Tags containing: "video advertising"

Advertising | Featured Post | Innovation

How digital, streaming services are pushing linear TV to innovate

June 21, 2018 Mark Glaser, Founder and Publisher – MediaShift

The idea that digital is the new TV is no longer just an idea, but a reality for many media consumers. A recent report from the measurement company Zenith predicts that next year will be the first year that internet usage globally will eclipse TV time; the same will be true in the U.S. by 2020.

However, that doesn’t mean linear TV — to pinpoint the old-fashioned kind of television programming long associated with the word “TV” — is heaving its last breath. Yes, scaling up against the tech behemoths like Google, Facebook, and Netflix, which are squeezing into the programming space, is a tall order. But linear TV companies can survive by accelerating innovation their own way. They must focus on targeted and addressable ads, emphasize brand safety, and become more like their streaming competition.

Deconstructing TV Advertising

Traditional 30-second commercials still have a place in U.S. television programming, particularly around high-profile events like the Super Bowl. However, alongside the growth of over-the-top television has been the tendency for people to skip over ads with the press of a button. As early as 2010, 86% of TV viewers skipped over ads while catching up on programming saved by their digital recorders. Streaming services such as Netflix and Amazon Prime Video are attractive in part because there is no advertising.

At least not in the form advertising blocks or commercial messages. But there is a less obvious form of advertising happening on streaming services more often than ever: the old-fashioned product placement. Whether show characters eat a certain kind of food or use a particular app, advertisers are working it to get their products written into storylines. KFC’s deal with Netflix to appear in “Stranger Things” is a clear example of product placement in action.

And the revenue makes the trend clear. While the actual number of product placements executed this year declined, the value of each integration has been increasing since 2009, according to Patrick Quinn, president of PQ Media. He predicts the U.S. product placement marketplace will exceed $10 billion this year, thanks largely to more valuable plot integrations — which, essentially, amounts to a more creative form of advertising. So, for linear TV to thrive, it will need to get even more clever with product placements and make them a bigger part of the mix.

Working the Data and Brand Safety

At the same time product placements are booming, and some advertisers are becoming less incentivized to spend money on the diminishing demographics tuning into traditional TV, digital has also had a leg up in another realm: targeted advertising. The wealth of data our digital footprints leave behind has made it easier to cater ads for the niche interests of an individual.

But that’s not to say there isn’t opportunity for cable providers to experiment with targeted ads as well; AT&T, for example, already sells addressable TV — the linear TV version of targeted advertising — through DirecTV, which it purchased a few years ago. With AT&T’s purchase of Time Warner finally approved, this is the chance for AT&T to up the ante and try to scale this up further. The telecom giant has already been working to build a team to focus on addressable ads.

Indeed, one of AT&T’s rationales when purchasing Time Warner was that it needed a bigger advertising platform to compete with the Facebook-Google duopoly. What it lacked prior to scale is what Time Warner can offer: inventory. The pool of content that Time Warner brings to AT&T’s ad platform gives it a fighting chance against Google’s dominant ad buying platform. While Google has had to deal with objectionable content appearing alongside adverts on YouTube, AT&T has the chance here to emphasize its brand safety. And that is what the company, and others, have been pointing out.

A (Realistic) Look to the Future

Still, even if addressable advertising presents a huge economic boost for linear TV — according to the investment bank Credit Suisse, it’s a potential $100 billion opportunity — that doesn’t mean anything AT&T wants to do will happen overnight. Aside from DirecTV and other apps in their own ecosystem, channels under the AT&T-Time Warner banner will have to work out deals with cable companies — which distribute the majority of Time Warner programs — if it wants to use AT&T’s data to beam ads to every house in the country.

While “audience-based” TV ad buying is growing, it’s still minuscule in comparison to traditional TV ads. It makes up only about 10 percent of total TV advertising, according to research from eMarketer. “In terms of the future, it continues to be much more of an addressable (data-driven digital) world as consumers go over-the-top, but that doesn’t mean traditional demographic targeting won’t still play a massive role in the TV advertising ecosystem,” Aleck Schleider, SVP of client and data strategy at the video advertising platform Videology, told Axios’ Sara Fischer. “Especially because the digital TV ad space is still so fragmented and demographic advertising is very unified.”

What’s more, it may very well be that TV commercials still have a future — but in a shorter form. A recent study by the Advertising Research Foundation found that six-second ads on broadcast and network TV capture more attention per second than standard 30-second commercials.

Bottom line: The best bet for linear TV companies is to forget about being linear TV companies and put digital innovation at the top of the priority list. Working toward quality addressable advertising is one way. So too is emphasizing the brand safety issues that tech giants are struggling with (while ensuring that there’s action behind the talk). And maybe the best bet is working to make advertising better, whether it’s with more creative ad integrations in network TV or shorter commercials to appeal to our ever-decreasing attention spans.

