Good afternoon. My name is Jason Kint. I am the CEO of Digital Content Next. DCN is the only trade group dedicated to serving high-quality digital content companies that manage trusted, direct relationships with consumers and advertisers. We have grown to represent more than 80 digital media companies which reach 100% of the U.S. online population and are leading much of the evolution in news and entertainment.
Despite the incredible advances of the last 20 years, the internet still holds vast, untapped potential for consumers. Devices are getting smarter. More immersive experiences roll out every day. At the same time, premium content companies face challenges in the transition to a digital world. What business model works best for each brand? How much should they partner with the big platforms? Is their content being used fairly? Are they being credited and compensated appropriately? Our members are at the forefront of these challenges – investing in engaging experiences and experimenting with new ways to distribute and monetize their content.
Copyright piracy is a serious crime that undermines the progress to a healthy digital ecosystem. Ultimately, it costs consumers in the form of higher prices. But, copyright piracy also hurts the ability for media companies, our members, to monetize their content.
Newspapers are constantly fighting online scams that offer discounted or free subscriptions to their premium content. In a case this spring, one website was found to be offering discounted subscriptions to 20 or so premium news sites including our member, The New York Times, Financial Times and Wall Street Journal. The site’s owner would sign up for free trial or short-term subscriptions and then re-sell the subscription as a full-year subscription. Of course, he collected full payment up front. The newspapers were tipped off when consumers called to complain that their subscription had been cut off after a few months. These efforts to combat piracy cost resources and money, but they also have real damages for consumers.
Live sports broadcasts are another category that is particularly vulnerable during the transition to digital.Companies are experimenting with new ways for consumers to view this highly compelling content. But, these efforts are undercut by thieves who blatantly post full live streams of entire games on social media or other platforms. According to one study, 54% of millennials have watched illegal streams of live sports and a third admit to regularly watching them.
This impact is felt disproportionately by smaller media companies with fewer resources to monitor and stop these crimes. Ellen Seidler, an independent filmmaker took out a second mortgage and racked up credit card debt just to make “Then Came Lola.” In 2006, it debuted at film festivals and then was released via DVD and via streaming sites. But the movie only grossed a quarter of what was expected because Ellen found that the movie was available for “free” on thousands of pirate sites. Similarly, Maria Schneider, an independent musician, testified before the US Congress that she has no time for making music anymore as she focuses entirely on protecting her copyrighted works. She is an artist who hast lost the time to create her art. In a game of whack-a-mole, independent creators like Ellen and Maria don’t stand a chance. And, left unchecked, consumers will be left fewer options for high quality news and entertainment.
Another harm, unknown to many consumers, is that many of the pirate sites also traffic in malware. According to a 2015 study by the Digital Citizens Alliance, one out of every three pirate sites contained malware. As organized crime syndicates moved into the content theft business, they saw the opportunity to make more money by distributing malware.
To really combat content theft, we need more resources/focus/coordination from law enforcement. Piracy actors react differently to law enforcement than they do to lawsuits. For instance, when Megaupload was taken down, a number of cyber lockers got out of the business. That wouldn’t have happened without the attention of law enforcement.
We also need more attention from Google, which holds a monopoly on the internet search market. Currently, Google will flag pirate sites after thousands of downloads or complaints. But, they make no effort to favor authorized copyright holders or trusted sources in their algorithm. Instead, Google crawls the Pirate Bay and other known copyright thieves every day to ensure that content can be found. Google enables this game of whack-a-mole that places a huge, unreasonable burden on the copyright holder. Google works with many of our members to take down pirated content, but they can and should do more.
The same holds true for Facebook. Content creators don’t have visibility into these platforms to see where their content is being shared illegally. Google and Facebook collectively act as a duopoly, sharing as much as 99% of the growth in advertising last quarter. At the same time, the platforms are slow to adopt measures to combat fraud or even provide more transparency to protect the content ecosystem. More can be done to ensure that valuable content isn’t illegally streamed.
We’re living in a new, unprecedented digital era. Consumers have the ability to discover premium content and experiences like never before. Facebook and Google engineers have created social and search discovery engines which are quite literally changing global society. But, without greater protections for content, consumers might be left with all the tools of discovery but with a bad malware hangover and no good content. Thank you for having me.
The regulatory burdens of Europe’s General Data Protection Regulation (GDPR) have the advertising industry in a flurry. The industry press is rife with doomsday scenarios predicting the end of online advertising.
Is the regulation complex and in some instances, onerous? Yes.
Does it signal the end of online advertising? No.
GDPR does, however, force companies to examine the costs of collecting and using online behavioral data. Because GDPR increases the compliance costs associated with the collection of data, it becomes necessary to examine whether the collected data is worth the added compliance expense. Why absorb compliance costs for data that may or may not be valuable to clients and partners? While the industry has been talking about a “flight to quality” for years, GDPR has cemented Lotame’s commitment to data quality initiatives.
The Personal Approach
“Personal data” under the GDPR is broadly defined to include personally identifiable data points like name and email address, as well as less precise data points like cookies, device IDs, and IP address. The rationale is that modern technology allows marketers to identify individuals with one or more data points, even if those data points do not refer to each individual by name.
The problem with this broad definition of “personal information” is that GDPR treats anonymous data and personally identifiable information as similarly situated. A company that collects and uses cookie data has nearly the same compliance obligations as a bank that collects and stores highly sensitive financial data. The bank, and the consumers it serves, are all well aware of the risks inherent to the storage and processing of financial data. A breach has significant consequences for both the bank and the consumer. For this reason, the bank is able to pass some portion of its high compliance costs along to the consumer in the form of fees. These fees help to make banking one of the world’s most enduring, and lucrative, industries.
