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Advertising | Industry-Research | Perspectives

Navigating the social media advertising paradox

There are two opposing views on social media that are impacting digital marketing decisions:

  1. Audience attention on social platforms offers a strong advertising environment (good for marketers).
  2. Consumer distrust of social platforms’ data and privacy practices detracts from their effectiveness (bad for advertisers).

Marketers and media executives discuss the social media advertising paradox ad nauseum in meetings, forums, and conference panels. Still, a whole lot of advertising dollars are being invested on Facebook regardless of its lack of transparency, data sharing, and stories of the company’s mismanagement and mishandling of data. In fact, Facebook’s Q3 2018 earnings cited a 33% year-over-year increase in advertising revenue while user growth remains stagnant in its larger markets.

Streetbees’ new research report, Re-positioning, reflects on this dichotomy. A full 86% of respondents follow brands on social media and 73% agree that a social media presence is necessary for brands to be successful. This research ranks Facebook as number one among consumers 25 and older for following brands (86%). Thus, the findings showcase Facebook as a positive environment for advertising placement.

Yet the research also finds that one-third of consumers in the US and India, Facebook’s two largest markets, do not trust the social network to keep their data safe. Further, nearly all users surveyed (98%) state that they continue to use Facebook even though they do not trust the service to protect their personal data. Yes, the paradox, a platform of users that do not trust its environment.

Facebook: friend or foe?

Streetbees’ consumer findings are analogous to advertising practices on the platform. Both consumers and marketers alike continue to use Facebook regardless of the mounting distrust of the platform. In October, Fortune exposed that Facebook inflated its video metrics for how long users were watching video content by up to 900%. Despite a steady stream of Facebook mea culpas, advertisers continue to purchase advertising on the platform.

The research also suggests that Facebook needs to focus on user retention. Younger audiences show limited interest in Facebook and older users’ attention appears to be waning. Only one in five of those under the age of 25 think Facebook is the “coolest” social platform. And when it comes to consumers reasons for quitting social media, the top two responses include “boredom” (51%) and “my friends stopped using” (22%). Eight percent also quit due to data concerns. As Facebook confronts user fatigue, growth in daily active user is significantly slow.

As social media challenges continue to emerge, advertisers need to hold platforms accountable. Short-term media strategies will not lead to marketplace sustainability. Audience attention is a critical commodity in the advertising paradigm and continued reliance on distrusted environments will undoubtedly harm the long-term success of the digital advertising model.

Advertising | Perspectives

Instagram vs. YouTube: Who will win the digital ad war?

YouTube is currently the most popular platform for video content. So, it’s no surprise that when Instagram released IGTV, its stand-alone app for long-form vertical video, everyone’s first reaction was to compare the two. And YouTube pretty much always came out on top.

However, in the past year, YouTube has been under fire for brand safety issues. In fact, there was a point when 250 brands stopped advertising on YouTube at the same time in order to protect their assets and brand image. To date, many advertisers still believe that YouTube has done a poor job of preventing its advertisers’ brand safety issues, even though they have gotten better at the response.

This led us to host a panel discussion on October 4th to ponder a key question: With YouTube in its most vulnerable state, and given its ongoing brand safety concerns, is it IGTV’s time to steal advertisers away?

The discussion, entitled “Instagram TV vs. YouTube: Who Will Win the War?”, was moderated by Kerry Flynn of Digiday. The panel  consisted of five advertising experts: Kaydee Bridges, VP of Digital & SM Strategy at Goldman Sachs, Elijah Harris, VP, and Head of SM, US at Reprise Digital, Noah Mallin, Managing Partner at Wavemaker North America, Brittany Richter, VP and Head of SM, US at iProspect, and myself.

The discussion offered three key takeaways:

1. YouTube still wins the popular vote.

The majority of panelists agreed that brands interested in video content should be on YouTube rather than Instagram’s IGTV. They pointed out YouTube’s benefits: It’s cheaper, long-form content performs better on YouTube, and it’s better for sharing. Elizabeth Richter, iProspect’s Head of U.S. Social Media, offered a different point of view, arguing that Instagram may work for some brands: “If a brand is struggling with their messaging, or just getting started, Instagram’s IGTV is best because they can experiment with different brand messages and see how consumers respond,” she commented.

2. Instagram’s IGTV is transforming and expanding in promising ways.

For Elijah Harris of Reprise Digital, the early IGTV experience was underwhelming. Its focus was to share long-form content from those he followed on Instagram – something he didn’t enjoy. However, Harris added that the platform currently offers more opportunities worth exploring, raising his confidence in its potential for the future.

3. Instagram’s IGTV isn’t quite ready to compete with the big boys.

Elijah Harris suggested that, if it wants to compete with YouTube, IGTV needs meta tags and better discoverability. To go up against Snapchat, he added, it needs curated content and multi-channel network (MCN) participation.