Perspectives | Revenue

YouTube growth flat as brand safety woes continue

June 8, 2018 Todd Krizelman, CEO – MediaRadar

In lieu of Facebook’s reputation struggles, as well as changes to their Newsfeed, many publishers are considering YouTube for both inventory and audience development.

However, YouTube has problems of its own – namely, brand safety. According to a brand-new study by Oath and Advertiser Perceptions, polling more than 300 advertisers, 42% say user-generated content sites like YouTube aren’t addressing their concerns over brand safety. This study comes just a month after Cisco pulled all ads from the video platform. Per Cisco’s CMO Karen Walker, in her original blog post (the piece was later edited to remove mention of YouTube), “We have pulled all online advertising from YouTube until the platform has met our standards.”

As digital video consumption rises, publishers see YouTube as an obvious opportunity. Marketers do, too – but they’re also growing increasingly weary of brand reputation across the platform. In looking at our own data at MediaRadar, the numbers bear that out. Across a sample of 70 top YouTube channel pages, advertising spend has been flat in 2018, with only an 0.2% increase YTD. Publishers and marketers alike both want to tap into YouTube’s exploding audience (nearly 1.6 billion watch YouTube content at least once a month right now). But for this to be a go-to platform, there’s work to be done.

To YouTube’s credit, they’re taking on the work. At the company’s NewFront, YouTube talked up its newly expanded Google Preferred lineup, emphasizing its top channels as premium, brand-safe environments. They also touted the increase in human reviewers auditing content. However, as the Oath study shows us, the effort to resolve brand safety and win back trust from now burned and cautious brands will be slow-burn and long-term.

As that process continues, high-quality digital publishers are in a good position either way. While YouTube addresses trust, more marketers will flock to the service. This, in turn, could boost revenue opportunities for the publishers that want to play in that sandbox.

In the interim, however, digital publishers are still the beneficiaries. The Oath report also found that 45% of advertisers are moving spend to “well-regarded premium” digital publishers — think sites like USA Today, BuzzFeed, The Huffington Post, and The New York Times — until they feel standards have improved on social platforms like YouTube. It’s a win-win for publishers, with brand safety a key theme both now and in the future.

Industry-Research

Research finds that publishers rely on autoplay, but not without risk

September 19, 2017 Todd Krizelman, CEO – MediaRadar

Thanks to the increasing popularity of digital video, autoplay ads have become one of the most common forms of online video advertising. But that could change if Google and Apple have their way.

In recent months, both companies have hinted at browser-based features that will potentially curtail autoplay video’s impact. In April, for example, Google teased an ad-blocking feature in both the mobile and desktop versions of Chrome that would limit auto-start content. And in June, Apple unveiled an upcoming autoplay-video-blocking feature for its Safari browser. How might this impact proliferation and adoption of autoplay among publishers? To answer this question, we first need to know how many publishers rely on auto-start video inventory.

The Big Picture

At MediaRadar, we examined nearly 63,000 video ads from January to June of this year to get a better sense of how the industry is reacting. Here’s what we found:

Nearly one-third (31%) of publishers auto-start 75% or more of their on-site video ad inventory.
Roughly another third (30%) of publishers auto-start between 50 and 75% of their video ads.
Just under 40% of publishers are less reliant on autoplay video ads, auto-starting 50% or less of their inventory.

So what do these findings mean for digital publishing/advertising? Here’s a closer look.

Websites that use auto-start ads stick with them.

Among our study’s three segments that embrace autoplay video ads, there’s no broad shift in websites reducing their dependency on auto-start video inventory. In fact, we see exceptionally low variance month-to-month. Most sites have chosen a model and stayed with it consistently in 2017. It’s also worth noting that there isn’t one singular type of media company that supports autostart ads – they can be seen practically everywhere.

There are some commonalities across the types of publishers using auto-play.

Publishers that use auto-start video ads the most have some commonalities. Smaller websites – think niche, regional, enthusiast, business-to-business, as examples – have fewer overall impressions. This likely drives the need for video inventory, which is sold at a higher cost per impression. These same websites have the highest incidence of autoplay video advertising. This shouldn’t necessarily be interpreted as bad news. Presumably, video ads running on these sites are highly-targeted and likely to be well-received. Sites reliant on programmatic advertising were also more likely to employ auto-start video.

How might Google and Apple shake things up here?

While the threat of Google Chrome stripping out auto-start videos is real, it’s not imminent — at least not yet. Based on past experience – like with Google AMP, for example – we found that most publishers have taken a wait-and-see approach before making a change in their business practices. Apple could be a more interesting company to watch as their advertising interests are limited. They have no dog in the auto-play fight, so to speak, and could dramatically disrupt things for publishers and advertisers if they decide to block these units more aggressively via pre-installed software or hardware.

