With the introduction of new advertising formats, ad types, and methods of buying and selling inventory, consumer publishing is undergoing some big changes. To get a closer look at what’s working, MediaRadar conducted the “2016 Consumer Advertising Report,” using our data science-powered platform to review these trends for 2016 and Q1 2017.
Here’s a look at some of the most notable findings.
Native advertisers up 74 percent.
High CPM ad placements are surging. Native ad buyers, in particular, are up, rising three-quarters (74%) from Q1 2016 to Q1 2017. This represents the largest growth in buyers for any ad format. Looking back further, we found that demand for native has nearly tripled since January 2015, which had less than 1,000 buyers (981). In January 2017, there were almost 3,000 (2,882). Consumer advertising is shifting as audience consumption patterns evolve. We foresee advertisers will keep spending more on native because it often outperforms traditional ad units.
Print ad spend declined 6 percent.
The number of print ad pages in Q1 2016 was 117,551. Compared to Q1 2017, the number of print ad pages has decreased 8 percent year-over-year to 107,698. Similarly, estimated print ad spend has declined 6 percent from Q1 2016 to Q1 2017. However, even with this decline, there are still a considerable amount of pages being bought. We notice niche and enthusiast titles are on the rise, with some regional titles flourishing.
Programmatic buyers down 12 percent.
According to our data, 45,008 advertisers purchased ads programmatically in Q1 2016. In Q1 2017, however, the number of programmatic advertisers dropped substantially, falling 12 percent year-over-year. On the quarter, more than 5,000 fewer advertisers (39,415) bought programmatically.
After years of growth, the decline in programmatic buyers is likely attributed to concerns around brand safety – especially given the recent problems for companies like YouTube. This form of advertising continues to evolve as brands seek more control over where their ads are running. We expect to see programmatic rise as more brands move to programmatic direct models.
Our report showed that native is surging, and buyers are investing accordingly. Print ad spend is declining as a whole, but is buoyed by vertical subject matter and titles. Publishers can also expect to see programmatic rise as more brands shift to programmatic direct models. It will be interesting to see how these developments play out in the second half of 2017.
When you think of The Washington Post, you probably think newspapers, not software company. But the reality is that the company operates a lot more like the latter. Under the influence of owner Jeff Bezos, The Post has been trying innovative approaches to everything it does and is experimenting with new ways of doing business.
That includes running an ad tech startup inside the company, one whose job is to use The Post as a sandbox of sorts to come up with new ways to deliver ads and then market the technology they produce to other publications. It’s not the kind of project you expect to find inside a publication like The Post, but it’s one of the qualities that attracted VP of commercial product and innovation, Jarrod Dicker several years ago.
Dicker says he originally reached out to The Post in 2015 about a job because he was seeing the continuous trend of media companies’ reliance on third-party companies for things core to the business, such as ad technology.
After he came on board, Dicker helped form the RED team, which stands for research, experimentation and development. The group, which consists of software developers and product managers, began to look at the ways the company did ad tech.
As with any attempt to change the way you do business, Dicker ran into the “that’s just the way the industry works” attitude. His idea was to look at it fresh. What if you didn’t have any preconceived notions about how ad tech was supposed to work, how would you build it from scratch?
What he knew for sure was that users didn’t like the way ads were being delivered to them. So the first thing he decided to do was focus on improving the user experience. When consumers ignored ads—or worse, blocked them—Dicker recognized that the approach the industry had been taking needed to change if publishing was going to survive and thrive moving forward.
Thinking Like a Startup
“My pitch to The Post early on was—and it was me coming in as an individual contributor at the time—how do we take a startup mentality and really think about our focus as a media company and figure out how to differentiate ourselves,” he said. The problem as he saw it was that most media companies were focusing so much on building the content side of the business, they were forgetting about innovating on the revenue side.
So, he said they took the approach: “What if we actually applied an effort to build products that we think would be perfect for user experience, knowing how our consumers engage on The Washington Post and apply those to what we know brands and marketers want.” And that may just have been the key that unlocked the strategy. Dicker and the team he helped form wanted to create products that worked for marketers and brands as well as users who were fed up with online ads.
Getting talent to come in and work on ad tech proved to be a challenge at first precisely because it had such a bad reputation. “People didn’t want to work on ad problems because of the association with fraud, blocking and bad user experience. And the people who could apply [for these positions] and make the change didn’t want to be a part of it. They assumed that things couldn’t change or be better,” he said.
Those were precisely the people Dicker wanted however. Solving these issues requires people who could look at ad tech problems with fresh eyes. One of the problems they found was related to ad load time, so speed became a priority. The result was aproductcalledZeus that has the fastest ad load times in the industry, faster even than Google, according to Dicker.
The RED team developed Zeus and other ad tech products at the Post including PostPulse, FlexPlay, Re–Engage, Fuse, InContext, and PostCards, and then began licensing them to other media companies, such as the Los Angeles Times, Toronto Globe and Mail, and Chicago Tribune. He found that providing a way to potentially improve ad technology across the industry, while producing another revenue source, was a happy side effect.
Dicker isn’t under any illusions that the tools his team has created are going to supplant the content/ad/subscription revenue model. However, he does see it as a viable additional form of revenue for the company, and he finds it exciting that his team is helping the core business grow and thrive.
