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Advertising | Featured Post | Perspectives

Facebook’s political ad disclosures are a train wreck in progress

As the midterm elections ramp up — and the foreign interference from Russian operatives during the 2016 election continues to haunt pseople — Google, Facebook and Twitter have all announced more stringent rules around online ad disclosures. And the Federal Election Commission too is seeking public input on a proposal that would expand political ad disclosure rules for other media to mobile apps.

So far, though, the disclosure rules at Facebook are not just a work in progress, but more of a train wreck in progress, as flaws with Facebook’s new rules are already emerging. The social giant was supposed to archive all political ads publicly but missed some, and critics have complained that they aren’t giving enough information about how the ads are targeted. And so many publishers are getting caught up in the rules and can’t boost their own political stories on Facebook without jumping through hoops. An effort by the News Media Alliance to get publishers whitelisted has started, but so far Facebook doesn’t have plans to do that.

It’s clear that more overarching, consistent rules across social media and the web — not just from Facebook and other tech giants — are needed to monitor political ads on the internet.

Facebook’s New Rules – And More Hiccups

In May, Facebook launched its ad transparency tool in the U.S., which requires ad purchasers on Facebook and Instagram to reveal and verify their identities and locations. Upon verification, those ads — whether for candidates or political issues — must come with a “paid for by” label disclosing who paid for the ad. Anyone on Facebook can now also search for any of these ads for up to seven years in an online database the company set up.

Almost immediately, the new rules caused hiccups. In California, at least one progressive group was able to continue targeting local voters with negative campaign ads about a candidate without disclosing who was behind the campaign. In Florida, ads for more than a dozen political candidates and organizations — which had cleared previous disclaimer requirements — were shut down because they didn’t reveal who paid for them. This resulted in a loss of thousands of dollars for campaigners already in full election swing mode. Facebook’s new tool also saw an article’s link to a Breitbart piece as a red flag. The article was immediately shut down — even though linking to Breitbart was actually part of a broader initiative to correct partisan propaganda, not spread it.

Meanwhile, the Florida Department of Highway Safety and Motor Vehicles had its safety ads caught up in the terms of the new rules, even though it’s running public service announcements. And certain loopholes allow one person to go through Facebook’s verification process and then give the reins for an account to someone else.

What’s more, Facebook needs to negotiate with unique local transparency laws at the same time it’s trying to implement these rules nationwide and eventually globally. Failure to do so means the social giant is actually violating local laws with these new ad disclosures — which is precisely what’s happening now in Seattle and Washington state, which is now suing Facebook and Google for violating those laws.

Do the Rules Go Far Enough?

While there are obvious problems out of the gate, there are also some important missing elements to Facebook’s rules.

Facebook’s new database is missing ads it should obviously catch, as ProPublica’s Jeremy Merrill, Ariana Tobin and Madeleine Varner have reported. But more strikingly, Facebook is also not revealing a critical piece of information that’s been a contentious force in past advertising: how the ads are being targeted. ProPublica previously found, for example, that certain housing ads on Facebook were made to exclude African Americans and other “multicultural affinities” from seeing them, which violates Fair Housing Act protections.

In response, ProPublica is building an independent database of political ads to monitor Facebook’s efforts.

Publishers Struggle

While certain roadblocks are to be expected in the process of setting things up, publishers have to be especially alert to Facebook’s new rules. The definition of “ads with political content” is “astonishingly broad and may affect any promoted content that relates even vaguely to the political system,”  said Ned Berke, program director of audience development at the Center for Cooperative Media at Montclair State University.

Here are some particular points publishers should keep in mind to avoid scuffles, according to Berke:

  • get authorized;
  • bookmark the 20 issues of public importance Facebook has outlined;
  • modify ads that started running before May 24 — before Facebook’s new terms launched — so they have the required disclaimers;
  • watch out for the keywords that could trigger Facebook’s machine-learning classifier.

Many angry smaller publishers have decided not to boost posts or run Facebook ads until the social giant makes it easier for them to get verified or starts a whitelisting regime so they can promote their journalism covering politics.

Self-Regulation?

While the FEC is currently waiting on public comment for its proposal of new disclaimer rules for online political ads, the Digital Advertising Alliance is advocating for more self-regulation that could potentially work in conjunction with the FEC’s proposal. The DAA hopes to create new “Political Ad” icons that would link back to sites disclosing the identity and contact information of advertisers. It would be comparable to the DAA’s AdChoices, an icon that informs consumers of tracking data and gives them the option of opting out of behaviorally targeted ads.

Like the FEC’s proposal, it’s unlikely the DAA’s suggested political ad icon could come out in time for this year’s midterm elections. But the broader point is that we need more compliances on a federal and organizational level aside from just companies making their own rules for their platforms. The Honest Ads Act, which would bring online advertising disclosures on par with television ads, is another push in this direction, though the bill hasn’t gone far in the current Congress.

The Good, The Bad, The Hopeful

Facebook knows it may not catch all ads and has welcomed feedback on actors that appear to be trying to game the system. It’s also stated that political ads will be subject to human review on top of the machine-learning classifiers. The company is also in talks with groups, including news publishers, about how the authorizing, labeling and archiving of political content will affect them. However, the specifics for how publishers can avoid being bogged down in disclosures that may affect their online presence have yet to be announced.

Still, the ad tool and the database are currently confined to the U.S. And in countries like Sri Lanka, Facebook has already proved to be the gasoline that ignites political wars on social media. While the company maintains it’s committed to expanding these initiatives internationally, there’s still a long way to go. While the hope is that things will improve over time, Facebook needs to tread with care and get this balancing act right to make sure trusted publishers can promote their important political coverage. Let’s also hope oversight from independent groups and government regulators comes through as well.

Innovation

How Google’s News App is tackling some of social delivery’s tough problems

Google’s CEO Sundar Pichai kicked off last month’s Google I/O by stating that “there is more great journalism being created today than ever before.” Pichai and Trystan Upstill, Head of News Product and Engineering at Google, went on to highlight the programs and products Google was working on to help publishers sustain quality journalism. A lofty approach by a company often on the receiving end of publishers’ ire. They are making an effort, however, by doing the work and committing the resources to change the narrative.  