Perspectives | Video

Pivoting to video: It’s not one size fits all

August 30, 2017 Clare Carr, Vice President of Marketing—Parse.ly

With more than one media company laying off staff to “pivot to video,” the move bears some scrutiny. Understandably, those in the “text” camp emphasize the power and speed that written content brings, while the other side sees dollar signs behind video advertisers. But these opposing storylines hide nuances that need to be considered, if you’re considering video at all.

First, the data. Yes, average time spent watching digital video is expected to keep growing and the prospect of television ad dollars ripe for the picking seems too good to not consider how digital sites can grab a piece of it. However, our research has also shown that video on media sites underperforms when it comes to content types: people spend, on average, 30% less with video posts than a non-video post.

Video is Not for Everyone

But all of that data ignores a crucial, but somewhat basic point: not all video is the same.

This summer, Parse.ly hosted a series of events in New York City asking publishers about this issue. Ryan Sager, Editorial Director of the Ladders, and Time Magazine, WSJ, and NYPost alum, took a stand against the pivot to video. He pointed to Facebook sharing inflated metrics and the uninspiring push for live video, but more broadly pointed out that the actual content of the videos people want to create matters. “What do people want to watch?” Sager asked the audience, “If you are a food brand, great. But if you are in a news space, it’s a much tougher sell.”

Even for publishers that fit into one of those spaces, like the home decor and DIY site Domino, the number show that video does better when paired with text. “Our video needs to come in tandem with content. There needs to also be text with it,” Tracy Cho, Executive Director of Marketing, Growth and Analytics at Domino told the audience.

The attendees agreed. We polled attendees and found 76% of them supported using a mix of content formats, while only 13% wanted to see a more sites pivot to video.

Video is Content Too

Some even questioned thinking about video in such a bifurcated way. “It feels foolish to categorize video as separate content,” said Andrew Littlefield, Managing Editor at Ceros. “If you examine your own habits, you don’t go on the internet and think, “Time to look at some videos,” or “Time to read some words.” It’s just all one hodgepodge.”

Sachin Kamdar, CEO of Parse.ly, emphasized that any company making a pivot to video out of desperation would face challenges unrelated to the format itself, including poor internal communication and a culture unaccustomed to producing this type of content. However, he also noted that the opportunity that video presents needs to be taken seriously in an industry struggling for monetization options. The intersection of consumer intention, market dynamics, the added incentives of the tech platforms, and the ability to monetize means that any company not considering what video could mean for their business out of sentimental value to the written word could be missing out.

So, what does make sense for publishers as the video conversation progresses? “Understand your audience and decide what products are going to best serve them, and potentially make you money,” Kamdar said. Melissa Gilkey, Vice President of Growth at Upworthy agreed, noting that when considering any choice that affected content that “data is a huge component of that. It’s a non-negotiable if you’re building a strategy.”

Perspectives | Revenue | Video

Who’s winning (and losing) the online video boom?

May 18, 2017 Mark Glaser, Founder and Publisher – MediaShift

As the NewFronts wrapped up, there was a growing feeling that online video wasn’t just a precursor to the Upfronts and broadcast that were coming next. The NewNew Fronts are becoming the main event.

Traditional TV networks are losing their audiences as competition from non-linear, streaming programming is rising — everything from Netflix and Hulu to Facebook and Snapchat. Digital ad spending overtook TV ad spending for the first time last year ($71.6 billion versus $71.2 billion, respectively), according to eMarketer. A new report commissioned by the IAB found that spending on ads around original digital video programming has doubled in the past two years.

These inescapable trends are creating a new frontier for publishers trying to reap the benefits of the video ad boom. Broadcasters and newspapers are trying to figure out how to allocate more resources for video, while digital-native publishers try to keep up with demand.

With that in mind, here’s a rundown of some of the winners and losers in the online video explosion.

Winners

Comcast

NBCUniversal, the digital offshoot of the traditional broadcast network, earns major points for having invested $500 million in Snap (think long-term, not just the first earnings report!), $400 million in BuzzFeed and $200 million in Vox, thereby creating partnerships that benefit both traditional and new media players. When Conde Nast joined the NBCUniversal and Vox Media advertising network, the digital conglomerate announced it’ll reach 200 million consumers online, including 99% of all millennials in the U.S. And these three entities are together developing two new ad products around mobile video and branded content.

Facebook

If there is a behemoth winner in the house, it’s surely Facebook. The world’s largest social network has pushed its news feed to prioritize video, and publishers have to post videos there if they want to reach Facebook’s nearly 1.3 billion daily users. Recode’s Kurt Wagner reported last month that Facebook is planning to pay publishers to create more produced video on the platform, to help push its new mid-roll ad products (the new deal will replace the one Facebook struck with publishers last year to use Facebook Live).