Noah Mallin of Wavemaker believes that, to compete with Snapchat, IGTV needs “breakout content,” even suggesting that it might fill the void left by the demise of Vine. (“I’m still mourning it,” he confessed). Mallin added that YouTube is “stuck in desktop mode” and must quickly adapt for mobile users.

The consensus was clear. IGTV wants to be the most popular platform for video content. However, it still has a lot of growing up to do. Perhaps Instagram will take note of our panel discussion, and we’ll see a more mature IGTV before we know it.

Featured Post | Perspectives | Revenue

Snap rises as Facebook falls

For so long, Facebook has been the classroom bully in social media, with Snapchat taking it on the chin when Facebook copied Snapchat’s Stories format on FB, Instagram and WhatsApp. But now, the little tyke is exacting revenge as Facebook deals with blow after blow in the public arena: ongoing Russian meddling on the platform, incendiary posts inspiring real-life violence in Myanmar and Sri Lanka, and a stock market plunge that encapsulates its challenges fighting misinformation. Meanwhile, Snap has been quietly rolling out new deals with publishers and making itself out to be a much friendlier space to do business.

While it’s hard to compete with Facebook’s 1.47 billion daily active users, the story of Snapchat as the underdog fighting back is one to watch — especially as publishers tire of Facebook’s litany of problems.

‘Brand Safety and Control’

While Facebook consistently dominates tech news coverage, Snapchat also turned heads recently when it launched a private marketplace for advertisers akin to its own premium programmatic advertising marketplace. Now, advertisers can book space on specific shows and channels from a variety of publishing partners, including BuzzFeed, ESPN, and NBC Universal. Previously, brands could buy Snapchat ad inventory, but not target their advertising to specific publishers.

The beauty of this? Publishers can set their own ad rates, target only certain segments of a show’s audience, and advertisers can find more brand safety on Snapchat than they currently do with Facebook and Google’s YouTube. This is of course a boon for Snapchat too, as AdAge’s Garrett Sloane put it:

“Advertisers have been concerned about the type of content that appears on both YouTube and Facebook. Snapchat is trying to take advantage of the industry’s unease by offering a higher level of brand safety and control: Discover already operates as a gated community for professional publishers only, and the private marketplace now lets advertisers expressly select the shows they want while still using ad tech.”

On top of this, Snapchat is planning to sell six-second, unskippable ads in the private marketplace — meaning the chances of sustaining audience attention is even higher.

Broadening Discover’s Horizon

Snap also recently announced a new Discover partnership with an LGBT publisher — its first one — the U.K.-based website PinkNews. According to PinkNews CEO and editor-in-chief Benjamin Cohen, part of the incentive is that Discover is still a curated platform, meaning that accessing the humans behind the automation is still possible. Snapchat was also enticing in part because Facebook traffic for PinkNews— as is the case with many publishers — has gone down, Cohen said, and so he was looking to broaden audience traffic elsewhere.

The idea of working with a social platform like Snapchat that is actually willing to pay publishers became even more attractive for PinkNews. The partnership is also, undeniably, a win for Snapchat. It gains an outlet that will help the platform attract a young audience willing to push the boundaries of sexuality.

Indeed, it’s obvious that Snapchat is on the hunt to broaden its 191 million daily active users. In addition to working with traditional publishers, Snapchat has made a bigger effort this year to partner with digital publishers and social media stars that appeal to younger audiences. That includes Daquan Gesese, a hip-hop and pop culture personality with a huge presence on Instagram, and Fanbytes, an 18-month-old digital media company that runs four popular accounts on Snapchat, and operates a network of mostly 15- and 16-year-old creators who run their own accounts and publishing brands on Snapchat.

In May, Daquan launched his own Discover channel, and Fanbytes and Snapchat are currently trying to figure out whether “official” versions of its channels could be tailor-made for Discover.

More Flexiblity

But here’s what’s ironic about the Snapchat comeback: It wasn’t that long ago that Snapchat was ridiculed for a redesign that paired friends and family in one stream, and publishers and advertisers in another. Audiences complained, publishers worried.

“Content producers from eight publishers I spoke to said that the redesign had made their metrics go haywire,” Vanity Fair’s Maya Kosoff wrote. So it seems pretty natural that some publishers don’t necessarily see Snapchat as a particularly good long-term strategy if they can monetize better elsewhere, as one publisher anonymously confessed to Digiday last month.

However, it’s also understandable — decent, really — that Snapchat is letting publishers introduce non-exclusive shows to Snapchat Discover. Syndication is not particularly sexy, but even if shows have already aired on YouTube or Facebook Watch, this is a chance for Snapchat to build a Discover audience — and it’s a chance for publishers to ignite new revenue streams for its most popular intellectual property without having to create something original for each platform.

While publishers aren’t going to give up on a massive platform like Facebook anytime soon, Snapchat is getting back in the game on two counts. First, it’s actually the steady performer as Facebook struggles. And second, it is finally serving publishers in more ways while opening itself up to newer creatives. As with all platforms, there’s only so much trust publishers can give third parties who change their practices and rules on a whim, but it’s a good thing that Snap is trending up at just the right time – finally getting off the mat to give Facebook a few good licks.