How the Cookie Crumbles
The potential loss or unauthorized disclosure of cookie data did not, until relatively recently, raise the ire of consumers or regulators. But now, with GDPR, cookie data is placed in the same category as financial data – meaning that a company like Lotame has the same compliance obligations with respect to its cookie data as does a bank that transacts in highly sensitive financial data. While regulators may view cookie data as having equal footing with consumer names and addresses, marketers do not, and they have not been willing to pay premium dollars for data that is viewed as less precise than personally identifiable information.
On the one hand, GDPR validates what Lotame has known and proselytized for years – that data is tremendously valuable – even when that data is not tied to personal information like name, email address, street address, or telephone number. On the other hand, GDPR makes it costly to collect, store and push large volumes of cookie and device data. There is substantial risk that compliance costs, relative to the earning potential of this data, are being driven too high. In order to drive revenue in the face of mounting regulatory burdens, Lotame and other players in online advertising must focus on quality.
Quality Over Quantity
Over the past year, we have invested heavily in technology and partnerships that emphasize quality over scale. Earlier this year, for example, we announced a partnership with Are You a Human, to provide advertisers and their agencies the ability to quickly and easily identify non-human traffic and create new bot-free audiences for ad targeting, analysis, content personalization, and more. This allows our clients to remove all profiles identified as bots, to reduce wasted ad spend, decrease bot traffic, and increase conversions. For Lotame, it also ensures that we are not absorbing compliance costs for data that offers minimal value to our clients and partners.
GDPR is a game changer for the online advertising industry, but it is not the death knell that many fear. With its emphasis on consumer transparency and consent, Lotame expects GDPR to produce higher quality data assets from more engaged consumers. We have embraced the regulations as an opportunity to review our business practices with fresh eyes and have encouraged our clients and partners to share in this approach.
Tiffany Morris is General Counsel & Vice President of Global Privacy at Lotame, overseeing all aspects of the company’s global legal strategy and operations. She brings more than 10 years of legal and business experience in the advertising, sports, and entertainment industries. Prior to joining Lotame, Tiffany held legal and business development roles at Vox Media, Inc., during a period of significant growth and acquisition activity. She previously served as Legal Counsel for The Kraft Group, where she handled a full range of legal matters for a private portfolio of companies, including the New England Patriots, Gillette Stadium, and Patriot Place. Tiffany started her career with the consulting firm McKinsey & Company. Tiffany has a BA from Wellesley College and a JD from Boston College Law School.
Make no mistake, Trump’s words and blatant disregard for the free media sends chilling signals and has a ripple effect with real consequences for reporters around the globe. He has that power. On the other hand, MSNBC exercised its right to effectively block Trump’s attempt to rewrite Charlottesville history by switching over to its studio for context and commentary about half an hour into his remarks.
It should be noted that you—the audience—have the right to turn off MSNBC if you don’t approve of its broadcast. This is how a free media works. Much the same, you can choose to read Trump’s tweets, ignore them, or block his tweets if you don’t want to see them at all. This is how open technology works. You have that power.
But in Silicon Valley, where technology companies pretend to stay “neutral” to avoid these messy issues, things are only getting more complicated. The platforms continue to assert that they are not media companies, or at least not “traditional” media . And this distinction is important because, as Josh Constine pointed out, pure technology platforms receive greater immunity regarding the content they serve, both legally and in the public eye. Media companies are considered more directly responsible for their content although ironically the platforms often get undue credit for delivering it.
Yet—in part because of moral outrage, and pressure from media watchdogs and international governments—tech platforms do step up willy-nilly to exert their control over content. Well-intentioned or not, the loose rules and vague promises of technology companies threaten to block the important role of the free media and the ability of the public to stay informed.
Closed for Good
While our President was struggling to adjust his messaging to speak out against neo-Nazis and white nationalists marching in Charlottesville, these abhorrent humans had their favorite website, Daily Stormer, effectively shut down.
“Literally, I woke up in a bad mood and decided someone shouldn’t be allowed on the Internet. No one should have that power.”
These are the words of the CEO of network security company CloudFare, who decided early last week to remove its protection and stop defending an indefensible website as a client. This followed after two other companies, GoDaddy and Google, refused to provide DNS services for Daily Stormer. These technology companies have the ability to silence this viewpoint. And they did.
However, the Electronic Frontier Foundation (EFF) called these moves “dangerous.” I agree. Take a look at EFF’s Free Speech weak links and you’ve got a jackpot situation of intermediary technology companies, and their CEOs, that possess the ability to shut down a site. No one should have that power.
Make no mistake, I’m as pleased as anyone that the website Daily Stormer was reduced to zero audience. I do not have an ounce of worry for their fate and I do hope the site sinks to the bottom of the garbage heap that is the dead web. But there is an underlying concern that has been exposed here.
“One of the problems with defending free speech,” the celebrated author Salman Rushdie said, “is you often have to defend people that you find to be outrageous and unpleasant and disgusting.”
As the EFF wrote: “Protecting free speech is not something we do because we agree with all of the speech that gets protected. We do it because we believe that no one—not the government and not private commercial enterprises—should decide who gets to speak and who doesn’t.”
Simply put, no intermediary should be able to single-handedly shut down a website. Unfortunately, our beloved open web appears to be broken. And because of flaws in its own brilliant design, they can.