“We now also have a Software as a Service model where the Washington Post is no longer solely reliant on advertising or subscriptions. We are actually becoming the technology vendor for other publications.” And that not only helps them diversify revenue, but has created an internal culture of innovation, which should help drive long-term success.
You’re half-way through a gaming session and the world is breaking apart around you as you run from attacking aliens. Firing as you go, you turn a corner and suddenly your view is filled with the sight of a brand new sedan. You see a cute dog at your local coffee shop. When you lean down to pet the dog an ad pops up next to your hand inviting you to buy puppy food. Sounds dystopian? No, it’s just the latest in advertising technology guidance from the Interactive Advertising Bureau.
Augmented Reality (AR) and Virtual Reality (VR) are exciting technologies, but they are far from mature. Early adopters have paid a lot of money for expensive devices but the future of both the hardware and software for AR and VR is still uncertain.
New Advertising Opportunities
This murky future hasn’t stopped the IAB from pushing out guidance in its latest “#IABNewAdPortfolio” on advertising formats for both platforms. The enthusiasm for new advertising opportunities is understandable. However, these new ad formats could easily kill off these infant platforms.
Worse, it is unlikely that early AR and VR advertisers will strictly adhere to the IAB’s guidelines. The reality is most ads have a tendency to step over the already permissive restrictions laid out in IAB documents. It seems likely that will also be the case with AR and VR.
The IAB has specified ad formats that could turn their hosting technologies into a wasteland. Advertisers could display any ad format onto a virtual wall or billboard. Considering the current state of display ads, that alone is a troubling concept. The IAB offers almost no restrictions on interactive objects, only recommending that a branded can of soda shouldn’t take up the whole view. One innovator in VR advertising provided their own horrifying example of a virtual landscape infested by Despicable Me’s Minions.
Disruptive, And Not in a Good Way
According to Crunchbase, this mission to create a world where every flat surface and vehicle stares at you through the dead goggled eyes of a Minion garnered over 5 million dollars in funding, surely a sign of the future to come.
The IAB guidance specifies an opportunity for interstitials as well:
360-degree video placed as an interstitial ad between different VR scenes. 360-degree video MUST completely fill the VR scene with video ad.
It is hard to imagine a more disruptive experience than being in one world and turning around into a 360 ad embodying an entirely different one. Such an ad format would be easy for less ethical content providers to exploit, with every virtual head turn or gaze providing a chance to fall into an ad.
I’m Looking at You, AR
Then comes the horror that is the IAB’s ad guidance on Augmented Reality experiences: AI that watches everything you glance at and triggers ads accordingly. Here’s the guidance on what happens when Orwell meets Ad Executive:
For example, a brand may choose to associate a product or service with dogs. When the AI system on a device “sees” a dog using the device lens, the AI system can associate the familiar concept with the previously known concept of a “dog.” The unknown visual of a dog that the AI system scans may be either an image of a dog or the three-dimensional animal. Once recognized, the system can trigger the display of brand content.
This is a terrible concept. First, eager marketers would likely train AI to trigger on even vaguely associated objects. Second, the guidance allows for display ads to be either attached to physical objects or stuck to your viewport until… I don’t know, you go crazy? The concept is so obviously terrible that it was satirized 17 years before the IAB even came up with it.
Tracking the Trackers
This doesn’t even touch on consumers increasing opposition to the tracking currently deployed in display and video ads on the web. Ads run by AIs that track every gaze would only compound that invasion of privacy.
Considering the low-quality technical performance of ad tech and the heavy battery use of AR devices, the platforms themselves would probably not be capable of supporting the ad space effectively. Endless popups assaulting an Augmented Reality user’s view is sure to destroy any chance the technology has to make it into the general consumer market. While current ad tech may have damaged the viability of publishers on the web, this may be the first time ad tech destroys a whole technology category with its urgency to monetize.
Slow Down and Get it Right
If AR and VR are to bring advertising dollars, it isn’t by replaying the mistakes of the last decade on new formats. The first step will be severely limiting the possible locations where—and amount of time when—advertising can appear. The next, in any guideline or best practice we must recommend against the invasive tracking of ‘Advertising Intelligences’. This is not the world we want to build and we cannot open the door for this type of tracking tied to these platforms.
This does not mean that there aren’t opportunities. Product placement is, without a doubt, a clear trade-off that most consumers have already accepted. Another option is that sponsors of VR and AR experiences could provide opening areas before users encounter the content, a more appropriate type of pre-roll. If the technology is given the opportunity to mature, many other opportunities will certainly emerge.
Whatever the future brings, if we wish for it to include AR and VR in our everyday lives—and in the lives of the consumers whose trust is essential to our success—we can’t allow these types of proposals to go unchallenged. If we need ads to fund these platforms, we will have to find more creative options, ones appropriate to the technology and user experience. No matter what business model supports AR and VR, we don’t want to create an untenable experience before these emerging formats have had a chance to develop and capture audiences.
