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Perspectives | Revenue

The future of content is sponsored – but maybe not in the ways you think

Brands have long supported the creation of content, whether through traditional advertising or by more direct means such as brand tie-ins, product placements, and brought-to-you-by sponsorships.

But moving forward, their support may be more critical than ever.

With Facebook and Google cannibalizing publishers’ ad dollars over the last 10 years, myriad new revenue streams have emerged to help publishers sustain their businesses. Among them we find banner ads, e-commerce, and sponsored content.

Sponsored by

Sponsored content is defined as any material in an online publication (written, video, etc.) that resembles the site’s editorial content but is paid for by an advertiser. The content is often intended to promote the advertiser’s product or values. In contrast, editorial is independently created by a publication and posted on their site, with the goal of educating, informing, or entertaining their audience.

Letting brands fund the creation of sponsored content is an arrangement that benefits both parties. This kind of content allows brands to leverage the reach and influence of publishers. At the same time, publishers earn the revenue necessary to continue both their editorial and advertising programs.

Marrying the two can produce outstanding (and better funded) results, but many worry about the slippery slope. While editorial and sponsored stories often exist in their own worlds, opportunities for overlap are everywhere. Beyond simply producing thinly-veiled content that ties into a brand message, these days brands are working with premium publishers to create quality content that might not otherwise make it to the market. In fact, the success of sponsored content has supported the growth of a new model: brand-supported editorial.

Devil and angel, church and state

Let’s step back for a second.

Although sponsored content as we understand it is a relatively new phenomenon, journalists and content creators have been disagreeing about the ethics behind it for decades. As far back as 1975, American essayist E.B. White expressed outrage when the Xerox Corporation announced that they had commissioned Pulitzer Prize-winning reporter Harrison Salisbury to write a piece for Esquire Magazine.

He remarked, “Sponsorship in the press is an invitation to corruption and abuse. Wherever money changes hands, something goes along with it — an intangible something that varies with circumstances.”

There have been other problematic instances of sponsored content in the past. In 2013, The Atlantic published (and quickly removed) a piece of sponsored content titled “David Miscavige Leads Scientology to Milestone Year.” The article extolled the virtues and accomplishments of Scientology’s venerable leader. Blowback was immediate, with industry leaders criticizing the publication for publishing content antithetical to its journalistic principles.

The problems aren’t siloed to sponsored, either. We’ve seen how the relationship between advertisers and publishers can affect editorial content, too. Some sites will promise advertisers an editorial story promoting their business if they buy a real ad; others will refuse to cover stories if they don’t. While the pervasiveness of this practice is still up for debate, it raises real questions about the durability of the line between church and state, sponsored and editorial.

Sent from above

It’s not all bad news, however. There’s also been a lot of social good brought about by sponsored content.

One of the best examples comes from Variety’s campaign “Abilities Unlimited,” made in partnership with Easterseals. The collaboration provided illuminating research on just how underrepresented people with disabilities are in the entertainment industry. Featuring interviews with high profile actors, directors, and writers, the pieces offered tangible advice to members of the industry for how to ensure their projects are more inclusive.

Original journalism like this can be incredibly expensive. For example, ProPublica’s 2013 to 2015 “Overdose” series, which exposed the FDA’s inaction regarding a dangerous ingredient in Tylenol, cost an estimated $750,000 to produce. This is content that could save lives. But with shrinking budgets and newsrooms, publishers may lose the ability to create it.

Sponsored content can also give the public access to information they otherwise would never have seen. Last year, Siemens brought their full technological capabilities to the table in a campaign with The Economist, which visualized the relationship between fan enthusiasm and team performance.

There’s no doubt these programs have helped people, whether through information or entertainment. So how do we make sure we can have our cake and eat it too?

The future of editorial and sponsored

Even as publishers investigate subscription models and e-commerce solutions, it’s clear that branded content remains one of the most critical sources of revenue for publishers. Our research suggests that branded content will continue to grow over the next years, with 90% of publisher survey respondents saying that they expect branded content revenue to increase moving into 2020. But if this is the future, how can we ensure that it’s ethical and sustainable?

First, if we want to retain the value of sponsored content, editorial content must be prioritized. Sponsored content works due to its association with a publisher’s journalistic standards and high-quality content. It’s a matter of pattern recognition. When we see a brand partnering with a reputable publisher, our brains take that as a signal that the company shares the same values and reputation. Keeping a ratio of content that prioritizes editorial over sponsored content, not just on-site but also on social feeds, will help maintain that authority, benefiting both advertiser and publisher in the long term.

Second, we need to embrace brand support in the newsroom. This doesn’t mean letting Coca Cola write your next feature or interviewing BP as an expert on oil spill mitigation. It also doesn’t mean deciding what stories to pursue based on an external party’s agenda (or conversely, ad budget). But it does involve partnering with companies to fund important stories — including those couldn’t be told otherwise.

Third, publishers need to say no — as frustrating as that is for advertisers. Say no to partners that don’t share your values, no to ad dollars tied up with editorial promises and no to content that doesn’t benefit your readers. Otherwise, you risk losing your readers’ respect, which translates to less traffic and fewer ad dollars.

And fourth, we need to constantly question what stories we’re telling, why we’re telling them, and who we’re telling them for. The line between sponsored and editorial is such a polarizing and emotional topic, so it’s important to unravel it — no matter how many knots we find along the way.

Advertising | Perspectives | Revenue

How publishers can unlock outcome-oriented advertising models

For anyone working in ad tech for more than a few years, the publisher monetization challenge comes as no (major) surprise. Ever since the ecosystem divided itself into demand-side and supply-side with the “impression” as the primary currency traded over automated exchanges, it was only a matter of time until the side “closer to the money” would overshadow the other.

While digital-native publishers quickly embraced these models and optimized their traffic for automated buying, traditional publishers (typically in print negotiating the “digital transition”) faced a different story. Most assumed that brand and editorial quality would ensure buyer competition to lift prices. However, this intersection of traditional and digital publishing ultimately diluted the value of these brands given the surge in digital inventory and resulted in disappointing “fair market value” in a CPM world.