Industry-Research

Bots are busy on Twitter, where non-human activity is common

Bots are software applications that typically run repetitive and easily-automated tasks. You can find bots posting content or interacting with users online without any human involvement. They are a valuable tool, often employed to answer questions and post updates to articles. However, there’s also a dark side to bots. Their malicious behaviors include the ability to spread fake news and influence online rating and review systems.

According to the Pew Research Center’s new research, Bots in Twittersphere, bots (be they”good” or”bad”) create 66% of all tweeted links across all web content and among popular news and current event websites, respectively. Bot percentages are even higher (89%) among popular aggregation sites that compile stories from around the web. Interestingly, a small number of highly active bots are responsible for a significant share of links to known news and media sites.

The Pew study analyzed 2,315 of the most popular websites, examining a random sample of 1.2 million tweets over six weeks in the summer of 2017. To identify the bots, Pew used the Botometer, a tool created at Indiana University and the University of Southern California. The Botometer estimates the likelihood that any given account is automated.

Analyzing bot traffic is a prevalent research topic with several noted academic reports in the marketplace. One study from the University of Indiana and the University of Southern California, Online Human-Bot Interactions: Detection, Estimation, and Characterization, estimates up to 15% of all Twitter accounts are bots and another study from Rice University, Hunting Malicious Bots on Twitter: An Unsupervised Approach, estimates up to 23%. The Pew analysis focuses on the content of the tweets to understand the proportion of bot links, many of which refer to sites outside of Twitter.

It’s not surprising that automated accounts provide links to a higher-than-average number of sites without a public contact page. Lacking a contact page, omits the opportunity for reader feedback that provides an opportunity for corrections or additional reporting. This can sometimes be an indicator of malicious bots directing users to fake content sites.

Intriguingly, automated Twitter accounts share a larger volume of links, 57% to 66%, from sites that are more centrist and an ideologically mixed. The analysis does not show that automated accounts are politically biased toward liberal or conservative in their overall link-sharing. Bot accounts share approximately 41% of links to political sites of liberal audiences and 44% to political sites of conservatives.

Social media makes it easy for automated accounts to create content and interact with users with no direct human involvement. It’s seamless and usually undetectable to the user. Bot accounts play an important part in the social media ecosystem. The provide automated news updates, answering questions and offering immediate feedback and more. Nevertheless, what impact do bots have on the user experience? Additional Twitter research is needed to focus on bot engagement. Understanding to what degree bot accounts engage users and to what degree bot accounts, when combined with human-sourced accounts, impacts engage offers insight into the complete user experience on Twitter.

Industry-Research

Fake news has limited reach—but high engagement—in France and Italy

In efforts to quantify the spread of false information online, Reuters Institute for the Study of Journalism at the University of Oxford, examines the reach of fake news in France and Italy. Both countries see fake news as a serious issue. However, the report, Measuring the reach of “fake news” and online disinformation in Europe, determined the reach of fake news websites as less than 1 percent of each countries online population.

The study based its analysis on 300 websites in each country that independent fact-checkers identify as publishers of false news. The research combines analytics from ComScore and CrowdTangle to measure usage of both established news and fake news sites. comScore, a web analytics company, uses a combination of panel-based and server-side measurement to provide usage data and CrowdTangle, a web tool, collects engagement data for Facebook accounts using the Facebook API.

Time Spent

The data also shows that the total time spent with fake news websites each month is lower than the time spent with established news websites. Online users spend an average of 178 million minutes per month with Le Monde (France), and 443 million minutes with La Repubblica (Italy), that’s more time than 20 fake news sites combined.

Still the impact of social platforms must also be accounted for in this analysis. Unfortunately, Reuters cannot measure Facebook’s average monthly reach or time spent for any website or article link Facebook. (Only Facebook has access to this data.)

Interactions

However, Reuters did examine the average number of Facebook interactions (shares, comments, reactions) with each news outlet to access user engagement. Importantly, based on this analysis, Reuters determined that a few of the fake news websites generated more or as many interactions as established news brands. In fact, one fake news site in France generated an average of over 11 million interactions per month, at least five times greater than established news brands

While the research suggests that articles from fake news sites registered low reach and social engagement in these countries, there are still those one-off articles that reach high levels of engagement. The problem poses serious implications and what still needs to be determine is the impact of the false information on people’s attitudes and beliefs.

DCN-Research | Industry-Research

DCN and Reuters Institute studies align: Trust is key for the success of digital media

Digital Content Next (DCN) and the Reuters Institute both released significant studies on trust in digital information within a week of each other. Here’s a topline analysis of the many consistencies in the findings important to navigating the future of digital content and building trust in media.

First and foremost, it’s important to note each methodology and identify the differences. Here’s how they compare:Here are some of Reuters’ top findings (and how they compare with DCN’s):

Social media is trusted less than the news media in its ability to separate fact from fiction. Respondents think newsfeeds are filled with inaccurate information, extreme agendas, and strong opinions, perhaps encouraged by social media algorithms.  

