Tags containing: "duopoly"

How to make it easy for brands to buy your advertising (like Google & Facebook)

January 9, 2018 Tim Bourgeois — Digital Media Auditor and Consultant

We all know the story only too well by now: depending on whose estimates are cited, Google and Facebook — the oft-referred to “duopoly” — together account for 60%-80% or more of all digital advertising revenues. eMarketer succinctly captures the repercussions by stating “With the duopoly taking in about two-thirds of US digital ad revenues, that leaves around a third of the market for every other firm to compete for.”

These “other firms” include deep-pocketed companies like Microsoft, Amazon, and Verizon — all of which pose a threat to both eat into the duopoly’s market share as well as capture the lion’s share of the remaining $30 billion or so in US digital ad revenues. But this is by no means a foregone conclusion.

Microsoft has been stumbling around this category for years without finding its groove; Amazon doesn’t understand the ad business; and Verizon doesn’t know how to compete in unregulated categories (yet). Among the duopoly itself, Facebook will have the Department of Justice on its back for at least a couple of years due to its complicity in the election mess, and Google is just waiting for the other shoe in the saga to be dropped on its doorstep. Meanwhile, the braintrust at Googleplex in Mountain View is focused on figuring out how to diversity revenues into non-advertising channels, with mixed results so far.

For companies seeking to successfully capture or grow their share of the roughly $100 billion US digital advertising marketplace, the following tactics will help ingratiate you among digital marketers and media buyers.

Make It Easy To Buy From You

The path of least resistance here is joining the exchanges and allowing media buyers to access your inventory via programmatic platforms like AppNexus, MediaMath and OpenX. And this should certainly be part of a multifaceted strategy.

But there’s also old-fashioned tactics like providing media buyers with case studies that resonate, transparent pricing, low minimum buys, creative support, accepting credit cards, and trafficking campaigns quickly.

Without question, most advertising is done by the largest 100 or so brands, so from one vantage point, it makes the most sense to allocate inordinate resources to this area of the marketplace. But this is also a crowded and fiercely competitive part of the market. The upside of the emergence of Google and Facebook is that small and medium sized businesses now understand the power of targeted advertising as never before, and are more receptive to advertising pitches as a result.

Emphasize Your Strengths

Brands still matter — arguably now more than ever. And seminal publishing brands have brand power in spades. Longevity, relationship with readers, and unique value propositions can help, over time, combat against the duopoly dominance.

By contrast, problems associated with digital advertising have entered the public consciousness via Russia election meddling, with Facebook serving as the poster child. While challenges associated with ad fraud aren’t easily avoided by any organization with robust digital properties, they are certainly more manageable relative to Facebook trying to monitor billions of users or Google’s ad network, which supposedly reaches 90% of the internet. Buyers need to understand these risks, and the pros and cons of going in one direction versus another.

To be sure, it’s easy to buy ads from Facebook and Google today. But these avenues can be expensive, and are rife with potential problems — fraud and transparency among them, but dozens of others as well related to campaign configuration and tuning. The media buying community writ large still requires a good deal of education on these issues, and traditional publishers have an opportunity to carefully deliver these messages. (In my experience, there is a subtle and mostly silent shift underway in the marketplace, as experienced media buyers aren’t happy about being overly reliant on two outlets for more than half of their media buys.)

Help Marketers Help Themselves

Perhaps Google’s greatest genius —not including search marketing (which was a happy accident, like Pfizer’s *discovery* of Viagra) — has been in helping marketers reorient their fundamental value proposition in the organization. By emphasizing business-based metrics such as “conversions” and “dollar value per conversion” in their ad buying (AdWords) and measurement (Google Analytics) tools, which can be easily linked to revenues and profits, they’ve helped marketers do their jobs more easily and effectively. At the same time, Google’s tools provide marketers with myriad ways to shape performance data in order demonstrate a campaign’s effectiveness.

Publishers can steal a page from this playbook by providing prospects with similar support (recognizing that some manual labor will be required in this effort) to monitor performance and ROI after the campaign has been completed (or even mid-flight). Like the Google and Facebook systems do, it’s not so much the absolute data that matters most, but their organization, meaning, and presentation. And most marketers need help separating the wheat from chaff. This kind of pre- and post-sale support will go a long way towards generating industry goodwill (unless you’re a top 100 buyer, Google and Facebook support is awful) and, of course, repeat buyers and loyal customers.

While both the advertising and publishing sectors have experienced seismic changes over the past decade, we could be on the precipice of another shift, albeit a far more subtle one. The volatile political environment has created an uptick in demand for quality journalism, and venerable properties such as The New York Times are growing subscriber bases and figuring out how to make the transition to digital work. Fallout from politics has also ensured that one of the biggest players in digital advertising will have a neon bullseye on its back for the foreseeable future, at least limiting any unusually aggressive behavior. For storied media organizations looking to make a move and carve out their territory in the digital advertising ecosystem, conditions may not get better than this.

Tim Bourgeois (@ChiefDigOfficer) is a management consultant at East Coast Catalyst, a Boston-based advisory firm specializing in digital strategy assessments and media audit projects.

Perspectives

IBM Watson CMO Jordan Bitterman predicts a “pivot to flexibility” in 2018

December 20, 2017 Michelle Manafy, Editorial Director – DCN

As chief marketing officer for IBM Watson Content & IoT Platform, Jordan Bitterman oversees messaging to both internal and external audiences. He is responsible for all marketing functions across the IBM Watson Content & IoT Platform division – connecting b2b marketing, ad sales marketing, consumer marketing, as well as corporate communications. Based in New York, he is part of the IBM Watson Content & IoT Platform executive leadership team and reports to GM, Cameron Clayton. Here, Bitterman offers his thoughts on some issues he thinks will be top of mind for marketers in 2018:

What’s the biggest challenges that marketers face in 2018?

