advertising in New York.

 

Innovation | Revenue

What Drove Hearst to Invest in Ride-sharing Service Via?

Darcy Frisch, vice president of Hearst Ventures, discusses the unique model, business structure and future of Hearst Ventures’ newest investment, ride-sharing service Via.

Hearst Ventures is always on the lookout for the next big thing in the technology space that can help impact consumers’ lives. The group’s newest investment, ride-sharing company Via, shows big promise in the on-demand transportation sector and has a unique business model that provides an attractive price point and sophisticated technology that differentiates the company from the ever-expanding market competition.

Can you give us a brief background on Via?

Frisch: Via is a ride-sharing service that allows you to reserve a seat in a car using an app on your smartphone. Using Via’s app, customers drop a pin in the location where they’d like to be picked up and where they’d like to be dropped off. Via’s technology matches the request with a nearby vehicle that can fulfill the ride, and dynamically coordinates the route to include other users going in the same direction.

We think there is pent-up demand for transportation alternatives in Manhattan and other major metro areas. Via offers a solution to riders who want to share the cost of their ride, but are looking for, and willing to pay for, more convenience and comfort than what is currently offered by mass transit.

What Hearst Ventures finds particularly compelling about Via is its software platform: an automated dynamic routing system optimized for many variables ranging from traffic conditions to predicted demand along routes traveled. The software—not the vehicle driver—chooses the route and ensures that the customer will always be picked up and dropped off within two blocks of their pin drops. It automatically communicates critical information about the location of the vehicle as it approaches and clearly instructs the customer, through the app, on where to meet their driver and vehicle.

Can you talk a bit about Via’s plans for expansion?

Frisch: Via has been expanding its service in Manhattan gradually over the past year or so and demand for the service has been extraordinary. At the time Hearst invested, service was operating limited hours and in a zone from 32nd Street to 110th Street. Very recently, Via announced that it was extending its hours of operation to be 6:30 a.m.-9 p.m. and expanding its service zone to cover from 14th Street to 110th Street, river to river. Via also has plans to expand into other metro areas in the U.S., and eventually internationally. The first two targets will likely be Chicago and Washington, D.C.

Tell us a little about Via’s pricing model and how the company keeps costs so low.

Frisch: There is a pre-pay option on the app where customers can use money they have already loaded, at the five dollar per-ride price. If customers pay for each individual ride, the cost is seven dollars per ride. If there is more than one person being picked up, each additional rider is charged at 50 percent of your per-ride price. The company keeps the cost low by matching vehicle supply and customer demand. The drivers are independent contractors, licensed by the New York Taxi and Limousine Commission, and are called to work based on what Via expects demand to be on a given day, at a given time. Fully utilized, a vehicle can make three to three and a half loaded trips per hour. Ideally, Via’s vehicles will run at full capacity, but there will always be times of less-than-full utilization. The supply of drivers and vehicles is being managed to grow with demand for the service. The two will expand together.

Tell us more about the founders and the team behind Via.

Frisch: The founders, Daniel Ramot and Oren Shoval, are impressive entrepreneurs. In their home country of Israel, they grew up with Sheruts—shared taxis and vans—that are a popular and effective means of transportation. Ramot and Shoval are both graduates of the elite Talpiot program of the Israel Defense Forces, and clearly have the engineering skills, training and experience that made them able to build the Via technology and successfully roll out the service in New York. Their team is divided between New York and Tel Aviv. The engineering team resides in Tel Aviv, under Shoval, and the operations and marketing teams are based here in New York with Ramot.

What separates Via from some of its competitors?

Frisch: We think there is a lot of room for new transportation solutions in Manhattan. Via is offering a new type of service that combines the low price and sharing aspects of mass transit with the personalization and convenience of a for hire taxi or limo ride. Also, the software and technology platform that I described before is a defensible advantage that Via has over its competitors.

What about Via ultimately made it an attractive investment for Hearst?