  • Supports DCN’s findings of 62% agree “There’s so much random content on social media, there’s no way to tell if an article is credible or not.”

A significant proportion of respondents feel journalists do a good job in checking sources, verifying facts, and providing evidence to back up claims.  

  • Supports DCN’s findings regarding the building blocks of the Trust Model and the importance of key components: brand sites must focus on four key areas to build trust: attribution (confirming multiple sources), reputation or authority, navigation/user experience, and prediction — building a direct relationship with consumers that builds upon past experiences.

In talking about trust, people mention television brands more than any other type of media (e.g. print or online).  

  • Supports DCN’s findings in the regarding top trust brands – Newspaper and TV/Cable legacy brands historically rooted in media.

Some media outlets are taking sides, encouraging polarized set of opinions.  

  • Supports DCN’s recommendation that Brand sites and apps should focus on what’s vital to consumers to drive trust, position their content as regularly updated, respected, and authentic in addition to the core positioning of high quality and trustworthy.

A substantial minority who trust social media, do so for its broad range of views and authenticity.

Source: Reuters Institute

Key Recommendations:

The news media needs to differentiate itself more from information that has not gone through the same professional checking processes

  • DCN’s recommendation that fake news and distracting settings are significant problems in the digital landscape. A good opportunity for premium publishers to market themselves as a destination to avoid these annoyances.   

The media need to do a better job in separating facts from opinion.  

  • Correlates to DCN’s discussion of vital drivers of trust. Premium content should be in-depth, respected, expert and authentic. These are the definitions of trust that move the needle.  

Build a more representative media – in terms of age, politics, economic outlook, and gender – is likely to help answer the criticism that media is only looking after the interests of the establishment (we don’t speak to diversification of reporting).

Building trust takes a strong commitment from publishers and platforms, alike, to develop a successful consumer relationship. It requires understanding and strategically implementing components and drivers of trust. Importantly, the need for self-monitoring is essential to ensure accurate and credible reporting is commonly practiced.

Industry-Research

Digital news is a mixed media experience

Most adults today use a combination of different sources and platforms to get their news reports the Reuters Institute Digital News Report 2017. The global report is based on a survey of more than 70,000 people in 36 markets, with added qualitative research in many of the countries. Social media is a big part of this media mix, as are TV, websites and apps. In fact, two-thirds of social media news users in the United States also watch television news (67%) and two-thirds also visit mainstream websites or apps (66%). Further, only a quarter (24%) of the respondents think social media does a good job in separating fact from fiction, compared to 40% for the news media.

News brands struggle with their branding on distributed and social platforms. Reuters tracked over 2,000 respondents in the UK to see if they could remember their path to a news story found on Facebook, Google, or others. Only 37% of respondents could recall the name of the news brand when coming from search and 47% when coming from social.

Trust Issues

Trust in the news media varies greatly across countries. According to the report, less than half the population (43%) trust the news media. Trust in the news is highest in Finland (62%) and lowest in Greece and South Korea (23% each). There appears to be a strong correlation between consumer distrust in the media and perceived political bias, especially in countries with high political polarity like the U.S where trust in the news media registers at 38%.

The news also appears to be impacting the consumers’ emotional psyche. Close to a third of respondents (29%) state they often or sometimes avoid the news. Many say the news negatively impacts their mood and heightens concern over their inability to rely on the news to be true.

Additional findings:
  • Outside the U.S. and UK, growth in social media for news is leveling off many markets. In its place, messaging apps that are more private and do not algorithmically filter content are gaining in popularity.
  • Mobile access for news is increasing in many countries. Mobile news notifications have grown significantly in the last year, especially in the US (+8 percentage points), South Korea (+7), and Australia (+4). This has many news publishers working with third party distribution like Facebook Instant Articles and Google AMP for quick efficiencies for content loading on mobile devices.
  • Mobile news aggregators show usage growth, notably Apple News, and Snapchat Discover for younger audiences. Both have doubled YoY usage with their target audience.
  • Smartphones are now as important for news inside the home as outside with 46% of consumers using their smartphones to access news in bed.
  • Voice-activated digital assistants like the Amazon Echo are emerging as a new platform for news, outpacing smart watches in the US and UK.
  • Overall, YoY growth of digital news subscriptions across all demos, especially among those under 35 years old. Specifically, online news subscriptions in the U.S. grew from 9 to 16% subscriptions. Across all countries, approximately one in ten consumers (13%) pay for online news.
  • Ad-blocking growth has leveled off on desktop at 21% overall and is only 7% on smartphones. Interestingly, in some countries, more than half state they have temporarily disabled their ad-blocker for news in countries like Poland and Denmark (57% each) and the United States (52%).
Add Value

Melissa Bell, Publisher and co-founder, Vox Media comments on this analysis “if we work to rebuild trust with our audiences, we may find our way to more stable, significant businesses.” She’s identify a few key questions for publishers to think about and address as they continue to provide quality news content across platforms.