JB: The benefits of the big players in the digital space – scale, relative brand safety and deep targeting capabilities – have always had an equally challenging downside: data flexibility. At the same time these players have been addressing their current marketing needs, they have also been growing a massive stockpile of data on their customers. They have been collecting it, cleaning it and preparing it for use across all aspects of their business: marketing, sales, CRM, logistics, and yield management. The big challenge today: putting it to use.

As an industry, how should we best address this issue?

JB: The big, walled gardens in the industry act like a roach motel: data comes in, but it doesn’t come out. For the most sophisticated brands, 2018 is the year when they will address these issues and start demanding that their media partners become flexible with data. These brands will require that their own data can be mixed with publisher data to be applied on and off the publishers’ own platforms. This “pivot to flexibility” will begin this year and will ultimately up–end the new norms created over the last decade.

What do you think the biggest opportunity for marketers will be in 2018?

JB: As the Internet has become a tangled web of nontransparent, unknown and unsafe environments comprised of millions of publishers, Facebook and Google have been the prime receptacle for brand dollars. They have largely done it in the interest of brand safety – a known is better than an unknown. And, as we have seen, the duopoly accounts for about 85% of all digital ad spend. But that trend will begin to back off a bit in 2018. The opportunity that will come into clearer focus for marketers will be their ability to port data into and out of platforms.

Major brands have cut – or considered cutting – their spend in the programmatic space and have moved those dollars to the duopoly. It is important that we get the message out that programmatic isn’t the problem. Programmatic is just a way of buying media. The sheer volume of the site list – and efficacy of those sites – is the most important issue for buyers to consider as they shift dollars back into programmatic environments. The top 100 global website traffic list, which includes brand–safe properties such as the New York Times, ESPN, c|net and The Weather Channel – is populated with media brands that manage brand safe environments and can deliver audiences both at scale and with extreme competence.

Perspectives

The Google PR lobbying machine rumbles back

November 20, 2017 Jason Kint, CEO – DCN

We’ve entered the perfect storm.

The press worked itself into a flurry last week about missed projections, mergers, acquisitions, staff reductions, doors closing, and political influence across its own industry. Amidst this activity, there is real momentum and honest discussion of the challenges in building a sustainable 21^st century digital news and entertainment business. And there is opportunity knocking. Newly compiled DCN member research shows early signs of marketer investment moving upstream towards quality content with sequential quarterly revenue growth for DCN members. News and entertainment companies are transforming into truly diversified revenue machines that are less dependent on advertising. More importantly, DCN’s “duopoly” analysis continues to reach wider circles of influence (and understanding) with reporters, think tanks, academics, and lawmakers now asking tough questions of both Google and Facebook.

Therefore, it’s puzzling to see these two companies operating with blinders on as we watch their reactions to inquiries from the press, partners, and lawmakers. It should offend us all that, despite gob- smacking earnings this month, Google is attempting to double-down on its argument that their platforms are merely weather-machines innocently reading data rather than a major source of the media storm itself.

It certainly offends me.

In a speech last week to the Society of Editors’ at The Tamburlaine Hotel in Cambridge, Ronan Harris, Managing Director of Google UK and Ireland, fed decade-old Google arguments into the winds, despite the current media climate. While acknowledging that, “the open internet has turned business models on their heads and raised all kinds of new questions and challenges for us all,” Harris systematically tried to distance Google from any negative affect and control over the demise of news media and its societal consequences. By opening his talk on the uniqueness of the company’s role, Harris makes his Google-eyed perspective clear with the company’s classic “But we’re a search company” retort to any attempt to hold them to the standards to which responsible media companies gladly adhere.

However, this particular PR rhetoric is far from the most egregious that Harris wove into his talk. As the UK’s News Media Association observed, my visceral response to some of Harris’ points—which I first expressed on Twitter—was that he was trying to reshape the escalating duopoly narrative. You have to wonder if he’s being willfully ignorant or overtly resistant to the discussion happening in every corner of our industry.

Harris attempted to refute the simple math that demonstrates how Google and Facebook capture a majority of the growth across western media’s digital advertising by stating he’s “heard lots of people say that Google and Facebook are ‘ruthlessly stealing’ all the advertising revenue that publishers hoped to acquire through online editions. That analysis just isn’t right.” He went on to claim that these analyses conflate search and display while boasting about the amount of traffic Google drives to publisher’s sites “for free.”

Huh. Let’s break that down, shall we?

The duopoly’s power defined

This notion of an internet advertising duopoly is not based solely on Google and Facebook’s shared and growing dominance of digital advertising. Rather, it considers that the two share a core business model that leverages “free services” that collect inordinate amounts of consumer data in order to micro-target advertising at a massive scale. Importantly, Google and Facebook suggest that because their services are free, they can’t commit consumer harm. They do this by using the Chicago School of antitrust theory out of the 70s and 80s, which is now being questioned as competition law experts attempt to consider these issues in the context of our 21^st century world. This is already something the European Commission is addressing in its fines of Google. And just last week, multiple Attorney Generals joined in Europe’s concerns. Regardless of your view on antitrust law, the point is that Google and Facebook have the same business model and their dominance begets more dominance.