Neutral or Not
The FCC is in the final step of throwing out the Open Internet Order, which will effectively gut Net Neutrality. Make no mistake, this will allow a broadband provider to block content it doesn’t like. Broadband providers have promised they would never do this, and I trust that most, when left to their own judgment, will not. But we need only to look towards the Middle East and China for the reasons we must not sit idle and blindly trust such promises. No one should have that power.
Much the same, it is impossible to run a successful web media business without being discoverable on Google Search. Any publisher who turns down Google’s business rules for search is effectively off the grid – much the same as the Daily Stormer. No one should have that power.
Ultimately, we need a modern framework for when it’s acceptable for an intermediary to shut down a website or silence a voice. Search and social platforms are inexorably intertwined in our web experiences. So, they must—like the media companies with whom they so greatly rely upon—fully grasp and support freedom of speech and the open web.
Power and Social Responsibility
In fact, we need a new framework for public officials on Twitter. Right now, we have a situation where White House spokespeople, from the controversial advisor Sebastian Gorka to the President himself, block individual Twitter users. This is simply not the same as an individual blocking a troll. This is a case of public officials silencing an emerging channel for the public discourse that is a pillar of our system.
But beyond blocking individuals, politicians are also blocking reporters on Twitter. This shouldn’t be seen differently than a reporter blocked from a White House press briefing. Twitter is part of the modern media ecosystem and in fact has been declared official statements of the White House. And all media has a responsibility to share the statements of political officials with the public. Yet somehow, we find ourselves in a place where the single American who wields the most power is now able to block the public from reading and engaging through our modern media. No one should have that power.
Even if you accept the idea that public officials should have the right to block accounts on Twitter (which I don’t) then there at least needs to be public disclosure of the accounts they’ve blocked. It is significant that any blocked users are permanently unable to read the official statements for these officials. No one should have that power.
The Internet has created a global forum for communication, expression, and the dissemination of information. It has triggered the emergence of exciting—and dispiriting, even dangerous—technologies. It has transformed the very definition of media. Yet none of these developments has diminished the importance of the First Amendment. Technology evolves. The medium for media evolves. But our commitment to our fundamental American values must remain steadfast. This is far from the last time we will be called upon to consider these values in a new context. Let us do so in a way that supports progress along with public discourse and an open Internet. Therein lies the real power.
It was just a matter of time – we all knew it had to happen eventually – but the other shoe is dropping on digital advertising’s most glaring weaknesses: accountability and fraud. Brands are taking steps to exert more control over growing online advertising budgets, and rely less on external agencies to do the job.
This is according to a new survey from the World Federation of Advertisers (WFA) of 35 global companies with more than $30 billion in ad spend. To wit: nearly 9-of-10 say they are pulling back spending in ad networks that don’t allow third party verification, and three quarters of them say transparency is an “escalating” issue.
Though short of revolutionary, these survey findings indicate a meaningful attitudinal shift among brands: now more comfortable with the digital channel, and under pressure from CFOs and CEOs to get waste under control, they’re putting pressure on the source – the media buying function.
Former Mediacom CEO Joe Mandel set this process in motion back in March of 2015 at an Association of National Advertisers meeting when he declared: “I personally believe we’re living through the least transparent time for the media industry in our careers”. Fast forward to May of this year, when WFA’s survey was conducted, and we’re beginning to see empirical evidence of the backlash.
What this means for different constituents in the digital marketing ecosystem:
Whenever there’s talk of “digital media” in general, it’s important to remember that Google and Facebook comprise 70%+ of the activity. So evolving media buying practices are largely targeted at getting Google- and Facebook-enabled advertising under control.
These media buying shifts are significant, especially in light of the TV, radio, and print channels over the second half of 20th century, which were remarkably stable; it tooks brands awhile to respond to fraud and viewability issues because they hadn’t really had to deal with media buying challenges since the introduction of TV advertising in the 1950s.
As brands get more comfortable with theirs hands on the online media buying controls, new opportunities will emerge for channels beyond Google and Facebook. Nearly half of respondents in the survey indicate they are shifting away from using CPM as the key pricing metric, and this favors niche players and premium brands.
Agencies have been bracing for this market shift for years, and have been aggressively investing in their technology infrastructures and talent pools as a way to prepare. (See WPP’s list of investments on Crunchbase.) As is the case with brands, agencies are maneuvering to become less reliant on Google and Facebook, and those that haven’t are vulnerable and risk obsolescence.
Peripheral players in the ecosystem – lawyers, auditors, verification companies and watchdog groups – are boosted by these findings. Almost 90% of survey respondents said they already have or are planning to include “specific media/financial audit right clauses” in contracts, suggesting that brands are putting agencies on notice, and plan to keep a closer eye on activity moving forward.
Given that digital will soon account for nearly half of all advertising spending – and was barely its own unique line item as recently as 2000 – brands are smart to be re-thinking their approaches to online media buying. Indeed, many industry experts will credibly claim that these changes are long overdue. Regardless, the trends signal an interesting new chapter in digital marketing, where opportunities will emerge for organizations – brands, agencies, and publishers alike – that evolve to accommodate changing marketplace demands.
Tim Bourgeois (@ChiefDigOfficer) is a partner at East Coast Catalyst, a Boston-based digital consulting company specializing in strategic roadmaps, digital marketing audits, and online marketing optimization programs.
Amazon Echo Show, Alexa, and Google Home have been positioned as the next big thing for companies and consumers. Content companies, marketers, and advertisers have scrambled to get up to speed on the technology behind them and are actively trying to figure out how to incorporate them into their planning. Certainly, there are a slew of companies anxious to get in on the Internet of Things (IoT) home automation game. However, they all realize that what will make them the most money is delivering their messages on the home automation system that reaches the most number of households.