Facebook will offset the cost of paying publishers by earning the money back from the mid-roll ads, and then splitting whatever revenue remains with the publishers. While some publishers are hesitant to embark on such a deal with unproven benefits — no one knows how the ads will fare yet, and earning returns on Facebook video has long been a frustration for publishers — many others will give it a shot.

YouTube

Like Facebook, Google’s YouTube is riding the benefits of the online video boom. YouTube may have stumbled earlier this year when advertisers found their content showing on extremist videos, but it’s still the world’s most popular video destination. And now the world’s most popular video website is planning to produce six different ad-supported original series and develop more than 40 original shows and films over the next year. It’s also investing more resources into its ad-free subscription service YouTube Red (and the YouTube TV skinny bundle), pushing YouTube into a tier of competition that includes Hulu, Amazon Video and Netflix.

Google earned more than $24 billion in advertising sales in the first quarter — more than that of the entire TV industry – even in the face of boycotts over brand safety. The tech giant is betting on high-profile YouTube stars and celebrities to bring viewers to these advertisers, and has made changes to improve controls for advertisers. If it continues to cultivate a wide audience around its original programming, it can certainly demand higher rates from advertisers even in the face of setbacks.

New York Times

The Gray Lady may have been a late bloomer to the digital boom, but its adaptation strategies are certainly catching up. Its subscriber growth is the highest its been in its history, thanks in large part to the post-election bump — as well as wise investments on digital offerings. If you haven’t noticed, many articles online now feature video content alongside it. In February, the Times announced it’ll feature fresh daily content on Snapchat Discover. Alongside pushing VR video as an editorial decision, it’s also been publishing VR branded content.

And at this year’s NewFronts, the Times announced “Times Story[X],” which will launch this summer and serve as a powerhouse for creating strong visual, technologically forward narrative journalism that both the newsroom and its marketing unit T Brand Studios can use.

Losers

Traditional TV networks

The four major broadcast networks lost 8% of their audiences this TV season, adding to a four-year trend of declining TV ratings. TV networks have also increased their ad prices in these last four years in an effort to offset declining viewership — which doesn’t necessarily bode well for marketers. The ad-buying agency Magna has announced it’s shifting $250 million of its budget originally allocated for TV toward YouTube.

The Walt Disney Company, which owns the ESPN cable network, missed its revenue target this past quarter and announced in April it’s laying off 100 people to cut costs and better adapt itself for digital distribution. Time Warner and Viacom have also reported that second-quarter advertising revenues are likely to decrease. It’s no wonder: Viacom’s MTV, once the go-to network for younger audiences looking for information and entertainment catered to especially for them, is losing its viewers to Snapchat and YouTube.

Advertisers sticking to TV (and not diversifying)

Advertisers know that they can guarantee audience reach with the time they have with television advertising. Traditional TV has also benefited from the brand safety issues marketers have faced when their content has inadvertently popped up against extremist propaganda on YouTube. Networks touted their reach and reliability for serving up mass audiences, in a New York Times story, but they also face tough competition from targeted ads on social platforms and the explosion of choices on streaming services. But it’s still a question of when, not if, those ad dollars will move to digital video.

In the end, the winners of the video boom will be those publishers, platforms and brands who embrace the power of video, but make sure it fits with their mission – and serves their intended audience. Native video publishers like NowThis and Hulu might have an advantage, but legacy publishers and broadcasters still have a chance to shine if they can evolve quickly.

Advertising | Industry-Research

Pre-roll is the most informative and engaging video ad format

April 21, 2017 DCN

As brands continue to identify the most impactful video advertising formats, the report shared detailed insights about which format elicits the strongest consumer reaction. IPG Media Lab and YuMe recently released the results of a study that looks at user experience across video ad formats and devices, performance against brand KPIs and optimizing performance across video ad formats. Their report, Ad Format (R)evolution finds that pre-roll remains a solid, formidable platform in which to showcase brand offerings. Compared to mid-roll and outstream, pre-roll is considered the least interruptive across devices, with only 17% of mobile device users feeling the ad interrupts the content, compared with 60% on outstream and 72% on mid-roll.

Other key findings include:

The least intrusive formats are also the most memorable.
Mid-roll ranked higher in message recall for desktop viewers at 27%, compared to 8% for outstream.
Pre-roll feels more engaging.
Unskippable pre-roll is the clear winner on mobile.
Social video is well integrated and less disruptive to the browsing experience than other formats.
Mid-roll works better on larger screens.
More than half of those surveyed want to close both outstream and pre-roll ads immediately.

This research confirms that consumers are most critical of ads on mobile, which is their most personal device. And among the conclusions, the report emphasizes how important it is for advertising to minimize its intrusiveness and maximize engagement in order to generate higher purchase intent for all ad formats and delivery channels.