The core of Google’s strategy relies solely on the Google News app. Typically, social feeds aren’t aligned with publishers’ needs. This is because social lacks brand awareness, revenue opportunity, and data about the end audiences. Furthermore, social feeds are often blamed for creating “filter bubbles” that negate a holistic approach to a topic and disintermediate the publisher/reader relationship. The Google News app has put some serious work into addressing some, but not all, of these concerns.

Here are the top four concerns that they appropriately addressed.

1. Featuring the Publisher Brand

The publisher brand is well-featured and prominent in the app experience. This helps bolster publisher brand awareness and avoids the “I read it on Facebook” dilemma. (This is what over 50% of readers answer when asked which publisher authored an article they read online.)

2. Avoiding the “Filter Bubble”

The “Headlines” section of the new app lets readers view what everyone else is reading. This helps address the “filter bubble” effect that comes from a 100% curated social experience. Discovery of new content from outside your social circle or creating more engaging ways to expose interesting content is critical.

3. Delivering Full Coverage

Our favorite geek-out feature is “Full Coverage,” which is a link placed under most news topics. Full Coverage provides multiple points of view from many different sources. As stories evolve over time, Full Coverage hosts a timeline so readers can understand the changes in the storyline. To enable Full Coverage, Google uses temporal co-locality. In layman’s terms, Google can understand the people, places and things related to a story in real-time and then package them. Even tweets, fact-checking and commonly asked questions are included in Full Coverage.

4. Creating Better Content Experiences

In the ‘make it easier to consume content’ category, “Newscasts” is a new user experience for packaging content. It neatly combines articles, videos, quotes and other types of content on a single topic, no matter where you are in the app. Upstill referred to it as “a preview that allows you to get a feel for the story.”

At Outbrain, we applaud any effort that helps readers discover new content, and addresses publisher concerns. We aren’t ignoring the legitimate business issues publishers have with Google, but are more than willing to highlight a great product, we’re all readers at the end of the day.

Research

Hiding in plain sight: The HTML5 security conundrum

In recent years, as a growing number of security woes plagued Flash users, browser vendors and developers began to flee Flash for the more secure HTML5 and other open standards. Between 2014 and 2018, the percentage of people viewing a page in Chrome with Flash slid from 28% to 8%. Meanwhile, the percentage of websites that use HTML5 has grown to 70%.

In 2015, when the Interactive Advertising Bureau (IAB) updated its digital advertising guide with best practices for using HTML5, they cited security as the chief reason behind publishers’ adoption of HTML5. While the IAB was right that HTML5 offers far better security than Flash, it has a critical weakness. Hackers now use HTML5’s security functionality to hide malware. This should give pause to HTML5 devotees.

First identified in April, this malware appears to be part of a coordinated campaign that targets iOS devices. This is partly because they are popular, partly because they make detection even more challenging. It has produced at least 21 separate incidents affecting dozens of globally recognized online media publishers and at least 15 ad networks. Ironically, the malware by no means exploits an HTML5 vulnerability. Rather, it uses functionality that not only secures software from malicious attacks by making code difficult to understand, but also helps to deliver a rich experience.

Exploiting Weaknesses

In 2015, just as the exodus from Flash began in earnest, university researchers discovered several techniques to convert HTML5 into a safe haven for malware. The researchers found that if malware were written using the techniques to make code hard to read, it would avoid detection regardless of which browser web visitors used. When used to hide malware, these techniques were coupled with a drive-by download attack that followed these steps:

  1. Redirection and Cloaking: The victim goes through a series of redirects that effectively hide attack’s source. The victim’s browser information is gathered and sent to a remote server. If the browser has any vulnerabilities commonly, a malware code is sent back to the client.
  2. De-obfuscation: The malware code is obfuscated (broken into chunks) in order to prevent detection. Once vulnerabilities are found in the browser, the code is de-obfuscated (converted into clear-text and reassembled).
  3. Environment Preparation: The malware puts together code that will exploit the vulnerabilities.
  4. Exploitation: The malware injects the harmful code.
2015 HTML5 Malware Anatomy

A Growing Problem

Over the course of the two years that immediately followed the publication of the research, malware developers appeared to make little use of HTML5. In 2016, they used a bug in HTML5 to freeze computers and obtain unsuspecting users’ phone numbers. Then, in 2017, The Media Trust malware team identified a small number of random HTML5 malware that made little to no impact on the broader digital ecosystem. It is possible that bad actors behind the malware were simply experimenting before staging a more coordinated attack in a larger scale.

What distinguishes this year’s HTML5 malware from earlier versions is the underlying campaign’s level of coordination and the style of attack. More specifically, the campaign reflects the malware developers’ understanding of the display advertising supply chain. In particular, they recognized the thousands of potential victims. They stage the attack without user interaction, relying instead on auto-redirection. The result is a quicker, much more widespread attack on numerous unsuspecting users.

2018 HTML5 Malware Anatomy

The Malware Technique

  1. Delivery:  When a user visits a targeted online publication, an ad network delivers the malicious ad to the webpage.
  2. Checking Criteria: As the user’s device meets each criterion—namely, whether it’s iOS and whether it’s connected to the user’s carrier—the code serving the HTML5 creative checks the criteria. Once the criteria are met, the malware is reassembled in a way that allows the malicious code to execute.
  3. Auto-redirection: The redirect is executed. The user is taken to another page that requests their input of personal information.

Preventing the HTML5 Malware Spread Through Campaigns

Should advertisers and marketers stop using HTML5? The answer is no. HTML5 is still far more secure than Flash. However, the HTML5 malware, along with a burgeoning number of malware, are proving more difficult to detect and will require marketers to change how they secure their digital supply chain.

HTML5 malware fly under the radar of traditional security measures like antivirus. Thwarting it requires a more holistic approach where organizations collaborate with their digital partners and third parties on improving the security of their digital ecosystem. It also requires marketers to work with a cross section of teams outside of marketing — cybersecurity, compliance, etc. — in order to improve the security of their creatives and digital assets.

In the digital marketing and media world, hackers prefer easy targets like third parties because they often have weaker security postures than their clients. Once hackers break through a third party’s security measures, they can enter the client’s secure networks undetected through a trusted connection. Another easy target are online ads, which let hackers spread malware to thousands of users without having to compromise or infect a website.

