Last year was a whirlwind ride in ad land. Publishers navigated through a tumultuous period of reduced ad spend, axed campaigns, and overzealous keyword blocking. However, 2021 brings with it a new and arguably more significant challenge: the deprecation of third-party cookies and other universal identifiers.
But don’t listen to the nay-sayers as they opine the prospect of a doomed ad ecosystem. Instead, know this: The impending changes to online advertising, while no doubt disruptive, present incredible opportunities for advertisers and publishers alike. Publishers and content creators possess troves of first party data. Given their direct relationships with audiences, they may be in the best position possible.
Publishers: Seize your moment
Eliminating third-party cookies and other universal identifiers alters the dynamics of the digital advertising market. The “cookie-free” world aims to serve the needs and wants of consumers first and foremost. Consumers will set the terms for digital advertising. This marks a fundamental change from what we’ve been used to.
Publishers currently have the strongest and clearest connection to consumers through their large networks of audiences. As the market makes its shift away from universal IDs, we can expect to see many brands and advertisers work more closely with publishing partners. But this additional leverage doesn’t mean publishers can get away with business as usual. Innovation is crucial. For publishers to establish staying power, they’ll need a sophisticated first-party data strategy that’s proactive and meets the needs of today’s advertisers.
Diversification is key
As the digital advertising industry moves beyond personal identifiers, diversification will be key to success. A single-point, silver-bullet solution to replace cookies or MAIDs isn’t what anyone’s calling for. It’s unlikely that such a solution will exist given the ubiquity and heavily embedded infrastructure we rely on today.
Rather, the answer will more likely involve a diversified portfolio of solutions and approaches to data-driven targeting and measurement. The fundamentals for sound data strategy won’t change, though. In the “cookie-free” world, publishers will still need to:
Preserve customer experiences and deliver heightened value to visitors
Support advertisers in reaching the right people with the right message at the right time
Optimize yield through diversified approaches to inventory packaging
Strategic shifts
However, changes to data strategy will center around three core areas. Publishers will need to maximize data to build stronger advertiser relationships, leverage context-based technology to increase understanding of one’s inventory and commit to measurement that extends beyond baseline metrics.
Publishers must:
1. Maximize the value of your greatest assets: Harness the power of data and enrich the understanding of your customers.
As premium publishers move towards a subscription model and first-party data becomes critical, we expect to see the shift to gather as much known first-party data as possible. Many will leverage new subscription models in order to do that. The new data will primarily reveal demographics and online behavior restricted to a publisher site portfolio. However, publishers will need to enrich that data to get a 360-degree view of their audience to better sell inventory.
2. Learn how contextual intelligence drives value.
There are myriad signals on a page. Sentiment, for example, reveals the tone and context of an article. Understanding this context (and doing so at scale) will play a more integral role in ad targeting as cookies disappear.
ID-free technology such as contextual intelligence maintains an acute focus on content and consumer mindset. This allows intelligent publishers to curate inventory packages, based on high value content, which their advertisers seek.
Tapping into reader sentiment will be of particular interest to both advertisers and publishers. Research shows the value of emotionally connected customers. They buy, visit, and pay attention at higher rates compared to people who don’t share the same emotional connections. As context gets more advanced, expect to see this area explored with great interest from both advertisers and publishers as they aim to create detailed views into the content interests and subsequent consumption behaviors of their audiences.
Furthermore, brand safety, suitability, and sentiment-based decision making opens up publishers to more curated, bespoke solutions. This will more accurately value their supply and subsequently make addressable media more valuable. Plus, contextual advancements across a variety of formats, coupled with new and more data-informed approaches to context, will create additional opportunities for advertisers to reach people in an anonymous capacity. Sky’s the limit for the future of contextual.
3. Find out how analytics and insights matter more than ever.
Among the adtech lessons of 2020—media moves fast. Measurement must keep pace during critical times. It must also operate across all channels and platforms to ensure a comprehensive view of success and uncover areas for optimization.
We can also expect a greater focus on analytics with limited reliance on personal identifiers. Publishers will want to prove that their sites are safe for advertising. They’ll need viewable inventory that features low invalid traffic (IVT). They will also want to provide rich insights to show the best creative performance, media attention across multi-format content (such as video, CTV or streaming audio, eSports, desktop, and mobile).
A portfolio approach for the future
We cannot overstate the importance of looking ahead, beyond universal IDs. Digital advertising exists to evolve, and businesses need to adapt. The change to identity unquestionably baffles the best of us. However, some may mistakenly invest in only one solution when we’re certain another shift will closely follow. The nature of this business requires more forethought and imagination, especially now. By widening the array of solutions and ap
Research findings show that ad delivery optimization can often skew the exposed audience by gender or race. Specifically, research found that Facebook algorithms used to optimize a target audience discriminated in its delivery of job advertisements. New research, Auditing for Discrimination in Algorithms Delivering Job Ads, expands on this work to present an auditing methodology for gender bias in audience qualifications.
The auditing methodology analyzes the delivery skew of the algorithmic optimization. Further, it detects if the skew is due to ad targeting qualifications or the platforms optimization learning process. Importantly, if offers insight into social platforms’ black box algorithmic systems.
Methodology
Proprietary ad platforms, algorithms, and data make it difficult to audit Facebook and LinkedIn. To overcome this, researchers created an external auditing process. Facebook’s and LinkedIn’s custom audience feature allows advertisers to build audience targets on the platforms. This offers the ability to infer the gender of the ad recipients for platforms that do not provide post-delivery statistics.
The authors, Basileal Imana, Aleksandra Korolova, and John Heidemann, registered as advertisers on both Facebook and LinkedIn. They ran ads for real employment opportunities on both platforms and audited the results.
Audit criteria
To test for a bias in the algorithmic choices of the platforms, a set of ads run to compare audience delivery. Each set of ads must be similar in audience requirements. This permits the audience delivery to equally qualify (or not) audience members to each of the ads with a consistent assessment.
The set of ads must also exhibit a true bias in the real-world. A comparison of the delivered audience with an actual audience bias offers an important point of comparison. Real-life bias and non-bias factors are constantly informing the algorithms in a platform’s continuous learning process. Therefore, if there is a significant skew in the platform’s audience delivery, it likely stems from the optimization process. In other words, the system overrides the requested audience requirements to supply its preferred optimized audience.