Frisch: Hearst Ventures has been interested in on-demand service models and we have spent a good deal of time thinking about these businesses. On-demand transportation is particularly interesting because it is a very large market opportunity that is in its early days of disruption by smartphone hailing services like Uber and Lyft. We spent a long time thinking about the market, and Hearst President and CEO Steve Swartz challenged us to find a company for investment that offered a real competitive advantage to the market counterparts. When I came across Via, I honed-in on its technology platform as something that would differentiate the service. The automated routing system that enables the shared service and the low price point is truly groundbreaking.

Via’s management team is rock solid and their business model is new and different. The timing feels right, since well-funded companies already in the space have educated both the drivers and riders that it is very easy and convenient to transact using smartphones. With this new round of funding, Via can expand and grow more quickly. We are very excited about working with them as they do.

VIA

Advertising | Perspectives | Research | Revenue

Bad Ads: Research Shows They May Cost More Than They’re Worth

No one likes to click a link on a tantalizing bit of content only to be assaulted by a barrage of intrusive and annoying advertising. That fact is as in your face as a blinking pop-up ad prompting you to punch a monkey to win an iPad. And unless it’s the result of fat fingers, you aren’t clicking these annoying ads; you are hitting the back button as fast as you can to find a more pleasant place to consume content. And here’s the part that should send a chill down the spine of premium content publishers: Microsoft research has found that they’re not just bad in customers’ eyes; there’s also a high cost to be paid by the publishers that run them.

The research, The Economic and Cognitive Costs of Annoying Display Advertisements, set out to better understand the cognitive impact of annoying ads on users, and also to quantify the economic cost of annoying ads for publishers. Let’s just say their findings are more than a little jarring. The research shows the economic cost of “annoying” ads is about .153 cents each (for the revenue wonks, this works out to a $1.53CPM). Given that Turn reports that more than 53% of all online ads sell for between $.10 and $.80CPM and we know premium publishers typically earn around $1.35CPM from open exchanges, a little math paints a disturbing picture. We’ve always known digital ads can impact users and the bottom-line but not in the wrong direction.

If you believe the research—undertaken by an impressive team of researchers whose experience includes work for Yahoo, Google and Microsoft—then publishers need to know that running ads which site visitors find to be irritating, annoying, inappropriate or offensive has a significant net cost, both to brand value and the bottom line.  Private marketplaces reinforce this need for brand safety for all.  Chasing page-views and impressions at scale has diminishing returns and makes a sites more vulnerable to bad ads. What this means is that by running these ads, often to maximize sell-thru rate of your inventory, you’re actually chasing short-term revenue rabbits without understanding where that rabbit hole leads.

The Microsoft researchers conclude that “the practice of running annoying ads can cost more money than it earns.” That’s right: a site might be better off not running ads at all because of the net loss they will incur if some or all of their ads are perceived as bad by their users. A site or app actually needs more quality content and premium ads to make up for the economic loss from bad ads.

As is the case with bad advertising, we all know great ads when we see them. And research shows that there is a “halo effect” to advertising that is positioned within the context of a strong media brand with quality content, so it only stands to reason that the reverse would be true: that there would be a negative effect to a media brand associated with bad advertising. Microsoft’s research confirms this, finding not only that people notice annoying ads and complain about them, they are more likely to abandon sites on which they were present. Interestingly, in the presence of annoying ads, people had to work harder to understand content that contains annoying ads. In other words, they’re distracting and a general nuisance to user experience.

 

Again, it’s very important to note this isn’t simply about low-quality dating ads, yellow-teeth and belly-fat ads. Media companies need to consider the subtle and long-term effects that any ad running on their sites may have on user retention and revenue. The alarming rise of Adblocking software adoption makes clear that customers are fed up with poor advertising experiences. And once customers are driven to this extreme, they are taken out of the ecosystem for everyone, good and bad advertisers alike. Already 41% of 18-29 year-olds in America have opted-out of digital advertising altogether by installing an adblocker.