Organizations can avoid third-party and online ad risks by putting in place a robust digital vendor risk management program to police every actor and every code that executes in their digital ecosystem. Such a program enables organizations to develop and continuously update their inventory of direct and indirect vendors.

In today’s complex, dynamic digital ecosystem, an organization’s mix of vendors can change daily. Keeping track of these vendors will require continuous, real-time scanning of digital assets. Second, it helps assess and document the risks from each of these vendors. Third, it enables organizations to share policies and work with vendors and digital partners on resolving issues. Finally, it enables organizations to terminate vendors who continue to violate policy after they have been put on notice.

About the Author

Patrick Ciavolella is Digital Security & Operations Director at The Media Trust. He has been working at the company for over 11 years, protecting clients’ digital ecosystems from the ever-evolving threat landscape. His experience gives him a unique perspective on how companies can defend against rapid, sophisticated and targeted malware attacks.

Perspectives

The key to reaching Gen Z is speaking their digital language

You thought marketing to Millennials was tricky? Meet Gen Z. They’re not only digital natives, they’re social and mobile natives too. To gain insight into this generation, MNI Targeted Media Inc. commissioned a study of Gen Z behavior, surveying students at major universities about their media consumption habits. And we learned a lot.

This generation, born between 1995 and 2012, are mobile-first, and rarely seen without their phones in-hand. But don’t put them down just because they’re constantly staring at their smartphones: Gen Z-ers are socially fluid change agents with tremendous purchase influence.

They may be young, but they’ll be voting soon – and they’re more fiscally savvy than you think. Gen Z is entrepreneurial, saving up for and buying the things they want. Their purchase decisions are partly influenced by their peers and personalities they admire. But take note:  These influencers also need to align with Gen Z values and marketers will want to recognize that Gen Z are influencers and entrepreneurs unto themselves.

It’s equally important for marketers to keep messaging relevant and authentic. Interestingly enough for Gen Z, celebrities aren’t their “go to” source. For a generation that lives on social media, their influencers can be their fashion forward friends, political influencers or even fellow Gen Z members who have already gained notoriety on their own terms. In this regard, context matters and the platform on which they engage with influencers will be as important to marketers as their messaging. Businesses that take the time to understand how this generation consumes media, how they grow to trust and how they shop and make purchases stand to benefit.

This generation is smart, and they’ll see right through attempts to “buy” them. But if you approach them with authenticity and engage them on the channels and platforms where they’re most receptive, you may just win them over. Publishers need to adhere to these same insights, with an appropriate responsiveness when there is urgency from their audience. We can look to the recent news of ABC canceling its #1 ranked comedy Roseanne after the star’s bizarre Twitter rant. In this case, we saw the network put authenticity and value before revenue – which in the end I suspect will pay off in spades.

The key to making a connection with them is to make sure you know and understand all the channels in which they consume media – that means podcasts, YouTube, Snapchat, Twitter, Instagram, and Facebook, for starters. There’s more to it than just advertising or posting on these channels: you have to speak their language. You will want to have subject matter experts who really understand how Gen Z communicates on each channel so that your content is authentic. The language across channels varies, and the nuances will be important. Getting it wrong could mean losing this audience’s confidence for the long term.

With this in mind, here are six laws of marketing to Gen Z:

1. Keep your content platform-specific

This generation moves through social channels seamlessly, and they understand the value of the storytelling within each platform. They expect the brands they follow to do the same. You need to know the rules of engagement for each social network, and map custom content for each in a unique way. Here’s what they expect across channels:

  • Snapchat – A way to share real-life moments
  • Instagram – How they showcase their aspirational selves
  • Twitter – Their top news source
  • Facebook – A source of general information
2. Keep your prices competitive and your quality high

This is a generation of savvy shoppers. They like to save money and they know how to compare prices. If a competitor is selling a product for less, they will buy it for less. That said, they respect good quality, and will pay more for a better product.

3. Let them tell the story with their own original content

If you give Gen Z customers an opportunity to create user-generated content related to your product or brand, they’re likely to do it. There are big payoffs to relinquishing control of your branded content:

  • They like seeing their peers using products – and it will create a positive ripple effect.
  • They like posting content to their own channels.
  • They like getting noticed, and your brand benefits from going along for the ride. You get to enjoy the dividends by driving engagement and reinforcing your brand identity.
4. Be authentic

Millennials had a reputation for insisting that brands be “real,” but Gen Z takes it a step further. They want to feel like they know the people behind the brand, and they like brands that care about the issues that are important to them. Brands like Tom’s and Bob’s that donate to charity do well. Mattel’s support of same-sex marriage and Dick’s Sporting Goods halting sales of assault rifles were both Gen Z-friendly moves.

5. Want to capture them in-store? Consider testing AI

More than half of Gen Z shoppers go into stores, while their millennial contemporaries prefer to shop online. AI can help target and engage these younger customers while they’re in-store, creating more personalized and unique experiences. Sephora, for example, has created a new, AI-driven feature that helps shoppers find their ideal shade of foundation.

6. Ask them for feedback, and then listen to their responses

As digital, social and mobile natives, Gen Z is comfortable engaging in discourse with brands they care about. If you’re unsure about how a particular campaign or message you’re working on will resonate, solicit their opinion. They’ll respond, and they’ll be honest.

Adding Gen Z employees to your organization is the best approach to engaging them as consumers. These young adults have a language and a style of their own that is hard to replicate. So, bring in the real deal, and integrate them in with your older team members. Not only will this help your organization better understand how Gen Z moves through the world, it will ensure you’re not embarrassing yourself by posting three-month-old memes to your social channels. Gen Z team members will make sure you’re always authentic, and that your messaging is always current and on fleek.

I mean, on trend.

Vicki Brakl is Vice President, Marketing of MNI Targeted Media Inc., and its three business units, Targeted Media Health, MNI, and Harpoon Digital.  A 16-year multi-channel marketing veteran with a rich background that spans executive management, strategy, branding, positioning, promotion, experiential and event planning, public relations and internal communications, Vicki has extensive experience developing innovative multi-platform brand plans and media strategies. Her previous roles include client and agency-side positions at PepsiCo, several below-the-line Omnicom agencies and a few startups in the CPG, Publishing and private-public partnership sectors.  She has crafted and executed high-impact marketing plans for Pepsi brands, Walmart, Bank of America, TD Ameritrade, Citibank, Skinny Water, and countless others.