Aram Zucker-Scharff (@Chronotope) is Salon Media Group’s full stack developer, lead developer for the open-source tool PressForward and a consultant on content strategy and newsroom workflows. He was one of Folio Magazine’s 15 under 30 in the magazine media industry. His work has been covered multiple times in journalism.co.uk and he has appeared in The Atlantic, Digiday, Poynter, and Columbia Journalism Review. He has also worked as a journalist, a community manager and a journalism educator.
Spending on search engine advertising is trending up — increasing to 22% growth in Q2 on Google, an increase from 9% last year — according to Merkle’s Digital Marketing Report Q2 2017. Search ads delivers the best bang-for-buck when it comes to “low-in-the-funnel” prospective customers, across both the B2C and B2C categories, and the ease of use makes it accessible to companies of all shapes and sizes.
Experienced digital marketers know that search engine marketing, primarily Google, has served as the bread-and-butter of online lead generation since the early 2010s. And this category’s continued expansion can be seen as good news for everyone in the digital marketing ecosystem. Though Google remains the bellwether player, brands are looking to expand their digital advertising footprint, and are looking for options beyond Google.
This is partially represented in this analysis, which includes Bing Ads and Yahoo Gemini. Given the sustained efficacy of Google search ads — and breathtaking profits realized by Google — over the past decade or more, it’s notable that it’s taken several years to attract formidable competitors to the category. But it’s great to have Bing (Microsoft) and Yahoo (Verizon) show up for the party. Even though genuinely competitive offerings may be years away, their scale and ability to offer relatively discount price products will help the category as a whole. Digital marketers are also cautiously optimistic that others will be attracted to the category as well, as Google has held sway over the market for too long,
Back to the data. The following are the most pertinent data points from Merkle’s recent research report, and what digital marketing professionals need to understand.
Q2 2017 saw continued strength for the two major digital marketing platforms as Google search spending growth accelerated to 23% year-over-year (Y/Y) and Facebook budgets continued to grow much more rapidly than the online ad industry as a whole.
While mobile continues to be the main engine of spending growth across digital ad platforms, desktop has been pulling more weight for Google in recent quarters; this resurgence began soon after Google began allowing search advertisers to bid separately for tablet traffic and the better performing desktop segment in Q3 2016.
Bing Ads and Yahoo Gemini combined search ad spending fell 3% Y/Y in Q2 2017, an improvement from a 14% decline in Q1. Though in absolute terms this news does not optically serve Bing of Yahoo well, this is a relative improvement in a growing marketplace, and excited digital marketing professionals, who have grown weary in recent years of their reliance on Google.
Facebook ad spend increased 56% Y/Y in Q2 2017, in line with Q1 growth. Facebook CPC fell 3% Y/Y, while CPMs jumped 57%. A relative new entrant on the scene, Facebook is a force to be reckoned with, especially in the B2C category. Based on CPC rates, Facebook is more than willing to “buy market share” and for good reason. It’s only a matter of time before Facebook figures out how to makes its mark in the B2B sector, where it’s already a significant force outside of the United States.
The Bottom Line
Through their spending, brands continue to reinforce their estimation of the value and efficacy of text-based search engine marketing advertising. Consumers, both in the B2C and B2C categories, look to search engines to seek out vendors for their needs, ranging from new shoes to cars to enterprise software applications that cost hundreds of thousands of dollars. And companies continue to push more advertising dollars to the medium because of the success they experience in the channel.
The lack of metrics and tracking in the world of podcasts has kept many advertisers away from the space. However, podcasting has been a boon for direct response advertisers like Squarespace, BlueApron, and Samantha Bee’s favorite, MeUndies. Apple recently announced that it will finally share analytics on listener behavior in aggregate. This is a tremendous advancement for podcasting. The data will help producers understand what content hooks listeners and where they drop off. But, beyond measuring listener behavior, Slate wants to answer one big question for brand advertisers: Do podcasts work?
To answer this question, Slate Group Studios partnered with Prudential Financial Inc. on a program called Wealth Wits and paired it with the first study of it’s kind to assess the impact of a branded podcast program.
Slate was an early pioneer in podcasting and has been a leading force in the space for more than 12 years. As listeners flock to the medium, brands are keen to experiment. In 2015, Slate created its first branded podcasts with HBO, GE and Prudential. However, the lack of measurement has hampered aspirations to build out robust, long-term podcast marketing strategies.
Our Wealth Wits Investigation
The Prudential Wealth Wits program offered a customized content experience powered by the listener’s own financial behavior. The capstone of the campaign was an interactive self-assessment quiz, promoted on Slate, that served up a personalized podcast. The branded podcast was created in partnership with Prudential and hosted by journalist, comedian, and author Faith Salie. Wealth Wits intended to help people of all walks of life think about their retirement and plan for the future.
Slate Group Studios created a custom methodology in order to understand and assess the overall impact of the Wealth Wits campaign on Prudential’s brand favorability. The study looked at overall brand awareness, favorability and consideration. GFK Research measured the results.
For the study, control survey responses were collected prior to campaign launch to ensure no exposure to branded podcast. Exposed survey respondents were collected via a host-read at the end of the podcast to ensure exposure to branded content. The survey was hosted at an easy-to-remember vanity URL.
Measuring the Results
One positive result was that nearly 20% of survey respondents reported that they were very or somewhat likely to recommend Prudential to their friends and family.