Perspectives | Video

Facebook shifts focus from live-streaming video to long-form

January 26, 2017 Mark Glaser, Founder and Publisher – MediaShift

Although Facebook paid millions to the likes of the New York Times and BuzzFeed to live stream a certain number of videos — a $50 million investment altogether — publishers now say Facebook is talking to them less about live video and more about premium quality content, according to Recode’s Kurt Wagner.

“Our goal is to kick-start an ecosystem of partner content for the tab, so we’re exploring funding some seed video content, including original and licensed scripted, unscripted and sports content, that takes advantage of mobile and the social interaction unique to Facebook,” Facebook’s Ricky Van Veen said recently in a statement regarding original content.

While the one-year contracts haven’t yet ended, and there’s no official word from Facebook about them, it appears that they may have been a short term strategy for the platform. It also turns out many publishers aren’t interested in renewing these one-year Facebook Live contracts either. Some told Recode that Facebook’s compensation wasn’t enough to justify the time and resources needed to produce the live streams. So what’s the future of live-streaming on Facebook, and how can publishers get on board the new push for long-form video?

Live-Streaming Is Here to Stay
While some may interpret the news as Facebook admitting that live-streaming was never a profitable prospect, all arrows point to live-streaming’s staying power. Live viewership among Internet users decreased slightly in the second half of 2016. YouTube and Snapchat experienced small declines in market share of live-streaming, but Facebook’s market share actually rose from 14% to 17% between June and November of last year, according to eMarketer, suggesting that Facebook is emerging as a leader in a market that’s still in its infancy.

Meanwhile, Facebook has announced a slew of new tools and features for Live: a video tab on the Facebook app that makes spotting live videos easier (which helps fight against the algorithms that might keep viewership at bay); the ability to broadcast onto Facebook straight from a web browser (which is sure to keep Facebook competitive against the video bloggers doing this on YouTube); a “Live Contributor” role Page admins can assign people to broadcast live from the page; and enhanced live video metrics for people with at least 5,000 followers. Facebook is also planning to introduce mid-roll advertising, which will finally offer some payoffs for publishers who haven’t yet profited from these video streams.

Mediocre Content from Publishers Can’t Match Viral Hits
So it’s not necessarily that Facebook doesn’t believe publishers will now stay clear from Live altogether. In a breaking news moment, Live is the best way to reach as many as 1.7 billion viewers at once. Think of last year’s coup attempt in Turkey, or when House Democrats staged a sit-in to push for gun control.

Let’s also not overlookthe shooting of Philando Castile by police, and his girlfriend Diamond Reynolds’ Facebook Live stream in the immediate aftermath. Or even Chewbacca Mom, laughing in the glory of her own happiness, and the subsequent viral sensation she became.

When publishers slog through Facebook Live like it’s a chore, it shows. Hosts wear their ambivalence on their faces, and the quality is mediocre at best. With the abundance of competing content, users have no incentive to watch a live-stream. When individuals take to Facebook Live, however, it’s different. There’s no ambivalence. There’s the necessity that comes from immediacy. And the result is connection.

Brands Are Already Succeeding with Long-Form Video
Connection is the reason why some brands would prefer long-form video anyway. It often seems like Facebook is calling the shots these days when it comes to influencing media. But on-demand video services and live streaming are already pushing marketers to think beyond short 30-second ads, and toward advertising that is, essentially, stand-alone entertainment that connects with the viewer.

Case in point: Luxury brands like Burberry and BMW. Short commercials, which helps boost brand recognition, aren’t as important to them as it is to lesser known companies. They have loyal customers who are more concerned with the identity of the product — and identity comes from the perspectives, narratives and dramas you can present in what are basically short films. It’s a shift within marketing — “being” becomes more important than “having.”

Meanwhile, remember that ad blockers are some of the most popular mobile app and web extensions, with one out of every five smartphone users blocking advertising on web browsers, according to PageFair. Again, it goes back to the cable industry analogy. Just as viewers make time for premium long-form programming, getting them to turn off ad blockers requires making quality advertising! Because web advertising has become so targeted, there’s also more potential to experiment with advertising lengths.

So even though live-streaming on Facebook has been hit-and-miss so far, these could just be growing pains: Publishers will likely continue efforts with live-streaming and creating their own long-form video for editorial—and let’s not forget their focus on monetizing, regardless of format or platform.

Perspectives

What you need to know about digital video advertising in 7 charts

December 5, 2016 Michelle Manafy, Editorial Director – DCN

Okay, let’s start off with an obvious—but critical—fact: Just about everybody’s watching digital video. According to comScore, almost every demographic watches some form of digital video each month.