Driving traffic or driven by content

Another shared trait between the duopolists is that much of the information that they are able to collect about consumers is based upon the content that they discover on these services. As any premium publisher can attest, you learn a lot from audiences by what they choose to read, watch, and share.

But that’s something Google knows all too well. This is a company that owns 96% of the mobile search market and 67% of search overall. Harris crowed about driving “more than 10 billion clicks a month to publisher websites — for free — from Google Search and Google News.” But the reality is that search—as a concept, much less as Google’s foundational business—would not exist without publisher content.

Revenue share

Another argument that Google’s Harris made was that publishers only share a minority of the revenue from their own sites with Google. This is an argument from a decade ago that fails to recognize Google’s dominant lock-in for search and data collection across the web, which is what they are actually monetizing—in a massive way. Yes, most publishers keep a majority of the ad revenue on their own sites—after they’ve paid out the significant costs for programmatic/automated delivery. But Google also has trackers (data collectors) on more than 750,000 of top 1 million sites. And, not even the biggest publisher has leverage to negotiate with Google to limit their data collection and use practices. This data collection allows Google to target audiences using the cheapest inventory and cheapest suppliers possible. (And for now, let’s not even go into the dank, dark places ads end up with this particular approach.)

Harris also claims that analysis of Google’s dominance in digital advertising “conflates two markets: search and display.” The majority of Google’s revenue comes from showing highly relevant ads when you search for a particular term.” In fact, in this way, search and display are not actually that different. Both target direct marketing ads based on data collection. This is what most of digital advertising is transacted on. And as we know, Facebook and Google are empires fueled by data, so this statement is more than disingenuous. It is absurd.

Newsworthy

Harris points to the lack of advertising on “Google News” as a clear sign that Google isn’t trying to compete directly with publisher’s hard-wrought news business. The fact there is a “Google News” vertical is something most people outside of industry don’t even understand. People are searching for and discovering news and information through many Google sites and channels (including YouTube and general search) where Google drives significant revenue—and data. Even though there aren’t traditional ads on Google News pages they are most certainly still monetizing that area of their business.

Revenue mix

Additionally, over the past five years, Google’s own revenue mix has migrated from Google’s network of publishers (where they have the lowest margins and includes their AdSense text ads and DoubleClick ads which serve across the web) to Google’s owned and operated businesses (where they have highest margins and includes sites such as Gmail, YouTube and Search). Google controls this effect.

Blocked

And here’s part of Google’s business model that Harris didn’t cover: ad blocking. The fact is that many EU pubs lose more than 30% of their site advertisements to ad blocking software which significantly impacts publisher revenues and the ability to pay for newsroom jobs. Google’s recent decision to include an ad blocker in its own browser is not the biggest issue here. Google has admitted to subsidizing major ad blockers in order to service the “whitelisting” of Google’s own ads. Let’s be clear: Google is paying companies that develop ad blocking software. Meanwhile, Google is also the dominant company in discovery, distribution, and delivery of ad blocking software. While the rest of the industry is bludgeoned by ad blockers, Google’s payments protect what is likely billions of its own revenues on its highest margin products from the effects of ad blocking yet they refuse to disclose the details of these deals.

That speaks volumes about the company’s priorities and tactics. Is this the behavior of a company that genuinely cares about the future of the media business? Harris claims that Google wants “to act thoughtfully and responsibly in our relationship” with the media industry. I can unequivocally state that transparency here would go a long way.

What’s next

I don’t disagree with every point that Harris made. As he said, “as more and more people interact with news in different ways, we need to take advantage of new digital tools and capabilities to develop new experiences and sustainable business models.” Believe me, digital media executives are thinking about this every single day.

And while Harris claims that we’re misunderstanding who they are and what they do, I think we actually have a pretty good idea how they are making money and where publisher content fits into the mix. We get it, Google: You hire really smart people to create your products and your PR pitches. But don’t think that means we’ve lost sight of the value of premium content and the fact that we should be able to sufficiently monetize it in order to continue to support the journalism Google purports such esteem for and derives so much revenue from.

It’s been a full year since DCN sent a letter to Google and Facebook asking for moonshots to better serve the news industry. Facebook spent a full year dodging tough questions while at times demonstrating signs of early self-awareness of the problem. Google, on the other hand, has acted like a monopoly with its much more advanced lobbying machine. The fact Google is turning up its spin in the UK and putting Facebook out front to take the shrapnel in Washington should concern us all. It certainly concerns me.

Perspectives

Regulation is coming for the tech giants – but how much?

November 2, 2017 Mark Glaser, Founder and Publisher – MediaShift

With their enormous size, influence and well wishes to do good for humanity, the American tech giants have long escaped the regulatory and legislative scrutiny of Washington. But increased attention on how Russian operatives may have used Facebook, Twitter and Google to meddle in the 2016 U.S. presidential election — and a mounting anti-Silicon Valley sentiment — are providing an opening for regulation to finally come through. Most Americans don’t necessarily trust the tech companies, yet they maintain high approval ratings, enormous clout and popularity for their products and services.

Google, Facebook, and Twitter have all faced the House and Senate Intelligence Committees this week, and the EU is on its way to passing legislation that will maintain data protection and privacy in Europe. After many years of avoiding regulation, the tech giants are finding themselves cornered from the left and the right, with some sort of American intervention on tap. The question is just how effective it might be, and how much the tech companies’ lobbyists will water down those efforts.