Test ads
The researcher’s setup three tests to compare audience delivery. They include pairs of ads for delivery drivers, sales associates, and software engineers. The ads ran on both LinkedIn and Facebook. Campaign goals were exactly the same and included conversion (clicks), to maximize the number of job applicants and reach, to increase the audience exposure.
The first test included ads for delivery drivers for Domino’s and Instacart, both with identical job requirements. Note that, in practice, Domino’s has a higher male composition of drivers while Instacart has a higher female composition.
Audit results
The test results show evidence of a statistically significant gender skew in audience delivery on Facebook but not on LinkedIn. Facebook’s audience delivery is in line with the actual male skew of Domino’s, even though the campaign requested a gender-balanced audience. Facebook’s algorithmic optimization trained on real-life data adjusted the campaign’s audience delivery.
This unique research offers a new auditing methodology to detect bias audience delivery on social platforms. It offers insight into how ad platform algorithms adjust for platform objectives and override the advertiser’s requirements.
Further, testing on Facebook and LinkedIn demonstrates that the methodology is applicable to multiple platforms and that not all social platforms produce biased results. Importantly, this research offers an auditing solution to protect marketers from unwanted biases baked into social platforms black box algorithmic systems.
Recently, when I was reading an article in the The Wall Street Journal about our industry, it became apparent to me that web publishers, who spend millions of dollars every year creating highly engaging content, are clearly not being rewarded for developing that content. The very survival of our greatest media brands is in question. Yet the Triopoly of Facebook, Google and Amazon has captured 90% of all digital ad spend in the USA in 2020. Think about that. The remainder of the players in the digital media ecosystem compete for just 10% of the advertising revenue. Imagine what those percentages might be in 2021, 2022, 2023 and beyond?
To put this in perspective: What percentage of US digital ad spending did the Triopoly capture in 2018?
A. 53% B. 48.6% C. 66.8% D. 78%
How about 2019? What percentage of the US digital ad spending did the Triopoly capture in 2019?
A. 63% B. 58.6% C. 80% D. 68%
If you answered C for both questions, you are right. The Triopoly took 66.8% in 2018, 80% in 2019, and 90% in 2020. This is a pretty disconcerting trend if you are a publisher. However, it is equally consequential for readers as well as society as a whole.
So, what are the majority of web publishers doing about this? How exactly are they trying to stop this train from crushing them, or at least slowing it so that next year it’s not capturing 92% or 95% or 98%?
Stop complaining and act
The answer is they are doing not much more than complaining about it. Many (if not most) senior publishing executives will tell you the answers are direct revenue from consumers (subscriptions, memberships, etc.). Seems reasonable until you consider that most of it is already available for free from the competition.
Unfortunately, most publishers are not The New York Times, The Wall Street Journal, or The Economist. Therefore, subscription revenues are unlikely to replace the loss of the billions of dollars of advertising revenue that enables most publications to survive and grow.
And what exactly does the Triopoly have that web publishers don’t have? Well, that’s a long and somewhat complicated answer but let’s take a look.
A better mousetrap
Essentially, they have built an easy to access and toll-free on-ramp to every publisher’s unique content. Thus, they’ve eliminated the need to invest in the time-consuming and expensive process of creating that content themselves. What’s more, they have the ability to capitalize on their audience engagement in this content (that they neither created nor own). They offer high value and effective ad impressions to target specific audiences.
Now let’s pretend for a second that you sell fly fishing gear…
Google serves the ad to fly fisherman searching for gear
Facebook serves the ad to fly fisherman or those who appear to be
Amazon connects with fly fishermen via targeted ads and keyword search
In each case they have the ability to deliver a high value advertising environment that delivers proven ROI. In short, they get rewarded for their access to the content the user wants at scale.
Make your audience king
What, dear reader does the publisher have? They will say “we have unique content.” I respectfully and reluctantly say, BS. Many sites have content that is largely undifferentiated from that of other publishers. Even if some publishers actually do have unique content, they are not rewarded for the millions of dollars they invest to create that content as a result of the painful efficiency of programmatic advertising and RTB.
Truth is that the programmatic buying machine doesn’t reward publishers for better content. It simply seeks the most cost-efficient way to deliver advertising to the targeted audience. The algorithms don’t really care if they find their prospects at Bloomberg, The Wall Street Journal, or Fandom. In the programmatic world the target audience is king.
So, it’s very easy to see why the Triopoly has racked up 90% of the ad spend. Remember the Facebook boycott last summer? How long did that last? Advertisers ran back to Facebook because they have built a proverbial better mousetrap that consistently delivers a measurable ROI. The result? Facebook’s numbers are off the charts (as usual) and so are Google’s and Amazon’s.
My question is: What have we allowed to happen to our beloved and irreplaceable publishing community? Every year market share erodes, now 10%, in 5 years what? It’s time to stop that steady drip, drip, drip. These are desperate times for our industry and the survival of our cherished media will require bold action. If the audience truly is king then let us all capitalize on the engagement and commitment of our collective audiences and stop fighting with our sisters and brothers for the ever-dwindling market share. To paraphrase Pogo, “We have met the enemy, and he ain’t us!”
An immodest proposal
I am hereby issuing a clarion call for web publishers to stop competing among themselves. Your peers are not your opponents. They are your colleagues. Now is the time to band together and develop a consortium that can rival the Triopoly with the scale and the ability to provide unique ad solutions. It’s time for publishers to receive their just rewards for creating premium content. Yes, this has been tried (mostly without success) before, as discussed in this recent Digiday piece.
Yet, the concept is sound. And the time is upon us to act boldly and massively. Three or four or a dozen like-minded publishers will not make the difference necessary to turn the tide. A broad industry initiative led by an organization as credible as Digital Content Next and with support from its members and affiliated technology partners is what is called for. We are committed to make this happen. Who else is in? Let’s not wait a moment longer.
About the author
Bruce Brandfon is Chief Media Officer of Duration Media. Prior to that he was EVP of Webspectator, and before that VP and Managing Director at Publicitas. Before joining Publicitas, Bruce was VP and Publisher of Scientific American. He has also held leadership positions at The Philadelphia Media Network, Newsweek, and Time Inc. Bruce is Director of the Board of Advisors at Planet Forward, and an Adjunct Professor of Media Studies at Westchester Community College.
The demise of third-party cookies offers an opportunity for the digital advertising industry to rebuild on a better foundation. This is particularly true for publishers who are willing to leverage the right approaches and technologies to monetize their audiences and protect their data.