That said, it is clear from the comScore chart that there are segments that are consuming more than others. And, According to Defy Media, consumers aged 13-24 watch 12.1 hours of video per week on YouTube, social media and other free online sources, and another 8.8 hours weekly on Netflix and other subscription-video services. (That’s more than two and a half times the 8.2 hours weekly they spend watching television.)

While few of these younger viewers adore advertising, they are much more amenable to a brief sponsorship announcement or product integration is than the traditional preroll.

In its 2016 Digital Ad Spend Study, the International Advertising Bureau (IAB) reported that Digital Video and Original Digital Video budget allocations resulting from the NewFronts event have steadily increased over the last 3 years. Their research finds that ad spending on original digital video programming has increased 114% since 2014 and, on average, marketers and advertisers are spending more than $10 million annually on Digital Video, representing an 85% increase from 2 years ago.

According to Statista, there’s still plenty of room for growth, though. Statista analysts expect the digital ad market to grow at an average rate of 10.9% over the next five years, with social media and video advertising outpacing the overall market’s growth. And while search marketing is forecast to remain the largest share of digital advertising, it is predicted to rise about 57% whereas video is expected to experience an 80% increase.

While marketers find video to be among the most effective content type used in content marketing initiatives, they also rank creating it as among the most difficult, according to a report from Ascend2 and its Research Partners. Customer testimonials, explainer/tutorial videos and demonstration videos are ranked as the most effective types of video content marketing, per Ascend2’s research.

Time of viewing affects ad effectiveness. Online video advertising seems be most effective between the hours of 3 a.m. and 12 p.m., according to a study from cross-platform video advertising firm YuMe. They saw this trend across all age groups including millennials, Generation X, and baby boomers.

Mobile will be the biggest driver of digital-video ad spend over the next few years according to BI Intelligence. They found that US digital-video advertising revenue from PC- and mobile-based video ads will top nearly $5 billion this year, and grow at a five-year compound annual growth rate (CAGR) of 21.9%.

Advertising | Industry-Research | Perspectives

Interstitial ads shown to alienate, not engage

November 15, 2016 DCN

More than 50 years later, the wisdom of Herbert Marshall McLuhan, the Canadian professor and philosopher who famously observed in 1964 that “the medium is the message,” continues to strike a chord, underlining the inextricable link between the mechanics of how companies deliver their message and the influence these messages have on customer behavior and brand perception.

It’s all about engaging in a way that adds value to the “conversation” — and the rules of engagement that held true for the delivery of more traditional content and communications go double for mobile. It’s a medium where evidence is mounting that advertising and marketing approaches that merely retrofit online display advertising to smaller screens are patently out of sync with the requirements of consumers in the “mobile moment.”

Consider the findings of a recent report published by PageFair, which documented the meteoric rise in the use of adblocking technology on mobile devices. Studies like this document a clear disconnect between what content companies want to deliver and what consumers are willing to accept. However, most studies, including the PageFair research, draw from empirical data, not user surveys, to explain people’s growing fatigue with mobile advertising. Until now precious few have dared to delve into the real and root cause of brand affinity, or frustration.

This is where a new report by neuromarketing companies True Impact and Neurons Inc., and commissioned by MediaBrix, an in-app mobile video advertising platform for brands, breaks new ground, documenting the “how” and “why” behind consumers’ negative response to interstitial ads.

The Brand Receptivity Neuro Lab Study, which was designed to help marketers understand how consumers react to and engage with different ad formats, relies on technology to monitor people’s neuro and biometric responses before, during and after the delivery of a mobile ad. Respondents were wired up to neurometric and physical eye-tracking devices, and each consumer was asked to complete a post-exposure interview and survey.

The aim was to explore how different methods of delivering the same ad inside a mobile app (also known as an in-app ad) impact respondents’ receptivity to advertising. To test this hypothesis researchers measured the emotional and physiological impact (heartbeat, attention and the feeling of “wanting” that drives urges and decision marking) messages from two brands, MillerCoors’ Smith and Forge Hard Cider and a popular CPG brand, had on respondents during their sessions on a gaming app.

Among the findings:

Viewers were twice as likely to have a negative emotional response to a full-page interstitial ad than to an embedded, opt-in ad format. Pupil dilation, heart rate and other biometric data revealed that full page video interstitial ads aroused the brain’s “fight-or-flight” center, which explains why interstitial ad viewers also focused 22% of the time they did spend looking at the ad searching for the “X” button to close down the ad altogether. In contrast, respondents “actually watch the embedded, opt-in units,” with close to 90% of viewers watching the full 30-second video, compared to only 25% of viewers watching an interstitial ad.
Embedded, opt-in ad viewers don’t just watch the ad; they also spend three times as much time fixated on the brand creative and they’re 8 times “more cognitively engaged” with ad message.
Overall, embedded, opt-in ad viewers spend 9.5 times more time “understanding/considering the embedded value exchange offered by the ad” than they do considering the interstitial ad unit. This deep engagement with embedded, opt-in ad units resulted in 70% of those viewers remembering the product and 73% understanding the brand offer. For viewers who experienced interstitial ads the results were 40% and 49% respectively.