Publishers are now in a race to (re)create value for their content, as we see two main trends emerging:

1. Creating alternatives to platforms by aggregating scale and data

To better compete with the scale and data capabilities of the Google-Facebook duopoly, premium publishers in various global markets, including the US, have formed alliances. The jury is still out on whether this model will ultimately succeed, forcing competitors to work together while balancing “infighting, lethargy ,and incompatible data and systems.”

2. Aligning business models with editorial expertise – content and experiences

Publishers have recognized that advertising revenue is not linear with content “quality” particularly with the emergence of programmatic buying as quality has given way to reach and data targeting. Therefore, publishers are diversifying their revenue and incorporating subscription models to be paid on their own definition of quality.

Beyond creating various flavors of paywalls for their readers, something deeper is happening. Publishers are rethinking their approach of the digital ecosystem to their advantage.

The next generation of publisher direct sales

Similarly, on the advertising front, publishers can now leverage technology, data, and AI to unlock new opportunities and empower their sales teams to better compete against the duopoly and challenge legacy ad transaction models.

Publishers can and should move beyond the traditional CPM model and move towards advanced outcome-centric models (i.e., CPCV, CPiV, vCPM, etc.) to compensate for intrinsic scale limitations while better meeting the true goals of their advertising clients. Combined with premium context which results in better ad performance and engagement, these new models should become part of publishers’ core strategy to reinvigorate their advertising revenue and maximize the value of their content.

How do we move towards this new model?

Moving “closer to the money” and further up the value chain requires publishers to start a deep, cooperative discussion with advertisers. They will then need to create packaged, scalable solutions to address their specific challenges. To succeed with highly qualified but limited footprints, these solutions need to leverage all possible optimization levers towards advanced, advertiser-centric KPIs (i.e. leads, completed video views, etc.).

For example, to run a successful CPCV (cost per completed view) campaign, optimization starts with the creative itself (along with the data set, user-definition and targeting) to AI that will model reader behavior to identify the most probable combinations that will lead to video completion (which ultimately limits inventory waste).

Looking beyond the supply side view

Unfortunately, most publisher ad tech stacks solely aim at optimizing the supply-side view of the world, while most of the high-value operations occur on the demand-side platforms. Publisher technology typically stop at the “CPM wall” leaving out most of the optimization levers that help drive the most conversions from a given impression.

Publishers need to adopt tech stacks that use AI to also compute demand-side data-points, similar to those used by DSPs to extract the most value from their inventories. In addition, these tech platforms also need to support outcome-centric optimized transaction models beyond CPM.

Only a limited number of ad tech companies have a comprehensive vision that spans across both demand-side and supply-side visions of the world. And even fewer have the scale to make their capabilities relevant or share them directly with publishers instead of to their own benefit. The publisher ad tech stack of the future will ensure that advertisers can deliver advanced KPIs while preserving and optimizing the publishers’ inventory.

About the author

Federico Benincasa is SVP Product for Publisher Solutions at Teads leading the Teads Publisher Suite initiative, a full-stack solution leveraging all the company’s proprietary technological assets. Former adtech entrepreneur, Federico is a recognized industry veteran and recently led the Product team for the StickyAds video SSP before becoming SVP of Product for Freewheel’s Digital Video full stack.

Advertising | Industry-Research | Perspectives

DTC brands are disrupting ecommerce—and advertising

Direct-to-Consumer (DTC) businesses are a unique class of company, and they’re changing the way we consume products of all kinds. They’re often referred to as disruptors because they use mobile and digital channels to sell directly to the buyer. By eliminating the retail “middleman,” DTCs bypass traditional sales models and re-think otherwise staid markets.

MediaRadar recently conducted an analysis of DTC companies’ ad spending across digital, TV and print, as well as their CMOs, physical stores and funding practices. The analysis offers insights for all brand marketers.

How do they advertise?

According to our study, for the past five consecutive years, DTC ad spend has increased by seven to 20% annually and has continued to grow across almost every product category.

DTC brands typically focus their ad spend on social media in their early years. Instagram is the primary channel for these companies because the platform allows for very specific targeting and a seamless purchase feature from within the app, that few other platforms offer.

The data also shows that as DTC firms scale their businesses, they begin to shift ad spending. Many come to rely more heavily on TV to create broad, top-of-funnel awareness. For example, Casper spent over $30 million per year on TV over the last couple of years. Warby Parker started TV advertising in 2016, stopped in 2017, only to return again in 2018.

Our analysis also found that DTC companies place branded content pieces three times more frequently than traditional brands, with the top beneficiaries being Yahoo! and Buzzfeed. Buzzfeed has won a large portion of the IAB’s top 250 DTC brands, as the brand pairs well with DTC advertising due to its strong Gen Z and Millennial audience.

How did they start?

Some of the most well-known DTC brands include Uber, Casper, Brooklinen, Warby Parker, and Tesla. Outside of these well-known companies, there are thousands of DTC startups across the U.S., according to the Interactive Advertising Bureau (IAB). For example, we counted 387 DTC brands advertising in the apparel and accessory category alone.

These companies are not only numerous, but well-funded. According to data gathered from Crunchbase for the top 20 DTC advertisers, the companies raised an average of $230mm in funds, through six rounds of funding, and from over 20 unique investors.

When it comes to the leadership behind these companies, the CMOs are sophisticated, experienced marketers. Looking again at the top 20 DTC brands, their CMOs bring an average of 16 years of prior work experience to their positions. 75% have past experience with at least one “household name” company. Half (50%) of the CMOs hold an advanced degree, most commonly an MBA, while other common degrees were in either economics or finance.

How do they sell?

DTC companies are usually mission-driven, rather than solely focused on the product itself, and they often start by targeting the Millennial and Gen Z customer segments. DTC brands are typically available for sale exclusively online and usually specialize in one specific product category. About one-fourth have a subscription revenue model. For consumers, the brand’s authenticity and quality matter much more than price—and the brands know this.