Perspectives

DCN’s must reads: week of May 24, 2018

Here are some of the best media stories our team has read so far this week:

Advertising | Featured Post | Perspectives

Being big and behaving badly

On a panel a few weeks ago, Makan Delrahim, a top antitrust official at the Department of Justice, said that “Being big is not a violation of antitrust policy. Being big and behaving badly is a problem.”  

We’ve established without debate that Facebook, Apple, Amazon, and Google are big. As their Q1 earnings showed, they’re extraordinarily big. Rockefeller big. Carnegie big. But how have they been behaving? Rather than make any assumptions, I went to Twitter knowing many of my followers work in the press, inside the beltway, or across our industry and are very close to the behavior of the tech giants.  

The results were surprising to me. Not because Facebook came out on top. But that one out of three voters chose Google over Facebook. (Apple and Amazon didn’t even come close.) 

I thought it was worth examining the parallel paths of these two “winners,” to consider some facts that may not be on everyone’s radar.  

Facebook and Cambridge Analytica

Everyone has had their punch lines about the ineffective ten hours of United States Congressional hearings with Mark Zuckerberg in Washington last month. We can add this week’s meeting in Brussels to the joke. But not everyone has been paying attention to the work being done by the UK Digital, Culture and Sports Committee, which has been digging into the case for nearly 18 months and asking really smart questions. Here are a few facts established as of today. I’ll let you read through them and determine who is behaving badly: 

  • Last month, Facebook disclosed that up to 87 million Facebook users’ data was harvested in 2014 by GSR and then sold to infamous Cambridge Analytica (now being dissolved). These disclosures were made after joint reporting by The Guardian and The New York Times, and after legal threats by Facebook were reported by The Guardian. Facebook later admitted these warnings were not their wisest move and offered an apology.  
  • Facebook has refused to clarify exactly when Mark Zuckerberg or Sheryl Sandberg first became aware of GSR or Cambridge Analytica. Though The Guardian first reported on both companies in a report on December 11, 2015 and a Guardian reporter started asking questions in December 2014. 
  • GSR was launched and run by two “equal partners,“Joseph Chancellor and Dr. Aleksandr Kogan. 
  • It was recently disclosed that Facebook signed a confidentiality agreement with Kogan. This confidentiality agreement was signed by Kogan and an undisclosed Facebook executive on June 24, 2016. (Interestingly, this was the date results of the vote on the Brexit referendum were announced.)  
  • Lesser known fact: In November 2015, Facebook hired Chancellor and he signed a confidentiality agreement as an employee of Facebook. Yes, Facebook hired someone who participated equally in what Facebook characterized to The New York Times as a scam and a fraud. 
  • This leaves us with a minimum of 27 months (December 2015 through March 2018) and a maximum of 39 months (December 2014) in which Facebook was aware of the records being harvested and sold to Cambridge Analytica. Yet, they’re still not sufficiently answering questions about the matter.  
What is next here:  

The emerging pattern appears to be a massive cover-up. So far, despite a threat of future arrest, Mark Zuckerberg has refused to give testimony in the UK where the toughest questions will be asked. The Federal Trade Commission is investigating the issue raised by Senator Kamala Harris’s questions about who made the decision and why Facebook didn’t inform its users back in 2015 when they knew the “fraud and scam.” Being big and behaving badly.  

Google and GDPR

For a while now, DCN has been analyzing, advocating, and lobbying on GDPR, which will come in to enforcement this Friday, May 25th in the European Union. The law, which applies to data collection of EU residents, was approved in April 2016 so it’s anything but new at this point. However, despite DCN and publishers inquiring for many, many months, we only found out what Google was up to in the 23rd month of the two-year grace period. And then only after the Wall Street Journal scooped Google on their plans. (Un)fortunately, this news happened in the same week the Facebook and Cambridge Analytica news was breaking so its plan didn’t get the attention it deserved. And to be clear: Google’s plans are fairly offensive. 

Google’s Privileged Position

Let’s take a step back and look at how Google operates as a privileged platform in the advertising marketplace where they can set the rules of the game while also playing and winning the game. What gives Google the most leverage is its market power and unprecedented amount of data collection in this market (all estimates courtesy of Arete Research).  

  • Google DBM (their advertising bidding solution on the demand side) has $1.7B net revenue vs Google’s nearest peer (The Trade Desk) at $308 million. MediaMath is in third place at around $220 million. 
  • Google DoubleClick AdX (their exchange sitting in the middle) has $1.9B revenue vs nearest peer at $155 million. 
  • Google DFP (their solution on the supply side) has $700 million net revenue vs nearest peer with significantly less. 
  • Google’s measurement/attribution solution has $600 million net revenue vs nearest peer at under $100 million. 

In other words, Google is 5-10x its nearest competitor in every stage of the digital advertising supply chain — where Google both creates the market and makes the market. So, the question becomes what is Google’s responsibility in rolling out the GDPR, the most significant data protection law in history? We know our members depend on Google for nearly every component of their advertising revenues (which drive on average 80% of our members’ overall revenues.) It’s a simple fact that nearly every one of DCN’s members use Google DFP as their ad server.   

The Monopolist Move

So DCN was rightly concerned by Google’s vague policy updates where they attempted to retain all of the rights to the data harvested by each and every one of Google’s ad services without details in how they would use this data. And that they did this while the risk was being assigned to the publishers was, as I previously said, fairly offensive. They might as well don a top hat and cane.  It’s the move of a monopolist.  

Taking on Google regarding their policies in protecting one of their most treasured assets, their data collection, isn’t for the faint of heart. So, we worked with three other major global trade bodies representing more than 4,000 publishers and sent a letter of concern to Google CEO, Sundar Pichai. In the month since we’ve sent this letter, Google has continued to set up private meetings with publishers. However, we’ve consistently been told Google is unwilling to commit to the necessary terms for publishers and when they even begin to approach something workable, they will not put anything in writing.  

Hence the open public letter by DCN with our seven key questions. 

We’ve found it unfortunate that Google has refused to answer our questions and has since moved on to public relations tactics including organizing a “collaboration meeting” on May 24th — the last day before GDPR enforcement begins. We took the counsel of the other associations, their members and the legal and legislative experts across our DCN membership and declined Google’s invitation for a private, off-the-record event. 