Significantly, the study found that embedded, opt-in ad viewers are also more motivated. Motivation, which is a key brain imaging metric refers to the feeling of “wanting” that ultimately drives desire and decisions. High motivation levels in the brain therefore imply purchase intent and action.

“Those who experienced the contextual ad unit [embedded, opt-in ad unit] had four times a feeling of motivation according to neurometric measures,” the study concludes. In total 25% of embedded, opt-in ad viewers said the ads made them want to keep using the app.

This is a far cry from the “fight-or-flight” reaction triggered by full-page interstitial ads — and should send alarm bells ringing in board rooms everywhere on the planet, according to Richard Kosinski, MediaBrix President & Global CRO. “The key message is that the interstitial, the most common ad format, is also the format that users find most annoying and disruptive,” he explains. “Publishers need to consider formats that do not create a negative experience for their readership.”

He urges the industry to “rethink ad delivery and ad format” and remember the core importance of the user experience they deliver, not just the content.

The explosive growth of mobile apps — and the increase in the amount of time consumers spend on them daily — turns up the pressure on publishers to rethink mobile advertising and how they monetize their content. “Eyeballs have clearly shifted to mobile and mobile apps and publishers have to focus their efforts on creating a good user experience for their audience,” Kosinski says. “Our research shows that just running interstitials on mobile and in apps isn’t the way to achieve this.”

This dovetails with the 2016 U.S. Mobile App report released by audience measurement company comScore. It estimates that mobile now represents “almost two out of three digital media minutes.” As a result, mobile apps are approaching 60% of total digital time spent by consumers by platform.

Kosinski, a 25-year veteran in the media business who has held a variety of senior roles at brands including The Wall Street Journal, Yahoo!, CNET, Quantcast and Westwood One, advises content companies to rethink mobile ad creatives, not abandon them. The positive response by respondents to embedded, opt-in ad formats suggests that consumers might whole-heartedly embrace monetization models that reward them for watching a video, for example. “The result is a better experience for the consumer, who gets to read the article behind the pay wall, and higher engagement and higher CPMs for the publisher that enables this value exchange,” he says.

Opt-in ad experiences put consumers in control, but it’s not enough for publishers to change their creative message. They should also embrace the formats and delivery mechanisms proven to provide a positive user experience. This milestone study doesn’t just provide the industry with valuable blueprint to improve ad receptivity, human attention and brand recall. It bravely delves into the emotional and physiological traits and triggers publishers must understand to ensure their message (and marketing) is truly aligned with the mobile medium.

Peggy Anne Salz is the Content Marketing Strategist and Chief Analyst of Mobile Groove, a top 50 influential technology site providing custom research to the global mobile industry and consulting to tech startups. She is a frequent contributor to Forbes on the topic of mobile marketing, engagement and apps. Her work also regularly appears in a range of publications from Venture Beat to Harvard Business Review. Peggy is a top 30 Mobile Marketing influencer and a nine-time author based in Europe. Follow her @peggyanne.

Advertising | Industry-Research | Revenue

Mobile now accounts for almost half of all digital ad revenue

November 9, 2016 DCN

Digital advertising revenue increased to $32.7 billion in the first half of 2016, increasing 19% from the same time period a year ago, according to the Interactive Advertising Bureau’s Internet Advertising Revenue Report. The shift to mobile advertising was a key driver in the increase of digital ad spend. In fact, mobile advertising revenue totaled $1.6 billion, a 178% increase from the same period in 2015. Mobile advertising now account for 47% of all online ad revenues for the first half of 2016, up from 30% the prior year whereas desktop video ads remained the same at 13% of total revenue.

Among the key trends reported:

Display

Total display-related advertising (mobile + desktop) is up 26% to $13.9 billion and accounts for 43% of all internet ad revenue.
Display-dollars are also shifting to mobile: Mobile display is up 78% to $7.6 billion while desktop display is down 7% to $6.3 billion.

Video

Total digital video ad revenue (mobile + desktop) is up 51% to $3.9 billion.
Video now accounts for 12% of internet ad revenue for the first half of 2016, up from 9% in HY 2015.

Social media

Ad spend on a whole for social media increased to $7 billion, up 57% from one ago.

Other key findings

In terms of pricing models, performance-based pricing, defined as cost-per-click, sale, lead, acquisition, or application (e.g., credit card application) or straight revenue share (e.g., percentage of commission paid upon sale), continues to lead although slightly declined to 65% of total revenue in HY 2016.