As these firms mature, many begin to explore other selling routes outside of just online. Of the top 20 DTC companies, 30% had their own stores, 25% sold products in other retailers, and another 15% used both their own stores and other retailers. Interestingly, many DTC firms have partnered with only one retailer on an exclusive basis. For example, Quip is only available at Target and Leesa mattresses are only available at West Elm.

Growth plan

DTC firms have emerged as disruptors across multiple industries. These companies exhibit young digital-first personas, that sell their products directly to customers via social media. However, as these companies grow larger, they begin to take on characteristics of older brands; whether it’s opening retail stores of their own, employing leadership with years of experience, or pouring ad budgets into national TV.

Industry-Research | Perspectives

Chartbeat spent more than 400 hours analyzing subscriptions—here’s what we’ve found

Chartbeat has immersed itself in research around reader revenue and subscription models this year. This work has taken various forms including data analysis, comparing historical trends, and distilling insights from past use cases. However, we’ve found that the best way to create actionable reader revenue solutions has been going to the source—publishers.

In the last month, as part of our work to go from publisher revenue pain point to solution, we spent time with users across all sorts of roles. These include editorial, consumer marketing, audience development and membership management, data science and analytics, events marketing, user research, and product management, all as part of our work to go from publisher revenue pain point to solution.

After more than 400 hours of subscriptions research, here are some of our early takeaways:

Current infrastructure doesn’t match paid model ambitions

We have found that the infrastructure for user segmentation is critical for publishers to effectively market their offers and content. Yet time and again, we’ve witnessed a core infrastructure built on growing advertising revenue. In this case, the customer relationship is less important than the reach across platforms and sites. On top of that, this customer data is still tied up in legacy systems.

Therefore, modernization, consolidation, and centralization across systems is crucial for publishers. With one structure to rule them all, greater cross-team alignment can be achieved.

No need to change the channel

It’s no surprise that email is one of the most effective ways to engage consumers. Yet the publishing industry still lags other sectors such as retail in wider adoption.

The energy behind email’s return is that it remains the most cost efficient way to test conversion and retention strategies. There’s little risk and plenty of reward for readers to opt-in to newsletters and other distribution lists. That’s why those numbers could be in the tens of thousands. However, segmenting these email lists is often a manual data pull, and the content is often painstakingly curated.

To make experimentation productive, publishers need to take a page from retail marketing by taking advantage of automated services and creating dynamic lists that reflect its diverse audiences.

Get time (and sanity) back with better alignment

Industries throw the concept of “better alignment” around frequently, but its applications are often lacking in clarity. The result is fragmentation, which leads to conversions being tracked in different ways by each team in organizations. A centralized reporting system is key for everyone to understand the role they play in reader revenue. Then they can join together towards a common strategy.

Time is a scarce resource, so spending less of it on tracking and interpreting conversions for multiple stakeholders also means publishers can focus more time on improving their core products.

Be the master of your domains

Technology companies care about (and invest vast resources in) data collection. Publishers, in contrast, have not devoted a great deal of attention to how their data is managed, integrated, secured, and made available. Suffice to say, this points to a major gap in the industry’s data governance practices.

Consistent and understandable data is foundational to a successful business strategy. Data governance hasn’t always been a core competency of publishers. However, it directly influences their ability to quickly prioritize company-impacting decisions. Better data governance makes it faster and easier for publishers to synthesize and act upon trends.

Lean in to content strategy

Content attribution is disconnected from a publisher’s CMS and other internal tools in their system. Developing a content strategy for conversions (or retention) is dependent on editorial intuition plus an understanding of what the data is telling you. As publishers shore up their brands and continue to build products that appeal to consumer interests, content marketing attribution is the missing link for proving ROI.

The time is now to build out the right attribution model will support investments across both editorial and marketing. Publishers can rely on the same resources as marketers across retail and other industries, which have been growing in sophistication around mapping content strategy to ROI. Attribution is crucial to support (and justify) the additional resources that have been devoted to editorial and marketing teams.

Editorial, meet product

As we mentioned earlier, there’s been a notable shift among large publishers that no longer see editorial strategy and product strategy as two separate functions.

Product strategy is most successful when you can pull from multiple teams to build towards an outcome that actually serves the needs of end users. However, this requires a cultural change that many publishers are still navigating. There’s a push and pull at play—collaborative decision-making requires balance between competing business needs and existing revenue goals. We’ve seen this theme consistently throughout our research. Understandably so—culture change is a challenge for all kinds of organizations.

Subscriptions: What we’ve learned so far

Our early subscriptions research findings point to a familiar tie that binds cross-functional organizations and revenue goals: data. Whether we’re talking about attribution or strategy, the common thread is the data that informs the intuition that has guided publishers for decades.

Yes, publishers will continue to navigate the cultural evolution taking place in the industry, but a composite metric might be the missing link. Unite everyone in the organization to tackle their respective roles in reader revenue and support those goals with actionable data. There’s a better chance to see positive results, or at the very least, build upon the findings.

Perspectives

Google Chrome cracks down on tracking cookies. But who should make the rules?

Google has joined the likes of Apple Safari and Mozilla Firefox on the privacy front by offering users of Chrome the chance to disable or remove third-party tracking cookies. Last week, the company announced three protections that will soon be coming to the world’s most widely used web browser:

  1. In order to access consumers, developers will be required to specify – with attributes – which cookies contain user tracking and cross-site capabilities.
  2. Chrome users will be able to access this information and delete all cookies without affecting those which are active on a single domain (e.g., login, settings, site preferences).
  3. The browser will “aggressively restrict” fingerprinting techniques used by websites to identify browsers without a tracking cookie, though Google is vague on what this entails.

In today’s environment, it shouldn’t come as a surprise that one of the biggest players in online advertising and data-tracking is coming down hard on third parties (even if they don’t have a stellar track record with tracking). Let’s take a critical look at this new direction, starting with the positives.

The good

In the past, measures to crack down on data privacy abuse have swung between ruthless and milquetoast. Safari’s Intelligent Tracking Protection (ITP) has been called “nuclear” [by pundits for crippling trackers right out of the box, a measure that users rarely bother to disarm.

