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Perspectives | Revenue

Playing poker: betting big on the brand

Brands. Conventional wisdom is that they matter less and less in a world gone digital — that consumer media brands no longer serve as the anchor to media experiences because the tidy packaging that came from a magazine, newspaper or a TV show has been blown up. And what’s been left in its place is an endless stream of content competing for the attention of millions of goldfish swimming in social media.

The reality is that, in a world with a multitude of options just a tap away, the brand is more important than ever. More and more the brand is a proxy for trust, which represents consumer (and advertiser) confidence in value. Do I find this report from the Associated Press credible? You bet. Will I be entertained by this show on HBO? Likely. Will this new car review on The Edmunds help me with my car purchase decision?  Will this video from The Onion make me laugh? Does the AccuWeather forecast help me plan for an outing? Yes, yes, yes!

Focusing on consumer needs offers the greatest opportunities in expanding a digital media business. What needs are being left unfilled and how can your brand uniquely deliver on those needs? Meeting these needs in a reliable, ethical manner builds a valued relationship between brand and consumer. This deep relationship takes time and trust. It isn’t measured in the sort of hockey stick adoption rates crowed about in the social sphere. Media brands aren’t a value-add, they are, by definition, valued. Why do you think that so many new social media platforms lead with these media brands? They are building their credibility and trust by leveraging the credibility and trust the media brands already have.

Consider the brand a big pile of poker chips. Each poker chip represents the trust of 1,000 of your most loyal consumers. As you consider new opportunities for your brand, you’re playing those poker chips. If you play them wisely, you’ll build a larger pile of chips and have even more opportunities. If you play them haphazardly, your pile will likely shrink. It’s ok to make some big bets, just make sure you’re aware of the risks.

I’ve been asked a lot about native advertising in the past year. It seems to come up more and more given the growth of adblocking. Native advertising is nothing new. Packaging experiences for advertisers to inform, entertain or engage their targets and customers is tried and true. Your brand equity is exactly why the advertiser wants you to deliver the content for them. The trust in your brand is exactly why the consumer is open to quality native advertising within the context of your content. You’re just playing another hand of poker.

And, as the power of brands allows for native ad plays, strong media brands are able to find revenue opportunities that provide growth outside of traditional advertising streams. Sure, subscription models are terrific, but they aren’t right for every media brand, no matter how loyal the audience.

On December 1st, we’re launching an event for our DCN members called Power of Brands — I encourage anyone responsible for marketing, product innovation, digital strategy or revenue generation to attend. We’ll spend the day hearing from brands who have expanded into new revenue lines. Whether it be experiential marketing, subscription products, licensing into products or digital formats, e-learning or face-to-face events, these opportunities for growth start with a strong relationship between the consumer and the brand. And digital isn’t a simple question of disintermediation. Digital offers endless opportunities for new points of genuine connection.

Perspectives | Revenue

Personal Data NYC panelists dig in on ad blocking

An Ad blocker is a blunt instrument. They treat all ads the same, regardless of quality, source or context. Arguably, the notion of defining “acceptable ads” could be equally blunt in its application, given the likelihood that such an approach will fail to account for the context in which ads run or how such an acceptable ad system is itself funded. The reality is that the issue of ad blocking is nuanced, as demonstrated by the range of views expressed on a diverse panel on ad blocking hosted by Personal Data NYC (PDNYC) November 11.

Frederic Montagnon, CEO of Secret Media, expressed frustration commenting that “Ad blocking is black and white and it is not fair that this is the way it works because there are those investing money in doing things the right way.” On the other hand, author and journalist Doc Searls pointed out that ad blocking is an unsurprising response by consumers to the ways in which ad tech has influenced the course of online advertising. And Digital Content Next CEO Jason Kint said, “It’s accepted that there’s a problem, and it’s serious.” However, it was clear from the discussion that not everyone is in agreement on how best to address it.

Panelists included Montagnon, founder of Secret Media, technology that helps publishers create advertising that circumvents ad blockers; Jim Hirschfeld, SVP of Sales & GM Americas at PageFair, a company which provides both analytics to allow sites to measure how many visitors block ads as well as an advertising system that displays ad-block friendly ads to ad blockers; and Brendan Riordan-Butterworth, director of technical standards at the Interactive Advertising Bureau (IAB), which recently put forth its LEAN standards (Light, Encrypted, Ad Choice Supported, Non-Invasive Ads).

In the years that he’s been tracking the growth of ad blocking, Riordan-Butterworth said he’s seen things shift from an idealistic phase to one “where the capitalists are running the show.” In particular, he points to “intermediaries who have inserted themselves in between the audience and the publishers—and then ask them for money,” which he likened to highway robbery.

Hirshfield pointed  out that publishers have to monetize their audiences in some way and said he doesn’t hold out much hope for the efforts publishers have made to appeal to their readers to turn off blockers or pay “because ad block installations are orders of magnitude higher than their conversion rates.” Kint, who made it clear that he is concerned about solutions that may trigger a “tech arms race” said he’s seen DCN members testing a range of approaches, but emphasized that any solution needs to focus on the consumers “who are sending a clear signal that there’s an issue with online advertising.”

Searls pointed out that one of the issues consumers have is with unbridled tracking — citing the unexpected veracity of a recent Onion article, “Woman Stalked Across 8 Websites By Obsessed Shoe Advertisement.” However, he emphasized the relative youth of the internet and his belief that with continued experimentation, the industry can find effective answers. He was not alone in expressing the view that there needs to be a movement away from the type of digital advertising that relies upon tracking for targeting towards one that is includes more evocative brand advertising (think classic Madison Avenue campaigns). “The notion of the right ad for the right ad for the right person at the right time is absurd because most of us aren’t buying things all the time,” he said. “But brand advertising sends an economic signal. When I watch the ball game, I’m not going to buy a truck. But GM knows it’s worth showing me the ad.”