CPM/impression-based pricing increased up to 34% of revenues in the first six months of 2016 from 32% in HY 2015.

Hybrid pricing, defined as any mix of impression-based pricing plus performance-based compensation within an ad campaign, declined to 1% of total revenues in HY 2016, down from the 2% reported in HY 2015.

The report also stated that digital ad spending is becoming more concentrated with the top 10 digital ad-selling companies accounting for 74% of online advertising revenues in Q2 2016. The 10 companies were not disclosed in the report.

Many are forecasting that digital advertising will continue to be a larger and larger share of overall revenue generation for businesses. The question is who is capturing the increased profits? In an article in the Financial Times, Anna Nicolaou notes that “Google and Facebook have capitalised on the rise of the smartphone, swallowing the lion’s share of digital advertising revenues. In the US, 85 cents of every new dollar spent on digital went to the two companies in the first quarter of 2016, according to Morgan Stanley.”

Peter Kafta of Recode also offered insight the companies capturing the profit margins. Kafta’s shared the individual analyses done by Jason Kint’s, CEO of Digital Content Next, and Brian Wieser’s, an analyst at Pivotal Research, each illustrating that Google and Facebook account for 85% and 90%, respectively, of every dollar spent on digital. Their analyses also indicated that while Google’s and Facebook’s captured significant growth of ad revenues, the rest of the digital marketplace is diminishing.

Perspectives

Facebook did the digital publishing industry a favor

October 10, 2016 DCN

For more than a decade, desktop pre-roll video has been the one safe ad format for publishers facing a market full of ad products with declining CPMs. TV-based digital properties have prospered while those lacking video content have struggled to participate in this lucrative market. With the shift to mobile, however, the game is changing for everyone – but in a positive way for once.

While Facebook is seldom viewed as a solution to publishers’ revenue woes, it has done the digital publishing industry a big favor with its video ad products. Rather than adopt the pre-roll ad model, Facebook adopted an inline video product optimized for mobile and convinced advertisers it is as valuable as pre-roll.

For years, in-banner video on desktop was considered inferior to pre-roll largely because the video ads were disassociated from video content. Using its market leadership, Facebook was able to decouple video ads from video content while overcoming the perception that inline video ads were worth less than pre-roll. If a user watches a video ad, does it matter what they watch or read next? The enormous success of Facebook video has proven it doesn’t.

For digital publishers, with or without video content, this shift in ad buyer perception has created a massive opportunity to participate in video ad market. A number of ad tech companies and publishers themselves have responded with new video ad formats that run independent of video content and are optimized for mobile – outstream.

Outstream video advertising is defined by the IAB as anything that takes place outside of in-stream video content, which includes native video, in-feed video, in-article/read video, in-banner video, and interstitial video. Outstream solves for pre-roll’s shortcomings on mobile by providing a better user experience-a thumb-friendly, mobile-first ad format-while opening up premium video inventory.

Rather than running in fixed ad positions on story pages, some outstream ads appear dynamically within the page body, causing the content to split above and below the ad. While the page separation may be a little annoying for some users, frequency controls can regulate the how many ads appear on a page or are served to the same user. When no ad is served, there is no ad position on the page, providing a superior user experience and eliminating low quality, low priced remnant ads.

The outstream market is established enough to provide publishers with the confidence to adopt the format, but still new enough to command a premium. Last month, Mixpo surveyed 68 advertisers and agencies and found that 27% of advertisers and agencies currently buy outstream ads, with another 18% planning on buying next year, with premium inventory being cited as the top benefit the format provides. While adoption isn’t yet widespread, 71% of advertisers and agencies see the adoption of outstream video ads increasing in the next year. Digital ad spend is projected to surpass TV this year, but with the continued hunger for video and a new crop of video ad formats popping up, we can expect to see the shift from TV ad spend to digital faster than expected, into formats outside of pre-roll.

Mobile users on tight data budgets have driven the rise of ad blockers to avoid the literal cost of watching a pre-roll video ad. Recent stats from eMarketer show that 30% of ad blocker use is specifically to block pre-roll video ads. Outstream helps publishers improve the video ad experience by enabling users to simply scroll past the ad, with the video stopping when the ad passes from view. Importantly, the outstream ad is not forced in front of the content, but stats can be collected to show advertisers how many users watched the entire ad.

While pre-roll’s position is safe, outstream will provide the inventory to absorb the unmet demand for video advertising. The two will soon rival for the most valued video ad format on the web.

Charlie (@ctillinghast) is a strategic and resonant leader with over 30 years of industry and management experience at start-ups, large corporations, and joint ventures. Prior to becoming Mixpo’s President and CEO, Charlie served on the Mixpo Board of Directors for two years. Charlie held management positions at MSNBC Interactive News (msnbc.com), the last eight as President and CEO of the former joint venture between Microsoft and NBC News.