Nevertheless, home automation is a new game with a whole new set of rules. The winner of this space will be whomever can master a very different skill set: providing subsidies through tax credits and insurance claims, and developing tight relationships with residential and commercial general contractors.
There are two main obstacles to mass adoption of home automation:
1. It’s too expensive: To get the full effect of the IoT transformation, a homeowner would have to replace every appliance in their house. That includes everything from the garage door, the thermostats, and doorbell to every light bulb, roof, pool pump, possibly even an entire music library, and more. Not many will be able to afford this.To reach mass adoption, someone else will have to pay for it. But who?
Using smartphones as an example, they didn’t hit mainstream until carriers helped subsidize the cost of the phone by rolling it into the service plan. Similarly, broadband effectively crossed the chasm when it started getting bundled by default with TV and phone service. Providers and appliance companies need to figure out a way to subsidize the cost of every upgrade. This can be accomplished through tax credits and subsidies for environmental upgrades or through insurance companies willing to foot the (partial) bill to replace elements of the home due to age and wear-and-tear.
2. Integration is too difficult: Seamless integration is another major obstacle to the adoption of home automation. Setup is prohibitively difficult. Many products won’t work together because they’re made by competing companies. Users often are forced to use separate apps or hubs for each appliance.
Thus, whichever company can offer a full-package solution has the best chance of solving this integration problem. And whichever company has the capacity to work closely with residential and commercial general contractors will have the advantage since selling a “full package” is only financially realistic when rolled into the mortgages of new-build homes. There’s a domino effect here since the solar roof you choose will require a battery store, and that battery store will work best with the related fuse box, which might act as the control hub to the rest of the house. This, in turn, will determine most of the other appliances, such as wall switches, light bulbs, thermostats, ceiling fans, etc.
Who Will Win?
One may argue that there is already a company set up to dominate the home automation market, which already has cachet with consumers, and is both full of shine and substance. Tesla is the only major tech company making it an integral part of their business to embrace the complexities of insurance companies and residential and commercial general contractors. This is necessary for them to drive adoption of their Solar Roof. They are also already masters of helping consumers with government subsidies that come with environmental tax credits from buying their cars. These are the types of moves needed to, gradually over 20 years, deck out a house, top to bottom, with a seamless, consistent, single-vendor solution that was paid for by rolling it into standard maintenance costs or mortgages.
There’s another reason why the winner in home automation won’t be one of the usual giants in consumer tech today. This will be unfamiliar territory for them since they focus on glamorous consumer electronics rather than practical products meant to last a generation of home ownership. Apple will miss the boat by trying to “design” their way to success. But let’s face it: Home appliances are not “objects of desire” like jewelry. Amazon will try to reach success by slashing margins but “cheap” is still more expensive than subsidized. Google will try winning by having smarter devices than their competitors but most devices only need to be smart enough to turn themselves on or off.
For now, it’s a dream state as we wait to see how home automation can work together for an entire household in a way that’s not cost-prohibitive. It must also be seamlessly integrated into the home. Until these hurdles are “solved problems,” home automation—and the opportunities that come with it for content companies of all types—simply cannot cross the chasm.
Rylan Barnes is the co-founder of ShopSavvy, one of the largest shopping/deals apps, that is part of Purch’s portfolio of brands, and Vice President of Software Engineering – Mobile and Emerging Platforms at Purch.
This article was originally published on Don Marti’s blog on 16 August 2017
As far as I know, there are three ways to match an ad to a user.
User intent: Show an ad based on what the user is searching for. Old-school version: the Yellow Pages.
Context: Show an ad based on where the user is, or what the user is interested in. Old-school versions: highway billboards (geographic context), specialized magazines (interest context).
User identity: Show an ad based on who the user is. Old-school version: direct mail.
Most online advertising is matched to the user based on a mix of all three. And different players have different pieces of the action for each one. For user intent, search engines are the gatekeepers. The other winners from matching ads to users by intent are browsers and mobile platforms, who get paid to set their default search engine. Advertising based on context rewards the owners of reputations for producing high-quality news, information, and cultural works. Finally, user identitynow has a whole Lumascape of vendors in a variety of categories, all offering to help identify users in some way. (the Lumascape is rapidly consolidating, but that’s another story.)
Few of the web ads that you might see today are matched to you purely based on one of the three methods. Investments in all three tend to shift as the available technology, and the prevailing norms and laws, change.
The basic functionality of the internet, which is built on data exchanges between a user’s computer and publishers’ servers, can no longer be used for the delivery of advertising unless the consumer agrees to receive the ads – but the publisher must deliver content to that consumer regardless.
This doesn’t look accurate. I don’t know of any proposal that would require publishers to serve users who block ads entirely. What Rothenberg is really complaining about is that the proposed regulation would limit the ability of sites and ad intermediaries to match ads to users based on user identity, forcing them to rely on user intent and context. If users choose to block ads delivered from ad servers that use their personal data without permission, then sites won’t be able to refuse to serve them the content, but will be able to run ads that are relevant to the content of the site. As far as I can tell, sites would still be able to pop a “turn off your ad blocker” message in place of a news story if the user was blocking an ad placed purely by context, magazine style.
Privacy regulation is not so much an attack on the basic functionality of the Internet, as it is a shift that lowers the return on investment on knowing who the user is, and drives up the return on investment on providing search results and content. That’s a big change in who gets paid: more money for search and for trustworthy content brands, and less for adtech intermediaries that depend on user tracking.