Kint pointed out that to date, “TV has been the only great medium for brand advertising because of its scale. If digital can figure that out, and deliver great ad content that changes minds and effects emotions at scale, that will mean something.” And he reinforced that this is an issue that can’t be addressed by assigning blame. Rather, it is one that requires all affected parties—brand marketers, advertising agencies and media companies—to apply innovation and creativity to creating solutions that support the industry and satisfy consumers’ expectations.

Perspectives

Why I declined to attend the roundtable with AdBlock Plus

Eyeo, the owner of the AdBlock Plus product, has been quietly inviting industry influencers to a roundtable discussion on the future of adblocking. I received, and declined, their invitation and want to publicly explain why I will not attend.

First and foremost, adblocking is a consumer-driven challenge to our industry and therefore, as I’ve consistently advocated, solutions to this challenge should be focused on consumer needs. Mozilla,  maker of Firefox and advocate for an open and accessible Internet, has also focused on consumer needs, creating a great framework that is focused on privacy, performance and security.

It’s crystal clear that billions of dollars have been spent in ad technology with little to no value for consumers. And now, users are fighting back by installing software which opts them entirely out of advertising. As Doc Searls notes, this might be the “biggest boycott in human history.”

Paving the future for trusted content requires an open and transparent discussion in the marketplace but it does no good to use inflammatory and threatening language (“extortion”, “inner-city crack dealers” , “profiteers”) towards adblockers (or the consumers who use them). Especially when, to varying degrees, we’ve all been a part of the problem for quite some time.

Consumer (and advertiser) trust are vital to premium publishers. With this in mind, I’ve openly met with as many interested parties as possible on industry challenges including adblocking. My meetings with stakeholders have included dozens of premium publishers, associations, research companies and ad tech companies on both sides of the Atlantic.

I’ve had discussions with AdBlock Plus and some of the newer makers of adblockers including Shine and Crystal. And I listen even more intently when I meet with consumer advocacy organizations. Even the FTC has now weighed in on adblocking. Bottom line: If you’re thinking about adblocking or have a stake in the ground, I’m interested in being in the meeting.

Like many in the industry, I have always been concerned by the reports of Eyeo profiting from selling whitelisting of ads into AdBlock Plus. Their majority owner, who benefits the most from these sales, broke it down in some detail a year before the industry press erupted. Frankly, I see this practice as benefiting their owners possibly even at the expense of consumers. At minimum, it rightly creates a lot of questions about who is really looking out for the consumers.

I would look at these reports on Eyeo’s business model and their focus on consumers much differently if they were 100% open about it. If AdBlock Plus publicly stated which companies were paying them for whitelisting ads and the terms under which this was happening, then my level of trust would increase dramatically. I would even show up at their meeting! This statement also applies to Google which is reported to be one of the companies paying AdBlock Plus the most for whitelisting services.

Google has also been making waves that they want a new set of ad standards “within months.” How can we sit down at the table with a company that wants to set new standards but is also funding Eyeo in its own self-interests? And who in their right-mind thinks consumers will be better off if ads grow to look more and more like Google’s text ads? It certainly won’t subsidize the professional content consumers enjoy and love.

Standards must be set in a way that encourages better ads and higher-quality creative rather than simply reducing the Internet to light-weight text ads and low-quality advertising.  We’ve spent close to 20 years proving that the Internet can provide engaging, brand-building advertising experiences and we’re ready to scrap that now because we have been sloppy in rolling out the technology?

Standards should help meet consumers’ demand for a better overall experience by protecting premium content and allowing only respectful, trustworthy advertising. Adblocking is a blunt technology instrument with no regard for the content or its advertisements. Consumers are choosing it because it is their only choice right now. A true solution can’t be equally blunt in its lack of regard for the value of the content in exchange. As Univision’s Kevin Conroy wrote months ago in Ad Age, “we need to set the bar higher to see advertising truly break through on digital.” Kirk McDonald of Pubmatic recently followed with “and when the experience for the consumer is great, the invasion of the ad blockers should die out.”

Many have argued that ad blocking is a direct result of a flood of intermediaries clogging up websites in an effort to ubiquitously track consumers. I agree. These issues clearly are impacting performance and more quietly are impacting privacy and security delivering a vacuum in trust. If we’re going to truly work to create our industry’s future —  Advertising 2.0 — then we’ll need to make certain the benefit flows to the consumer and not yet another intermediary.

Here is my email declining the invitation.

Hi Ben, I appreciate you reaching out with the invitation. As discussed in our meeting, I’m deeply supportive of consumer-focused approaches to solutions. As much as your independent board is empowered to align better principles with what ultimately will drive consumer value long-term, I’m highly supportive. However, I’m still troubled by the existence of models where your company profits from allowing ads to be served. I must send my regrets and pass on the invitation.  Thank you again for the consideration.

Best-

Jason

Jason Kint | CEO
Digital Content Next | digitalcontentnext.org
Twitter: @jason_kint

 

Perspectives | Policy

Can you hear me now? 

The Internet has ushered in the most profound shift in the history of media. The public is in charge. As the seminal book of the 90s, Cluetrain Manifesto, noted in its preamble,

“We are not seats or eyeballs or end users or consumers. We are human beings — and our reach exceeds your grasp. Deal with it.”

Yet, at the same time, the Internet boom has also brought endless ways middlemen can take advantage of short-term opportunities without serving these human beings. These self-serving intermediaries do not survive long-term, but they can do plenty of damage regardless of their lifespan. Whether you’re an e-commerce company as respected as Amazon, a publisher as trusted as the New York Times, a brand advertiser as loved as Coca-Cola or a platform as large as Facebook, if you fail to think about your customers and what they most want, you will be replaced. Understanding that we’ve migrated to an on-demand, consumer-driven world is key to building, long-term sustainable businesses.