What is next here:  

At this point, it’s unequivocal that Google has strategically waited until the final months with the goal of protecting its own interests. This serves to push the market towards systems orchestrated by Google and the trade bodies that represent it and protect its interests above the interests of the public and the publishers. Again, given the dominance of Google throughout the digital advertising supply chain, publishers don’t have a reasonable choice to not sign Google’s terms and essentially shut down advertising revenue on May 25.  

The key question will be whether Google and its trade bodies roll the EU regulators. It’s worth noting Facebook’s troubles and a high-profile 60 Minutes report on Google last Sunday won’t help their cause.  Being big and behaving badly. 

When I do the math on these companies’ actions, they both add up to being big and behaving badly. And that’s a big problem. Being big is not inherently bad. Power can — and should — be used for good. But with great power comes great responsibility. And these are not the actions of responsible companies.  

Perspectives

How consent fragmentation could alienate users and undermine the GDPR

After a two-year grace period to allow time for preparation, GDPR finally goes into effect this week. For most enterprises, mapping and remediation of private data storage has been the focus. But now it is time to focus on sustainable operational compliance starting on May 26th and continuing for years into the future.

If you monetize with programmatic ads, we’ll assume that your legal team has made the (very typical) decision that “consent” is the best legal basis for processing data under GDPR. Regardless of which basis you choose, data subjects must be given a clear and understandable explanation of what data you will use, how you’ll protect it, who you will share it with, and how long you’ll keep it. When the user gives his (now “informed”) consent, a transparent, trusting, ongoing relationship is formed – exactly what the authors of the GDPR intended.

Because it can be revoked at any time, and processing must stop when it is, consent must now be easily checkable by both internal company activities, and also by third parties (called “Data Processors” in GDPR lingo) that utilize the data (for example, ad networks). Clearly, “consent” has become a very important new corporate asset.

The Programmatic Problem

The AdTech industry has realized that under GDPR, lack of consent could quickly lead to the end of programmatic ads. Last November, the IAB trade group proposed the Transparency Consent Framework (TCF), an open source consent solution that it believes will allow the ads to keep flowing. Many observers, (including DCN) have criticized it for technical and functional shortcomings.

The purpose of this post is not to dissect the flaws of the IAB TCF. My goal is to make clear that even if it worked properly, the IAB’s solution could never be considered a complete consent solution for a publisher. Its only purpose is allowing programmatic ads to continue to flow.

As this point, you may think “So, what? It will keep my ads running. Why not use a free solution to manage the programmatic ad part of the GDPR consent puzzle?” I submit that consent needs to be handled centrally as a key corporate asset, just like accounting, HR, strategic, and other corporate data.

Consent Deconstructed

Here is a real-world example illustrating what will happen when consent is not handled centrally. A mid-sized publisher runs ads (of course) but also offers newsletters, email-based promotions with sign-ups, and an affinity / personalization program with a persistent login.

If the publisher chooses the IAB TCF solution to run ads, they still have no solution for storing or managing user consent to their internal GDPR uses. (This could include email newsletters and affinity programs, but potentially many more. Today’s digital marketing creates a lot of data ingress points).

The publisher chooses a “GDPR compliant” third party email provider that gathers consent and stores it internally (not accessible to publisher). For their affinity system, the publisher creates a basic consent flag system on their internal servers. In theory, the publisher is now covered for GPDR consent.

A Poor Patchwork

In actual practice, this “patchwork” solution is very unpleasant for users. They will be interrupted and asked for their consent for ads the first time they come to the site post-GDPR. They will again be interrupted and asked for consent (by a different vendor and with a different UX) when they join the email list. Then, they will again be interrupted and asked for their consent with a different UX when they join the affinity program.

Because of the disjointed consent strategy (known as “Consent Fragmentation,” the user has been interrupted 3 times for consent, shown 3 different notices, and given their consent using 3 different user interfaces. At a certain point, users will become frustrated with the continual interruptive requests for consent, something the GDPR authors envisioned and referred to as “Consent Fatigue”

It gets worse. Under this patchwork, when a user decides to revoke or modify their consent, their path to success is extremely arduous (the opposite of GDPR’s “easy as giving consent” wording in Article 7).

Since the IAB TCF does not provide any user interactivity, the publisher must use an IAB approved Consent Management Platform (CMP) to provide users with required rights management capability. To modify their ad consent, users must use the CMP dashboard that the publisher has chosen.

To revoke email permissions, the user would have to visit the “unsubscribe” page of the email vendor. Finally, for the loyalty program, they would need to use a “revoke my consent” function from the publisher’s in-house consent manager.

Centralized Consent

Consent fragmentation is the result of using different “Band-Aid” systems to hold user consent, and there is no positive aspect to it. This situation came about because the publisher did not understand the true importance of consent. No publisher would ever hold separate general accounting ledgers in multiple unconnected silos. It would be a certain recipe for disaster.

This disconnected experience is bad enough for a single site. Now imagine how users will feel if most sites ask their consent three or four times. This is the nightmare scenario that risks the failure of GDPR because users will simply stop giving consent.

I think you can see where this is going. Post GDPR, user consent is a vital corporate data asset, a key gating item for all user interactions. As such, consent must be gathered wherever needed. However, it must stored in a central repository, where is easily accessible to all internal activities, and to a curated group of external partners (email services, analytics, ad partners and downstream ad partners.)

With a single consent repository, users are presented with the experience they expect: one single sign-on dashboard. It will provide them with an accurate and easy to understand notice of the uses of their private data, easy access to exercise their rights, the ability to selectively opt-in or out of each of the services used by the publisher, and a secure point of access for SAR and breach notification. The solution must be an easy to use, single sign-on privacy management is evidence of “Privacy by Design,” as envisioned by the authors of GDPR.

Roy Smith is founder and CEO of PrivacyCheq, a leading provider of SaaS privacy compliance services to enterprises and small business worldwide.

Perspectives

Drive customer connection and retention with the 3Cs of empathy marketing

Our lives and devices have become inextricably intertwined. Five years ago, mobile devices eclipsed desktops to become the platform that defines our daily routine. Mobile is our go-to for advice, assistance, and access to content and experiences. This attachment to mobile and apps turns up the pressure on brands and content companies to engage with consumers in ways (and contexts) that demonstrate a deep understanding of their needs and a genuine desire to put people first.