The argument for accountability

Take the case of Google. Among some of Google’s media rivals who are critical of the way the search giant surfaces news stories, the effort to increase government regulation has been dubbed “Project Goliath.” Yelp’s disdain for the company has grown over the years, and recently led to the filing of a federal antitrust complaint against Google for scraping photographs from Yelp reviews.

The News Media Alliance, which represents 2,000 news organizations, in July started advocating for antitrust exemptions in the hopes they might help bump against the Facebook-Google advertising powerhouse (Google is the world’s largest recipient of advertising revenue). The European Union has also fined Google $2.7 billion — the largest antitrust fine the EU has imposed on a single company — for favoring its services over rivals in search results.

And that’s just one company. Amazon, Apple, Facebook, Google, and Microsoft — what New York Times’ senior technology correspondent Farhad Manjoo collectively calls the “Frightful Five” — have been waging a battle over an anti-sex trafficking bill. The bill’s promoters want to curb legal protections for sites that host content promoting sex trafficking, but critics say the bill’s language could restrict free speech. Facebook and Twitter, to name two of the frightful, are continuously in headlines over the platforms’ influence on politics both nationally and globally.

And we can’t forget about Amazon, the massive online retailer that now owns brick-and-mortar Whole Foods and recently clocked more than $1 billion in ad revenues in the third quarter.

Tech lobby ‘armies’

The amount of pressure on these companies, and the momentum with which it is finally cascading, makes it likely that some amount of regulation is bound to happen. Ahead of their Congressional hearings, both Facebook and Twitter made changes to their advertising platforms, with more transparency around political ads in the hopes that self-regulation might ward off a harder fist from Washington.

Yet the power and money of these technology companies, and their influence on Capitol Hill, also means regulation will be hard-earned and hard-won. The New York Times’ Cecilia Kang writes:

“Internet companies are deploying some of the largest armies in corporate America to battle on Capitol Hill. House and Senate staffs say lobbyists for the big technology companies have swarmed their offices in recent weeks. Amazon, Apple, Facebook, Google and Microsoft have sharply increased their lobbying spending — a combined $14.2 million in the third quarter, up from $11.9 million a year earlier. Facebook, which has faced the most scrutiny over the election, increased its third-quarter lobbying budget this year by 40 percent, to $2.85 million.”

To say the rivals and critics of these companies don’t stand a chance in circumventing the giants’ power might be an exaggeration, but money talks. The IAB has also come out in defense of these internet companies, arguing that the problems within their industry are best left for them to solve on their own — not with the help of Washington.

Inspiration from the EU?

If U.S. players in this struggle are looking for inspiration for regulation, their European neighbors might be a good source. Compared to Washington, the EU is much more suspicious of the industry’s altruistic proclamations, and is demanding changes to Facebook and Google’s business practices that emphasize privacy for and consent from consumers regarding their data. Given the EU has already launched a taskforce aimed at protecting WhatsApp user data from Facebook, one can imagine the strict clampdown on tech will continue.

Will the U.S. match up? Likely not. But if the media cycle continues the way it has been in the U.S., and the critical voices here stay loud, it’s safe to say tech’s free pass is long gone.

Advertising | Industry-Research | Perspectives

Google’s dominance in digital ad spending continues, though challengers have emerged

July 25, 2017 Tim Bourgeois — Digital Media Auditor and Consultant

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.

Key takeaways:

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.

Tim Bourgeois (@ChiefDigOfficer) is a partner at East Coast Catalyst, a Boston-based digital consulting companyspecializing in strategic roadmaps, digital marketing audits, and online marketing optimization programs.

Perspectives | Revenue

Why the duopoly should help publishers drive subscriptions

June 22, 2017 Mark Glaser, Founder and Publisher – MediaShift

A growing number of publishers – non-profit and for-profit – have pushed into subscriptions, memberships and donations. However, it’s been difficult to motivate the big drivers of digital content consumption – namely Facebook and Google – to help push payments for publishers.

There are good reasons for this: The tech giants don’t have an inherent reason to drive subscriptions or put up walls between their unfettered platforms and paid content. But if they truly want to support quality journalism and the good content that delivers so much engagement on their platforms, then it’s important they put time and resources into supporting these publishers.

It is also a matter of principle. If the duopoly in online advertising is going to vacuum up all the online ad growth, then the least they could do is throw publishers a life-line by pushing some people into subscription funnels. And for smaller publishers, the platforms could provide true life support to make sure that news deserts and other underserved areas have thriving news organizations.

Facebook’s Baby Steps

Already, Facebook is developing a way to help people subscribe to news orgs via Instant Articles, according to a report in the Wall Street Journal. The feature is being developed for the mobile Facebook app, and Facebook would like to create a metered model where readers get a certain number of articles free before having to pay up.

But the devil is in the details. Facebook might want to take a cut of the purchases if people pay for content on Facebook. And setting up a meter would have to be variable as some sites have more severe paywalls than others. For instance, the Washington Post, and New York Times have more forgiving walls than the Wall Street Journal or Financial Times.

And yet, this is a problem that really must be solved for the small and medium-sized publishers whose life could depend on these subscriptions.

“Helping news publishers get paid for their digital content is arguably the most meaningful help that Facebook could provide to global journalism,” Lenfest Institute CEO Jim Friedlich told the Journal. “If Facebook truly creates a successful platform for the sale of news subscriptions at scale it will be a powerful and historic game changer for the news industry.”