So how did we get here? It starts and ends with the simple but powerful idea of what the Internet really is. It’s not the web, it’s not your iPhone, it’s not Comcast or AT&T and it’s not Facebook. The Internet is and will always be “packets” traveling between two points without discrimination. The Open Internet that was gifted to all of us by the geniuses that created it and put the consumer in charge for the first time.

At DCN, our members understand that their brands and businesses are built on the delivery of experiences, be it information or entertainment, to advertisers and consumers. Delivering that value builds trust. And, by definition, a premium publisher balances that trust with consumers and advertisers each and every day. To illustrate this ongoing commitment, take a look at our recently released research, DCN Bot Benchmark Report.

Against this backdrop, I recently responded to a request by the Federal Trade Commission (FTC) to offer comments on the future of cross-device tracking. It’s an incredibly important discussion and I’m thrilled to see the FTC continue to play the role of fostering open and candid discussion without threat of regulation. We’re building the future and these discussions have significant consequences. That being said, this discussion isn’t new. Yes, the method and scope of the discussion has changed. But it’s fairly simple to find the solutions when you wear your “consumer hat” and put their needs, expectations and concerns first.

Thus, it won’t come as a surprise that DCN’s comments to the FTC are focused on consumer expectations. At a bare minimum, any consumer should have transparency into how they’re being tracked across devices and be provided with simple, effective ways to control this tracking. At this point in time, I have deep concerns about incumbent interests once again getting this wrong. The industry currently suffers from an advertising supply chain that acts as a trust vacuum to the point that consumers are now opting entirely out of advertising altogether in what must be considered nothing short of a boycott.

Consider some ways in which cross-device tracking can be used:

Verizon Wireless, the ISP that connects more Americans to the Internet than any other company, has in the previous year been caught and pulled back from publicly broadcasting unique IDs of their customers for advertisers and everyone else to see. They’ve since acquired AOL, all of its inventory along with MSN’s inventory, and announced plans to monetize behavioral data from tracking consumer consumption across their pipes and airwaves. Would a consumer expect this? No. Can consumers control it? Not easily. Value to consumers: Zero. 

Facebook, the largest social platform having achieved one billion active users in a day, has announced plans to begin using the ubiquitous “Like” button to track consumers, before they even click on the button. They’ll do this on other sites, apps and devices if consumers are logged into Facebook anywhere on their device. Would a consumer expect this? No. Can consumers control it? Not easily. Value to consumers: Zero. 

Amazon, the largest e-commerce company in the world, allows consumers to log into multiple devices thereby pulling up their order history and making recommendations on other products they may want to buy. Would a consumer expect this? Yes. Can consumers control it? Yes, they can choose not to use Amazon. Value to consumers: Significant.

ESPN, the largest sports media company in the world, allows consumers to log into multiple devices thereby recognizing their favorite teams and personalizing their sports experiences. Would a consumer expect this? Yes. Can consumers control it? Yes, they can choose not to visit ESPN products. Value to consumers: Significant.

Our industry has spent billions of dollars in advertising technologies over the past few years. These investments have benefited advertisers, publishers and—most often—intermediaries. What clearly demonstrates that this money is not being spent wisely is that the consumer has been left out. Now those same consumers through the rise in adblocking are saying, “Can you hear me now? Deal with it.”

Perspectives

Ad Blocking: fear vs. reality

It was reported by Adobe that “The global loss of ad dollars due to ad-blocking software is an estimated $21.88 billion and $10.78 billion in the U.S. alone”.  It’s an alarming statement, but it is not accurate. Here’s why: there was nothing “lost”.  Without ad blockers, the market for advertising doesn’t grow by $22 billion.  No incremental money will be spent by marketers at all just because more supply of inventory is added.

However, the rise of Ad Blocking is real and certain to increase, but I don’t believe its impact on ad investment in online media will play out in the way that people fear. There is strong evidence that ad blocking will not unbraid the advertising industry.

Let’s take a closer look at why ad blocking won’t upend the digital advertising industry after all:

1. Ad sellers will be open to change and innovation. Many media companies are already finding ways to work around ad blocking, and history tells us that they will be successful. In television, broadcasters originally feared DVRs and worried that they would lose billions of dollars in ad revenue. As the New York Times reported in 1999, Forrester Research made the claim that “viewing of commercials would be cut in half, that without ad revenues to cover production costs…free network channels…would be left with…the dregs of programming.” This dire prediction never came true.

Annual revenue for the top four ad-supported national broadcasters has increased year after year over the past 15 years, with few interruptions.  Broadcasters smartly updated their strategies to reflect changing viewer behavior. For example, ESPN built advertisements into their sets and playing fields. Digital publishers will follow broadcasters’ lead and transform themselves in order to thrive in the new market. Many of them are already succeeding. The New York Times recently highlighted how Allrecipes is successfully deploying advertising, in which the ad is woven into the fabric of the recipes and editorial, making ad blocking much more difficult.  At MediaRadar, we have tracked a sharp increase in this trend.

2. The law of supply and demand. An almost unlimited supply of digital ad inventory has the net effect of relentlessly driving prices down. This trend has only accelerated in recent years, and it affects all the major players in digital advertising. For example, Yahoo’s 10-K report filed on February 27th, reveals that their price-per-ad fell 18% year-over-year.

But if ad blocking gains substantial adoption among users, supply of inventory will contract.  A decrease in ad inventory will benefit nearly every publisher selling advertising today since it will effectively set a floor on prices. Pricing will increase as demand from advertisers remains constant or grows. Of course, there are caveats to this rule. For example, if you are a niche publisher and your ad inventory is constrained, then ad blocking will directly hurt your bottom line. Overall, however, publishers could stand to make greater profits per ad.