Fulfilling consumer demand for content that is relevant, valuable, and in no way intrusive is not a mere courtesy; it’s a business imperative. Mobile has created a strong sense of entitlement among consumers — particularly Millennials and younger generations, which are accustomed to instant gratification with a swipe or click. The outcome is an audience of empowered consumers who want what they want, when and how they want it.

Audience Appropriateness

Mobile also forces companies to obsess around what I’ll call the “appropriateness” of the how, what and when of their side of this two-way conversation taking place on mobile. In a sense, mobile has rewritten the rules of engagement. Mobile is a fiercely personal device that requires companies to ask for consent and earn trust. A major trust factor is showing that they understand and appreciate what consumers want and value most. Missing a step and delivering inappropriate experiences has negative consequences.

Recent research from Forrester suggests that companies lack the skill set- mindset required to meet customer expectations. Despite “skyrocketing” mobile adoption rates globally, the analyst firm observes that most companies “struggle to engage with consumers via mobile.” Specifically, only 32% say they have systematically integrated mobile into their marketing approach, and less than 56% say they use mobile to transform the customer experience.

Underestimating the pivotal role of mobile is everyday life represents a dangerous disconnect with business best practice. After all, mobile is not another screen. It is the screen. The 2017 Mobile Maturity study, conducted by digital media and digital marketing solutions company Adobe and based on a survey of 4,000 consumers across the U.S. and Europe, reveals that over 90% of respondents consider mobile to be their “primary device.”

The Age of Empathy

People are more connected that ever. And they also demand to be heard. They hunger for experiences that are genuine. Companies must show they listen and care, and cultivating these capabilities is at the center of Empathy Marketing.

In daily life, empathy is all about the ability to take a walk in someone else’s shoes. It’s the action of understanding and being sensitive to the feelings and thoughts of another human being. In a company-to-consumer scenario, empathy is an approach fueled by hard data and soft skills to deliver people content and experiences that are amazing, appropriate and deeply engaging.

Empathy Marketing is mobile-first and consumer-centric, wielding the unique ability of the mobile channel to deliver personally- and contextually-relevant content and experiences that move the needle. But it’s not about technology. Companies must also move our hearts, with approaches that show they listen and care. Based on nearly two decades of research and writing about engagement marketing examples and best practice, I have identified 3 approaches (the 3Cs) that demonstrate empathy and drive results.

The 3Cs of Empathetic Marketing

Cognitive

Content, context, and, now, cognitive. It’s the capabilities mix that allows companies to move from acting mobile-first (table stakes at this point, by the way) to being people-first. At its core, this approach builds on a deep understanding of the consumer to anticipate needs and requirements and pinpoint proper moments in the mobile journey to interject with meaningful and useful suggestions or assistance – or simply show presence. The input is data, but not just from mobile.

Companies that have a broad range of content assets should connect the dots in the online, offline, mobile, social, and digital ‘sessions’ that define our daily routine. These insights will allow them to deliver what consumers want (when and how they want it and on their preferred platform) even before they want it. The output is a clear flow of content and experiences that feels as if it has been designed specifically to satisfy the individual’s need-state. Algorithms help. But companies should also act human, asking questions and responding in ways that indicate they are genuinely interested in listening and, above all, learning. Communications (notifications, text and email) are careful and crafted to show companies are there for their audience and dedicated to making their lives better.

Convenient

Companies can blame the new breed of on-demand apps, such as Uber, for setting the bar high. Apps and experiences that have succeeded in reducing time, friction, and frustration have created the consumer expectation that everything should be so simple. Avoid complexity at all cost. Start with a design that reduces clicks to content and keeps what’s important in “thumb’s reach.”

However, it’s not enough to embrace design that reduces friction. Fuel interactions with deep customer connection and automation where it counts. Avoid making consumers repeat actions or input information, particularly if they already provided at an earlier stage of the journey. Build in features and functions allowing consumers to save settings, store what they have read (or want to read later), make lists, and share with their communities. Think about the actions your content is likely to inspire plan to make sure their individual path-to-action is hassle-free. This starts with a review of your landscape to identify options and partners (for example, complementary content companies and apps) essential to delivering consumers a one-stop experience.

Borrow a page from the Ubers of the world — companies that offer services from the source down the last mile to the customer — and position your content within a tight-knit ecosystem with you at the helm. For example, if you have travel content, pair it with sites or apps that allow consumers to book a hotel or trip directly from the same page in the app or on the website in the all-important moment of inspiration. Remove the wait, reduce the friction or just enable an impulse action. Whatever you do, demonstrate a laser-focus on making experiences easy and enjoyable and consumers will reward your efforts with intense loyalty.

Creative

Effective approaches move the needle, creatives move the heart. Acquire and retain audiences with the help of authentic marketing creative that shows you understand and uphold what is important to them. The right creative resonates with your audience. Making that match requires a firm grasp of data that goes beyond demographics and location. Do your research, starting with consumer studies and surveys to open the aperture of how you see your audience. Harness psychographics to understand where your audience is coming from and help you map a journey that is aligned with their lifestyles and life stages (not just the stages in the funnel). There are no blueprints. But there are valuable lessons and guidelines if you have the vision to look outside your vertical.

A great example is finance, which has seen a massive decline in consumer trust and brand love. Mobile fintech apps and startups are gaining traction with the help of approaches that show they understand what their audience want and are sincere about helping them to achieve life goals. It starts with something as simple as imagery that is inclusive. For example: showcasing women in campaigns creatives and empowering them with the feeling they can take control of their financial future. Effective assets and advertising demonstrate traits women value most (trustworthiness, dependability, and accessibility). Companies can adapt these key takeaways to power approaches that drive consumer connection and deepen trust.

As the saying goes: Actions speak louder than words. This is a connected age where consumer crave authenticity. So, companies must use everything they know about their audience to deliver experiences that address needs, anticipate interests, or simply go the distance to make their life better. Anything less shows disregard for the individual and tells consumers you’re not listening, or worse, you simply don’t care.