  • What is currently not being offered to audiences? How can content appear essential to them?
  • Can the sense of community be recreated for audiences around the country – or the world?
  • How do publishers help audiences seek knowledge instead of simply publishing information?
  • How can publishers help audiences feel less anxious with today’s news content?

Importantly, publishers need to solve problems for their audiences. Digital news publishers’ focus on quality, transparency, and accountability will allow audience trust and engagement to follow.

Industry-Research

Nearly half of political news content tweeted is fake

The rapid spread of misinformation—better known these days as fake news—was named one of the top 10 dangers to society by the World Economic Forum in 2014. Powered by automation and algorithms, fake news is amplified more than ever on social media. In fact, orchestrators of fake news rely heavily on social media to create web traffic, drive engagement, and influence political views.

To understand the threat and impact of fake news, researchers at the Oxford Internet Institute (OII) studied 22 million tweets that contained hashtags related to politics leading up to the 2016 US Presidential Election. The research, “Junk News and Bots during the U.S. Election: What Were Michigan Voters Sharing Over Twitter?,” identified 138,686 users from Michigan, a battleground state evenly split between both presidential candidates, Clinton and Trump. The state of Michigan was specifically selected because the two presidential candidates were equally supported, limiting political biasness in the research.

The Twitter data revealed that Trump-related traffic (57%) significantly outpaced Clinton-related traffic (20%) and neutral content (13%). Importantly, the research uncovered that professional news and fake news are close to a one-to-one ratio when it comes to political news tweets. Further, nearly a quarter of political tweets (23%) contain fake news links. and a full 47% of the political news content can be classified as political propaganda. Needless to say, social media’s proliferation of fake news is reason for concern.

Social platforms provide a fertile environment for the fast spread of fake without the necessary vetting and questioning of the information. Significantly, the Oxford Internet Institute defines “professional news” as that produced by major news brands. The information displays “the qualities of professional journalism, with fact-checking and credible standards of production. They provide clear information about real authors, editors, publishers and owners, and the content is clearly produced by an organization with a reputation for professional journalism.” And, while social platforms claim to be addressing the problem, premium publishers consider ensuring the accuracy of the information they report fundamental to their business so that they can deliver value to the reader and maintain consumer trust.

Industry-Research | Perspectives

As content consumption evolves, so must media and marketing strategies

Streaming online content continues to grow as social media and over-the-top services appeal to more consumers, especially to Millennials and Gen Z audiences. In fact, almost half (49%) of all US consumers now subscribe to a paid streaming video services with almost 60% penetration among Gen X, Millennials and Gen Z.

Interestingly, cable and satellite subscriptions remain steady at 74% of US Households. This can likely be attributed to pay TV subscriptions bundled with Internet services. US consumer media habits are shifting significantly. To better understand these changes, Deloitte’s Digital Democracy Survey offers insight into the multi-generational view of consumer technology, media, and telecom trends.

Key takeaways:

  • Binge watching becomes the new norm. Close to three quarters (73%) of US consumers report binge watching. Nearly nine in 10 Millennials and Gen Z say they binge watch video content. Deloitte defines binge watching as viewing at least three or more episodes in one session. It’s time for marketers and content produces to think differently about reaching the binge-watching audiences. An advertiser may want to try product placements in a series for added frequency. Content producers may want to think about new distribution strategies such as releasing content as a bingeable mini-series instead of offering a feature-length movie. Of the content streamed, paid streamed content comprises 35% of consumers streaming time and free services take up 40% of stream time.

  • Social recommendations are proving more influential than TV ads. More than a quarter (27%) of Gen Z consumers report that an online recommendation from someone within their social media circles can highly influence a buying decision. This can be more impactful than TV ads (18%).
  • Advertising struggles for attention. When the TV is turned on, it competes with everything for attention. Nearly all Gen Z and Millennials (99%) report multitasking when they are watching television reporting an average of four other activities occurring simultaneously. Further, eight in 10 (80%) consumers’ report skipping online video ads when allowed, and just over two-thirds (67%) of consumers report mobile ads on theirs phone are irrelevant.
  • Digital ad avoidance is growing. Almost half (45%) of Millennials use ad blocking software on desktop. Forty percent report using it on their smartphones with 85% doing so to improve the speed and performance of their online experience.
  • Relevant and optional are key to engaging ads. More than half of all consumers say that they would be willing to receive geographically relevant ads on their smartphones. Further, nearly half (46%) of consumers say they pay more attention to an ad they can skip versus an ad they cannot skip.
  • Social media usage is ubiquitous. A full 84% of all consumers are active on social networks. Penetration is higher among Millennials (96%) and 93% Gen Z (93%).
  • Social media helps in connecting consumers to companies. Consumers interact with corporations, with more than 70% of Millennials reporting that they used social media to interact with customer service in the last year. Nearly three-quarters (74%) of Millennials find their interaction with customer service on social media more positive than connecting with customer service on the phone (70%).