3. Publishers will install technology to counter ad blocking and create incentives to view ads. In the unlikely event that all users employ ad blocking technology, media companies may require users to view advertising in exchange for free content. They will require users to go through a free registration process and make the link between advertising and content more explicit. Other publishers will charge users for content and update their pricing policies for advertisers as well. The Financial Times sells advertising exclusively by time, instead of impressions or clicks, and also requires all users to register and pay for their content. As another alternative, users may have the option to pay a premium for ad-free content or view free content with embedded ads. Hulu’s CEO Mike Hopkins recently explained how customers self-select. Those who passionately dislike ads can pay a monthly fee for Hulu’s No Commercials plan, while others are willing to put up with advertising. Finally, publishers and websites may negotiate directly with ad blocking technology firms to find a solution. As reported in the Financial Times, Google, Microsoft, Amazon, and Taboola are already paying the owner of Adblock Plus to unblock ads on their websites.

Ad blocking is here to stay, which means that publishers should be paying close attention to their ad blocking rates and how the market is shifting. It’s clear that inaction is not an option. Yet the advent of ad blocking is certainly not all bad news for everyone in the industry. For those who are willing to adapt, it will give rise to new opportunities.

Todd Krizelman is Co-Founder and CEO of MediaRadar (@MediaRadar). Growing up near the epicenter of technological innovation in Palo Alto, California encouraged him to become an entrepreneur and co-found of one of the world’s first social media sites, theGlobe.com. Krizelman also held leadership positions at Bertelsmann’s Gruner + Jahr and Random House. With his expertise in ad sales and innovation, Krizelman joined veteran web architect, Jesse Keller, to found MediaRadar in 2007.

Perspectives | Policy

Straight talk on consumer privacy from FTC commissioner Brill

Julie Brill, the outspoken FTC Commissioner, recently gave a stirring summary of how unaddressed consumer concerns have led to the rise of ad blocking software.

From cookies to device fingerprinting and cross-device linking, consumers continue to struggle to understand when they are being tracked, who is tracking them and how to opt out. The problem worsens for consumers when you consider that tracking technologies are becoming nearly invisible and ever more comprehensive. To underscore the concern, the FTC is hosting a workshop on November 16 to examine the practice of “cross device tracking.”

Piling on top of this transparency and education problem, controls for consumers haven’t kept up with the technology developments. And frankly: Ignoring clear signals sent directly from consumers is a perilous path. As Commissioner Brill opined, it’s surprising “the ad tech industry hasn’t been more motivated to offer consumers better tools to protect their privacy, because it has always been the case that consumers could take matters into their own hands.”

Indeed, fighting against better consumer controls has been a major contributor to the rise in ad blocking. Early on, the “cookie” became the boogieman of internet privacy so consumers began to delete them altogether. According to a Pew Research Center 2015 survey, 59% of consumers clear their cookies or browser history – the top method used by consumers to protect their privacy.

A few years ago, Do Not Track (DNT) emerged as a hopeful solution, providing a persistent way to signal consumer choice. But, despite a promise at the White House in 2012, ad tech industry representatives have been fighting a DNT standard for years even though it’s already built into every major browser and the World Wide Web Consortium (W3C) recently finished a reasonable standard for how the signal should be sent and how servers should respond.  The W3C standard clearly reinforces the distinction between 1st and 3rd parties and importantly makes it clear that companies who straddle the line (e.g. Google, Facebook) require consent before tracking users out of context.  So it should come as no surprise that, as Doc Searls notes here, the “hockey stick” rise in ad blocking starts around the same time it became clear that industry wasn’t going to honor DNT signals.

Do you see a pattern here? I do. It’s time for us to get off this merry-go-round of ignoring and then fighting consumers. As Commissioner Brill suggests – let’s “provide consumers with something they clearly want: to see advertising that respects their privacy and that they can trust.”

Perspectives

You say you ignore the banners but they never ignore you.

Public media has finally started to get in on the hot topic of Content Blockers on iOS9, thanks to Manoush Zamorodi’s Note to Self podcast interview with tech reporter Casey Johnston.

I too have been obsessed with this topic and agree this is a watershed moment in the history of media and technology. I have to say that I appreciated hearing an analysis by public media, which isn’t beholden to the interests at stake here. It’s truly a dilemma from every angle and very few people are well positioned to expose the issues at stake. (By the way: This episode is total pledgebait.)

I have no problem with advertising. It’s the engine of our culture industry. I have a problem with a consumer surveillance industry that we have no basis to trust.

Privacy matters
I think we need to push the conversation about privacy and surveillance much further now, as public media’s first stab at this didn’t really go ‘there.’ Here’s to hoping a follow-up digs deeper into this shadowy world of adtech which will probably expose our worst fears:

Why can’t we review and correct our browsing history profile? Why can’t we have any agency with our identity and behavior data? Do we need the equivalent of a credit report for the adtech industry?

Let’s consider some worst case scenarios for unfettered consumer surveillance: Do we know that banks and insurance companies aren’t using our browsing history to determine our eligibility and pricing? Can we know? We know insurance companies are using credit reports now to set premium pricing. But we can see that and correct it.

This is way more serious than getting us to buy towels or cat food. Our personal health, prosperity, and opportunities in life can be determined by an opaque infrastructure with zero accountability. In this worst case scenario, we wouldn’t even know how the sites we browsed online altered our destinies IRL.

Privacy, please
Why won’t the IAB acknowledge privacy is a consumer priority? The publishers have repeatedly asked them to offer a viable opt-out solution for consumers. The adtech industry’s AdChoices “privacy” program is a disaster, I think by design, so they can say they offer it but ensure no one uses it. I fear they can’t talk about privacy because then they have to admit that if too many people opt out, the whole system’s fragility will be exposed and unravel.

Somehow, enjoying content without paying means that you must consent to unlimited, pervasive, ongoing market research to unknown third-parties for unknowable reasons. There are huge costs to us personally and to society as a whole. Consumers’ rapidly increasing adoption of adtech-blockers has exposed this critical truth.