But we can’t simply take the lazy position that “people just hate ads.” It simply isn’t true. And the Microsoft research backs that up. We can also clearly see examples of superior advertising and content experiences on Vox and Conde Nast sites, among many others. Premium publishers like the members of DCN who focus on high-quality content, premium, well-lit experiences and brand-safe environments should be well-served as this all shakes out because they are laser focused on creating great customer experiences that are only enhanced by the relevant, quality advertising experiences that support all of the terrific content that they enjoy.

Perspectives | Revenue

Accounting for Attention Minutes as a Currency

Time-based metrics are of considerable interest to online publishers. There seems little doubt that “attention minutes,” in one form or another, will be a tool used by both marketers and media. DCN has identified many of these possibilities. But it’s far from clear whether these metrics will, or should, displace more conventional measures of audience size. To consider the strengths and weaknesses of time-based metrics as currencies, we explored the relationship between the time people spend with websites and the popularity of those sites.

Do attention and popularity measure different things?
There is a long-standing law of consumer behavior called “Double Jeopardy”  (DJ). It stipulates that popular offerings enjoy more consumer loyalty than unpopular offerings. DJ in television has meant that channels with high ratings have higher levels of time spent and repeat viewing. The only meaningful exception has been the “small-but-loyal” audiences of foreign language channels. So on the web, it’s possible that the most popular sites (as measured by UVs) also rack up the most attention minutes. If popularity and time spent are highly correlated, either metric would produce the same winners and losers.

To see if that’s true, we used comScore data to test the correlations among several metrics. We looked at three-month aggregates from October to December 2014 across 1,067 news sites. The time-spent measures, which included “average minutes per visit,” “average minutes per page,” and “average minutes per visitor,” were highly correlated.

However, there were only weak correlations between time spent and audience size. You can get a sense of this in the chart below. Most outlets with small-but-loyal audiences were, like TV, non-English sites. So there were no DJ effects. More importantly, it seems that time-based metrics are tapping into something quite different from popularity. So which is better suited to be a currency?

What do attention minutes tell us about content?
DCN and several others have suggested that attention minutes might be a good measure of audience engagement and quality. As such, attention minutes could be useful for developing content – which, in turn, could build audience loyalty. But currencies typically reflect the needs of advertisers. Do time-based metrics offer advertisers something of value that they can’t get from measures of popularity?

Source: comScore Media Metrix Key Measures Report, October – December 2014
Source: comScore Media Metrix Key Measures Report, October – December 2014

At a minimum, attention minutes can help authenticate exposure to an ad, serving as an extension of viewability standards. Beyond that, it’s harder to see why an advertiser would put a premium on the audiences’ engagement with a publisher’s content. One possibility is that an ad becomes more effective when it’s surrounded by content that has truly engaged readers. But here, the evidence is mixed. There’s some indication that the benefits of engagement in content bleed over to advertising. For example, a 2012 comScore report concluded that content engagement is more strongly correlated with advertising effectiveness than clicks or total impressions. Additionally, a 2009 experiment found that user engagement and advertising effectiveness are positively associated. On the other hand, consistent definitions of engagement are elusive. What’s more, a 2013 Nielsen report suggests that it’s the medium, rather than the content, that most greatly affects advertising efficacy.

If advertisers are convinced that engaging content benefits their ads, premium publishers might be able to profit from that association. But programmatic buying is gaining ground in online advertising, and that potentially divorces ad placement from its surrounding content (though the number of private marketplaces is growing). Some advertisers don’t care about content apart from its ability to deliver the attention of prospective customers. It’s the characteristics of the people being delivered that are likely to matter most for any currency.