As a cornerstone of the digital ecosystem, Google understands the importance of data tracking for online publishers, acknowledging on its blog that cookies “play an important part of the web experience today,” It went on to add:

“Blunt solutions that block all cookies can significantly degrade the simple web experience that you know today, while heuristic-based approaches—where the browser guesses at a cookie’s purpose—make the web unpredictable for developers.”

Chrome’s new privacy features differentiate themselves by providing, in outline, a standard for transparency that eliminates guesswork and ostensibly leaves users in charge of their web experience.

This approach is both more balanced and precise than the wide bat swung by some competitors. These approaches challenged publishers to take inventory of the cookies they drop, and to use them in a more responsible way.

But not everyone is convinced that Google should wield its power over the web this way.

The bad

With a natural vested interest in its own data-driven products and services, some wonder whether the new privacy standards will apply to Google itself. While the company insists that they will, its power to act otherwise points to a larger problem.

We have heard time and time again that “data is currency,” and that’s true. Organizations depend on it for every step of the business cycle, from lead acquisition to customer service. However, with customer bases collectively exceeding half the global population, tech giants like Google  and Facebook have as much data as they could possibly want.

Even assuming the best of intentions on their behalf, we still must ask: Should privacy standards be determined and enforced by the very organizations who stand to benefit the most from them?

The battle for control

The drive for more and more data has given rise to the advertising crisis as we know it today. In the face of invasive third-party trackers, malvertising, performance issues, data breaches and other privacy infringements, consumer trust is at an all-time low.

One thing is increasingly clear: The industry needs oversight, and many contenders have stepped up to fill the vacuum. From emerging legislation like GDPR and CCPA, to Google, Mozilla, and other browsers, publishers have no shortage of authorities trying to dictate their relationship with clients—both consumers and brands/advertisers.

Awash in downgraded content, poor segmentation, and privacy agreements galore, end users are the casualties of this struggle, and the battle for privacy governance has quickly become a case of too many chefs spoiling the pot.

So, here’s a thought: What if organizations were equipped to set their own rules? And instead of concentrating power in the hands of Silicon Valley giants, what if the relationship between businesses and advertisers could be self-governed?

A better way forward

Publishers and media organizations are on the cusp of winning the future of digital. With historical direct relationships with brands and ownership of coveted first-party data, there’s never been a better time to take control of the digital revenue channel. The first step to winning is knowing the parties that contribute to your supply chain and verifying compliance with publisher policies covering data, security, quality and performance.

In most cases, more than 90% of their code is third-party generated and the veil of mystery surrounding a third-party’s identity has been a significant obstacle to content moderation. If Google did one thing right with the new Chrome updates, it was forcing developers to identify the purpose and scope of their cookies to the end user.

As long as businesses can vet the partners executing on their platforms, vulnerable and abusive code can easily be censured, creating a better digital supply chain for users, ad exchanges and publishers alike.

In this future, Digital Vendor Risk Management (DVRM) can arm organizations with the information they need to govern their digital assets. With built-in regulatory compliance, DVRM not only identifies risks, but ensures that the proper response is taken in any jurisdiction.

The best solution for customers and the best solution for business always go hand in hand. Rather than bringing them under an iron fist, DVRM creates a sustainable digital ecosystem by empowering businesses to protect their customers while driving revenue.

About the Author

Chris Olson co-founded The Media Trust with a goal to transform the internet experience by creating better digital ecosystems to govern assets, connect partners and enable Digital Risk Management. Chris has more than 15 years of experience leading high tech and ad technology start-ups and managing international software development, product and sales teams. Prior to The Media Trust, Chris created an Internet-based transaction system to research, buy and sell media for TV, radio, cable, and online channels. He started his career managing equity and fixed income electronic trading desks for Salomon Brothers, Citibank and Commerzbank AG.

Innovation

OTT is disrupting the way we consume media—for good. Here’s what content owners need to know

When was the last time you channel-surfed to figure out what to watch?

It’s probably been a few years, right? But less than a decade ago, almost everyone watched live TV—either cable or network broadcast. Then in 2007, Netflix launched its streaming service and AppleTV was released, catalyzing a major shift in how we watch TV. Hulu and Amazon also launched streaming services, and a number of other smart TVs were released, including Roku and Amazon Fire.

By 2017, 28% of US adults cited streaming services as their main method of watching TV.  And that percentage jumps to 61% for consumers aged 18-29.

The technical term for these increasingly popular services is Over The Top (OTT). With OTT, content providers distribute streaming media as a standalone product directly to viewers over the internet, in turn bypassing telecommunications, multichannel television, and broadcast television platforms that traditionally mediate such content. A recent study predicts that global streaming subscriptions will surge to 333.2 million by 2019.

This new world order will likely cause a major turn away from traditional broadcast TV.

While traditional TV providers face physical network limitations, OTT opens the door to reach a global audience wherever an adequate internet connection exists. This will both decentralize content recommendations and democratize content, allowing content providers to reach previously untapped markets. But it’s not without its challenges—and the traditional program menu is chief among them.

Here’s how OTT is impacting the way content providers deliver media to their customers:

Today, both providers and consumers have more content options than ever before.

Once upon a time, the only way to get to consumers was through that one pipe coming into their homes. No more. Today, there’s no longer a stranglehold on network connections, which means content providers have more delivery options than they know what to do with.   

Thus, all those innovative services and content aggregation companies—like Netflix and Hulu—were born.

Open access has allowed for content aggregation companies or new content delivery companies to provide whatever content they please to massive audiences. And skyrocketing connection speeds are only intensifying this trend.

In particular, 5G—or the fifth generation of cellular mobile communications—promises faster speeds, a more stable connection, lower latency, the ability to connect even more devices to the network, as well as reduced costs and energy consumption. In terms of speed, 5G technology intends to be 10 times faster than 4G. Ever faster mobile speeds are changing what real-time means. It’s also made it easier for content providers to reach audiences.

And content providers aren’t the only ones with more options. The OTT revolution gives consumers more choices than ever, too. Instead of just subscribing to Comcast or basic cable, consumers now have access to any number of OTT services. They can also watch on multiple devices, whether it’s Apple TV, Roku, or their smartphone.