Furthermore, if the industry had supported the Do Not Track standard like publishers have demanded, it would offer the equivalent performance boost on our phones to an iOS9 Content Blocker because the tracking software causes the sluggish performance, not the ads themselves. More importantly, it would have solved the moral dilemma here because it would have delivered a viable basis for trust, which may well have stopped the rapid development of the adblocker market.

Before anyone thinks that untracked ads can’t be sold to people who opt-out, publishers could sell ads to users with Do Not Track activated based on the demographics of us privacy nerds. Studies suggest about 10% of users care a lot about privacy. This number will only grow.

When you look at research about teens and privacy, you discover they are very savvy and routinely employ defensive tactics on digital and social media, despite the perception otherwise. The core business model of consumer surveillance without agency is unsustainable because future generations are likely to break it, no matter what.

This Note to Self episode, and virtually all discussions on this topic, rightly point out that we shouldn’t punish publishers. But the conversation has stopped short of targeting the culprit here. It’s the IAB and its constituents that need to heed our demands for privacy, transparency, agency, and accountability. If they refuse to respond, we cannot trust them. They claim to have the high moral ground, but it’s a deception or at least a denial of what’s really going on and what’s really at stake. And all this makes it clear that public media is more important than ever.

David Carroll (@profcarroll) is associate professor of media design and former director of the MFA Design and Technology graduate program at the School of Art, Media and Technology within Parsons School of Design at The New School. His pedagogy and research surrounds digital media, especially for mobile devices, towards a critical practice and theory of software and interaction design as social engagement. His work crosses multiple fields of art, design, education, sciences, humanities, and policy among both private and public-interest enterprises. He founded the Center for Mobile Creativity to support research grants from New York City Media Lab, Pearson Foundation, MacArthur Foundation, NIH/NIDA, NSF and Nokia Research Centers. Prior to his professorship, he directed commercial multimedia for major interactive media clients from 2000 to 2007 including AOL, A+E, CNN, FOX, ESPN, HBO, PBS, Random House, Smithsonian, Sony, Sports Illustrated, Time, Warner Bros and others.

—-
Note: This column was originally posted as a comment and has been edited and expanded for DCN.

Perspectives

7 important ad blocking issues you need to know

This morning, DCN and WAN-IFRA, the global news body issued a “Call to Think” statement to help our industry in deal with the challenges of ad blocking.  Clearly, ad blocking is a topic of extreme concern and we all need to be thinking hard about how we approach it so that we apply our efforts to what is most important: the consumer. To that end, I recently had an expansive conversation with Joshua Benton, director of the Nieman Journalism Lab at Harvard University, about how worried publishers should be that ad blockers have now arrived on mobile.

Here are seven takeaways from our wide-ranging conversation:

1. Ad blocking is not new, but it is escalating.
Historically, our industry has not taken this threat seriously enough even though we’ve known about a fringe group of consumers that want to block all ads since they were turning off auto-load images in Netscape Navigator in the 90s. As I wrote in March, ad blocking has escalated on the desktop and now, with iOS9’s ability to block ads on mobile, ad blocking is an issue publishers must focus on more than ever. On a scale of one to ten, my concern is at a level eight or a nine (by way of comparison, the transition to viewability never hit this level.) The cold hard truth is that there have been billions of dollars invested in ad tech software – with little consideration for the consumer – and now these same consumers are speaking up with new software.

2. This is everybody’s problem.
In part, the issue of ad blocking is a “tragedy of the commons” in which the actions of even one rogue site or ad network that creates poor consumer experiences and erodes consumer trust can end up affecting the business model of everyone, even the most valuable content sites on the planet. It might be easy to lay blame at Apple for opening up its APIs in iOS9 but they aren’t the enemy here. In fact, Apple might just be the most consumer-oriented company of our generation. Tim Cook has been one of the loudest and clearest voices calling for protections around consumers’ privacy and data. You could take a cynical view that facilitating ad blocking doesn’t hurt Apple. But if you think about it, it definitely lines up with consumer demands. That is a valid, even essential, perspective. We need leaders across the industry to focus on providing better experiences, transparency and controls that will solve this issue.

3. Emerging ad formats are part of a solution, but so is better display advertising.
There have always been new revenue opportunities—ad units, devices, and formats—that show promising growth. This will only accelerate with the rise of ad blocking. Non-skippable video ads, podcast ads, native in-stream advertising—these all will continue to accelerate because of the fear of ad blocking. Anyone who is in the content business and is trying to build diverse experiences for customers would be foolish to think that any of these solutions will be a panacea for the problems with display advertising. It is also foolish to think that technology will once again save the day to allow these ads through to the same users who have opted out of advertising. Let’s end the tech arms race. If the customer isn’t happy, they will find another way to skip ads.

4. Revenue diversification is essential, but not the answer.
We’ve been counseling our members since the first dot com bubble that they should think about expanding their business models and diversifying their revenues to be less dependent on advertising. And if ad blocking continues to accelerate you will undoubtedly see publishers testing more and more ideas. And you’ll see more technology companies testing ways to enable these ideas. However, at the end of the day, pixels on a screen that marketers want their messages to run alongside will have to be part of the mix.

5. Data is not the solution. In fact, it may be part of the problem.
The industry has created a very dangerous myth that online behavioral advertising is vital to the content ecosystem. This myth has led to underwhelming controls for privacy-focused consumers who have answered with ad blocking. In the absence of simple and persistent controls, the user will find alternative solutions.

6. Native apps are a great experience, but the open Web must be too.
Ad blocking on mobile may accelerate energy around native apps again since publishers can more tightly control their clean, well-lit environments on a native app, though there are undeniable adoption issues. Conversely, the advantages in being distributed through apps that already have high adoption and engagement rates—Facebook, Twitter, Snapchat—come with less control and a corresponding fear that we’re surrendering to the platforms.

Ultimately, we can’t afford to lose the beauty of the open internet and everything that is fabulous about the browser in terms of openness, new content and new ways to explore that content. The worst thing that could happen is that we go back to private, walled-garden experiences.