Advertising: a fair deal for the user?
That depends. Search advertising is clearly the result of a user choice. The user chooses to view ads that come with search results, as part of choosing to do a search. As long as the ads are marked as ads, it’s pretty obvious what is happening.
The same goes for ads placed in context. The advertiser trades economic signal, in the form of costly support of an ad-supported resource, for the user’s attention. This is common in magazine and broadcast advertising, and when you use a site with one of the (rare) pure in-context ad platforms such as Project Wonderful, it works about the same way.
The place where things start to get problematic is ads based on user identity, placed by tracking users from site to site. The more that users learn how their data is used, the less tracking they tend to want. In one survey, 66% of adult Americans said they do not want marketers to tailor advertisements to their interests, and when the researchers explained how ad targeting works, the percentage went up.
If users, on average, dislike tracking enough that sites choose to conceal it, then that’s pretty good evidence that sites should probably ask for permission to do it. Whether this opt-in should be enforced by law, technology, or both is left as an exercise for the reader.
So what happens if, thanks to new regulations, technical improvements in browsers, or both, cross-site tracking becomes harder? Rothenberg insists that this transformation would end ad-supported sites, but the real effects would be more complex. Ad-supported sites are already getting a remarkably lousy share of ad budgets. “The supply chain’s complexity and opacity net digital advertisers as little as 30 cents to 40 cents of working media for every dollar spent,” ANA CEO Bob Liodice said.
Advertising on high-reputation sites tends to be a better investment than using highly intermediated, fraud-prone, stacks of user tracking to try to chase good users to cheap sites. But crap ad inventory, including fraudulent and brand-unsafe stuff, persists. The crap only has market value because of user tracking, and it drives down the value of legit ads. If browser improvements or regulation make knowledge of user identity rarer, the crap tends to leave the market and the value of user intent and context go up.
Rothenberg speaks for today’s adtech, which despite all its acronyms and Big Data jive, is based on a pretty boring business model: find a user on a legit site, covertly follow the user to a crappy site where the ads are cheaper, sell an ad impression there, profit. Of course he’s entitled to make the case for enabling IAB members to continue to collect their “adtech tax.” But moving ad budgets from one set of players to another doesn’t end ad-supported sites, because marketers adjust. That’s what they do. There’s always something new in marketing, and budgets move around. What happens when privacy regulations shift the incentives, and make more of advertising have to depend on trustworthy content? That’s the real question here.
Video has become an obsession for many publishers as a method to garner deeper engagement with their audiences. So why not post them on Facebook, YouTube and Snapchat and see if you can wring a few more ad dollars from those platforms? It always gets down to time and money: Which platform is really worth it?
Lately Facebook has been front and center with video, pushing live-streaming last year by subsidizing publishers who created recurring original content. And now comes Watch, a new tab for video with mini-shows from publishers that look more like YouTube than Netflix, funded by Facebook. And that’s after many publishers such as Hearst, Bustle and TechCrunch have prioritized Facebook’s Instagram over Snapchat.
So where will that leave Snapchat? It’s reputation as a millennial digital darling has now matured into that of a sluggish teenager seemingly in need of a parental (read: profitable) business model after another poor earnings report with big losses and slowing user growth. Perhaps Snap will try harder to play nice with publishers since it remains a relatively “safe space” within Discover.
Facebook has long said their future is in video, and a dedicated section to keep you sucked into the app is part of that strategy. The Watch tab also features a “Watchlist” of episodes created around your personalized algorithms, and is meant to capitalize on community viewership for the maximum Facebook experience. Seeing what your friends are reacting to and being able to watch videos within groups is how Facebook’s video platform differentiates from the likes of YouTube, Netflix and Hulu.
While Facebook eventually hopes for “thousands of shows,” so far only a few are available. And like its effort with Facebook Live, Facebook is paying a select group of publishers, including BuzzFeed, A&E, Major League Baseball and National Geographic, to create and offer content specifically for Watch. Publishers can make money either by splitting advertising revenues with Facebook (the social giant gets a 45% cut), or by creating branded content with advertisers from the start.
Facebook is anticipated to take in about 20 percent of the $83 billion in online advertising dollars this year, according to eMarketer, but it’s still unclear how much will eventually stem from Watch, even if it does have potential (and the backing of the all-powerful News Feed algorithm).
Watch vs. Discover
Even though Facebook has put a lot of energy into cloning Snapchat’s best features, it didn’t copy Snapchat’s strategy of only allowing a select group of publishers onto Discover. The result of Snapchat’s control is that it only has about one short original video show per day. When Facebook eventually opens Watch to whoever wants to create video for it — which is part of the plan — the YouTube-like experience, without YouTube’s powerful search function, might make discoverability hard for most people. In fact, as others have reported, Facebook’s Watch stands to increase the effect of the filter bubble.
When it comes to business, given the less than stellar performance of resource-heavy Facebook Live — not to mention the difficulty of making money with Instant Articles — it’s safe to say publishers should proceed with caution about putting all their eggs in Facebook’s video basket. Facebook is already on top of growth as one part of the two-part online ad duopoly, but it has yet to make itself a safe space for publishers to profit as well.
And Facebook will have to also deal with extremist content that has put YouTube in hot water. Facebook has already come under fire for violent content in some of its livestreams, and brand safety and offensive issues have been huge sources of contention for YouTube. It seems it’s only a matter of time for conflict to arise in that department as well for Facebook. Facebook hasn’t done a great job with humans or algorithms on handling fake news or extremist content, so it still has a lot to learn in editorial oversight.