What do attention minutes tell us about visitors?
Advertisers typically use metrics to describe and target audiences. Historically that’s been age and gender, but with all the digital exhaust users leave behind, it now seems the sky’s the limit. You could identify those users who are engaged by time spent measures, then add them to the targeting mix. But it could backfire. Our findings indicated that individuals who spent large amounts of time on news sites tended to be heavy web users. In other words, they spend a lot of time online. In a world that’s driven by programmatic buying, the heaviest users are the easiest for advertisers to reach. The laws of supply demand suggest they’ll be of less value to advertisers. And this just might turn the A in attention minutes into a scarlet letter.

James G. Webster is a professor of Communication Studies at Northwestern University. He’s the author of The Marketplace of Attention and Ratings Analysis: Audience Measurement and Analytics.

Jacob L. Nelson  is a doctoral student in Northwestern University’s Media, Technology, and Society program. A former journalist, his research looks at news consumption and media metrics.

IAB NewFronts Header
Advertising | Perspectives | Revenue

NewFronts 2015: It’s All About the Video – and Tech

There was a time when the NewFronts were considered a side show to the Upfronts, almost a joke. What’s the point of buying digital ads “ahead of time” when there is infinite inventory online and no real schedule?

But things have shifted considerably in the past few years. The NewFronts, now in their fourth year, were a serious blow-out party, with 33 presenters – up more than 50 percent since last year – threatening to outshine the Upfronts. And what has been the catalyst? Video, of course. Because now everyone from Yahoo to WSJ to Vox has their own video shows. So that makes the NewFronts much more like Upfronts, with seasons for shows – even if those shows can be binged instantly, in some cases.

And the numbers can back them up. Numbers always help. For instance, more than 68 percent of marketers and agency executives expect their digital video ad budgets to increase in the next year. And guess where that money is coming from? That’s right, from the Upfronts, with money moving away from traditional cable and broadcast television. But IAB honcho Randall Rothenberg argues that it’s our understanding of and relationship with television that’s changing — not “television” itself.

“The princeling that’s replacing television … is television,” he wrote in a piece for Adweek.

“Linear TV” and “Internet TV” may be two sides of the same coin, but a definite theme coming out of this year’s NewFronts is that digital is a “better ad buy” than ordinary television, especially among the coveted millennial audience. Research firm eMarketer expects digital video-ad spending to grow by 30 percent and hit $7.8 billion in 2015.

Original Shows and Tech

So just like at the Upfronts, many NewFronts presenters announced new series – a whole lot of them. Time Inc., for example, announced four new streaming-video series. And Yahoo announced 18 new series, in part to help attract interest to its digital magazines, which have lots of native advertising. Conde Nast also announced plans to release more than 2,500 new original videos in the coming year. Even Vox Media announced several new digital video series, as well as a few renewals for current popular ones.

It seems the key to monetizing digital video is to first have enough of it before you can really reap the benefits. But Vox went further, licensing its content management system — already well known in media circles — for outside use. That’s a huge incentive for an agency like DigitasLBi, which announced both a production partnership with Vice and a deal with Vox that will allow it first dibs on Vox’s native ad platform, Chorus for Advertisers.

Native Ad Ideas

But it’s not enough to just to sell shows. Many publishers also pushed their native ad tech solutions. Yahoo talked about its native-video ad program that can help it “integrate sponsored-video segments into its homepage, digital magazine and apps.” Yahoo also announced video-app install ads through which marketers and developers can promote apps — both on Yahoo and thousands of other apps.

Meanwhile, BuzzFeed announced its new technology, Pound, aimed at demystifying social sharing habits and how content goes viral. As BuzzFeed wrote in a blog post about Pound, “traditional web analytics are fundamentally unable to capture what actually happens on the social web today.” Not only would Pound help BuzzFeed better figure out stories you’d share with your friends and families, and the stories they’d be most likely to share, but it’s also a chance to see how the data collected from Pound could help produce more shareable sponsored content.

And maybe that’s the approach that will really set apart the NewFront digital folk from the Upfronts – offering not just some original web shows, but also the technology to help advertisers reach and engage those audiences. TV isn’t dead by any means, but the digital upstarts are making serious inroads.

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