7. Solutions begin—and end—with the consumer.
I think any solution that involves engaging directly with the consumer is interesting right now. The easiest most natural thing to test is asking the consumer to whitelist your site, but unfortunately all of the intel I’ve seen so far is that it isn’t getting consumers to act any differently.

Publishers need to test and learn about which options will work for them both in the short and long term.  But at the end of the day the focus needs to be on giving customers what they want.

We won’t solve revenue issues with a tech arms race or a race to the courts. Premium publishers have the ability to navigate this course for the long term and have the added advantage of strong brands and established relationships with their consumers who greatly value their content.

Despite what you’ve just read, I am optimistic and believe all of the concern, discussion and search for solutions will lead to a re-focus on the consumer and better experiences that will end up benefiting the brands and premium publishers. If we stay focused on the consumer, new business models will emerge to deal with this in the long term. If we focus on any other stakeholder but the consumer then we’re doomed to fail.

——-

Listen to the full Nieman Lab podcast.

Perspectives | Policy

Dear ad blocking community, we need to talk.

Here at DCN, we’ve been actively engaged on the issue of ad blocking software since last year. Unlike many in the industry, we’ve focused on the consumer and what we consider long-term solutions. We don’t think the digital ecosystem can reach its full potential without consumer trust—as we’ve written about here, here, here, here, here and here. Trust is the foundation upon which consumer demand is sustainably built and we’re hard-pressed to envision a digital business that doesn’t need to be built around consumer demand.

Here at DCN, we haven’t focused on how to wage a protracted tech arms race or destroy ad blocking companies. We recognize the value in having the open development community address inherent consumer concerns. In this case, consumers don’t want ads that are annoying, intrusive or drain their device’s battery – and who can blame them? We’re talking about their data plans, their phones, their computers and, of course, their valuable time. Without a doubt, we need to give them great experiences in exchange for their investment. And that applies to advertising too, as Univision’s Kevin Conroy pointed out: better advertising experiences may be exactly what’s called for to stem the tide of ad-blocking adoption.

This is an industry-wide issue and we all need to step up to address it just as we enthusiastically embraced the progression of digital media and marketing. Unfortunately, the race to invest billions of dollars in ad technologies has focused on following consumers all around the web. Instead, perhaps the industry should focus on developing features and tools in ad tech that assist advertisers and publishers in creating consumer-friendly ad experiences (e.g. warnings for excessive animation, latency/heavy load, too many ad calls and hops). To date, consumer privacy and user experience haven’t been given proper consideration. Now consumers are speaking up with software.

It can’t be denied that blocking all advertising could lead to a world where publishers can’t monetize premium content or experiences. This isn’t just an issue of profitability (though certainly that’s why the vast majority of content companies are in the business), it is also a question of supporting the creation of the content people love—and need. Some content companies are trying an approach that appeals to consumers on that basis—often it’s a reminder message on site entry about ads funding the content they are about to—something those combatting content piracy have tried in the past. And while educating consumers is a valuable piece of the puzzle, it fails to address the systemic issues that got us here in the first place. Long term, the industry must clean up the user experience and provide more transparency and controls for consumers.

As ever, our focus at DCN is on solving issues for our valued consumers and working with the trusted brands that comprise our membership, to seek solutions to this significant challenge. We don’t yet know precisely where the line should be drawn, but we’re talking with anyone and everyone about how to continue to create premium content and delightful user experiences in this new world of ad blocking.

One thing that we are sure of: When third parties cut out our messaging to our customers, that’s crossing the line. When a consumer decides to block advertising and visits sites, we need a way to communicate with them so that we can ask for feedback to solve whatever their issue is that ad blocking addresses. If it is an issue of load time, we need to know. If it is offensive or intrusive ad content or ad experiences, we need to know. If it is due to privacy concerns, we need to know. If they’d prefer an ad-free experience, we need the ability to offer them options, such as subscriptions. It’s beneficial to content companies as well as the consumers. Ad blocking tools cut off the ability for content companies and consumers to engage in a healthy, open dialog and search for solutions – principles that the Internet was built upon.

We are the brands consumers trust. We are the content creators, the publishers, the sites they choose to visit. If a consumer is uncomfortable or unhappy with the experience we provide, they can (as ever) go elsewhere. As the first party that not only creates the content experiences these consumers seek out and spend their valuable time with but, in many cases, have developed long-term relationships with—we certainly have the right to educate and engage in a constructive discussion with these customers.

So let’s be clear: blocking messaging from a site to its customers is wrong. Instead of blocking messages that inform consumers about their options for consuming content on the site, let’s work together on long term solutions that will provide our shared consumers with a better experience, thereby building an even stronger digital ecosystem. Give us a ring to discuss– we promise not to block your call.

Perspectives

Dear Abby: I don’t mind advertising but I do mind tracking. What do I do?

The scene: You are driving along Interstate 87 up to Albany (NY) and pass a billboard on the right side of the road.

In the early days of the Internet, the billboard was a sign on the side of the road: static and there rain or shine. To change the billboard, a crew had to go to the location and with a few tools and time, remove the sign and replace it. The billboard was technically dumb. It had no idea who you were, your car, or your license plate number.

On the Internet today, the billboard is still a sign on the side of the road but this time, the billboard is a bit smarter. Based on the time of day, day of week, or some other signal such as weather, it could rotate. You might see a billboard for Howe Caverns if it is nice weather but it might change to a Wyndham Mountain advertisement if it is snowing. As you pass the billboard in your Jeep Grand Cherokee, the billboard takes note: it records your vehicle model, your speed, and extra signals exhausted by your SUV. On your return trip, the billboard notes you passed it with 48 hours between trips. And maybe, the billboard knows you visited Howe Caverns so instead of wasting an impression to advertise Howe Caverns again, it shows an ad for Wyndham Mountain.