When Google announced its deprecation of third-party cookies in Chrome, advertising technology providers, industry consortia, and Google itself started to work on alternatives. The goal is to build solutions that ensure addressability without compromising privacy compliance.
Finding a valid alternative to the cookie is particularly important for publishers and ad tech platforms operating in the Open Web. Google and other Walled Gardens can count on billions of authenticated users to deliver personalized ads. However, the rest of the industry needs to find alternatives that enable them to address users efficiently to stay competitive.
Publishers can already see what a non-addressable internet looks like. In Safari, where third-party cookies are already blocked, media owners see their CPMs decrease by 50% as compared with Chrome.
Two popular approaches to identity
Today, there are two popular approaches to solving the identification challenge in the post-cookie world. One is based on cohorts and the other uses pseudonymous universal identifiers.
The cohort-based approach
Google has been working on its Privacy Sandbox. This collection of proposals is aimed at preventing individual user information from being shared with the ecosystem. The initiative focuses on local data processing. The goal is to provide technology platforms with APIs to collect aggregated data about user profiles, as well as aggregated campaign performance data. According to Google, the mission of the Privacy Sandbox project is to “Create a thriving web ecosystem that is respectful of users and private by default.”
Grouping users in cohorts may give the illusion of compliance because, arguably, you cannot individually address people. But this is not the real problem. This approach prevents publishers from engaging in a real conversation with people about the value exchange between their data and the services they receive. Moreover, it doesn’t offer transparency and control to consumers. They have no way of knowing in what group they have been added and why. They also lack the ability to remove themselves from a cohort.
The approach based on pseudonymous universal identifiers
The other method available is based on pseudonymous identifiers that are created when a user opts in to share some pieces of information with the publisher or authenticates on a website. This information can be used as a consistent identifier by all the websites that have collected and passed along the advertising value chain. Brands can use the ID to collect information, deliver messages and measure the performance of campaigns.
Pseudonymous identifiers can be created using different types of information and require users’ consent to comply with data protection regulations. When publishers can provide signals such as hashed email addresses or login IDs, these can be used to anchor consistent identifiers across the websites that have collected them.
Most of the time, email addresses and login IDs are not available. With this approach, probabilistic algorithms use passive identification signals, such as IP address and the device’s user agent string that are shared via the HTTP Protocol. This enables the ability to infer the uniqueness of a user across websites. This method can be particularly useful to address and monetize users that are not ready to authenticate yet but are willing to share some level of information with the website.
Why one approach is better than the other
Unlike the Privacy Sandbox, universal identifiers work in all browsers, not just Chrome. Thousands of publishers that are keen to monetize their cookie-less traffic on Safari today and in all browsers tomorrow have already adopted universal identifiers. Chrome’s Privacy Sandbox, on the other hand, is still a set of proposals at their infancy stage. And, so far, they’ve only been tested by Google.
So why would you sit still and wait for Google to develop and test its Privacy Sandbox when universal identifiers are already available and working? Even more so, why should publishers and the rest of the industry rely on an alternative that will further increase its dependency on the tech giant and, most likely, work on Chrome only?
By partnering with the right identity providers, publishers monetize cookie-less traffic in Safari today and prepare for the post-cookie world.
Choosing the right universal identifier
So, if you decide to try the universal identity approach, the first step is to choose which ones to use. As of today, there are over 25 different identifiers that publishers can test in preparation for the cookieless world. No publisher will have the bandwidth and resources to try them all. So, below are some questions and considerations that can help to select the most suitable options for testing.
Privacy and transparency
Does the identifier use privacy-by-design technologies to capture consumers’ data privacy preferences? And does it give consumers the option to opt-out in the future if they decide to revoke data processing access? Make sure that your identity solution provider can guarantee your users’ privacy protection and control over their data.
Data protection
What about your data? What mechanisms does the identity solution provider have in place to ensure the information that you’re sharing in the bid stream is only accessed by your authorized monetization partners? Data leakage was one of the main concerns with third-party cookies. Ensure that your identity partner can safeguard your and your users’ data.
Footprint and adoption
How many platforms have adopted the identifier? An identifier is useless if ad tech platforms are not using it. If you’re considering several identifiers, verify they have enough footprint to provide some results. Most user ID modules are available on Prebid. (See how many platforms have adopted each of them.)
Cross-domain linking methods
What methods does the identity solution provider use to link IDs across domains? Most of them use deterministic methods and are only able to link authenticated users. No matter how many logged in users and email addresses you have, you will always have unauthenticated users visiting your website. So why miss on the opportunity to monetize that audience if they are willing to be addressed through passive identification signals?
Prepare today to thrive tomorrow
There are only a few months left until cookies are deprecated by all browsers. If you haven’t started testing universal identity solutions yet, start now. You can already see what the cookie-less world looks like in Safari so use this to your advantage. Utilize Apple’s browser as your testing ground and work closely with your monetization partners to understand what solutions bring the best results and why.
Privacy regulations and browser updates are restricting the use of personal identifiers and customer data gathered via third-party cookies. Needless to say, this is causing no little disruption to the way the digital advertising industry works today.
To prepare for this privacy-focused future, publishers will need consent-based audience data. Brands will have to adapt the way they target and measure campaigns, and identity solutions. And technology providers will need to solve these challenges as updates continue to roll in.
As data deprecation continues — and the deadline for the removal of third-party cookies in Chrome draws near — we partnered with Forrester to research how brands and publishers are preparing. The project surveyed 100 advertisers and 100 publishers in the US and UK. We asked about their current data strategies, with Forrester providing analysis on the future of customer data in advertising and how the industry can realign itself successfully. It shows that within the oncoming threats, there are opportunities for publishers and brands who have access to first-party data.
Privacy regulations are a concern, but solutions are underway
Data deprecation is an ongoing issue. New regulations and frequent browser changes, including the recent announcement from Google banning alternative identifiers in the bidstream, are creating a certain amount of chaos. These changes will dramatically change the way people are targeted on the web. And brands are feeling the impact.
The Forrester research shows that 73% of brand respondents are very concerned about increasing privacy regulations. And 69% are concerned or very concerned with the restriction of third-party cookies in major browsers. However, despite this high level of concern 41% of brands are still relying “mostly or exclusively on third-party data” to target their audiences.
Brands know they need to take privacy seriously. But time is running out to reduce their use of third-party data and test first-party data strategies. Some work has begun, 36% of brands say they are starting to explore accessing publishers’ first-party data. They are also starting to move away from relying on third-party data. Yet, more advertisers need to look at alternative ways of targeting. They should work closely with publishers to incorporate their first-party data.