Perspectives

What Medium’s message should tell publishers about collaborating with tech partners

I remember the first time I discovered the existence and encroaching omnipresence of the Media Technology Complex. I was covering the film and music fun at South by Southwest 2009, when I ran into a pair of young enthusiastic coders who I previously met at some event at MIT back home. Unlike me and all the road dog journalists I knew in Austin who had come to drink and hustle like a pack of donkeys, the coder journos were in Austin to speak at the burgeoning SXSW interactive conference, which it turned out had a journalism track. I would have liked to check it out, and to follow up with any progress they made upon my return to Massachusetts, but like innumerable other overworked exhausted hacks, I was far too busy working 80-hour weeks covering several beats to pay too much attention to the sausage-making process and evolving innovations blossoming around me.

Surveying the Landscape

In the years that followed, I focused an increasingly amount of attention on the seismically shifting “digital landscape,” as the chaos that has run amok throughout commercial media this whole millennium is easily and often euphemized. In time, I even jumped in as a close observer, student, and participant. I was sent to cover summits at places like Google’s New England Research and Development center. I wound up profiling startups such as Echo Nest, which has since been absorbed by the music behemoth Spotify, as well as MuckRock, an essential online transparency resource that I still use today, before other writers gave them a glance.

While I have been fascinated by the changes in both social media and journalism, I’ve also come to acknowledge developments in these sectors with buckets of skepticism. That doesn’t mean I don’t get played like a damn sucker every now and then. I do. That’s what this essay’s all about. But unlike many grantmakers and influential media funders I meet in my current role as the director of the Boston Institute for Nonprofit Journalism (BINJ), I do not believe that any app or tech—short of a low-cost printing press that cranks out hundred-dollar bills—will “save” the publishing industry.

I feel that way for several reasons. But for starters, at least observationally, I’ve seen how many elite academic researchers (along with startup brats) have infinitesimal interest in bolstering local reporting. They frequently make bold announcements and opine about the future of journalism. Meanwhile, it’s 2018 and we don’t even have a sustainable crowdfunding platform. I have watched my own hopes in that realm, as well as those of many other journos, get dashed with the shuttering of Spot.us, then Contributoria, then Beacon Reader. (Don’t get me started on Kickstarter’s lackluster initiatives for journalists.)

Despite doubts about the media tech sector, my partners and I launched BINJ in 2015 with a mere couple of grand from our personal bank accounts. We couldn’t afford to develop a standalone destination site. Since the features we produce run in various outlets anyway, including on the websites of our partners, we simply set up a presence in the form of a clearinghouse on the popular free platform Medium, and enjoyed the easy formatting and minimalist slate they offered. It was a similar scenario in 2016, when BINJ was shopping for a way to accept recurring donations. Medium was there, their services were free, and we even visited their crew in San Fran and snapped selfies in their sweet ass office. The situation was attractive. Until it wasn’t.

Medium’s Larger Message

Earlier this month, after nearly two years of hosting a paid membership program on Medium, all of the monthly donors to the Boston Institute for Nonprofit Journalism were suddenly told that their monthly gifts were cancelled. It was such a tone-deaf blow, even for a Bay Area tech company that I thought it was in error. When I found out that it wasn’t, and that the company’s outspoken mastermind Ev Williams had simply decided to pivot the platform—again—I went bananas on the Twitter machine Williams helped build before starting Medium.

After four days, hundreds of RTs, and coverage of the fallout by outlets including Columbia Journalism Review and Fast Company, Medium apologized, announcing that they’re giving all the outlets that were impacted the total of four months’ worth of anticipated contributions. What’s more valuable than their pity, though, are the lessons spurring from this. Most will probably seem obvious to those who work on the technological side of the business, but if my experience is some kind of indication, these are things that average rank-and-file journalists exploring independent or nonprofit pastures probably don’t consider enough.

Question Everything

So, as you consider technology partners, here are some important questions to consider:

  • Did you initially approach your partner? Or did they approach you first? How might the way in which this partnership formed impact the outcome? How can you control for that ahead of time?
  • What are they, the innovation partner, getting out of the relationship? What is your nonprofit or news organization getting in return?
  • Will there be customer or user information collected through this partnership? If so, do all partners have equal access to it?
  • If there is publicity around the project, will it be shared? Equally? Will your media nonprofit be driving that exposure? If so, has that asset you bring to the table been acknowledged by your partner?
  • Do you have other comparable options for the services the innovation partner will provide? If so, why aren’t you using them?
  • Are the things that you are telling your handlers getting through to the coders, technologists, and/or anyone else needed to implement the requested measures?
  • How has your handler’s response time been during the courtship and planning process? Do you feel that you could actually get someone to be responsive within an hour in the case of an emergency?

Had I latched on to the reporting innovators I bumped into back at SXSW, I may have hit the startup jackpot by now, as they did. More importantly, had I taken these questions more seriously two years ago (as, I humbly acknowledge, some of my partners did), BINJ would not be scrambling to reestablish our nonprofit online today.

In writing this, I re-discovered several articles, written by me as well as others but all comparably humiliating in hindsight, in which I shilled for the likes of Medium and Beacon Reader. If you’re in a situation like the one that we were in when BINJ first started, and you are reading this warning ahead of time, think long and hard about your next move, and don’t wind up like we did.

A Queens, NY native who came to New England in 2004 to earn his MA in journalism at Boston University, Chris Faraone is the editor and co-publisher of DigBoston and a co-founder of the Boston Institute for Nonprofit Journalism. He has published several books including 99 Nights with the 99 Percent and I Killed Breitbart, and has written liner notes for hip-hop gods including Cypress Hill, Pete Rock, Nas, and various members of the Wu-Tang Clan.

Perspectives

DCN’s must reads: week of May 17, 2018

Here are some of the best media stories our team has read so far this week:

Revenue

Are ad-free environments winning video?

It used to be a given that advertising was the major driving force in media business models—from TV ads to sponsored content online. But two big factors have scrambled that equation: 1) data and brand safety scandals at Facebook and YouTube as the EU pushes stronger data rules; and 2) the rise of streaming content as cable-cutters and cable-nevers soar.

More and more, consumers are paying for premium content without advertising. This includes streaming services such as Spotify, Netflix and HBO. Even Facebook researching a new subscription-based, ad-free version as privacy concerns mount. As the upfronts take place this week, a new reality is setting in for TV networks as Magna projects a 2% decline in national TV ad sales each year through 2022.