Consumers are now conditioned to watch content whenever, wherever, and on whatever device they choose. The constant availability of streaming content and social media offer new opportunities in the marketplace. Advertisers and content creators can form new relationships with the consumer, interacting with and personalizing the consumer experience.

Perspectives

Speculation over Spectacles: Snap’s IPO and its mixed value for publishers

Snap Inc., the parent company of the millennial-loved Snapchat app and makers of camera-equipped sunglasses, Spectacles, recently filed paperwork for an initial public offering, targeting a valuation between $20 billion and $25 billion. With a coveted core base — the app claims to reach 41% of all 18- to 34-year-olds in the U.S. on a given day — and a business model matching the advertising industry’s ongoing shift to mobile, the five-year-old company remains a media darling in an environment dearth of other significant offerings.

Snap wants to raise at least $3 billion, but it has yet to turn the kind of profit that justifies such an expensive offering. Closer inspection on the company’s revenue sources, losses, competition and stagnating growth rates shows that despite the attention, the company might present challenges to investors — and publishers who are investing time and money in the platform. The company lost $514.6 million in 2016 and has warned prospective shareholders that it “may never achieve or maintain profitability.”

The Pluses for Snap — and Publishers
But Snapchat has certainly made hay with its walled garden, Discover, showcasing content from premium publishers eager to get daily content in front of that juicy core audience. And the New York Times recently signed on to deliver its Morning Brief for Discover, citing Snapchat as the “ideal place” to deliver “smart, visual digital journalism” to younger audiences. According to new research from eMarketer, nearly half of Snapchat’s revenues last year — 43%, to be precise — came from ads on Discover.

Unlike the 30-second standard ads for television commercials, or even YouTube’s 15- or 30-second pre-roll ads, the quick and easy 10-second spots on Discover are just right for an audience used to on-demand television. And advertisers must tailor their creative to the audience, in order to drive swipes and attention. Plus, eMarketer projects that Snapchat’s total revenues will more than double in 2017, from $348 million to $804 million, while the company says it is aiming for $1 billion in revenues this year.

The Downfalls for Publishers
That’s great for Snap but not so hot for most publishers, who have received little more than tepid gains from their work on Snapchat, according to research from Digital Content Next. DCN found that their members surveyed reaped the least revenues from Snapchat in the first half of 2016 — $192,819 per publisher, compared to $773,567 earned on YouTube, $560,144 from Facebook and $482,788 on Twitter. DCN publishers also cited Snapchat as the most difficult company to work with.

While Snapchat has alluded to future offerings of better metrics for advertisers, and announced a pay-up-front licensing model that may help publishers monetize on Discover more effectively — a model akin to what TV networks use when purchasing programming — that’s not exactly a foolproof profit plan, at least not yet. While Snapchat has managed to avoid the onslaught of fake news that’s polluted other platforms, publishers would be right to continue to be wary of giving complete control to the platform — even a hot one like Snapchat with a lock (for now) on millennials.

The Stresses of Being a Hot Commodity
Of course, Snapchat’s biggest rival, Facebook, isn’t standing still. Like Snapchat, Facebook also wants to be the next TV, and a much more visual network. From Instagram Stories to tests of disappearing messages on Messenger, Facebook hasn’t been discreet about cloning Snapchat, and this intense competition may prove difficult for the upstart in the long run. (Note that Snap rejected a $3 billion buyout offer from Facebook previously.)

In its prospectus, Snapchat cited “increased competition” as one of the key reasons user growth slowed considerably at the end of last year, a trend that prompted comparisons to Twitter — another company with a hot IPO that’s failed to attract new users and growth. And unlike Facebook — which has grown to be the most powerful network in countries like India, where mobile connectivity is the de-facto way users access the Internet — Snapchat’s reliance on strong mobile infrastructure and cheap bandwidth costs means that its international growth is limited. It also faces competition from regional apps like Asia’s Snow.

Then there’s the concern that Snapchat will fail to reach users over the age of 30, whereas Facebook has proved to be friendly for multiple generations. Better ad targeting and deeper engagement, therefore, is crucial for Snapchat. But it’s running neck-and-neck with Instagram when it comes to being an important network for teens, according to a fall 2016 survey by Piper Jaffray, with 80% of teens using Snapchat to 79% opting for Instagram. Not only that, but one in three users on both Instagram and Snapchat said they hardly noticed the ads on their platform of choice, according to eMarketer.

Snap certainly has some tall orders to fill if it wants to match its valuation hype, as the buzz builds around its IPO. Publishers, especially magazine and digital native outlets, will continue to shower attention on Snapchat and get a payoff, but for the platform to really reach beyond its core millennials, that will take more time and investment.

Perspectives

4 Signs of life for Twitter

Many people consider Twitter to be on death’s door, almost flatlining and barely breathing. But, in the words of one Monty Python character: “I’m not dead!” Well, at least not yet.