There’s an opportunity for publishers to partner with advertisers
Publishers are working hard to build-out their data monetization capabilities. They’re keen to supplement their subscription and ad revenue through advertiser partnerships. The research shows that 95% of publishers surveyed have started building their first-party data monetization strategies. However, only 28% are ready now with an established, implemented strategy.
Identity and tracking individual across the internet — knowing their every move — isn’t the only route to understanding consumers. Publishers understand their audiences and are building cohorts — a group of users that share some common attributes or behaviors — from their first-party data insights. This will give publishers an opportunity to build direct relationships with buyers, as publisher cohorts are privacy-safe. They allow advertisers to continue to target and reach audiences post-cookie, across platforms.
Publishers are primed to take action. Half of those surveyed believe increasing privacy restrictions will allow them to work more closely with advertisers. Access to consented, granular data on their audiences will strengthen their advertiser relationships, especially as first-party data becomes even more valuable to brands.
But convincing brands to test, trial and book campaigns with this cohort-based audience data is vital for this closer partnership model to succeed.
Publishers must proactively showcase the power of their first-party data
In order for brands to wean themselves off third-party data, they need scalable, relevant audiences. They also need partners that can help them reach those audiences across all buying platforms.
Brands should look to publisher cohorts to test first-party data campaigns. They need to be open minded about how they can reach new audiences as the industry rebuilds itself for the future. While publishers have gained significant ground in establishing their strategies, brands will need to find trusted partners. Publishers that are proactive about collecting their first-party data and sharing their work with brands are the ones that will benefit most.
Instead of replicating the old ways, publishers and brands should see this as a chance to build deeper relationships and prepare for buying via cohorts that don’t identify and track people as individuals. It’s time to embrace a future based on first-party data.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove, interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company.
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
Header bidding has become an essential component of most publishers’ ad monetization strategies, enabling better inventory fill rates and higher revenue. It allows publishers to receive bids from multiple trading partners at the same time. Contrast this to the traditional ‘waterfall’ method of trading, in which inventory is passed to ad networks sequentially.
Five critical metrics
Header bidding is a success story because it improves on what came before. But that doesn’t mean it is optimized to drive the best possible results for each publisher. The following five metrics can help publishers evaluate the health of their header setup. They will also provide insight into how they can use this information to further increase revenues.
1. Page Load Speed (the time it takes to fully display the content on a page)
Header integrations can be client-side or server-side. (Very simply, client-side header bidding sees all the auction-related activity takes place on the user’s browser, while in server-side bidding this happens on a standalone ‘auction’ server.)
As a general rule, client-side increases the audience match rate. (This, in turn, increases CPMs and monetization potential). But it also increases page latency. Server side reduces latency. However, this is at the expense of the match rate. When it comes to selecting which ad stack to go live with, publishers are forced to choose between prioritizing revenue and maintaining the user experience.
For most publishers, a combined approach that leverages both client and server-side setups is optimal, but it needs to be fine-tuned regularly. Ideally a publisher will have an A/B testing framework that moves client-side partners to server-side one-by-one, testing the efficacy in both locations (client versus server). By measuring for revenue, CPMs, page performance, viewability, and bidder timeouts between the test and control groups for the integration locations, the publisher can find the optimal balance to ensure maximum revenue.
For example, an SSP might have a tendency to time out in a particular region when it is called directly from the browser. A successful combined approach might see the publisher permanently move this SSP from client to server side in this specific geolocation. A/B testing, which can be carried out by the publisher or a partner, will show revenue remaining the same and the page latency being reduced. Using this technique with MediaGrid partners, we’ve seen load times reduced by up to 50% and viewability increase by more than 10%.
2. Timeout Rate (how often bidders fail to return ad auction bids within the publisher time limit)
When a bidder fails to return a bid within the timeout limit specified by the publisher, the bid is said to have “timed out.” The timeout rate indicates how often a bidder fails to return a valid bid response within the required time period (i.e. while the page is waiting for it) compared to how often it achieves this. When viewed alongside the bid rate and win rate, timeout rate can help publishers understand the opportunity cost of retaining a particular bidder. Bidders with a consistently high timeout rate harm the site’s user experience and the publisher’s revenue-generating ability.
Historically, publishers grouped all ads on a page and sent them to demand partners in a single request, with one universal timeout. While this reduces page latency, it also increases the likelihood of timeouts and may also reduce the fill rate and user experience.
A better way to manage timeout rates is to group ads based on page position (above the fold, below the fold for example). Then, send these in separate requests to demand partners, with different timeout windows. By tracking timeouts, a publisher can see the time frames in which partners respond. Those with shorter response times can be grouped in ad calls for above the fold inventory. Partners with longer response times can be placed in a second ad group lower down on the page.
The slowest partner may still be a strong revenue generator for below the fold slots, even if they do not bring anything incremental to the table for above the fold inventory. Using this approach, rather than a single request one, we’ve seen 10% higher CPMs and a 20% increase in bid rates.
3. Fill Rate (impressions served versus requests received)
Google Ad Manager (GAM) has traditionally prioritized direct sold campaigns. This means they will be served before line items that have been assigned a lower priority (even if the lower priority items have higher CPMs). These lower priority programmatic ads will get fewer opportunities to compete in auctions. This can adversely affect a publisher’s fill rate, and therefore revenue.
Publishers can achieve higher fill rates within their header bidding integrations by rethinking how they set line item priorities within GAM. This can be particularly important during periods when media buyers are looking to spend budgets (at the end of a quarter or the financial year, for example).
Traditionally, line items are set up in descending priority tiers: Sponsorship, Standard, Network, Price Priority, and House as the lowest with header bidding scoped to run only as Price Priority line items. However, this setup is far from ideal since high CPM header bids are unable to compete with direct sold campaigns.
To correct this, publishers should start by identifying the CPM threshold where the header bidding fill rate of the line item stops growing proportionally to the price tier. (Note, this is data that can be obtained from GAM reports or the SSP’s bid density reports, which include both impressions and bids).
Using this value, publishers can change a line item’s GAM priority tier from Price Priority (which is where header bidding lines are historically placed) to Sponsorship or Standard. This will increase its priority. It will, therefore, increase opportunities to complete in auctions. Based on analysis carried out for our publishers, the CPM threshold tends to be between $15 and $20. Publishers can create higher priority line items for open exchange bids above the CPM threshold value ($20 for example) and let them compete with direct sold inventory.