Google’s ‘Funding Choices’ and Roundtable Chat

Google definitely has a head-start on Facebook when it comes to working with publishers of all sizes. Its Google News Lab has been providing training and tools for newsrooms for a few years. But its early efforts in driving payments to publishers have been underwhelming so far.

In 2015, Google launched Contributor to give publishers a way to offer options to visitors. They could either disable your ad-blocker or pay a per-page fee for your visit without ads. But that effort was scuttled for a new version of Contributor this month that includes “Funding Choices,” a similar message crafted by publishers to give people the same choice as before: Pay up or turn off that ad-blocker. Users can buy a $5 pass and then pay as they visit these sites.

But Google can do more. At a recent Platforms + Publishers private roundtable that I produced at Google’s office in Chicago, one of the most popular breakout groups was around driving subscriptions to smaller publishers – including donations to non-profits. Some ideas discussed include a potential Chrome extension for donations; and a product called “AMP Revenues” or “AMP Donate” that could drive payments from within Google AMP. And with the data that Google has on potential customers, they could partner to help publishers identify future subscribers.

Why It’s Worth the Challenge

Helping publishers drive subscriptions and donations isn’t an impossible challenge for the tech giants, but it is a challenge. Every publisher has its own kind of paywall, its own membership structure, its own tiers of paid content and services. There’s very little that’s standard, and there are a million different small publishers out there. Not to mention the issues that platforms have just identifying who is trustworthy and not polluting the web with spam and fake news.

However, there are associations that can help the tech companies work with small and local players, including the Local Media Consortium, National Association of Broadcasters, Local Independent Online News Publishers, Institute for Nonprofit News and, of course, Digital Content Next, though it skews bigger.

Sound Reasons Why

Here’s a roundup of reasons why this is worth the effort for platforms:

Google wants to organize the world’s information, and if it truly wants quality information from all over the country, all over the world, it will have to help identify and help keep the ecosystem of smaller players healthy. Driving revenues to those players, whether through ads or subscriptions, makes sense for everyone’s bottom line.
The platforms have already built relationships with the publishers on so many fronts – around ad-blocking and ad quality, mobile speed, fact-checking – that making a bigger investment in subscriptions will only deepen those relationships and build more trust.
Even though there’s a feeling that putting up a paywall will only remove the content from platforms, or send them off the social networks, the reality is that subscription sites still depend on engagement, comments and community (think Facebook Groups) on social media.
The tech giants in Silicon Valley already have to contend with enough bad PR, and even global anti-trust concerns, so at the very least this will show that they care about the little guy and gal, the non-profit, the hyper-local, the metro daily.

And speaking of PR, we all know that when Facebook and Google talk about developing new ways to help publishers, we all roll our eyes and wonder if it’s all just for show. On the subject of subscriptions and paid content, this is a chance for the platforms to show that they aren’t all talk and no action. Supporting publishers could make a lasting difference.

Advertising | Industry-Research

Digital advertising insights as the market reaches attention saturation

May 3, 2017 Rande Price, Research VP – DCN

Digital advertising will capture 77 cents of every new ad dollar this year and will surpass TV advertising in five additional countries, reports GroupM in its annual Interaction Report. Rob Norman, global chief digital officer and author of the report, addresses the value exchange between the user and the advertiser. Norman points to new revelations in today’s advertising model, “Attention is a reward not a right. Useful advertising is a function of relevance which in turn is a function of time, place, context, cognitive targeting and creation, and actionability.”

Once again, overall daily media usage grew by nine minutes in 2016, to a total of eight hours. Mobile and its many devices drove the increase with a 14-minute increase of time online. In this report, GroupM states that the 2017 forecast appears to be approaching a point of saturation. They see this period as a time of two distinct challenges: peak advertising and peak segmentation. Peak advertising refers to a state of reduced commercial interruption and peak segmentation is the point at which the value of user data cannot be converted in value. Both of these challenges can offset advertising results, for example when inefficient allocations counterbalance detailed targeting precision.

GroupM media snapshot offers key insights on digital platforms and marketing practices. These include:

Advertising paradigm shifts

GroupM recommends that every brand have data and every brand have a data story. Without a data story, a brand lacks discovery, relevance and algorithmic referred platforms. Today there are also expectations of augmented reality and data overlays. Consumers expect brands to have a voice (which may soon be powered by artificial intelligence) to increase consumer interaction, both structured and unstructured.

Many market channels are experimenting with limited commercial interruption on a whole, or within individual programs. The thinking here is the less cluttered an environment, the higher the recall, the more an advertiser is willing to pay the premium that offsets the reduction in inventory. And further, the better the advertising, the more native to its environment, the even better and improved recall. This thinking warrants creative advertising content to be easily placed inside programming and network context.

Media options:

TV with commercials, as we know, will continue to exist. However, commercials will be more creative with skippable options.
A middle ground of mostly short form commercial content will be traded with guarantees on view duration and “sound on” consumption. GroupM’s current standard will continue to apply; human verified exposure to 100% of the video window, audio on and 50% of the ad viewed.
An entirely new creative category that values both time and attention with the opportunity scale and share.

Platform profiles

Google/YouTube/Google Preferred

Google/YouTube/Google Preferred want to change the idea of the “forced view” advertising television paradigm, which is the forced completion of a commercial. In contrast, Google’s TrueView counts viewing only after a video ad is clicked on or after completed viewing or viewing of the first 20 seconds. The video ad length has no limits, it can be longer than 30 or even 60 seconds and the advertiser only pays for the ads the consumers choose to watch.