In my house, we’re heavy users of AppleTV. But we also use YouTube TV, ESPN+, and Bleacher Report (to get all my Champions League soccer matches). And HBO, of course, because we have to watch Game Of Thrones.

Traditional economic theory says that choice is always better for the consumer and will lead to pricing efficiencies. However all of these options can be more than a little overwhelming—which is something the industry needs to think about in this new OTT world order.  

Content owners need a better technological solution—but there are no easy answers.

In the past, it was a big deal for the service providers to figure out how you were going to design the program menu. Even the smallest changes to the design can have a major impact on the user experience.

But what’s a user to do when there are 17 services and they need to figure out which to watch?

This is one of the biggest challenges for content owners in the OTT era. There are so many different independent streaming services people regularly use, and consumers don’t want to have to sit down and click on 17 different top menus in order to figure out what to watch.

After all, watching TV is supposed to be a relaxing experience.

As we enter this new world order, content providers need to figure out a user-friendly menu where consumers can easily toggle between streaming services. There’s no one recipe. However, one option is to have the various content services pick up on user intent/interest based on their actions in the moment. At my predictive analytics company, Liftigniter, we provide a lot of the building blocks to do this. But it’s going to require more than just some really good tech from a startup.    

Rather, it’s going to require the industry to pull together to devise a solution.

Regardless of how this all shakes out, the primary goal for the user should be twofold: price efficiency and a user-friendly personalized experience. After all, the OTT revolution is all about democratization and relevance.

Perspectives

Should publishers ditch native ad content promotion for good?

The internet is filled with tricks and tactics to reach your target audience.

There’s the e-newsletter blast, the banner campaign, the native ad widgets. There’s Facebook and Instagram and Twitter. These methods are constantly changing and requiring publishers to adapt to new rules and regulations, but one thing remains constant: if you want to reach your audience, you’re going to have to pay. Given that paid promotion is a part of most content programs these days, it’s vital that publishers are getting the best bang for their buck – or else their margins will suffer.

In recent years, platforms have cracked down on organic traffic, forcing publishers to adjust their spend accordingly in order to drive traffic to their sites. It’s also changed how we sell products like content. You can no longer put an article or video on your page and sit back as the views roll in. Instead, campaigns need a dedicated (and usually significant) amplification budget to deliver the results the client expects.

Considering this, it’s important to ensure that you’re getting the most bang for your promotion buck. Otherwise, you’ll end up breaking even — or worse — on something that should be a significant revenue stream for your business.

Two of the most common tactics are Facebook and native ad network promotion. Each has its pros and cons (scale, price, engagement), which we’ve explored in the last five years at Pressboard. But after more than 3,000 stories, we’ve stopped using native entirely and have shifted our whole client content promotion budget to Facebook. Here’s why.

The Native Ad Problem

Native ad networks have been praised for their ability to deliver a nondisruptive ad experience to viewers. In fact, research from the Native Advertising Institute suggests that readers prefer them over pre-roll video ads and banner advertisements, probably because they blend into the page more seamlessly.

And while they do succeed in sending traffic to a site, native ad networks face one major challenge: quality.

In order to outcompete other native networks and provide advertisers with adequate scale and inventory, many native networks have had to expand their reach beyond premium sites. As a result, quality of traffic has naturally given way in favor of quantity. The readers on these sites are often less qualified, which means they’re less likely to click on and engage with your stories.

At this kind of scale, native ad tactics also inevitably encounter brand safety issues. We’ve all seen those cringe-worthy headlines popping up in “Stories You Might Like” panels; it’s even worse if your sponsored content is sitting next to one of them.

Why Should Publishers Care?

Not all native ad networks are created equal. There are networks with built-in quality control measures, like minimum time spent, that ensure the audience they reach is, well, actually human. They can also lead to massive revenue if done thoughtfully.

But at the end of the day, there are better ways to deliver the results your clients want to see.

Content is different than banner ads or other kinds of advertising. While a banner needs 0.5 seconds to communicate its message, content needs audiences to engage with it to be effective. That connection is incredibly powerful: branded content leads to 59% greater recall than other digital ads. Beyond this, advertisers need to show that their investment in content is making an impact, and their clients are increasingly concerned about engagement rather than clicks. Therefore, it’s vital that the people who click on your ad intend to read and scroll through your content.

In a recent study, we compared how two traffic sources — Facebook newsfeed and native ad networks — compare when it comes to engagement and click-through rate.

The data came from over 1 million unique reads promoted through Facebook or native ad networks and tracked using Pressboard’s platform. We analyzed engagement metrics including time spent, scroll depth, and click-through rate on links in the article to determine which tactic was most successful. The results?

The Facebook Solution

After reviewing the results, Facebook is the clear winner when it comes to both engagement and conversion. Readers spend an entire minute engaging with content when they reach it from a Facebook ad. That’s almost two times higher than traffic coming from a native ad network. They also convert at double the rate of what we’d expect from a reader who reached the content after clicking on a native ad.

Even when we considered cost, Facebook outperformed native ad networks. Sure, native drove cheaper clicks and impressions, but that advantage changed when we looked at verified reads. Fewer clicks on native ads reached the content we were trying to promote, whereas the Facebook audience was more likely to reach our content. As a result, each actual read that came through Facebook cost $0.34, while reads earned through native ad networks cost $0.59.

Anyone that invests in content promotion knows the importance of every dollar. And while clients aren’t concerned about the publisher’s bottom line, they are invested in the performance of their content. Finding a platform that delivers strong conversions and engagement and at relatively affordable cost is a win-win. Until something inevitably changes in the AdTech space, we think we’ve found it.

Advertising | Perspectives | Revenue

To maximize OTT performance, should we think lean back or lean forward?

Given that OTT is the new TV, how should audience interaction be considered? TV is conventionally viewed on a large screen ten or so feet away and described as a “lean back” viewing experience. However, the new capabilities that come with OTT are associated with “leaning forward” – similar to browsing the Internet. In the digital age, people navigate content by swipes on mobile touch screens or clicks on portable laptops and desktops. In other words: They lean forward.