Uplift can be measured by tracking CPM and spend per line item priority type (Sponsorship, Standard, Network, etc) on a daily/weekly basis. We’ve doubled fill rates when header bidding lines greater than $20 CPM (or the respective monetary value for that publisher) are set at Sponsorship / top Standard priority.
4. VAST Impression Rate (video ad impressions versus bids)
The IAB VAST specification aims to ensure that video ads run in the way a publisher wants, regardless of which website and device they are being shown on. But the high number of technical integrations increases the likelihood of a VAST error in the time between the advertiser winning the auction and the ad being served. Our experience shows that, across the board, 13% of video supply results in errors and no revenue.
Monitoring the VAST impression rate lets publishers know whether video ads are playing. Then, it helps them to mitigate errors if they are not. Setting up a VAST waterfall combines video ads sequentially to ensure an ad is always shown (by having a fall-back VAST ad unit pre-prepared in case a failure results in the first unit not running). Publishers hesitant about investing in VAST waterfall development work may want to encourage their SSPs to support this technology as it also positively affects the video impression rates. MediaGrid partners utilizing this technique have seen 14% increases in VAST impression rates.
5. Downstream Match Rate (match rate between DSPs and requests from the publisher)
With no direct end-user relationships (and therefore no first-party data), SSPs and DSPs rely on cookie matching to “sync” the users that are common to all trading partners. The cookie sync determines a match rate, i.e. the percentage of shared known users. This usually averages 50-80% between each downstream participant. With higher match rates, publishers can command more advertising revenue.
Cookie syncs are often performed “downstream” in the media trading chain (publishers to SSPs, SSPs to DSPs, DSPs to brands). Unfortunately, the reduction in match rate between downstream trading partners (that are not directly connected to the publisher) is compounded at each step. This can result in a loss of revenue for the publisher.
For example, the typical match rate that a publisher has with a connected SSP is 70%. If that SSP has a 60% match rate with a DSP, the overall publisher to DSP match rate is only 42% (i.e. 60% of the SSP-to-publisher 70% match rate). From the DSP’s perspective, it may make sense to only bid on the matched 42% of inventory coming from the publisher, saving on hardware costs by not listening to the unmatched traffic.
Historically, publishers only deploy syncs with partnered SSPs, increasing the user matching with the SSPs. This however also has the side-effect of allowing the SSP to control matching with all other downstream partners. This may not be the best way to achieve the highest match rates. An alternative approach is to include a direct sync with the downstream DSP partners in addition to the SSPs, increasing the match rates with media buyers.
By syncing data between the publisher and every downstream trading partner, such as its top trading DSPs, the publisher can match user data directly with the DSP, improving the match rate and revenue with those key trading partners. Publishers on the MediaGrid using this approach have seen downstream match rates increase almost threefold, with revenue following a similar path.
Measurement for success
When looking to create an optimal header bidding setup, publishers should track as many health metrics as they can. Improving just one of them can increase revenue considerably. And because these metrics can make such a large impact on their business, publishers should not be shy about asking their SSP partners for input, data access, or support.
Armed with more data and solid benchmarks, publishers should create an on-going testing program that regularly and intelligently experiments with the header setup to find the optimal balance for maximum yield (which will change over time).
In early March, Google announced that it was committing to its FLoC method of targeting and would not support alternative identifiers in any of its adtech products. The industry had a small, and understandable, panic attack.
Don’t worry. This is good news. There are still a lot of alternatives available for each use case. Alternatives include cohorts, contextual, authenticated identity, and probabilistic identity.
Cohorts
FLoC (Federated Learning of Cohorts) is technically the addition of a semantic classifier to the Chrome browser. It will scrape page content and URL data and qualify users into small segment groups based on their navigation history. Everyone’s still being tracked, but now only by Google.
It’s a pretty blatant data land grab. Google is using the specious legal argument that if a consumer browses the Internet with Google Chrome, all of the data collected while they browse is the first-party data of Google. Publishers, marketers, and most importantly users of the internet should take a careful look at what Google is doing.
Critical questions:
Is the algorithm that builds these cohorts going to be open to publishers and partners for investigation?
How exactly will Google decide what cohorts to qualify users in? And how can we be sure they won’t be the cohorts that make Google the most money?
How will Google differentiate between valuable and less valuable scraped content?
If one company controls the advertising of, the discovery of, the navigation of, and the monetization of the internet, how is this not an antitrust issue?
Are cohorts privacy safe and are there controls for the consumer? Why, for example, has the Hague flagged FLoC as potentially non-GDPR compliant?
If it’s neither privacy-compliant, nor competitive, nor pro-publisher, then what’s FLoC’s value to the industry?
Contextual targeting
Contextual has gained a lot of traction in recent months. There are some that think contextual targeting is a privacy carte blanche. The truth is a little more complicated. Contextual does not require user consent as long it’s scoped to a single page of content.
However, as soon the context of more than one page is combined, even in session, even on a single publisher’s site, it becomes tracking. Thus, it carries the same legal burden of consent as any other tracking method. Further, without cookies, device IDs or other third-party identifiers, contextual has obvious struggles. These include precision, scale, frequency capping and, most importantly, measurement, which is critical to attract spend from advertisers.
Our recent survey of publishers and advertisers found more than 69% of U.S. publishers are bullish on contextual targeting as a replacement for audience targeting. However, 66% of advertisers disagree. That’s a big enough divide to question placing all bets on context.
Authenticated identity (deterministic)
Authenticated, or deterministic, identity requires the user to provide a known piece of personally identifiable information, such as an email address. To obtain that email address, publishers, data providers, and brands ask consumers to log-in or register to a site/app to access free content, deals, or other services.
There are a lot of worthwhile pros here. Because it can be tied to a person, it’s a highly accurate solution and great for targeting and measurement. Additionally, user consent is easy to track, which allays privacy concerns.
However, how much of the web requires logging in? Early estimates expect the authenticated web to capture 10-20% of users. Scale is a real issue. Some publishers have a clear advantage in the authenticated lane. The vast majority of publishers will struggle to drive authentication, while others have built their value around free and open content. Without deep technical and monetary resources to draw on, authentication could be a game-over for many.