Because this was a cross-platform program with interactive, display and audio elements, the study allowed us to compare the impact of different media types. These comparisons produced the most exciting findings, offering up valuable, statistically significant evidence of podcast advertising’s effectiveness. In short, the study found that podcast units were more than twice as successful than banner ads in driving statistically significant lifts in Brand Awareness (+14%) and Ad Recall (+21%).
In addition to finding that podcast units were more than twice as successful than banner ads in driving statistically significant lifts in Brand Awareness and Ad Recall, the units’ display creative also led to statistically significant lifts of 7% in Favorability and 8% in Consideration.
It was encouraging to see the success of Wealth Wits reflected in meaningful metrics. However, it’s even more exciting that the results offer up much-needed data on the effectiveness of branded podcasts as a medium. While the creativity afforded within the podcast space and the deep engagement have made branded podcasts desirable, the data to support the investment has often been elusive. With our custom methodology, the industry at large now has a model to follow and hard numbers to measure against.
We can now say emphatically that, yes, podcasts do work.
About the authors
Charlie Kammerer is Chief Revenue Officer of Slate, where he focuses on developing ways for brands to tap into Slate‘s audience through editorial content, podcasting, video, and custom programs. Kammerer joined Slate in 2017 after spending twenty years at Time Inc., where he was a brand builder and revenue generator across a diverse portfolio of brands, including Real Simple, Fortune, Food and Wine, Cooking Light, Golf, and This Old House. He’s based out of Slate‘s Brooklyn office.
Jim Lehnhoff is Vice President at Slate Group Studios, Slate’s in-house branded podcast agency. Formerly, Jim was Director of Advertising Strategy at Gawker Media, where he was responsible for overhauling the company’s go-to- market strategy while managing a team of six strategists. Prior to Gawker, Lehnhoff cut his teeth at Serious Eats, Curbed Network, and The Onion.
With all the moves by brands and publishers to use virtual reality for immersive storytelling, it was only a matter of time before true VR advertising would follow. But this being a relatively new form of advertising means that the rules and standards haven’t been written yet.
While recent VR launches by Google, Adobe, and Nokia show the potential of ads in VR, the momentum has yet to start catching on for audiences. And with current audience limitations — and what’s viable given industry trajectories — it seems that VR advertising remains a niche reality for now, despite exciting new experiments.
Pioneering Ventures into VR Advertising
As part of its Area 120 internal incubator, Google recently announced its foray into VR advertising: Advr, an ad prototype that’s essentially a cube of content. Viewers are able to see an ad by clicking on the cube or staring at it long enough to generate a video ad pop-up. It’s an almost telekinetic use of your eyes to open a jack-in-the-box of advertising. The viewer can then either watch the ad or close the player.
In a blog post announcing the prototype, which is currently in testing with VR game developers, Google stated that VR ad formats — and its work within this space — ought to follow a few key principles:
easy for developers to implement
native to VR
flexible enough to customize
useful and non-intrusive for users
Adobe also has a VR advertising venture that creates a “theater-style experience” for 2-D videos, rather than 3-D or 360 degree video. Think of it as a video clip pausing for an advertisement to take over a whole theater before slowly fading out and the clip starting again.
It’s a bit more intrusive than Google’s effort, but Adobe says it could get this kind of advertising solution out to publishers in the next six to 12 months, and could eventually offer the same attributes of video advertising, including consumer targeting and detailed analytics. Adobe also says it wants to prioritize mobile VR as opposed to higher-end headsets, to make use of what’s more affordable to audiences.
Not to be outdone by competitors, Nokia is boasting a VR advertising experience as well. Technically a 360-degree video , the ad allows people to people virtually walk around a house to see how the its new line of digital health products by are used. It’s also a not-so-subtle way for Nokia to advertise its VR-creating hardware, the OZO camera.
While the potential for VR ads to boost retail and e-commerce (as Nokia is doing) is certainly on point, travel is another promising area. Cathay Pacific has partnered with the VR and 360-degree advertising firm OmniVirt to deliver such an ad experience. Marriott Hotels has also used 360-degree video to transport people to exotic destinations.
While these brands are trying to be forward-thinking and innovative in the advertising space, they’re also able to tap into the emotional longing for anyone considering a vacation. It’s no wonder that a recent study by Vibrant Media on VR and AR advertising shows consumers are interested in experiencing travel destinations before buying their tickets.
Niche Footholds = Niche Outcomes
Still, the same study by Vibrant Media lays out the harsh truth to new pioneers in VR advertising: There are tough hurdles to building audiences. The study found that consumers don’t want to have to worry about additional software and hardware. They also worry about getting charged for overages with cellular data.
Given that VR headsets have yet to expand beyond gaming and entertainment, it’s tough to imagine VR advertising expanding beyond these same kinds of consumers in the short term. Data from Forrester Research indicates that 46% of online adults in the U.S. in 2016 didn’t see themselves using VR and 42% of online adults hadn’t even heard of VR headsets. Mass consumer adoption of VR technologies is at least five years away, according to the research.