Combining the viewership data with all of Google’s other data, provides a robust and detailed report of an opt-in view. Despite YouTube’s success, it has not achieved the watercooler moment of significant simultaneous reach. Consequently, YouTube is often used as a compliment to TV and not a replacement. Even Google Preferred, an aggregation of its highest quality content, has difficulty building scale. The impressions are often placed in questionable content causing marketers concerns.

Facebook/Facebook Video Live

Facebook’s video product is questionable as an advertising vehicle given unease with auto play and sound off. Unfortunately, the consumer’s news feed is now being populated by content that is not necessarily of interest. GroupM shares their Moat data which implies that for every 20 video ads served in the news feed, three are watched for three seconds or more and just one is watched for ten seconds or more. Facebook believes that even minimal exposure has value. However, advertisers need to factor into their own valuation of the platform’s performance to accurately reflect actual video ad consumption.

Facebook’s Live video inventory is familiar to the advertiser because the ad frame is content rather than just the user interface. These ads are initiated by the producer of the content with Facebook determining which ads are seen.

The challenge of measurement is huge with the need to identify and share who watched what, where, for how long and on what device. This is a necessary building block to assess ad and audience value.

Over-the-Top (OTT) or Connected TV (CTV)

Over-the-Top (OTT) or Connected TV (CTV) refers to “television” content delivered via streaming over the internet to a smart TV, streaming Player (such as Apple TV, Roku, Chromecast, Amazon Fire TV) or gaming console. OTT services offer consumer choice, new distribution for program and channel owners and new opportunity for advertisers. The OTT inventory is currently limited but becoming more targetable and measurable. OTT offers an opportunity to reach quality content in a brand-safe and on-demand environment.

A hybrid service combining on-demand and live linear television, called skinny bundles, has a number of strong players in the marketplace; AT&T, Turner, Google, Verizon, Hulu, CBS, Sony and Sling (Dish Network). The premise here is that consumers via their broadband connection can access a reduced channel line-up for a fraction of their original cable bill. The monetization of skinny bundles is based on subscription sales, highly targeted advertising (at a higher cost to marketers) minus the network transmission fees.

Audio on-demand and streaming

Spotify is an online on-demand music collection with the added the ability to find playlists from others, to customize your own and download music for offline listening. Spotify is generally recognized as the global market leader with 100 million users and 40 million subscribers. Pandora, on the other hand, is more about music discovery and a radio service. Pandora decodes music on hundreds of vectors and uses it to create custom “stations.” Pandora also launched an on-demand service (including offline downloads) bringing it closer Spotify’s model. Neither Pandora nor Spotify are profitable, as about 80% of their revenue is returned in royalties to artists and labels. Pandora and Spotify revenue models include subscriber fees and advertising revenue.

AOL/Verizon

The merger of AOL and Verizon offer the world’s third largest aggregation of ad impressions with scaled “channels” in news, sports and finance, and significant ad tech assets and first party data from Yahoo Mail. While it may not challenge the duopoly of Google and Facebook, it could be, if executed properly, a strong offering for advertisers.

Twitter

Twitter is a unique environment for brand video advertising and for brands to be an immediate and timely connection to consumers. While Twitter’s social significance is unquestioned, it still has not established itself as a profitable entity.

Snapchat

Snapchat has over 100 million users. It is the first of the internet mobile giants to offer a multimedia person-to-person communication experience. The Snapchat Lens is the most innovative digital ad product since the keyword and the news feed. It’s native to the platform and the ability to offer brand assets in user communication makes earned media that much more powerful.

Pinterest has approximately 150 million monthly users with approximately half residing in U.S. People use the platform to collect and share images. While often used by hobbyist, it also presents highly commercial and monetizable categories like fashion, food, design and crafts. Pinterest users “pins” (picture postings) of what they like and also learn about what they do not know much about from other user pins. This duality offers a unique advertising opportunity to reach different audience across the lower, mid and upper marketing funnel.

Google and Facebook Duopoly

The market dominance of Facebook and Google is concerning. Google operates seven platforms with more than a billion users globally: Google itself, Google Play, Gmail, Chrome, Android, YouTube, Google Maps. It also operates five of the top 10 apps. It’s data machine monetizes user information through paid search, through the Google Display Network (GDN) and through YouTube.

Facebook has more one billion people using it every day, Instagram has 600 million uses and Messenger and What’s App have another 1 billion users. Three to four of the 10 most used apps are operated by Facebook. Facebook Audience Network competes with Google’s GDN among mobile publishers. The company is video centric and this forces a dependency on content outside of their network. To date, new models and interfaces have not disrupted the duopoly or the dominance of these two players.

Conclusion

Technologies growth and advancement in both hardware and software is shifting market dynamics from the Information Age to the Intelligence Age. Today’s digital strategies must include plans to build a content destination that allows users to find, experience, share and buy and have the high probability for sharing and recommending.

Advertising | Perspectives

Media alliances take on the Google-Facebook duopoly

March 23, 2017 Mark Glaser, Founder and Publisher – MediaShift

The Google-Facebook digital advertising duopoly seems like a fait accompli at this point. So too is less-than-favorable revenue that publishers get from them, as a leaked DCN report earlier this year indicated. So it’s not surprising that publishers keep trying to team up to take on the online tech giants. The question is whether these efforts will amount to much more than throwing rocks at a Google bus.