Non-authenticated identity (probabilistic)
To capture the rest of the 80% of the open web, publishers can use non-authenticated identity. This is better known as probabilistic ID. The tech behind the probabilistic method assigns a cluster of devices and browser signals to an ID that can be moved via established pipes into activation channels. Publicly available, IAB-approved signals can include IP address, time stamp, or browser user agent.
Probabilistic identity is the perfect complement to deterministic identity. Probabilistic is data minimized with no email, home address, or phone number required. It scores points for consumer privacy and ensuring that no brute force attack on an encrypted ID can reveal an email or a phone number.
Unfortunately, probabilistic identity is also widely misunderstood in the industry. While it does rely on IP address, some misconstrue it as fingerprinting. In fact, probabilistic identity has no more or less privacy burden then multi-page contextual targeting that leverages a first-party cookie. IAB Europe Transparency and Consent Framework 2.0 stipulates that “with consent, vendors can create an identifier using data collected automatically from a device for specific characteristics, e.g., IP address.”
Certainly, it’s up to you to pick the best solution for your business. That said, it always makes sense to diversify your toolset to capture the most revenue possible. It’s too early to tell which tools will perform best for which marketers. So, having all of them at your disposal allows you to work with more brands.
Publishers and advertisers need to be proactive about engaging with their potential customers where they are. And where they are, regardless of age or income group, is consuming content on mobile devices. Advertising is normally viewed as the currency used to view content. But if the ad experience isn’t positive for the consumer, they may choose not to buy in.
Whether it’s through differentiated ad units, frequency caps, or less intrusive delivery, the advertising experience needs to enhance the content, not lessen its impact by competing with it. The increase in time consumers now spend online can be seen as a boon. However, in the wake of last year, it means they’re bringing more expectations – and more uncertainties – about what they interact with. The savvy publisher can offer what others cannot: quality curated content, editorial standards, a less-cluttered ad environment and a greater degree of premium brand safety.
I spoke with Kelly Andresen, president of sales development at Gannett, to hear about the challenges they faced in an unprecedented year. We talked about where they still found opportunities for growth and where they are placing their bets in 2021 and beyond.
Kelly Andresen, president of sales development at Gannett
What are the challenges you are currently facing as a digital publisher? How have those challenges changed during the course of the pandemic?
Kelly Andresen: For years, news and media companies like Gannett have been very focused on advertiser-led revenue. Of course that’s still very important to us. But one of the things we’re focused on right now is putting more emphasis on growing our subscription business.
We have some aggressive goals to reach by 2025. So now we’re figuring out how that looks on the B2C side, growing subscriptions to our news products and other content we publish. On our B2B side we’re looking at building subscriptions directly with our advertising and marketing partners. The challenge is building solutions that really meet everyone’s needs.
Consumption habits have changed significantly in the last year. How have readership trends changed across devices? How has this shifted your thinking for next year?
KA: Content consumption in general has moved to mobile. That’s not a new trend, but it was certainly accelerated by Covid-19. The total amount of screen time and the amount of time people spend interacting with content have both increased. That’s a great thing for a publisher. However, we need to remain conscious of the demand and need for truthful, trusted content.
In addition to the pandemic there was a lot of political and social unrest last year, and consumers thirsted for content they could rely on. As we all work to transition out of survival mode, we know that for us to thrive as a news organization we need a laser focus on what our customers and other partners need during this time. That’s been a driving force behind our thinking for the year to come: to grow subscriptions by helping the local communities we serve find trusted content.
The last 18 months have brought significant changes to privacy with Google sunsetting Cookies, Apple doing away with IDFA, and stricter laws like CPRA. Publishers are now faced with an identity conundrum. What are you doing to rebuild the identity structure?
KA: There’s an opportunity with these changes for publishers to take back ownership of that audience relationship without using an intermediary. By providing more transparency we can build our own zero-party and first-party data in a way that provides people the choice about how, when and where they share their information within our ecosystem.
I think the larger question as an industry is then, how do we put all the pieces together? Is there an opportunity to share data and if so, what does that look like? We want to not only provide amazing content but also ensure people feel they’re in a safe and trusted environment. The goal then becomes educating the public so they can make informed choices and we can build a better experience together.
When it comes to identity, should the industry as a whole spend time re-evaluating the value exchange between publishers and advertisers? How will this benefit —or hurt — publishers?
KA: This is an opportunity to take a less-than-optimal model and transform it into something where everybody benefits. Consumers opt in to share their information. Publishers share information with advertising partners. And advertising evolves from the early online days of pushing out a message and instead takes that data to create an experience that consumers value.
I think we can build something unique as long as we focus on maintaining that trusted environment and that transparency, and think about what’s effective beyond ad impression opportunities. There are a lot of unanswered questions. That means there’s a lot to explore and chances to innovate and test for the future.
What are you doing to re-imagine the way you nurture the coveted publishers-reader relationship when it comes to advertising experiences, devices and targeting?
KA: The focus has to be on the overall experience. Now that we’re asking our audience for their data, we have to deliver something that makes sense and makes it worth their while. There should always be a choice around data, but I think we have more work to do for that choice to work in our favor.
We’ve conditioned our audience to consume content in one area and see ads in another area when we need to look at how to be beneficial to the overall content experience. And that extends to technology and knowing that people are consuming in different places on different devices. How do we encourage people to seek out and spend more time with a specific outlet because it’s a good experience for them?
Let’s talk about brand safety. What does brand safety mean for publishers now? How has the conversation around safety and suitability changed during the pandemic?
The story is no longer about “click here and buy my product,” it’s about how a brand is helping individuals, communities, society as a whole, move forward. It’s also broadening beyond immediate health and safety concerns to create a top-of-mind support system, reminding consumers that when they’re ready, brands will be waiting to accommodate them. I suspect this approach will continue, but only as long as it’s still viewed as a partnership.
What advice would you give to publishers looking to withstand the lure of the walled gardens and compete with that model?
KA: I think this is something that all of us are thinking about and trying to innovate around. What can we do to continue to focus on that trusted experience and then how do we build scale together? I think there are opportunities for brands to work together again.
For example, we recently announced our partnership with McClatchy, one of the other very large U.S. newspaper publishers. Even though we’re in the same space, we’re coming together to build something that pushes our own standards and brings more value to publishers, advertisers, and audiences. We actively have national advertisers telling us they want to be more relevant. They want to speak to a local audience in a trusted space. I think the fact that they want to help shape that consumer experience with us is perhaps an early example of things to come.
What new — or carryover — challenges and opportunities will 2021 bring for the digital publisher industry?