Meanwhile, a January 2017 report by Yes Lifecycle Marketing found that few advertisers are currently delving into VR or have plans for it. More than half of marketers surveyed said VR or AR advertising didn’t apply to their organizations, and only 8% of them were currently using VR advertising (7% AR advertising). The current marketers in this space are definitely on the cutting edge.
It’s important for publishers and advertisers to experiment with virtual reality and immersive storytelling, because they can truly be awe-inspiring experiences. But so far, the moves into VR advertising are baby steps and the standards and best practices are still a work in progress. While there is a load of potential, we have a long way to go for it to be a reality for the public at large.
The Cannes Lions International Festival of Creativity wrapped recently, and there was plenty for advertisers and marketers to chew on as they departed the French Riviera. Throughout the event, several themes emerged that seem poised to shape the rest of the year. Here’s a closer look at three in particular, based upon conversations we had with attending clients and partners.
Advertisers want more brand safety.
In the digital environment, which is a relatively open ad ecosystem, brand safety has always been top-of-mind for advertisers and agencies. Recently, given very public challenges for some platforms, brand safety is now front-and-center in conversations between brands, agencies and their technology partners. We saw this dynamic emerge at the NewFronts. And it continued – and accelerated – at Cannes.
Many platforms have responded by touting Artificial Intelligence (AI) capabilities for weeding out offensive content. But that’s only part of the solution. The most practical fix is for advertisers to work with trusted sources of premium inventory that can combine their supply with leading-edge quality control tools and technology. This is the most effective means of delivering true peace of mind for advertisers and boost brand safety.
Trust and accountability remain hot topics.
Trust and accountability were part of every discussion at Cannes. It’s clear that advertisers want and deserve deeper insight into how agency and technology partners act on their behalf. They want to know how their money is being spent. P&G is a good example. It announced a review of all media agency contracts this year to extract a broader transparency commitment and more granular data insights from “murky” agency and publisher relationships. That resonated at Cannes, where every buyer was calling for greater accountability across the digital ecosystem. Candidly, we think we led the discussion in how to get there.
It starts with the technology vendors and platforms. Advertising technology is the backbone of the industry. So, as supportive partners and category stewards, we have to take the lead and build and refine our services to deliver accountability. Third-party verification of inventory sources and attribution metrics is a first step. But beyond that, platforms need to be proactive, providing buyers with greater access to attribution data, making their technology stacks both vendor and media agnostic, and offering more programmatic transparency in areas like fees, CPMs and bids.
Immersive experiences are taking off.
Brand safety and accountability are critical. But at the end of the day, helping an advertiser engage their core audience effectively matters the most. To that end, “immersive experiences” were a centerpiece of this year’s event in Cannes, with an emphasis on mobile video.
Smartphones continue to grow as a screen of choice for video, rivaling desktop viewership consistently year-over-year. At Oath, we recently conducted a global study that found nearly 60% of all consumers watch videos on their mobile phones every day. We are very close to the tipping point where mobile will soon be the number one video screen. What’s more, the rate at which consumers are adopting immersive, mobile-enabled video formats like VR, 360-degree video and live video, are surging. These types of experiences help brands reach their audiences in new and unique ways, through interactive storytelling. The technology to deliver immersion at scale has also improved, just as the audience’s appetite for immersive content has exploded.
Brand safety, accountability, and immersive experiences will continue to dominate industry discussions over the next several months. It will be interesting to see how they shape the ecosystem in the second half of the year.
Currently President, Ad Platforms at Oath, Tim has more than 20 years of online advertising experience living in Asia, Europe and the United States specializing in digital advertising platforms, data analytics and programmatic exchange-based technology. As President of Adtech Platforms, Tim’s role is to oversee all of the Demand and Supply Side engineering, product and business divisions that comprises of One by AOL, Brightroll, Flurry and Convertro, among others.
Tim came to AOL from the acquisition of Vidible where he was the founder. As CEO, he oversaw the Video Content Exchange Platform that streamlined the way video content owners syndicate their content to publishers. While incubating Vidible, Tim was an Entrepreneur in Residence with Greycroft Ventures, advising portfolio companies such as Klout, Livefyre, elicit and Collective Media.
“Two ways,” Mike said. “Gradually and then suddenly.”
Digital media veterans may find solace in this passage from Hemingway’s 1926 novel The Sun Also Rises.
“Gradually” could best describe the glacial change to the mobile web we witnessed from 2000 through 2007. But then Steve Jobs introduced the iPhone and “suddenly” we couldn’t move fast enough to keep up with consumers.
In every case of digital transformation, there have been “Sleeping Giants” offering premature and often prescient hints that turn into rapid change seemingly overnight. This acceleration is normally brought on by a significant tipping point whether it be a disruptive technology, competitive move, or a provocative press headline.
In digital advertising, Marc Pritchard’s January speech demanding independent accountability didn’t really cover new ground. His points were issues that the industry had discussed many times over the previous years. But it certainly mattered when Pritchard said it (and the press covered it). At that moment, in that room, in his voice, to that audience, to the IAB he said: “The days of giving digital a pass are over.” He urged the rest of the ad industry to follow P&G’s lead. “It’s time to grow up. It’s time for action.”
By virtue of the ad dollars he controls, Pritchard is a giant in the industry. While the issues he called out are far from new—particularly to a savvy industry vet like him—the very fact that he so directly addressed them shook the industry.