Twitter had its shares of missteps in 2016, including an exodus of executives, including its CTO and COO, and a failure to sell itself in a highly-publicized bake sale. One of the reasons that sale fell through was the problem Twitter has with trolls and abuse, which has driven off many high-profile users. And its CEO Jack Dorsey is only part-time on the job, as he’s also CEO of Square.

So why am I confident that 2017 will breathe some new life into Twitter, besides our new Troll-in-Chief taking office soon? Let me count the ways…

1. Jack Dorsey’s Listening Tour

Twitter CEO Jack Dorsey certainly showed his interest in taking public commentary seriously when he issued a public call for feedback at the cusp of 2017, asking what the microblogging service ought to be doing better. His request drew hundreds of responses circulating around four themes: curbing online abuse; allowing an edit function; providing users better management of topics and interests; and offering easier ways to track conversations.

His tweets on the four requests — brief, of course, given he was limited to 140 characters — show where Twitter may put more emphasis this year. He said that following topics was the strongest request and that being more topic- and interest-focused “opens up a lot.” He also noted that conversations, while a huge part of what makes Twitter magical, are simply very difficult to follow, and promised to make that easier. So it looks like we can bank on anticipating more ease in those departments.

The others are a bit thornier. It’s one thing to offer a quick fix to edit errors, for instance. But if the President of the United States uses Twitter in such a way that his account becomes the most powerful publication in the world  — and it’s a guarantee that his tweets will be included in news stories — Twitter is no doubt part of the public record. It’ll have to do more development to ensure accountability if it chooses to steer toward an edit function.

2. Fighting Abuse

When it comes to abuse, meanwhile, Dorsey acknowledged that a ton of work is necessary ahead and that the “biggest ask” was for greater transparency around its actions. And then, as if on cue, Twitter swiftly shut down the account of pharmaceutical executive and Trump supporter Martin Shkreli after he targeted freelance reporter Lauren Duca — who penned “Donald Trump is Gaslighting America” on Teen Vogue. You could see that Twitter was at least trying, even though it missed the opportunity to showcase full transparency by only giving a one-sentence response to justify shutting down Shkreli’s account.

That aside, the fact that this occurred on Twitter — followed by chatter around it on Twitter — only to be followed by news about it generated again, on Twitter — shows the company excels at a certain kind of rabid engagement among its regular users.

3. Brands Experiment with Twitter Moments

In fact, it could have been a Twitter Moment, something that marketers and publishers are also experimenting with on the platform. Moments, with its curated tweets, are an ideal product for casual users who don’t want to be on the platform all day but want to know the Twitter gossip around a particular event or story.

From a brand or company perspective, they’re also inexpensive to produce and take advantage of the real-time marketing that Twitter also offers — hence why clients as diverse as Lime-A-Rita, YouTube and Newsweek are all jumping into the fray. It would come as no surprise if more news clients and marketers followed suit in 2017, or if Twitter did more to enhance the feature — after all, Moments is already a solution to help people follow a topic or interest.

4. Twitter Remains an Important Source of News

Indeed, while Twitter may never be able to scale the way Facebook has, it has been leaps and bounds ahead of its rival when it comes to hiring editors, working with news publishers and generally positing itself as a media company. Unlike Facebook, whose recent hire of Campbell Brown to lead news partnerships seems more like a hire of a marketing rep rather than a public editor or editor in chief, Twitter is looking to hire editors and an associate producer.

And let’s face it: News breaks all the time on Twitter, whether by eyewitnesses at the scene, or journalists giving inside dirt, or celebs and sports stars posting what they shouldn’t. Twitter has also been testing breaking news push notifications along the lines of the Associated Press and New York Times, and has moved from the “social networking” to the “news” category on Apple’s App Store. Not only that, but Twitter’s push into live video, including its deal to air NFL games live on the platform, is a much more elegant maneuver than Facebook’s own insistence on Facebook Live (which, with its conspicuous sponsored posts on Facebook and enormous banners on buildings, seems much more desperate).

Twitter may have trouble growing its user numbers and stock price, but its relevance keeps rising. Let’s see what 2017 brings. And remember, when you hit rock bottom, there’s only one way to go: up!

Advertising | Perspectives

The Big 10: Media executives call out the industry’s biggest challenges

While it is appealing to start off a New Year with rosy predictions, it is also important to take a clear-eyed look at the road (and roadblocks) ahead. We asked a few of our members what they see as the biggest challenges the digital media industry faces today.

Here’s what leaders at ten diverse media companies see as the biggest challenge in the year to come:

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Scott Bailey, President, TEN Automotive Division
@TENenthusiast

Monetizing scaled social audiences and the content made for these channels is a challenge. We see the benefit of being a first mover and building a large social audience. That said, the benefit today lies heavily in the marketing value it provides in driving traffic to our sites and leveraging it to convert fans into paying customers through subscription offerings like Motor Trend OnDemand. We are able to monetize through advertising, but the nature of the monetization on social is more challenging to do at scale, as it requires a more custom approach compared to more traditional, turnkey placements/buys.