Before we get into the latest efforts, let’s look at the numbers: eMarketer’s latest forecast finds that Google and Facebook continue to dominate in 2017. Online advertising in the U.S. is expected to grow 16% this year to reach $83 billion, and the two companies stand to earn the most from this growth. Google will account for 40.7% of U.S. digital ad revenues in 2017—more than double Facebook’s share. And Google will outperform on search and grow this year to seize 78% of all U.S. search ad revenues. Facebook, which rules U.S. online display ads, will grow to control 39.1% of the U.S. display market.

New Alliances

Condé Nast recently teamed up with Vox and NBCUniversal to join their year-old effort, Concert. The premium advertising marketplace was meant to help advertisers get better combined audience. It promises to reach over 200 million online consumers — including 99% of all millennials, according to the comScore data that the companies cite. As part of their new team effort with Condé Nast on board, Concert will develop new ad products catered around mobile video and branded content. Vox and NBCUniversal also now benefit from the addition of Condé Nast’s behavioral data-tracking platform Spire — evidence that these companies are thinking about a win-win situation for everyone, not just themselves.

Meanwhile, just as YouTube and Facebook have made moves into video and TV — or what some people are suggesting is “the new TV” — Fox Network Group, Turner and Viacom have created a new consortium called OpenAP. The grouping is meant to align offerings but also help navigate the tricky territory of audience measurement. The group says that a neutral third-party auditor will run OpenAP and attacks what it calls “proprietary walled garden, self-governed reporting” — a likely nudge at Facebook and its measurement flubs.

The team effort is also necessary for the TV industry to maintain a semblance of control in an environment where digital is taking hold. As OpenAP’s letter states:

“OpenAP will be a single platform that agencies and advertisers can integrate with their own planning systems to activate advanced audience targeting and independent measurement within premium content. That premium content reaches 93% of all television audiences today, and we hope it will expand if additional publishers join OpenAP in the future. This consortium is a necessity to move our industry forward.”

And there have also been newspaper alliances. The holding companies of The Daily Mail, The Guardian, The Telegraph, Mirror, The Sun, Express, Metro and The Daily Star in the U.K. are involved in a collaborative effort called “Project Juno” to take on the tech behemoths. Meanwhile, another U.K. body representing national and local publishers, the News Media Association (NMA), has called for an investigation into Google and Facebook’s online dominance because of their roles in helping to distribute fake news. This serves as a reminder of the perils of a news supply chain running on just a couple of distributors.

Coopetition Revisited

This isn’t the first effort at alliances to take on Facebook and Google. As I noted in a 2015 DCN column, coopetition — when companies put competition aside and cooperate for the greater good — has long been known in Silicon Valley. But for all the attention it attracted then, the Pangaea programmatic alliance of different newspaper publishers — including The Guardian, Financial Times, CNN International, Reuters and The Economist — has been fairly silent.

So too has the Truffle Pig advertising model that Snapchat, The Daily Mail and WPP became involved with in 2015. Like the real-life truffle hog it was named for, that advertising agency was meant to use its heightened sense of smell to sniff out and market content in a way only it could. As Digiday’s Jessica Davies pointed out last summer, “Such alliances have historically run into problems around infighting, lethargy and incompatible data and systems.”

And while some publishers are teaming up against Facebook and Google, others are imagining a different kind of coopetition altogether: working with them instead of against them. Some may refer to this as a “frog in boiling water” mentality (in which the publisher eventually dies). However former editor-in-chief of The Guardian Alan Rusbridger, is among those to suggest otherwise. His take is that it’s obvious the two companies will maintain an authority no matter how hard publishers resist. “I can’t think of an editor that can afford to not be on Facebook; that would be suicidal because a third to half of your audience is there,” Rusbridger has said. And some local news partnership groups are following suit.

In the end, the alliances are good for publishers who can share knowledge and audiences and get more attention from marketers. But the idea that they will somehow supplant or topple tech dominance is wrong-headed. In the end, it will take cooperation between publishers, as well as between publishers and tech companies, to succeed in a disruptive era.

Advertising | Industry-Research | Revenue

Q3 ranks highest quarter ever for digital advertising, but who’s making money?

January 4, 2017 DCN

Advertisers spent a total of $17.5 billion dollars in digital media in 3Q 2016, a 20% increase compared to same time-period last year and a 4.3% increase over prior quarter. This is the highest third quarter for digital advertising spending on record according to the latest IAB Internet Advertising Revenue Report.

Almost half of all digital ad buys (47%) were on mobile platforms with spending on desktop experiencing a 12% as compared to the same time last year.

But the real question is which media players are capturing these digital ad dollars? According to Brian Wieser, a Wall Street analyst specializing in AdTech for Pivotal Research, Facebook and Google received more than 75% of this revenue. Based upon his analysis, Digital Content Next CEO Jason Kint points out that while Facebook and Google registered strong quarterly profits, when these two players are excluded from digital ad revenue growth, digital media spending averaged a mere 1% increase in Q3 2016. So while digital advertising revenue growth is exciting, the overwhelming dominance of only two players certainly dampens any enthusiasm around the finding for the majority of industry players.

Perspectives

Media climate change is real. Are you ready?

December 8, 2016 Jason Kint, CEO – DCN

Many of our member companies have stepped into the industry’s latest fray around fake news and its potential impact. Our member companies are not immune. They have a lot at stake because in a world where false stories often can spread faster than the truth, trust matters more than ever. From The Weather Company’s response to Breitbart on the veracity of climate change to NPR’s call for healthy reader skepticism and Vox’s analysis of “Pizzagate,” reputable media outlets are eager to get to the root of the problem.