However, despite his call to arms, alarm bells continue to sound. Just this past Monday, Digiday reported that up to 80% of Facebook’s video advertisements weren’t viewable. We first heard this more than a year ago. Facebook tried to fend off the whispers for as long as it could —going so far as to state last year, “we have our own measurement and how we measure.” Yet these whispers have risen to a general outcry. And independent measurement coupled with industry press will carry the message far and wide.
Many have called out issues of brand safety over the years, including the more recent renegade Sleeping Giants Twitter account. However, the March headlines out of the UK that reported on extremist content on YouTube changed things overnight. Major advertisers pulled their campaigns. UK and French governments surfaced regulation discussion. Chase Bank began individually whitelisting the sites where its ads could appear. Premium publishers have long highlighted the brand halo that respected content confers on the ads that surround it. But this chorus of major advertisers decrying the effect of negative contexts triggered a precipitous escalation of the issue.
DCN has led the “Duopoly” discussion since 2016 regarding the lopsided competitive environment with Facebook and Google. But it was Margrethe Vestager’s $2.7 Billion decision out of the EU that will drive Google to change its business behavior going forward. (Side note: Read this and be highly skeptical of the motivations of anyone who argues this decision is EU “protectionism.”)
But there is a much larger sleeping giant about to rise and roar.
DCN and its counterpart organization for the marketers, ANA, have been systematically documenting the issues of building a quality advertising supply chain over the past three years. We started with the shift to viewable impressions. Both organizations have intensely studied invalid traffic and bot fraud across the web. The ANA also recently studied financial transparency and the economics of the ad tech tax. And comScore studied the value of environment and, in turn, brand safety.
But documenting the problem does not go nearly far enough. So DCN’s board bravely accepted ANA’s challenge and, in Sept 2016 began to build out a premium digital marketplace called TrustX.
We set out to answer to these demands:
100% premium publisher inventory in an open RTB private marketplace. Check.
100% human and viewable ad supply, or advertisers don’t pay. Check.
100% priority on brand safety and campaign efficacy. Check.
100% trading transparency down to the publisher URL. Check.
100% financial transparency from bid to delivery, reporting and billing. Check.
If you do the math, digital advertisers are wasting away more than $10 million per day on overpaying for a murky digital advertising supply chain. I can’t imagine this sort of waste is escaping a CFO or CEO these days. And let’s not forget the ripple effect caused by their dollars and brands being associated with criminal ad fraud or extremist material on predominantly user-generated content experiences like Facebook and YouTube. It is clear that the market demands a solution to these problems—one with scale, simplicity, efficiency, and accountability.
On behalf of the premium publishers, we have stepped up and built it: TrustX. I’ve been informed by the TrustX management team that nearly every major agency and brand is leaning into TrustX as exactly what our market needs.
So, the only remaining question is who are the Sleeping Giants that will ensure that digital advertising grows up – not gradually but now, suddenly ? Which advertisers and partner agencies will take a stand at scale making the true economic commitments necessary to drive the transparency and accountability priorities that TrustX represents and the industry needs?
Programmatic advertising will account for 80% of all digital display advertising in 2017. However, this technology-driven ad buying process has seemingly created as many problems at it’s solved, in the forms of both wasted ad spend and brand risk exposure. In response, CMOs are taking steps to protect and safeguard their brands by reducing spend in certain digital channels until better controls and compliance measures are in place.
With all of the talk over the past couple of years about ad fraud and compromised viewability rates, we as an industry have sort of overlooked the implications of online advertisements that are seen, but in sub-optimal settings. That is to say: How are consumer behaviors impacted when they interact with ads in an unseemly or unexpected context? (Example: a banner ad layered over a hate group recruiting video on YouTube.) Marketers need to understand the impact of these negative advertising experiences.
This issue, to be sure, has been a persistent problem for advertisers since the early days of the business. One needs to look no further than Harry Crane (Rich Sommer) of Mad Men’s Sterling Cooper agency. They launched the firm’s new television department and charged it with monitoring a client’s ad buy just as the medium took off. Fans of the show quickly learned what media buyers the world over already know: Advertisers do not appreciate their promotions running anywhere but in the slots they’ve approved.
Managing this challenge across the digital channel has been a problem since the first banner ad was sold in the early 2000s. And it has only worsened in the wake of programmatic. To date, this issue has evaded intense scrutiny because the digital channel is some much more cost effective than its offline counterparts. But, as advertising economics continue to evolve and companies become smarter about managing a multi-channel environment, brand safety in the digital channel is gaining steam. Leading this movement’s charge are private companies such as Integral Ad Science and industry organizations like the Association of National Advertisers (ANA) and and CMO Council. Indeed, digital marketing auditing is emerging as a cottage industry unto itself as advertisers are becoming more aware of inefficiencies in the channel.
Almost half of survey respondents say they would consider defecting from brands who fail to control where their ads appear. This suggests that marketers should be “deeply concerned” over the integrity of content environments.
66% of those surveyed say their respect for brands decreases when they encounter ads near hateful, inappropriate, or distressing content.