Can Snapchat Snap Out of It?
Meanwhile, with slow user growth and poor earnings performance, Snapchat has a lot to catch up on if it wants to keep pace with competition. Its growth rate this quarter was about half of what it was in the first quarter. When it comes to daily users, Snapchat also only added 15 million new daily users in the first half of this year — whereas Instagram Stories added 100 million, more than six times as much.
Snapchat could try to subsidize more content, but the question is how. And the truth is that Facebook’s better ad targeting and measurement makes it that much more difficult for Snap to grab advertisers onto its platform over Instagram. Snapchat may have an automated ad-selling platform, but some publishers are grumbling that they have no way of knowing their performance on the “dying” platform.
To top it off, Google is planning to launch its own answer to Snapchat’s Discover, “Stamp.” Built around its AMP mobile web pages that load faster, it’ll allow publishers to create visual-oriented content that — unlike both Facebook and Snapchat — they can also host on their own sites. Another boon for publishers is that Google-backed publisher stories would be available in Google search results.
With all this in mind, publishers would do their best to diversify their video efforts and distribution. They’ve tried complaining and teaming up against the tech giants, but maybe this is a better idea: pitting the platforms against each other. If they all want to dominate in video, why not hold out for better terms, subsidies and promotion in the feed? Snap is in a real bind, and this would be a good time to ask them for a better deal. Facebook wants Watch to catch on? Maybe they can offer producers a better deal for good content.
If platforms want to divide and conquer, then publishers should do the same back at them.
From the advance of AI and bots, to the explosion of mobile and apps, media companies must understand and evaluate a myriad of “hot” technologies. Business outcomes are linked to technology choices. Make the right choices, (and investments in the right platforms) and media companies can send traffic into the stratosphere. Miss a step, or a trend, and media companies can lose their shirt. Either way, the ability of media companies to determine their destiny as publishers is inexplicably intertwined with their willingness to experiment and innovate as technology companies.
Since Amazon founder Jeff Bezos bought the Washington Post in 2013, the publication has become a sandbox for digital ideas that span a wide spectrum. At one level, efforts to re-imagine old-school audio podcasts have won the company recognition as a top 10 podcast publisher, according to May 2017 data from podcast measurement company Podtrac. At the other end of the spectrum, experiments with Alexa and Snapchat are breaking new ground, and building new audiences.
Peggy Anne Salz, mobile analyst and Content Marketing Strategist at MobileGroove, spoke with David Merrell, Manager of Product Development at The Washington Post, to discuss how the company is harnessing audio content, exploring voice interfaces, and preparing for the opportunities and challenges of storytelling on new platforms.
Peggy Anne Salz: Podcasts are popular, with almost 20% of U.S. adults ages 18 to 49 listening to them at least once a month. It’s a trend the Washington Post embraced early. Now you have a string of podcasts, several of which hit 1+million downloads as early as a month after launching. Tell me about the chief factors you considered before making your move.
David Merrell: We saw that smartphones are ubiquitous and—because podcasts are now available in everyone’s pocket whenever they want—we saw the opportunity. We then reviewed the studies, did research with our own readers and made the decision to go this route. We saw a fit with our efforts to expand our audio offerings in general across voice platforms such as Alexa and Google Home. But we also knew this was not a core competency. Our traditional competencies in news and storytelling were not what we would need to have a big impact in podcasts since podcasts are not about breaking news. We had to look at storytelling beyond breaking news, and really bring the analysis piece of it, as well as our own perspectives, into the podcast.
Since taking the plunge, we’ve launched several podcasts. There’s the historic focus podcast called Presidential, which was a huge success last year with one episode focused on each president. Now history wasn’t what you could call a core Washington Post product, but we were able to take our expertise and apply current thoughts and questions to historic aspects of the country and create a very compelling podcast that counts more than 9 million listens since it launched in January 2016. We just launched a sequel to Presidential called Constitutional that looks at the history of the Constitution and applies this to current events. With our lineup, we recently cracked the ranks of the top 10 publishers in the U.S. for podcast listens, which given the size of our team and where we were just a year ago is pretty incredible.
Podcasts and traditional news and investigative journalism—both are forms of storytelling delivered by mobile and apps. Some publishers might have been concerned one product would cannibalize the other, but you obviously weren’t…
It is a concern that comes up a lot. But we balance. Our big focus, in terms of business growth, is on digital subscriptions. Sure, it would appear at first glance that podcasts do not drive that since they are also available on iTunes. But we have seen very impressive results from successful marketing campaigns where we will tell people, “This is part of the wide breadth of Washington Post content that your subscription supports.” We’ve also seen huge engagement with our podcasts by our subscribers. So, even though this is a product that is widely available, it’s also a product that is highly engaging – and Washington Post subscribers access and appreciate the content.
Is this important in your efforts to attract new audiences?
When we’re talking about getting in front of new audiences, audio is a component of that. But we’re not limited to one way to get to this goal. Take our presence on Snapchat Discover. It’s also allowing us to get in front of people who wouldn’t necessarily have seen the Washington Post otherwise. Like all traditional media, we have an older audience that is very engaged, like other newspapers, we have had trouble reaching a younger audience and showing them who we are and what we offer in a way they can understand and see value in. And that’s important because don’t have to just get in front of them; we have to demonstrate value and show them why they should make the Washington Post part of their daily lives. Podcasts offer a way to do that, but so does Snapchat.
The Washington Post also launched a Reddit public profile, so another example of being on a platform to reach new audiences and find what a new home for your content. How do you choose and pursue these opportunities, without spreading too thin?