From a media perspective, it has proved optimal to follow traditional TV practices in order to maximize viewer time with OTT video content. This starts with playing video the moment the app opens just like tuning into a TV channel. These days, the practice is becoming standard particularly across OTT apps for broadcasters with linear establishments. (AKA, leaning back.)

By the numbers

The metrics behind the lean-back practice are particularly compelling when comparing average view time for media companies that have transitioned from on-demand menu starts to starting with video streams. Average viewer times have increased between 80-120%— more than doubling from less than a half hour to over an hour per session.

Moreover, Pluto TV, the leading free streaming service with more than 15 million monthly users, takes it a step further with 24 hours of programming on OTT channels. Pluto recently announced a view time of two hours per session, which already represents half the average daily view time of TV in the U.S. of nearly four hours. And consider Hulu (with 28 million customers), which recently announced binge watching on the service as a new ad targeting metric. So, length of viewing time is now a metric of significance in OTT viewership and even advertising.

Ad engagement

From an advertising perspective, lean-forward ad engagement can be far more impactful. This means capturing consumer attention with interaction of any kind, whether a game of sort for brand recall or data capture for direct response. In digital, user interaction is the driving force behind premium and higher value ad opportunities. 

However, when we consider OTT as the new TV — where leaning back is the status quo on a connected TV versus the underwhelming amount of time spent watching OTT on mobile phones — a new balance must be struck with the level of interactivity and added value that is possible. Compare this to the lean-back paradigm of TV in OTT, where the remote is purely a means of turning the stream on or off or tuning the volume up or down.

With lean-back, media companies and marketers will need to capture the most meaningful signals from viewers through their viewing behaviors and activity along their content journey. They will also need to break the mold with interactivity in simple and beneficial ways to the viewer, such as skip or continue to watch a certain commercial like done with simplicity in digital.

For OTT, we’ll need to take a hybrid view to maximize consumer understanding and ad performance. As a medium, OTT must be evaluated in the context of “lean back” in terms of programming presentation, and a “lean forward” opportunity in the presentation of commercials through viewership behavior.

Perspectives

Publishers face new risks in the wake of the CCPA

While the California Consumer Privacy Act (CCPA) is poised to present peace-of-mind for many, it could be crippling for any publisher that relies on their GDPR compliance framework. In light of recent updates to CCPA, it’s clear that publishers must get on board or face some seriously damaging consequences in the form of not only revenue loss but also severe financial penalties.

The CCPA ripple effect

When CCPA first passed in June 2018,  just one month after GDPR’s enforcement, people were quick to refer to it as “GDPR light.” This was an indication that the landmark law will have significant ramifications on how companies that meet the thresholds and do business with Californians will have to change how they operate. At its core, CCPA signals a shift in business models, in particular where data is a revenue stream. What “GDPR light” downplays, however, is how significant that shift truly is.

The very fact that such regulations were passed in the world’s 5th largest economy was a bold statement in itself. With California at the helm, it’s only a matter of time before the rest of the nation follows suit. Other states are not just going to sit back and have privacy issues impact their citizens after California has made the first move.

More legislation in the works

Already, several other states have already jumped on board with similar laws, some with pages pulled straight from CCPA.  For example:

  • North Dakota: A proposed bill would require companies to provide to consumers (upon request) with information about the types of personal data that companies collect and possess.
  • New York: Two bills are on the docket: one addressing biometric privacy and another that would govern businesses’ collection and disclosure of personal information. Utah: A bill would require law enforcement to get a warrant from a judge to access electronic information.
  • Washington: Legislation would allow consumers to ask companies for a copy of their personal data and to delete or correct inaccurate data. It would also regulate facial recognition technology.
  • Texas: Two bills have been proposed that take more than a page, entire chapters in fact, from CCPA: TCPA and TPPA.

The results are clear: CCPA is about to shake the very foundation of how companies conduct business nationwide. Because of this, several federal regulations have also been proposed. And while it’s unlikely any of them will pass before CCPA is enforced on January 1, 2020, it’s vital to note that these things are currently being worked on behind the scenes. More importantly, since CCPA passed sooner than anyone expected, publishers should begin taking immediate action to align with the upcoming regulations. The groundswell of consumer privacy ballot initiatives is only growing stronger as consumers become more outraged with their lack of privacy rights in the digital landscape.

Proposed amendments

Every publisher, whether operating in California or not, needs to be fully vetted on the new law because it affects anyone who conducts business with California residents. It provides those residents with new rights to their information such as knowing what personal information is being collected, shared, and sold, and with whom.

Furthermore, it also allows them to access and delete, or decline the sale of their information while still receiving equal service and price from businesses. Meanwhile, publishers must inform their digital readers of what information is being collected and why. Publishers must also work to ensure that each vendor in their supply chain is operating within their contracted policies. Additionally, toll-free numbers, email, or websites must be provided to consumers so that they can easily request their information.

The latest on CCPA

Recent changes to CCPA include several notable items, but there are two amendments in particular that could affect businesses for years to come—SB-561 and AB-25. The first dramatically increases the legal risks of businesses that collect and keep information by allowing consumers to file suit for any alleged violation of their CCPA rights without any evidence of harm—even before the Attorney General publishes guidance. What’s more, if the amendment passes, businesses will no longer have the right to consult with the AG on such matters.

The second amendment deals with how the law defines “consumer information.” If passed, this amendment would exclude information collected by a business from a job applicant, employee, contractor, or agent. That’s a good thing, because without this change, consumer information will include business contact information and employee information, resulting in unintended consequences. Former employees will be able to request items from  previous employer records, such as emails and other corporate documents that mention their name, including those that contain confidential corporate information and performance evaluations. They can also request emails to and from former contacts, enabling them to reach out to company clients and prospects.

Preparing for CCPA

At the end of the day, there’s no definitive answer on how CCPA evolves by the time it is enforced on January 1, 2020. Still, with less than a year to go, businesses need to take a risk management approach. They need to find out what information is collected  and from whom, what information is  shared and with whom, and how to secure that data. Operations, security, IT, and compliance teams will need to keep abreast of the regulations and their consequences for the organization. And in order to operationalize security and privacy, these teams will need to work together.