Where an ad runs is just as important as its message. And consumers seem less likely to give their preferred brands “a pass” for appearing in inappropriate environments or next to jarring content.
85% of those surveyed expressed some level of concern about how easily they are directed or redirected to offensive or objectionable sites.
According to publishers, consumers are actively contacting them to ask if their properties endorse certain content, given their stated values.
With increasing fervor, consumers are demanding that brands respect their time and their messages appear in environments they trust.
The bottom line: Context matters. All parties in the digital advertising ecosystem must ensure that great advertising experiences are delivered in equally excellent environments.
When Apple announced last year that it would offer mobile ad blocking on iOS 9, and Google stated it would crack down on interstitial ads on mobile websites, publishers went immediately to sky-is-falling mode, predicting that these moves would undermine their chances for mobile ad revenues. But so far the panic has been overblown, especially in the U.S.
What appears to be a burgeoning trend in Asia is still in its infancy here. This gives publishers a bit of time to readjust their advertising formats to meet consumers halfway.
That said, Google, with its own vested interests, has just announced a new offering that will definitely push publishers: A new ad blocker. Thetech giant prefers to call an “ad filter” which will be integrated into its widely popular Chrome browser. It’s a move that’s likely to shake the entire advertising industry. Then again, it may just help to thwart the dreaded rise of further third-party ad blockers.
But Apple announced its own Safari ad-blocker in the new High Sierra operating system for desktops. This one would block auto-play videos as well as ad tracking across the Internet. While Google is taking a more collaborative approach with publishers, Apple is “taking a harder line,” as Undertone’s Eric Franchi told Adweek.
Mobile Ad-Blocking Uneven
The 2016 report from Pageview, a company in the business of trying to get publishers to reevaluate their advertising models, caused a stir among some circles for its analysis of global ad blocking. Ad blocking increased by 30% last year. And among the 615 million devices blocking ads, more than half — 308 million, to be precise — were blocking on mobile. Taken in another light, that’s 16% of all smartphone users in the entire world.
Yet 94% of all that mobile ad blocking took place in the Asia-Pacific region — in countries where Internet penetration is increasingly mobile-first, and where data prices are too high for most users to want to tolerate video and other data-heavy ads. North America and Europe, meanwhile, were much calmer in comparison, no doubt thanks to more affordable data packages.
A sampling of some of these global figures show what’s exactly at stake:
In India, mobile ad blocking is at 28%, whereas desktop ad blocking is a mere one percent.
In Indonesia, 58% of users block on mobile, while just 8% do so on desktop.
In the U.S., one percent of users block on mobile, whereas 18% do so on desktop.
In the U.K., content compensation platform Sourcepointreports ad blocking is at about 18%. The figure is slightly higher in France and Germany. However, data suggests that these rates are stabilizing due to more effective communication between users and publishers.
The Underlying Concerns
It’s pretty obvious why ad blocking on mobile is increasing: Users don’t like the ad experience, and publishers aren’t effectively communicating to readers about why their use of an ad blocker is detrimental to their business.
A fair number of users don’t want to see ads at all. However, users aren’t simply hating on the content of ads. Among the reasons people chose to use an ad blocker were privacy concerns and irritation at interruptions. Users who block ads tend to be highly educated and aware of the ecosystem they’re involved in.
That being said, of course publishers feel threatened. The West may be slow to block on mobile, but the world’s next billion Internet users are going to be mobile-first.
Still, it’s not an apocalypse. In the current climate, publishers need to be more transparent to users about what’s at stake — and how they can make a difference.
Google, Apple Making Moves in Browsers
In an environment like this, it’s no surprise Google has announced what it’s hinted at for some time: A new ad blocker for its Chrome browser. The new browser will create a higher bar for the kinds of ads that appear on the web by filtering out the more annoying ones, like auto-playing video ads. The goal of the blocker, which is slated to come out in 2018, is to create a better user experience. The Coalition for Better Ads, an industry group Google belongs to, is creating the standard for permissible ads.
The tech giant is signaling its collaborative intent by giving publishers six months to prepare for the ad blocker’s release, and to adjust their advertisements accordingly. It will then essentially grade publishers on the kind of advertising they’re offering. Google is also launching a feature called “funding choices.” This will let publishers charge users per page view if they’re already using an ad blocker.
Apple, meanwhile, announced new features for Safari in its glitzy announcements at the Apple Worldwide Developers Conference recently. While they might not have been as sexy as the new HomePod speaker system or multi-tasking iPads, the default setting in Safari to block ad tracking and auto-play video will make a huge difference for publishers. (Irony alert: The link above to Apple’s website listing its new products does include — gasp! — an auto-play video ad.)
While it’s discomforting that Google and Apple wield such dominance, the companies are at least taking leadership positions where others haven’t. And they’re doing so while mobile ad blocking is still on peoples’ minds, but before it’s become unstoppable. The time is right for publishers to get their advertising house in order.
Mary Meeker’s annual Internet Trends Report is often referred to as the state of the union for the media and technology industry. In it, Meeker—a partner at venture capital firm Kleiner Perkins Caufield and Byers (KPCB)—highlights the biggest internet developments for the coming year. Her report provides insights on digital adoption, identifies which interfaces are resonating, and examines the dynamics of ecommerce.