KA: First, there isn’t one leader in the privacy space. So, this is a great opportunity for trusted brands to come together and develop a new standard. Second, the new normal will probably not look like 2019 or 2020. In this next iteration, how do we remain relevant and provide an experience that people are truly seeking out in the 10, 12, 14+ hours they’re spending in front of screens or subscribing to audio streaming or other services?
Our current situation is pushing publishers to think about their audience in a much different way – not in a vacuum where it’s enough that they come to consume our content – more of a holistic view of how we can be even better and complementary to the other things our audience is consuming.
KA: As a publisher in the news category we know sometimes the news is not positive. In the past, brands often told us they didn’t want their messages to appear in the news category. But those kinds of blanket refusals are changing. I spoke earlier about changes in consumption, and how we’re all looking for trusted sources to help make sense of the world we’re in today. Brands and advertisers now recognize the audience demand for news and information content. We saw a large increase in advertisers aligning with social justice messaging in a way we didn’t see prior to the pandemic.
Announced earlier this month, the discovery of the “SneakyTerra” fraud scheme showed how an organized instance of fraud could impact more than 2 million devices a day. If left unprotected, this scheme alone could cost the industry over $5 million a month in ad spend. As the digital advertising industry grows, attacks like these show how fraudsters are evolving to take advantage of emerging technologies and supply chain complexity.
Some may consider fraud to be a buy-side problem. However, the truth is that this pervasive issue threatens the stability of the ad-supported ecosystem. And it takes millions of dollars away from trusted publishers in the process.
Recently, DoubleVerify surveyed 300 executives in the digital media sector. We asked digital publishers and supply-side platforms about challenges they have faced in the industry (particularly amid the 2020 Covid-19 pandemic). Publishers stated that “the ability to proactively identify and troubleshoot impression-level fraud issues” was one of their biggest concerns moving forward. Fortunately, there are several steps publishers can take to prevent the downstream effects of fraud from negatively impacting their revenue.
Stay informed
The World Federation of Advertisers estimated that by 2025, ad fraud will be a nearly $50 billion industry. With that much at stake, fraudsters are constantly evolving to work around measures that publishers have taken to quell their impact.
An example of this is ads.txt, a common method for publishers to increase transparency by declaring who is authorized to sell their inventory. While this practice accomplishes its goal of reducing fraud, it quickly became a target for a more advanced scheme. In 2018, fraudsters designed a bot network to take advantage of the ads.txt framework in order to commit fraud that would not trigger ads.txt violations.
This demonstrates that no single strategy against fraud will act as a silver bullet. Publishers need to stay vigilant and informed (alongside the rest of the industry) in order to keep a lid on fraud.
Develop transparency and best practices
The more shrouded the supply chain becomes in ad tech, the more gaps open up for fraudsters to exploit. Publishers can implement policies that provide a clear picture of where ad spend is directed to make it easier to diagnose and eliminate potential fraud. These policies have to put supply chain transparency at the forefront because it reduces places for fraud to hide.
In addition to a transparency-first approach, publishers have the ability to implement a few best practices into their anti-fraud strategy. These include:
Proactively looking at inventory on ad exchanges to monitor for misrepresentation.
Ethically sourcing ad traffic to prevent sources that benefit from fraudulent activity.
Establishing baseline metrics and campaign expectations so that you notice irregularities caused by fraudulent faster.
Despite fraud continuing to have a measurable impact on advertiser and publisher performance, there is not a clear road map for anti-fraud strategies. Even if there were, those strategies often expose themselves to new opportunities for fraudulent activity. Publisher operations must remain nimble to combat this evolving threat.
Bridge the buy-sell divide
Fraudsters eat up thousands of opportunities for publishers to monetize inventory by posing as publishers. (Yet they operate with no obligation to create legitimate content.) To make matters worse, the presence of fraudsters in programmatic marketplaces often force trusted sellers to lower prices in order to compete with fraudulent inventory that appears to be high quality.
These second-order effects show how complex the fight on fraud can become. They also know that brands and publishers alone aren’t equipped to snuff it out. By working with third parties that bring buyers and sellers together through verification metrics that measure fraudulent traffic, publishers can prove the quality of their inventory, protect their reputation and give fraudsters fewer openings to exploit.
Fraud negatively impacts publishers by diverting key ad dollars away from premium inventory. This erodes the trust that needs to exist between buyers and sellers. However – with the right tools and strategic approach – the industry can reduce the impact of fraud and it can divert misplaced ad spend back to trusted content providers.
While we all know the end is coming, we’d usually rather not contemplate it. That’s the approach most media and adtech companies have taken toward cookies over the past year or two.
These companies have long used cookies to monetize their content. Yet we all know the end of cookies is near. However, Google drove the final nail in the coffin with the announcement that they won’t support alternative identifiers after they kill cookies across their stack (including Chrome).
Really, this should come as no surprise to anyone. Content companies have been looking down the barrel of this gun for a long time. A few years ago, I was at a Google summit for adtech leaders when the company announced it would do away with third-party cookies in Chrome. You could almost feel the panic. Without cookies, how would adtech platforms grow revenue? And without adtech, how would media companies monetize their content?
After Google’s most recent announcement, adtech stocks, which have been on a tear in 2021, took a hit. But in all likelihood, the market will stabilize and rebound. Many of the stocks already have. Content companies that already shifted their attention to strategies that are less cookie-dependent (CTV, subscriptions, curated communities, etc.) are thriving.
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However, content companies that don’t have a cookie-less strategy need to get one, fast. Relying on contextual advertising or alternative identifiers is far from a panacea. The good news is that many media companies already have good customer understanding, or the tools to get there.
These days, we live in a subscription-based world. Many sites require registration — if not payment — before accessing content. Gartner has predicted that by 2023, 75% of B2C companies will offer subscription services, and for good reason: The success rate of selling to an existing customer is 60-70% compared to 5-20% for new customers.
Without the cookie, content companies are now “forced” to create a direct, permission-based relationship. A positive side effect could be a level of personalization and customer engagement that the cookie could not provide.
Positive steps
As content providers and publishers shift from cookies to a new paradigm of permission-based services, here are three areas of focus for content companies:
Create a better customer experience. Admit it: the cookie spoiled you. You were tracking that visitor to your site with a focus on scale and not quality. However, a better, truly omnichannel experience will drive behaviors that your advertising customers will appreciate. Consumers will gladly subscribe to your content and give you permission (and declared data) to help you better serve them. And their increased engagement will drive up page revenue.