Jordan Bitterman, Chief Marketing Officer, The Weather Company, an IBM Business
@JordanBitterman @weathercompany

Our industry must build a parallel world adjacent to the current one dominated by Google and Facebook. This new world must be scaled, intelligent and open. Currently, 85 cents of every new dollar are going to the two biggest players because they have been solving for scaled and intelligent – and have done a great job doing so. But, an open garden is increasingly becoming a requirement for sophisticated advertisers who want partners who are flexible on data and transparent on pricing and performance.

Jim Brady CEO & Founder, Spirited Media
@jimbrady @spiritedmediaco

It’s hard to pick a “biggest” challenge, as there as so many. But, to me, refining user experience remains a crucial one. There are still way too many sites alienating readers for a quick buck by hammering them with pop-ups, unnecessary slideshows, pagination, interstitials and more. Yes, we need to make money. But gouging readers to the point where we drive them away is an abysmal long-term audience strategy. Treat your audience like you don’t care about them, and they will surely return the favor.”

Steven Smith, President of Digital Media, AccuWeather
@accuweather

In 2017, we continue to hurtle toward a ubiquitous global user audience, accessing data from every imaginable kind of device with a greater focus on personalization, localization, service and mobility. Content providers are going to have to step up to meet the needs of an audience that wants fast, relevant, and localized—and provided consistently regardless of device, from smartphones to connected refrigerators. That makes strong partnerships with vendors a necessity, from Cloud storage providers for scaling data to meet demand demands to robust content management solutions to help port news from format to format and device to device. And of course, the audience will continue to demand content that is more timely and relevant than ever.

Joy Jones, Vice President, Global Products, Associated Press
@AssociatedPress

The biggest challenge we face is building diverse streams of revenue that support innovative storytelling. In 2017, digital media companies must bridge the current divide between creating compelling stories that attract interest and attention, and the opportunities for monetization that are increasingly concentrated on just a few of the largest platforms. The industry is not going to be successful if there’s too much focus on trendy stories that spin up on a one-off basis or so-called native ad content that lacks authenticity. We need immersive and captivating high-quality content that engages diverse audiences and creates a wide fan base across emerging media platforms. That diversification of revenue will be critical to building and maintaining a sustainable engine for digital media innovation.

John Kosner, EVP, Digital & Print Media, ESPN
@JKosner @ESPN

Establishing timely and trusted cross-media measurement is an enormous challenge — but a critically important one. People consume media on an ever-growing number of platforms and devices and we must establish accurate ways to measure the total audience we reach and their engagement with content. That means having clear, trusted standards and metrics — which measure across TV, apps, web, OTT and more — and do so both in- and out-of-home. The connection people have with digitally-delivered content and advertising continues to grow enormously. But so does fake content and ad fraud. Trusted and transparently-measured environments will become ever-more valuable.

Beth Lawrence, EVP of Digital Ad Sales, Scripps Networks Interactive
@ScrippsNet

A big challenge in digital in 2017 will be the ability for clients and consumers to separate the wheat from the chaff. We all know digital is here to stay and continues to be a more important revenue driver every year. But the quality of digital content has been under the radar, and in the final analysis, marketers care what brands they associate with. Period. Content matters; quality content rules. It will be a year of cleaning up, properly measuring and delivering great results in digital.

Matt Minoff, SVP, Digital Platforms and Strategy, Meredith Corporation
@mattminoff @MeredithCorp

The biggest challenge will continue to be capturing consumer attention as existing platforms grow and new platforms emerge.

Vikki Neil, SVP/GM of Scripps Lifestyle Studios
@ScrippsNet

In digital, you must stay open to all ideas that come your way, but disciplined enough to say no to many. You must move quickly and not wait for perfection, but perfect what you do daily. There’s not time to develop a long-range plan like a traditional media business offers. From my seat, the biggest challenge is a combination of making the right bets, and moving as fast as humanly possible to understand the space before your competitors, so that you can build the best offering for consumers and advertisers. It’s impossible to be everywhere across all opportunities, so choose wisely, go quickly and iterate daily.

Alex Skatell, Founder and President, Independent Journal Review
@AlexSkatell @TheIJR

The biggest challenge for media is building community. The strategies that have propelled many digital media companies into large audiences are largely commoditized, so you need to figure out how to connect your content and communities together in a deeper and unique way.

Brendan Spain, VP, Advertising – Americas, Financial Times
@spanishbrendan @FT

The biggest challenge for digital media in 2017 will be for quality publishers to cut through the noise – of ad fraud, fake news, and non-human traffic – to command fair market pricing for their trusted brands and influential audiences. Evaluating and leveraging these trusted environments will continue to be both important and difficult as the market weighs chasing scale and audience against quality and transparency.

Domenic Venuto, General Manager, Consumer Division, The Weather Company, an IBM Business
@dvenuto @weathercompany

As we look at the 2017 media landscape, there is potential for a massive upheaval on multiple fronts with the forecasted political uncertainty. The industry is resilient and adaptable, and we must remain focused on building great products for fans. And perhaps anxiety is unwarranted.

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