Those taking a wait-and-see approach should look no further than the average cost of GDPR compliance. It’s been noted that, after factoring in legal and other fees, the cost sits anywhere between $1M‐$10M. That number could quickly grow if a violation occurs, and the likelihood is high, given the increased right to personal information. To put it bluntly, waiting to see what happens next is not an option. Businesses of all sizes must act now to protect their bottom line or face the impending consequences. 

About the Author

Steve Stup is responsible for developing and overseeing the revenue strategy at The Media Trust. He has experience developing high growth sales teams through the course of his career spanning around 30 years at The Washington Post, Lexis Nexis, and other recognized brands. During his tenure at The Washington Post, Steve built the company’s digital business and spearheaded successful sales and revenue operations teams. He is an alum of Virginia Tech and The George Washington University.

Innovation | Perspectives

Channels, conversions, and churn: Why better mobile UX is key for publishers

Publishers attempting to unlock new sources of reader revenue are understandably honing in on device usage, particularly when there are an estimated 5.1 billion unique mobile users around the world that could be paid subscribers.

Chartbeat data between May 2018 and April 15 of this year shows that mobile continues to dominate device-based engagement across the world, with between 55% and 60% of readers engaged through this channel, followed by desktop and tablet. This trend is also reflected across North America, where approximately 57% of readers prefer mobile devices to consume content.

However, simply possessing the analytics to know whether readers prefer your mobile, tablet, or desktop experience is only step one. The next and crucial step is understanding the sources of retention and churn.

Therefore, we wanted to take a closer look at the relationship between devices and subscriber behavior, specifically where subscribers most often convert or churn. From there, publishers can uncover the solutions that will improve subscriber retention rates.

Analyzing subscriber conversions by device

We began by analyzing subscriber status changes (i.e., conversions or churns) that took place across publishers in January. In order to be included in the dataset, a user* would have had to visit a site on their device at least once in the last quarter of 2018 and at least once in January.

Quick note: Why do we refer to the data population as “users”? Since we don’t track individuals across devices, it’s possible for a single person to appear multiple times in the data if they’re accessing a publisher’s site on multiple devices.

Subscriber patterns

Our findings show that while tablets have the most subscribers (as a proportion of total audience size on each device), they are also the most likely to convert, as indicated in the chart below. This is followed by desktop and mobile, suggesting on first impression that publishers should be focusing their web conversion UX efforts on tablet and desktop.

You can also see that the churn/conversion ratio is highest on mobile (which also has the greatest number of users), followed by desktop and tablet. This suggests that the mobile web subscription and/or login experiences on websites is simply not up to par with their desktop counterparts. This could potentially take the form of slow loading speeds or difficulty navigating through form fills, for instance.

What can publishers do to improve subscriber experiences?

Chartbeat’s analysis demonstrates that publishers will want to shore up their mobile UX and subscription flows, thereby improving the likelihood of subscriber conversions and retention while reducing churn. This is particularly important on mobile devices, given that those sites are now the predominant way new users experience a publisher’s website, but through which so few are being converted.

We also think it’s worth noting here that this slice of data does not include app users, which tends to be where mobile loyalists congregate. That said, we see a good opportunity for experimentation—publishers can analyze the impact of tailoring experiences towards acquisition, engagement, and conversion on the mobile web versus re-engagement and retention on the mobile app.

All publishers need to take a deep dive into new and churned subscribers over various time periods, their reading patterns by device, and whether their user journey flow would encourage, or turn off, a potential subscriber from converting. Our approach is to help publishers integrate subscriber analytics in an effort to provide a clear idea of the connections between audience engagement, loyalty, and more paying subscribers. Clearly, publishers need to develop a deeper understanding of their subscribers’ device-based usage.

Revenue

Back in black: The rise of revenue diversification

The publishing industry is going through a transformation due to continued shifts in reader habits. As readers spend more time within social platforms, publishers are exploring new opportunities both on and off their sites to reengage users and grow their bottom line. Revenue diversification has become a priority in the media business.

With a large number of readers congregating on social platforms, advertisers and publishers followed them there. All types of content that ranges from personal posts to advertisements to videos have made their way into people’s feeds. But akin to display ads in the early stages of internet advertising, the feed has driven a need to break through the clutter. In today’s media environment “normal” coverage doesn’t always make it through – surprising events do, particularly when main metric that news outlets are judged are through ratings and page views. 

The changing social relationship

Social platforms are characterized constant changes to algorithms, the latest of which prioritizes posts of friends and family members over publishers. At the same time, Facebook regularly tries to entice publishers to try new products and features.  

Earlier this year, the social media giant also informed its production partners for news shows on Facebook Watch that it won’t renew two-thirds of its existing news shows. At this point, publishers aren’t likely to put too much faith into these so-called partnerships. As a result, they have to seek out new revenue approaches that rely less on social platforms.

Even web natives like Buzzfeed have recently struggled with layoffs, reinforcing the view that diversified revenue streams outside of platforms are imperative for survival. These venture-backed sites have seen issues surrounding the need to prove profitability faster than they can grow organically, causing a focus on sheer traffic and get-rich-quick strategies.

A healthier approach

Then there are niche players, like wellness publication Well+Good, which have done the exact opposite. They focus on growth by creating content and real-life experiences for their core audiences in order to connect with their readership in new ways and create additional streams of revenue.  As they understand the lifetime value of their readers and cater to their wants and needs, they’ve created a loyal following that transcends from online to real life.

By noticing a trend for “one-stop wellness” among its readers, Well + Good created experiential events through teaming with other wellness brands and expanded their offering. Readers can now experience the brand through wellness retreats, in-person monthly talks, and the potential for health & wellness pop-up shops.

Flowing with the revenue streams

However, it is important to recognize that new revenue opportunities need to be a natural extension of the brand. At the 2019 American Magazine Media Conference in New York City, Troy Young, president of Hearst Magazines, mentioned how media brands need to be more “thoughtful, research-oriented and data-driven.” At the same conference, CEO of Bonnier Corporation stated “…it’s dangerous for us in media to think we should stay in our swim lane. We are not going to get out of media, but we’re attached to it,” when commenting on how he would “future-proof” Bonnier by proposing one-third of his revenue comes outside of publishing.