I am using the above examples to outline two complimentary but distinct areas: advertising and tracking.

Advertising does not need tracking and tracking does not need advertising. Often we think of these as together and dependent. They are not.

Advertising
A paid-for placement on some form of media (billboard) by an advertiser or agency (on behalf of advertiser). (my definition)

Tracking
The components where the billboard starts to know it is a Jeep Grand Cherokee, the speed, names of people in car, and the time in between passing the board. Collecting and logging data with or without permission. (my definition)

There is a solid conversation happening right now around ad-blocking. Howard Stern is even talking about the subject. Users are blocking ads (and tracking) and this could lead to a complete break of the Internet economy. Ad agency execs are even blocking ads. I recently wrote about a lot of this here.

I want to dig into this subject a bit more as I believe what users are doing on the Internet might have unintended consequences.

There are three types of users:

  • Users who want to block ads
  • Users who want to block tracking
  • Users who want to block both (ads + tracking)

I am not convinced that blocking of ads (ad-block) on the Internet is a good thing. I am convinced that blocking of tracking on the Internet is a good thing for people who do not want to be tracked.

Ad-blockers have been playing the default role of both: blocking ads and blocking tracking.

I do think there are opportunities for publishers, ad-tech, advertisers, and the ecosystem to take a responsible role for letting users know when they are being tracked.

I am not going to outline every single idea here but I’ll toss one out that we’ve been noodling:

One of the ideas that surfaced from my team was around highlighting the advertisement (or the URL [awesome] bar) with a specific color so the user knows something is happening related to tracking.

Example: If ad + tracking is rendered to user, URL bar turns yellow. If yellow, the user can click and see why.

The user can then click on the advert or URL bar to turn-off or add the site/tracker to a white list. A derivative white list idea was talked about recently by my pal Eric Franchi.

I don’t want to deal with managing every company who is tracking me.

I don’t think most Internet users want to manage each tracking platform: the good ones, the bad ones, and the not-so-bad ones. For users who do want to manage their own list, then they can do so. Similar to how I’ve learned how power-users of Firefox tweak every little thing to optimize their own experience.

I do think that it is rationale for a user to do one (or more of the following):

  1. Subscribe to a curated list. Is there a person (i.e. Doc Searls) or company (i.e. Mozilla, Digital Content Next) to whom you would subscribe to in order to use their trusted list?
  2. Subscribe to a brand. Since brands are the ones advertising, would you sign up to receive that respective brands tracking? If you subscribe to Nike, then you receive whatever Nike chooses to use for their tracking and ad-tech.
  3. Or none. Which is fine too.
  4. Or something else that I’ve not listed here, of course.

The content business is in for a nuclear winter if we don’t find a way to directly and/or indirectly compensate publishers and creators.

Advertising is a natural form of content subsidy but there are other direct methods of subsidy as well such as what the folks at LaterPay, Flattr, and others are doing.

I am biased and want to believe that advertising can still exist online but we need to give users control of how they (not) want to be tracked. You can still show an advertisement to a user who doesn’t want to be tracked: show the ad, with respect. More on respect and trust here.

This post is written by Darren Herman, the VP of Content Services at Mozilla. While not skiing with his family or on cross-country flights to Mountain View (CA), Herman thinks about the future of content and it’s convergence with Madison Avenue. This post, which originally appeared on Medium, is his thinking and not one that is reflective of his employer. You can follow him on Twitter @dherman76.

Perspectives

Mobile Use: Simply Spectacular. Mobile Ads? It’s Complicated.

The attention surrounding mobile is old news now — as more people spend time with their handheld gadgets, content is becoming more streamlined for these devices. But mobile advertising? That’s a whole different story. It’s messy, inconsistent, dominated by tech platforms and not functioning well for most publishers. In the words of a Facebook status update: It’s complicated.

The raw numbers for mobile advertising tell us of a thriving, growing business. A recent report from the Interactive Advertising Bureau showed that mobile ads brought in $32 billion in 2014, a 65% increase from 2013, when it was estimated at $19.3 billion. And global ad spending is expected to reach $69 billion this year, according to eMarketer.

Yet a new report from the Wall Street Journal suggests the hype surrounding mobile advertising may be more about the talk and less about the show. Although mobile advertising is now a multi-billion dollar business, the profits aren’t keeping pace. A “mobile gap,” according to industry executives, is now at play with a great deal of money going to ad platforms and networks. And industry experts fear Apple’s upcoming release of ad-blocking on Safari with the new iOS 9 will threaten this already precarious scenario.

“In the short-term, ad-blocking is disruptive for almost everybody,” DCN’s Jason Kint told TheStreet.com. “The entire ecosystem should be aware of ad-blocking. It’s a topic too many companies are ducking and it’s time for the industry to come together to find solutions.”

Platforms Dominate
The blessings mobile devices have offered users with their size and convenience have actually become curses for publishers and marketers.

“That’s because mobile devices have small screens — making traditional display advertising all but useless — and user behavior on a mobile device is even less conducive to interruptive ads than desktop browsing was,” Mathew Ingram explained in Fortune.

Forget the fact that banner ads don’t work on mobile devices. Mobile users also typically spend less time on a website than desktop users, using apps more. So they also just don’t see — and therefore don’t click — on as many ads as desktop users do. This makes tracking and targeting advertising according to user behavior much more difficult for publishers.

But online behemoths Facebook, Google and Twitter are able to sidestep many of these issues. Facebook accounted for nearly 40% of mobile display advertising in the U.S. in 2014 and earned $3.5 billion from mobile display advertising in 2014. Google alone earns about half of all global mobile advertising revenue. These tech companies can profit as much as they do because they know their users in a way no other platform or publisher does. Given the Facebook log-in can track which desktop or mobile devices people use, for example, Facebook can access consumer data that is so crucial to advertisers — and difficult for most publishers to obtain otherwise.