In the case of audio and podcasts, we made up our mind early that it was a boat we wanted to make, not miss. We launched Presidential, and after we were convinced of the success we hired people for audio roles. That’s what’s fueled the explosion is bringing in people with audio experience to help with the recording, to help with the scripting, to give feedback to the folks, internally, who are recording the podcasts. Since then, we’ve hired a product manager, who is almost wholly-focused on audio, and especially on Alexa, and then another hire in the newsroom focused on conversational audio. Now we are at the point where we are figuring out how do we record for new platforms like Alexa and Google Home, and what can we do to create a really sticky voice UI experience?
Frankly, the answer is always part tech and part user experience. What’s your approach?
There are different pieces to our Alexa strategy. The biggest one, is what you just described: the user experience. Right now, it’s like you wake up in the morning, you go to your kitchen where your Alexa likely is, and you say, “Alexa, what’s news?” Alexa cycles through a list of sources that you choose when you first set up your device, and that’s called your flash briefing. Alexa plays the briefing and you hear short bits of news from each of those sources. We’ve determined that this is the the stickiest news experience on Alexa right now because it’s so simple and baked-in to the device itself. It’s one word: news. The user just says news and gets news.
But it’s also a huge learning curve—for us as well as the consumer. As it works right now, people need to install a skill, which you can think of as an app. But there’s no home screen on Echo to remind people to tap on a Washington Post icon. Instead, users have to remember to say, “Alexa, open the ‘Washington Post’” in order to get to our news on the platform. We’ve found that is really difficult. It’s a whole lot easier for people to remember to say, “What’s news?” and then go into their flash briefing.
So, how do you plan to change that behavior or introduce new habits?
We’ve found it starts with marketing. We have to direct people to install our skill, and that means promotions to get our skill in front of people. So, we either need to reach them in exactly the right moment to tell them to enable “Washington Post” on their device, or we need to market to them on other channels away from the device. In which case, the marketing has to also educate them to remember to say, “Alexa, open the ‘Washington Post’” when they are back in front of their Echo. It’s a hurdle for every company with a skill. To encourage habits and get people to remember, we have also introduced a news quiz feature that’s updated fairly frequently to get people to come back in so they can play. They can only access the news quiz by saying, ‘Alexa, open the ‘Washington Post.’
As you said, every company that has a skill, or plans a skill, will struggle with this. What is your advice about how should they approach this?
We have not figured it out, so we don’t have a magic bullet solution. But I would say that content companies should go through the process of building a skill as a way to find out if there is a fit and find what users will value. If you are a smaller newsroom, and you have fewer resources in both engineering and editorial, then I would start with a flash briefing. Direct and educate your audience to add that to their flash briefing lineup, and go on from there since that is really the most engaging way and easiest way to get news on the platform.
Specifically, which channels and formats work to move users from accessing news via mobile apps or whatever platform they are currently using to consider getting news from Alexa.
We are in the very early days of experimenting with that now. To start, use a survey to figure out how many of your users have Echo devices. Then also look at your engaged users and target them. For us it’s our subscribers because they are the “Washington Post” super fans likely to switch. If anyone’s going to remember to say, “Open the ‘Washington Post’” every day, it’s going to be people who are already subscribing to us. As far as the precise channel, we start with email.
The Washington Post is exploring a plethora of platforms and technologies. But it’s also a company that has the resources to do so. What is your advice to companies that can’t be early adopters, but can’t afford to be late to the party either?
First, let me tell you about our approach. We dive in and define a period of time when we’re in all the way. After that, we look at the data to determine if what we are doing is worth further investment, or if we need to pivot. We do this will all the platforms. We go all in with AR, we go all in to test new storytelling format in Facebook Instant Articles, and we did it to create content for Apple News. We do this because we feel like that’s the only way to get enough data. It tells us where these new platforms fit strategically for us, and, it’s not working, we use the data to see how it could work for us and how we could work with these large tech partners to move their roadmaps in a direction that we would want to travel.
The point is I think media companies should be experimenting all the time. The status quo is not going to sustain anyone’s publishing business for very long going forward. So, I would encourage everyone, no matter their size, to experiment. I think it’s the scale of the experimentation that matters, not the company. If you’re a smaller publisher, look at where your audience is. If you have a huge percentage of your audience coming from Facebook, then I think it makes a lot of sense to focus some energy on Facebook products such as Instant Articles.
But don’t just look at your audience; look internally at the skills sets you have. You know, it’s a very low technical bar to start a podcast. I’m not saying that anyone can do it – you need some setup and training – but many companies and even individuals have achieved and engaged huge audiences with podcasts. It’s really a matter of trying it, seeing what resonates, and doubling down on that. And that’s the ethos of experimentation. Doubling down on the success to grow that success is something that any newsroom of any size can tackle.
So, is the post-Bezos Washington Post a publisher or a tech company?
Both. We think of ourselves as a technology company and a publisher at the same time. Our Arc Publishing [software-as-a-service] business continues to expand its client base, and we’re now licensing our tools to other companies including Tronc, which has adopted Arc as its fundamental platform throughout its nine-city metro chain. And there are more clients in the pipeline. Now that isn’t a business for a traditional publisher, but it’s something that we do and that’s all technology that we develop.
I’d say, we defy classification. We are a journalism company, we are a storytelling company and we are a technology company. You know, next to where I sit is a quote on the wall from Jeff Bezos: “What’s dangerous is not to evolve.” And that’s what it feels like to be owned by Jeff: to be constantly evolving and realizing that staying static is not an option. Staying static is the most dangerous thing a publisher can do.