Revenue streams outside of ads are not a one-size-fits-all. And figuring out how they fit within existing infrastructure can be difficult. But publishers that get it right have new ideas that focus audience attention and command bigger media budgets from brands. “There is going to be a new crop of players like us that accelerate because they understand how to connect content, commerce, and conversation,” Erika Nardini, CEO of Barstool Sports said. “Companies that do that are going to be in a good spot.”

Experience and growth

Leading local news organizations like Gannett are diversifying their revenue through subscriptions, though they are still focused on ad yield and engagement. To help with this, publishers are starting to personalize the onsite reader experiences with unique and proprietary formats to prove engagement with audiences for a higher price from advertisers. This is revealing to be a viable strategy for revenue over struggling standardized banner units. As people continue to shift toward mobile where there’s less real estate for ads, it has led to the rise of publishers embracing native, according to Digiday.

A recent eMarketer report forecasts that the spend for native display ads from US advertisers will be $43.90 billion in 2019, a $24.6 year-over-year growth. They also anticipate native display ad spend to grow over 20% to $52.75 billion in 2020. Principal Analyst for eMarketer, Nicole Perrin said “Native formats have made significant inroads in channels like mobile apps, but there are still a lot of traditional display units being traded programmatically, especially on desktop and the mobile web.”

It’s interesting to note that when it comes to the share of native from social, eMarketer sees a slight decline from 76.6% in 2018 to 73.5% in 2020. Yet this may be a silver lining for publishers. As Facebook finds itself embroiled with data concerns with its ad-targeting tools and constant change of its ad policies, it may become less appealing to brand marketers. It may also give publishers pause in how they include social as a part of their online strategy.

If today’s publishers want to explore new opportunities to diversify their revenue streams while making meaningful connections, a native feed experience is a viable strategy. It can help improve reader engagement by personalizing content experience and shift share from the social media giants and bring publications back into the spotlight. 

Advertising | Innovation | Perspectives

Mobile apps are making a comeback and publishers better be ready

The mobile app ecosystem will turn 11 years old this summer, and it has evolved into one of the largest industries globally with forecasted revenues of almost $190 billion. There are now millions of apps in both the Apple App Store and Google Play. And they account for over half of digital media usage and time spent in the US. We are obviously in a mobile-first world – at Teads, mobile traffic represents over 70% of our publishers’ traffic worldwide.

However, we find that many publishers continue to focus investment on web while either treating their existing apps as side projects or not developing an app presence at all. Given the rapid shift in consumer media consumption and shift in the publisher landscape, combined with digital dominance by the “duopoly” (and soon triopoly), the time is now for publishers to prioritize their mobile app presence.

Increasing consumption and engagement

Consumers not only spend the majority of their time on mobile in apps, but the average number of apps used continues to increase (by 15% in 2018) to ~35 apps per US smartphone user. Mobile app users are also more attractive audiences given their high engagement rates in app as opposed to mobile web.

The Daily Beast recently confirmed this trend, noting that their app users average 3x more pages per session than their mobile web users. Bleacher Report is a prime example of a publisher whose audience is primarily in-app vs. mobile web – with its users averaging 5 minutes per day in the app. More and more editorial publishers are now appearing among top apps, as names such as The New York Times, CNN, Bleacher Report, The Washington Post, BBC News, and USA Today, among others, continually rank in the top 500 apps in the US (per comScore, July 2018).

Mobile apps > mobile web

The mobile app user experience (and native apps in particular) is superior to mobile web for both content and advertising, which is probably a core driver of consumer engagement in-app. Native apps are typically faster, lighter, more interactive, and can often allow offline content browsing. They’re also easier to access for consumers, especially if apps are loaded on to the home screen of a smartphone.

These benefits extend to ad experiences in-app as well, where advertising growth continues to explode and expected to reach $77 billion in the US this year. Mobile app ads have evolved beyond just traditional display and rewarded videos, which are typically fueled by app-install spending.

The market has evolved to include video, outstream, and native formats, many of which provide more innovative and interactive experiences then web since these ads can tap into the native features of smartphones (i.e., Bluetooth, GPS, gyroscope, camera, compass, etc.).

Measurement is also greatly improved with the IAB’s Open Measurement SDK, which facilitates 3rd-party viewability and verification measurement in-app, and this is poised to further accelerate mobile app ad spending. In addition, mobile apps are relatively immune to ad blocking which is pervasive in web environments.

Better personalized ads

Mobile app inventory for publishers could become an even more critical component of a wholistic digital ad strategy as industry concerns around data privacy escalate and tech giants clamp down on tracking and personalization in browser environments. Apple’s ITP (Intelligent Tracking Prevention) in Safari and Mozilla’s Firefox browsers have placed significant limitations on cookie usage and hence programmatic ads on mobile web. And Google is rumored to be evaluating similar restrictions in Chrome, which would then effect the majority share of mobile web browsers.

Mobile apps represent both a hedge against these limitations and a superior environment for personalized advertising. In-app ad targeting can leverage Device IDs, which are tied to specific users rather than browsers, as well as more accurate location (GPS) and detailed demographic/behavioral data (particularly if the app requires registration).

Revenue diversification

Ultimately, mobile apps provide a new path for publishers to diversify their revenue streams. Not only do apps provide more opportunities for advertising, but also a channel for subscriptions, in-app purchases, e-commerce, etc. In-app subscriptions actually fueled growth in consumer spending in non-gaming apps by 120% since 2016. App stores also provide an easy way for engaged audiences (which are generally more prevalent in-app than web) to subscribe and make payments for transactions.

It’s time for publishers to start investing in mobile apps, which should no longer be an after-thought. While mobile app development and maintenance is not an easy task for many publishers, it should be considered an integral part of long-term digital strategy and a major growth driver. A successful transition of web users to app users can result in significant increases in loyalty and engagement, leading to new revenue opportunities while defending publishers against threats in a rapidly changing digital landscape. Mobile apps are no longer just a game (pun intended).

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