More Ad-Blocking Coming
This also could have rough consequences for publishers looking to maintain control over their content and reap the profits of mobile advertising, especially with ad-blocking coming to iOS 9. Most media companies have offered their users horrible experiences in their attempt to generate as much revenue as possible, because ads get in the way of web browsing and slow down page loading. The availability of ad-blocking on iOS 9 will certainly generate a more positive user experience — but it will make it even more difficult for advertising. Ad-block usage grew by 41% in the last year, according to Pagefair, a company that sells tools to fight ad-blocking, and there’s no doubt usage will increase.

Apple Poised to Profit
“Blocking ads on the web means it’ll force publishers toward the ‘News’ app which also happens to be included in iOS 9, where it’s not possible to block ads and Apple gets a cut of money made from advertising shown via its iAd network,” Owen Williams wrote in The Next Web.

The page loading/user experience/consumer tracking/mobile profiting trade-off is not dissimilar from what’s happening with Facebook, where its “Instant Articles” also load much faster, look better and offer publishers the chance at ad revenue — on the condition that publishers use Facebook to post and share their content.

The flipside, of course, is that Facebook maintains control. But at this point, disengaging from Facebook, Apple, or any other giant media company for that matter, may not be a realistic option. A mobile gap exists. Now is the time to close the gap and figure out how to reap the profits — quite possibly in partnership with platforms. And it is also likely that publishers and brands will be focused on native advertising, which won’t fall prey to ad-blockers, and better creative in order to stem the tide of increasingly negative consumer sentiment about online advertising.

Advertising | Perspectives

Where’s the signal? (And why it matters to digital advertisers)

Philosopher Thomas Wells, in an essay for the Australian Broadcasting Corporation, argues that advertising is a market failure:

The advertising industry consists of the buying and selling of your attention between third parties without your consent. That means that the cost of producing the good – access to your attention – doesn’t reflect its full social cost.

…

Since advertisers pay less to access your attention than your attention is worth to you, an excessive (inefficient) amount of advertising is produced.

For the web, though, there is still time to turn advertising into a net positive, if we fix a few things.

The main reason advertising exists is to help deal with information asymmetry. Nobel Prize-winning economist George Akerlof pointed out that, in a market where low-quality and high-quality sellers compete, and sellers know their products better than buyers do, high-quality sellers have trouble staying in business. When the buyer can’t tell a low-quality car, a lemon, from a high-quality car, no buyer can justify paying more than a lemon’s value for any car.

Over thousands of years, people have figured out ways to deal with Akerlof’s market for lemons problem. Licensing of sellers, product reviews, and protecting trademarks are all ways to give some advantage to quality sellers.

Advertising is another piece of the solution. Tom Goodwin compares advertising to stone buildings for banks, and writes:

Old world advertising used to be the same, the very act of investing in TV, buying a premium billboard, taking an ad in Vogue, became brand building because of the cost, not despite. The general public doesn’t know rate cards, but there was a tacit, enduring, innate feeling that companies that advertised were companies of quality.

Perceived advertising costs matter to users. In The Waste in Advertising Is the Part That Works, Tim Ambler and E. Ann Hollier describe a signaling test based on showing “expensive” and “degraded” versions of the same TV commercials to experimental subjects, and found:

[P]erceived expense influences perceptions of brand quality, which in turn is the most critical predictor of a participant’s inclination to purchase a brand.

Wells, however, argues that signaling is a waste. He writes:

Like banks housed in grand marbled buildings, companies which pour vast amounts of money into advertising campaigns must be supremely confident about the quality of their products and its long-term sales. Otherwise they couldn’t afford to burn so much money on ridiculous Super Bowl ads. This argument rather reminds me of John Maynard Keynes’s suggestion that in a recession caused by a collapse of aggregate demand one could solve the problem by burying bottles filled with bank notes and then leaving it to private enterprise to dig them up again.

But signaling isn’t just based on the production values of the ad.

Ads appear with content. Signal is proportional to the value of the content, not just the ad itself. In signal-carrying media such as magazines, a positive feedback loop can emerge. Valuable signal-carrying ads bring in money for content, whose quality and perceived cost increases signaling power, therefore ad rates, and so on. This can make a signal-carrying medium a great business to be in.

But when advertisers try to target users individually, signaling breaks down. Targeting turns an ad into the digital version of a cold call. Targeted ads tend to “burn out” the medium in which they appear, through a Peak Advertising effect. Each new targetable medium falls in value and popularity as users figure it out, filter it, or get their governments to restrict it.

Even when a web ad appears on expensive content, it fails to carry the signal that it would convey in a less targetable medium. Users are aware that ads “follow them around,” so instead of viewing an ad as part of an expensive, signal-carrying ad buy, even an ad on high-quality content could be an example of cheap targeting.

Solutions
The two extreme positions on web ads each miss something. Ad blocking everywhere and eliminating ad-supported content is clearly suboptimal. The existence of magazines that people voluntarily subscribe to is proof that some level of advertising can work.

The other extreme is anti-adblocking, telling users to stay in an unprotected, targetable state. This doesn’t work, not just because of the malvertising problem, which make some protection a necessity, but because of signaling failure.

A third way is needed. Fortunately, tracking protection tools are able to block cold-call-like targeted ads while permitting signal-carrying ads. Instead of waiting for more and more users to give up on advertising and get an ad blocker, publishers can help and encourage users to run tracking protection tools instead. But if sites fail to turn the web into a signal-carrying medium, web ads could slide into a no-win struggle like email spam/anti-spam, and anti-advertising philosophy could turn out to be right after all.

Don Marti (@dmarti) is a contributor of code and documentation to the aloodo.org project, a low-friction way for sites and brands to reclaim the value of online advertising from fraud and ad blocking. He is the former editor of Linux Journal. Don is the subject of an out-of-date Wikipedia article, which he will not edit himself, but wishes that someone would.

 

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