Have a data strategy. The cookie made you beholden to your ad/martech partners. Now that you have formed a relationship with your customer, own that relationship. Build the right product tools and platforms, and don’t leave it to someone else to determine your success (or failure). The first-party relationship you are creating with your readers, viewers, and customers gives you direct data on their habits and interests. These are things that third-party platforms could only infer.
Build more digital products. Be everywhere. Host virtual events, like Complex Networks ComplexLand. Create curated members-only communities, like Fortune Connect. Embrace new ways of generating revenue. Experiment! Be agile (and Agile). Don’t be afraid of fragmentation. Own your relationships and customer experience by having an omnichannel strategy.
The death of the cookie isn’t the catastrophe you might think it is. It is a necessary evolution. If you embrace it, it can actually set you up for long-term customer engagement and sustained higher revenue. Change has come … and it is good.
About the author
Chris Hansen is senior vice president of 3Pillar Global’s media and information services client service vertical.
Last January, Google announced the end of third-party cookies by 2022. The industry went into a frenzy.
All the while, Google forged ahead quietly on its own. Occasionally, it would pop up to say, yes, we really are going to stop supporting third-party cookies and no, the pandemic hasn’t changed our plan.
It wasn’t until last this past January that Google fully reappeared announcing its plan to start publicly testing Privacy Sandbox. This included some associated privacy controls, and early performance results for FLoC, or “Federated Learning of Cohorts,” which allows ad targeting at large groups of users based on common interests. And just a few weeks ago, they affirmed that they would not adopt new tracking tech after phasing out third-cookies. Their claim: It’s no longer necessary to “track individual consumers across the web to get the performance benefits of digital advertising.”
The end of ad tech?
Another frenzy ensued. First reactions predicted the end of non-platform ad tech. And many companies saw their stocks drop. But then, by the second day after the announcement, some observers started pointing out that Google hadn’t actually done much besides make it clear (yet again) that support for third-party cookies will end this year. They also stated that they aren’t going to adopt a solution like Unified ID 2.0, which The Trade Desk, Prebid.org, and IAB are lining up behind.
That wasn’t the only announcement of note in the past few weeks. IAB Tech Lab released draft guidelines for advertising identifiers like Unified ID 2.0, LiveRamp, ID5, etc. The Trade Desk announced the start of beta testing for Unified ID 2.0, with advertisers being able to transact on impressions using the tech. And just a week after Google’s identity announcement, the company published another blog post with initial details of a plan to extend publishers’ first-party “Publisher Provided Identifiers” (PPIDs) from private marketplace deals to open auction.
Pointing out that the ad landscape is confusing and in flux for publishers is a bit of an understatement. And that’s without mentioning Apple’s moves on tracking consent and IDFA. Let’s try to clarify things a bit.
Prepare to have options
Between Google, Apple, and the “open web” ad tech players, there seem to be at least three different approaches publishers will need to test and adapt to:
Google’s FLoC, which might (or might not) become an industry standard;
Apple’s strict app tracking rules and Safari ITP limits; and
Unified ID 2.0 or whatever other standard emerges from the IAB TechLab working group, assuming that either regulators or the browsers don’t block those cookie replacement solutions.
Publishers and advertisers alike have fought an increasingly brutal battle against the walled gardens. Chatter has abounded that the cookieless future could tip things in their favor. Google’s latest announcement actually runs counter to that theory. Their publicly confirmed focus on Privacy Sandbox means, in the words of Magnite CTO Tom Kershaw, that Google will “actually use the same tools as the rest of the industry.” The end result could be a peaceful coexistence of the Chrome solution, user logins and publisher first-party segments. And that would mean choice for publishers, advertisers, and consumers alike.
Focus on first-party data and identity
While there’s an element of self-interest, it does seem clear that Google is developing solutions to make it possible for publishers to activate first-party data. These include non-PII user IDs in the Google ad ecosystem. Of course Google relies heavily on first-party data and known user identities in YouTube, Search, Gmail, and its other properties. So, limiting publishers’ ability would be hypocritical. It would also be risky at a moment when the company is under antitrust investigations in more than one country. However, from a publisher perspective, this is further reinforcement of the need to focus on first-party data and identity.
Start your transition now
In some ways, we’ve been our own worst enemies in the run-up to third-party cookie deprecation. Many publishers and advertisers have awaited Google’s next move as if we were pawns in a drawn-out chess game instead of coming up with a plan and starting to execute on it. Let’s not so quickly forget that where third-party data offered efficiency, it often lacked effectiveness, due to uncertainty of where it comes from and, therefore, its accuracy.
Six steps for transitioning away from third-party cookies
There are six areas you need to cover as you begin your shift away from third-party data:
1. A minimum amount of zero-party data
It’s not just about first-party data. Zero-party data — the data that users volunteer to you via other explicit data-capture tactics like registration forms — will be just as important. You need a certain amount of data to generate effective lookalike segments. To do that, it’s necessary to start targeting some segment of your audience and guiding them to register and provide their data with incentives such as the ability to access locked content.
2. Tools for storing and managing consent
Whether it’s a data-management platform, a customer-data platform or a consent-management platform, figure out now where you will store all of this data and consent.
3. Audience segmentation tools
You need audience segmentation tools to create subsets of your users. This can be based on like characteristics extracted from zero- and first-party data. They can also leverage lookalike modeling to produce larger audience pools.
4. Collect data at the right moment
Collecting more data over time requires thinking through the right moment in the customer journey to ask for it. At each stage, aim to understand how to move users deeper into the funnel with the right offers that will net you more data to round out your customer profile.
5. Vet identity partners
You need one of these to replace cookie-matching and activate all that zero- and first-party data you will collect. Be sure that you vet their offerings to see which identifier could work best for your business.
6. Start testing solutions now
As Travis Clinger, SVP, Addressability and Ecosystem at LiveRamp, said in our recent Piano Academy event: you don’t want to get caught trying to apply new technologies and strategies in the middle of the Q4 holiday season. It’s worth testing different solutions, including identifiers and different data- or consent-management platforms, now.
We’ll be sure to hear more from Google publicly throughout the year. It will remain important to read successive announcements with a critical eye. We’ll need to remain focused on the steps required to prepare for third-party cookie deprecation now (as opposed to needless panicking). And remember you have a whole industry navigating this transition with you as we move towards a new era of privacy-first personalization.