For publishers, this means giving much more serious consideration of ways to offer consumers a user-friendly, ad-free environment. It’s also time for serious reckoning of what content will succeed with a subscription.

Incumbency and Monthly Rates

Make no mistake about it: The popularity of non-cable, commercial-free shows, and their seemingly indispensable association from today’s cultural conversation, means that TV — if we are still choosing to call this TV — no longer rots your brain. Rather, HBO, Netflix, Hulu, Amazon, and other such services are, arguably, as good for you as the best journalistic enterprise. And that means that for many people, a monthly fee is worth it. The result is a profitable business enterprise.

But these networks have their own strategies and identities behind those business models. HBO has long been established as a premium cable network, and that incumbency has given the network a leg up. Subscribers who pay for HBO are probably likely to leave it on in the background after they finish watching their favorite show because they know they’re paying for high-quality content. Netflix also has a comparable consumer base. However, the typical Netflix consumer’s watch-and-go mentality means the network has to keep churning out new content.

Still, the high growth rate for both networks means their consumer base hasn’t even peaked yet. As cable continues to decline, both HBO and Netflix will have to remain nimble. But a loyal fan base willing to continue to pay will certainly help sow the seeds for more good shows to sprout.

AMC Networks Offers Multiple Options

In comparison, with fewer younger audiences and diminishing returns on network advertising, more traditional broadcast and cable networks must balance out their options. Take AMC Networks: Two-thirds of its revenue comes from distribution fees and sales of content to streaming and pay services, while one-third of that revenue pie comes from advertising. While its first quarter earnings set records, ad revenues were down 9%, distribution revenue increased 11%, including to networks like YouTube TV and Acorn TV.

AMC Networks CEO Josh Sapan anticipates this revenue pie will continue to adjust as trends change. “We will probably see that accelerate toward the non-ad-supported pieces over time,” he told Deadline’s Dade Hayes.

Indeed, the network has already invested in non-ad-supported options like a premium subscription service. So, the same time AMC is continuing to make itself a quality destination for advertisers, it’s also planning for a future where advertising will play a diminished role. And its recent boffo first-quarter financial results suggest it may be on the right track.

Europe’s Privacy Laws Shift U.S. Ads

It’s not just that publishers are working against changing consumer preferences. The EU’s General Data Protection Regulation (GDPR), set to be enforced starting on May 25, will also shift the scales on data gathering and consent. Companies will have to be much more transparent about the data that they are collecting about users. Consumers in the European Union will also be able to access what data is stored about them and have the right to correct that data — regardless if that data is processed in or outside of the EU.

And that’s already influencing how much advertising may proliferate, as Wired’s Nitasha Tiku reports:

In March, Drawbridge, an ad-tech company that tracks users across devices, said it would wind down its advertising business in the EU because it’s unclear how the digital ad industry would ensure consumer consent. Acxiom, a data broker that provides information on more than 700 million people culled from voter records, purchasing behavior, vehicle registration, and other sources, is revising its online portals in the U.S. and Europe where consumers can see what information Acxiom has about them.

How Many Publishers Can Charge?

While ad-free environments are gaining steam, and more publishers are selling subscriptions in exchange for premium ad-free services to those with ad blockers, there are still only so many subscriptions that consumers can buy before getting overloaded. Om Malik argues that publishers will have to stop drinking their own Kool-Aid and eventually reckon with the fact that few among them will be able to fully capitalize on the subscription craze.

More likely, as ad-free environments proliferate, publishers will have to consider them as part of the mix, especially with the loss of advertising to the duopoly and data security. While not every publisher can simply put up a paywall and watch the money roll in, every publisher can consider just what they can charge for, and what their audience really values.

Advertising | Industry-Research

Older listeners are as likely to pay to avoid ads as they are to stop listening altogether

Consumers value access to ad-supported content when they feel that there’s a fair trade between the content and advertising. The study, “Consumer Sensitivity to Audio Advertising: A Field Experiment on Pandora Internet Radio,” examines the balance in this relationship. Specifically, the research analyzes the correlation between the number of advertising breaks, the number of ads, and content consumption. While Pandora sells display, video, and audio advertising, this study focuses on audio ads. Today most of Pandora’s advertising revenue is generated from audio advertising.

Jason Huang, David Reiley, and Nickolai M. Riabov created an experimental design using more than 30 million Pandora listeners. The design included nine test groups (1% of listeners) and a control group (10% of listeners). Each test group received either three, four or six ad interruptions per hour. And each interruption was comprised of either 1, 1.5, or 2 ads. By varying these two dimensions, the research assessed whether listeners prefer more commercial interruptions or longer commercial interruptions. The control group received Pandora’s normal advertising experience: four interruptions with 1.5 ads per interruption. The level of audio advertising remained consistent for each test group for the 21-month duration of the research.

Quantity Matters

The findings identify aclear relationship between the quantity of hours listened and the number of audio ads per hour. Interestingly, the number of commercial interruptions per hour showed little impact on listening behavior. Reactions in the test groups in the final month support these findings.

The findings identify a clear relationship between the quantity of hours listened and the number of audio ads per hour. Interestingly, the number of commercial interruptions per hour showed little impact on listening behavior.

Results across all nine test groups included:

  • A 41% percent decline in the number of active Pandora listeners,
  • A 41% decline in the number of days per active Pandora listener, and
  • An 18% decline in the number of hours per active Pandora listener.

Of the three reactions, the most common (82%) reaction involves a decline in listeners or listening sessions.

Age Impact

Further, the decline in demand for Pandora’s ad-supported product that was triggered by an increase in ads suggests a potential opportunity to transition consumers to an ad-free alternative. The findings show that the correlation is highly significant and increases the older the consumer. Therefore, the probability of leaving Pandora entirely due to an increase in ad load decreases with age. It turned out that older consumers were just as likely to switch to an ad-free paid subscription as they were to leave the Pandora service entirely.

Huang, Reiley, and Riabov use of an experimental design allows for a better understanding of causal relationships. Each independent variable, the number of ad interruptions and the number of ads per interruption, is important to evaluate. Examining the impact of the independent variables and the correlation with listening time (the dependent variable) offers a dynamic learning environment. Interplay between the elements identifies the variable impacting a change in behavior.

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