Our members have also called upon the technology enablers that make it so easy to share information to step up and help ensure our brands can serve as proxies for credibility and reputation to guard against further pollution of the web. Because we all realize that it is way too easy to retweet or to re-share news without vetting it ourselves.

Without a doubt, fact checking and fake news are a couple of the topics that dominated the media mindset in the final months of 2016. But as we head into the New Year—and a drastically different political landscape—it is a good time to take a clear-eyed look at what lies ahead.

So, here’s my “forecast” for DCN’s premium publishers in 2017:

1. Duopoly Powers (DCN Outlook: Cloudy start with clear skies ahead)

Unfortunately, the industry was seduced into seeing Google and Facebook as friends when the truth is they are better described, as they often are now, as “frenemies.” We must face up to the fact that two public companies operating effective monopolies in their carved-out lanes (search and social media, respectively) will never be “friends” with the serfs working their land.

The duopoly powers have three things in common: 1) they control much of the data collection across the web and app world; 2) they own the technologies to deliver and target ads; and 3) they often control how or if they’re even measured. So no one should be surprised that they also control 100% of the growth in the U.S. digital advertising industry. This is real. The press is talking about it. And regulators are asking about it.

However, one thing is certain: Monopolies eventually draw scrutiny which can open up competition. And a competitive distribution environment almost always leads to more opportunity and value for content companies. So, the ultimate question to be asked is how valuable would these two companies be without all the information, entertainment and news brands that populate them. I expect these discussions to continue into 2017. I also expect the New Year to bring warm hugs from Facebook and Google. If not, they really have let their egos and quarterly earnings usurp common sense.

2. Net neutrality (DCN Outlook: Stormy)

ISPs welcome Trump their savior. The consolidated large media distribution companies fought incredibly hard for many years to support “net neutrality” but avoid any legitimate regulation to enforce it. They ultimately failed in 2014 because, simply put, the rules make sense: Protect the 1^st amendment and emerging players by allowing content companies and consumers to unite without gatekeepers choking the access points to the world wide web.

Well something funny happened after the fight was thought to be mostly over: Republicans swept Washington and are now in position to roll back regulations. It’s not a question of when but how. The companies best equipped to fight this off, Google and Facebook (despite opposition from open internet advocates) are likely to stay on the sidelines as they have deep fears of the privacy rules that were also put in place. If net neutrality is overturned, the only certain losers will be publishers and their consumers. As Barry Diller said at Ignition: “It would be wildly criminal” to lose net neutrality.

If net neutrality is indeed neutered, expect more M&A activity as content companies marry up with the pipes in the blueprint of AT&T and Time Warner. The content company can then combine the data of its friendly distributor with its own media and advertising inventory. Unfortunately, there can only be so many suitors and even if mergers can get around the obvious consumer concerns, it still doesn’t get around the scale issue. ISPs see all of the data for only the percentage of market they control. Google and Facebook have the tremendous advantage of seeing nearly everything for everyone.

3. Advertising transparency will grow (DCN Outlook: Sunny)

In 2016, the marketers (ANA) released their landmark investigation on transparency practices. The agencies (4As) released their own transparency rules. Publishers mostly watched the tussle with the underlying sentiment that the more transparency from start to finish, the better the digital advertising ecosystem will work in providing value to brand advertisers. Simply put, marketers want to run their advertising in trusted environments that enhance their brands and messaging.

As comScore research showed, DCN’s members offer precisely these environments. Too often the complexity and opacity of the current programmatic digital advertising environment pushes quality marketing messages into invalid and often fraudulent impressions but also into inappropriate placements that hurt their brands rather than provide value. This discussion is far from over. Audits are growing, agencies are making waves and I expect more information to surface. The Department of Justice’s subpoena earlier this week only confirms it.

4. Golden Age of Journalism (DCN Outlook: Windy)

In 2013, Henry Blodget, Editor in Chief of Business Insider, famously wrote we were entering a “golden age of journalism.” Repeat after me “golden age.” His arguments were that the world was more informed, every journalist on earth had more distribution opportunities to reach consumers directly across devices and platforms, there is more talent than ever coming into the field, and the peril of newspapers and magazines were greatly exaggerated. When I get a minute, I want to ask Henry if he still believes this, particularly the last point.

Here is what I do know: Running uphill makes the heart and other muscles stronger. The pressures on media properties whether from CFOs, shareholders or from the President-elect will result in stronger brands. This is what motivates them. At the core of the matter, the public (particularly the next generation) wants an independent and strong press. The Constitution protects it. The well-documented acceleration of New York Times digital subscription business is a direct outcome of a unified vision for the company and a fight to double-down on its subscribers. So yes, it’s still possible that we are in a golden age. (And Dean Baquet, EIC of NYT agrees!)

While we may not be able to control the weather, our ability to predict it accurately (or not) can greatly affect its impact. Taking a clear, informed view and building our strategies accordingly will allow us to be prepared for anything from the extreme heat of consumer mistrust to the mudslides resulting from a torrent of bad actors.

As witnessed by The New York Times’ post-election subscriber surge; as seen through Dow Jones CEO Will Lewis’ belief that the furor around fake news will prompt Google and Facebook to own up to their role in the media ecosystem; and as expressed by Michael Rosenblum on the Huffington Post—there are also opportunities that come with fair winds and stormy weather alike. And we, as the trusted media brands, need to be ready for whatever is next in this rapidly changing media climate.