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. Full disclosure: 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.
With the introduction of new advertising formats, ad types, and methods of buying and selling inventory, consumer publishing is undergoing some big changes. To get a closer look at what’s working, MediaRadar conducted the “2016 Consumer Advertising Report,” using our data science-powered platform to review these trends for 2016 and Q1 2017.
Here’s a look at some of the most notable findings.
Native advertisers up 74 percent.
High CPM ad placements are surging. Native ad buyers, in particular, are up, rising three-quarters (74%) from Q1 2016 to Q1 2017. This represents the largest growth in buyers for any ad format. Looking back further, we found that demand for native has nearly tripled since January 2015, which had less than 1,000 buyers (981). In January 2017, there were almost 3,000 (2,882). Consumer advertising is shifting as audience consumption patterns evolve. We foresee advertisers will keep spending more on native because it often outperforms traditional ad units.
Print ad spend declined 6 percent.
The number of print ad pages in Q1 2016 was 117,551. Compared to Q1 2017, the number of print ad pages has decreased 8 percent year-over-year to 107,698. Similarly, estimated print ad spend has declined 6 percent from Q1 2016 to Q1 2017. However, even with this decline, there are still a considerable amount of pages being bought. We notice niche and enthusiast titles are on the rise, with some regional titles flourishing.
Programmatic buyers down 12 percent.
According to our data, 45,008 advertisers purchased ads programmatically in Q1 2016. In Q1 2017, however, the number of programmatic advertisers dropped substantially, falling 12 percent year-over-year. On the quarter, more than 5,000 fewer advertisers (39,415) bought programmatically.
After years of growth, the decline in programmatic buyers is likely attributed to concerns around brand safety – especially given the recent problems for companies like YouTube. This form of advertising continues to evolve as brands seek more control over where their ads are running. We expect to see programmatic rise as more brands move to programmatic direct models.
Our report showed that native is surging, and buyers are investing accordingly. Print ad spend is declining as a whole, but is buoyed by vertical subject matter and titles. Publishers can also expect to see programmatic rise as more brands shift to programmatic direct models. It will be interesting to see how these developments play out in the second half of 2017.
When you think of The Washington Post, you probably think newspapers, not software company. But the reality is that the company operates a lot more like the latter. Under the influence of owner Jeff Bezos, The Post has been trying innovative approaches to everything it does and is experimenting with new ways of doing business.
That includes running an ad tech startup inside the company, one whose job is to use The Post as a sandbox of sorts to come up with new ways to deliver ads and then market the technology they produce to other publications. It’s not the kind of project you expect to find inside a publication like The Post, but it’s one of the qualities that attracted VP of commercial product and innovation, Jarrod Dicker several years ago.
Dicker says he originally reached out to The Post in 2015 about a job because he was seeing the continuous trend of media companies’ reliance on third-party companies for things core to the business, such as ad technology.
After he came on board, Dicker helped form the RED team, which stands for research, experimentation and development. The group, which consists of software developers and product managers, began to look at the ways the company did ad tech.
As with any attempt to change the way you do business, Dicker ran into the “that’s just the way the industry works” attitude. His idea was to look at it fresh. What if you didn’t have any preconceived notions about how ad tech was supposed to work, how would you build it from scratch?
What he knew for sure was that users didn’t like the way ads were being delivered to them. So the first thing he decided to do was focus on improving the user experience. When consumers ignored ads—or worse, blocked them—Dicker recognized that the approach the industry had been taking needed to change if publishing was going to survive and thrive moving forward.
Thinking Like a Startup
“My pitch to The Post early on was—and it was me coming in as an individual contributor at the time—how do we take a startup mentality and really think about our focus as a media company and figure out how to differentiate ourselves,” he said. The problem as he saw it was that most media companies were focusing so much on building the content side of the business, they were forgetting about innovating on the revenue side.
So, he said they took the approach: “What if we actually applied an effort to build products that we think would be perfect for user experience, knowing how our consumers engage on The Washington Post and apply those to what we know brands and marketers want.” And that may just have been the key that unlocked the strategy. Dicker and the team he helped form wanted to create products that worked for marketers and brands as well as users who were fed up with online ads.
Getting talent to come in and work on ad tech proved to be a challenge at first precisely because it had such a bad reputation. “People didn’t want to work on ad problems because of the association with fraud, blocking and bad user experience. And the people who could apply [for these positions] and make the change didn’t want to be a part of it. They assumed that things couldn’t change or be better,” he said.
Those were precisely the people Dicker wanted however. Solving these issues requires people who could look at ad tech problems with fresh eyes. One of the problems they found was related to ad load time, so speed became a priority. The result was aproductcalledZeus that has the fastest ad load times in the industry, faster even than Google, according to Dicker.
The RED team developed Zeus and other ad tech products at the Post including PostPulse, FlexPlay, Re–Engage, Fuse, InContext, and PostCards, and then began licensing them to other media companies, such as the Los Angeles Times, Toronto Globe and Mail, and Chicago Tribune. He found that providing a way to potentially improve ad technology across the industry, while producing another revenue source, was a happy side effect.
Dicker isn’t under any illusions that the tools his team has created are going to supplant the content/ad/subscription revenue model. However, he does see it as a viable additional form of revenue for the company, and he finds it exciting that his team is helping the core business grow and thrive.
“We now also have a Software as a Service model where the Washington Post is no longer solely reliant on advertising or subscriptions. We are actually becoming the technology vendor for other publications.” And that not only helps them diversify revenue, but has created an internal culture of innovation, which should help drive long-term success.