Some key takeaways from her presentation:
Mobile dominates digital usage. U.S. adults now spend 5.6 hours a day using digital media, 3.1 hours (from 2.8 in 2015) via mobile devices and 2.2 hours on desktop and laptop.
The ad spend on mobile is not proportionate to the share of time spent on mobile. While consumers spend 28% of their time on mobile, only 21% of the digital ad dollars is spent on mobile media. This is expected to correct itself in the second half of this year.
As internet advertising continues to increase, the growth is concentrated in Google and Facebook, the internet duopoly. Meeker’s report notes that Google and Facebook control 85% of online ad growth. Google’s ad revenue grew 20% and Facebook 62% in 2016. For everyone else, the growth was less than 10% year over year.
Internet users are concerned about their privacy and security online. Consumers report being concerned with how their data is being collected, used and stored. Consistency and self-regulation of privacy policies are important steps in the monitoring the Internet ecosystem.
Where Meeker’s insights meet opportunity:
Voice recognition software and devices such as the Amazon Echo and Google Home are reshaping the consumer digital experience. In fact, Amazon Echo is now installed in 11 million households in the U.S. Further, 20% of all mobile searches are now voice activated.
Gaming goes mainstream. There are now 2.6 billion gamers today compared to a 100 million in 1995. In fact, viewing time for eSports, professional video gaming live-events and tournament, increased by 40% compared to a year ago. The gaming revenue concentration remains in Asia, with 47% of 2016’s $100 billion global market. Meeker believes video gaming’s socially engaging features will offer new businesses opportunities and sporting events.
Streaming music helps revives the music industry. Spotify, the marketplace leader, exceeded physical music sales, adding to the first revenue growth in the music industry in the last 16 years. Free trials are also driving sampling and subscription sign-ups.
Healthcare data is flowing with approximately 25% of U.S. consumers owning a wearable device, up 12% from a year ago. Further, 6 in 10 people report they are willing to share with health information with Google. Collecting and analyzing healthcare data has huge implications for the medical and healthcare sector from aiding clinical trials to identifying geographical and environmental healthcare concerns.
The marketplace is rapidly advancing and continues to grow in importance. According to Meeker, the top 20 Internet companies—many of which were not around before 1995—have a market value of nearly $3 trillion. New media platforms and information technologies are transforming new market economies. Yet it is important to note that Meeker sees new opportunities across multiple platforms to connect and add value for consumers.
Fun fact: 96% of TSA Precheck passengers wait less than five minutes in line. This innovation is no less than a modern marvel created to save valuable time during an unprecedented increase in security. Meanwhile travelers “unknown” to TSA are relegated to the slow lane removing their shoes, pulling out liquids and laptops, and assuming the position to be body-scanned.
Now imagine for a moment that precheck has been eliminated. Every. Single. Passenger has to be hand-frisked, one at a time in a Single. File. Line. It would rip out the remaining thread of joy in air travel. You would scream. I would scream. There would be a collective cry of despair from travelers across America.
That’s what we see happening in our digital advertising industry today.
“Brand safety” is the latest float in the parade of ad tech problems. I know we’ve seen it before but it’s back with a vengeance. Unfortunately, we’re also seeing a rerun of ad tech firms trotting out “brand safety” filters. Some have even suggested that their tech can work like an ad blocker to prevent the advertisement from loading in an “unsafe environment.” Oh dear. This baggage needs to be hand-searched for restricted materials. Please step out of the line and join the security officer for a reality check.
The security firm White Ops stated in its 2015 Bot Benchmark Study, which analyzed fraud, that the real answers to advertising problems lie in the economics rather than the technology. We thought this was a fairly astute perspective, particularly from technology people.
Advertisers don’t need another layer of technology. Instead, they need transparency so that they know where their ads and money are going. This same approach can apply to solving for nearly every issue in digital advertising. Spend your advertising investments with publishers you know, and you’ll eliminate most of your issues.
Just a few weeks ago, JP Morgan Chase shone a sparkle of sunlight across our beleaguered industry by doing something so simple that there is no way anyone in the Silicon Valley would propose it. They had humans (remember them?) evaluate publishers for their campaign. These people whittled down the targeted sites on which their ads appeared from 400,000 to less than 5,000. The campaign had the same results. I repeat:same results.
Rather than treat every single ad impression as if it’s a random collection of pixels on an unfamiliar page of an unknown website, marketers who seek out trusted publishers already have the advantage of knowing their ads are likely to be viewed by an engaged audience in clean, well-lit environments. By this so-called “whitelisting” of sites, they’re undertaking the equivalent of the “Known Traveler” program: I know your site because it has been carefully evaluated. We can accelerate the process and I won’t need to slow you down with a pat down. In fact, we can speed you right through with a smile on your face.
I sense a movement from marketers (and audiences) towards trusted publishers. In this brighter future, viewability vendors, IVT vendors, and brand safety vendors are all unnecessary when working with quality publishers like the members of DCN. Instead, advertisers can confidently say “I know them and I don’t need to waste my time and money with layers of security measures that will hinder the experience.”
Keep your laptop in the bag. No need to remove your belt, jacket, or shoes. Let’s make this trip fast and fabulous.