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Advertising | Industry-Research | Perspectives

Changing consumer behavior drives new advertising priorities

Cord-cutters are having a transformative effect on the entire video advertising ecosystem. As viewers enthusiastically embrace connected television (CTV) advertisers are following suit. They have accelerated their CTV investments in order to engage consumers at every digital touchpoint in a video everywhere world.

In addition, the impact of CTV growth is reverberating across destinations and devices, with premium publishers benefiting from its growth, and mobile moving into second place in terms of percentage of overall impressions by device. These are some of the biggest takeaways from our  Q4 and Full-year 2018 Video Benchmark Report from Extreme Reach, which provides a cloud-based creative asset management platform, AdBridgeTM, tailored to the needs of the ad industry.

Based on the latest aggregate performance data from ER’s proprietary video ad server, the latest benchmarks report reveals emerging ad performance trends as indicated by such metrics as viewer click-through, video ad completion and viewability rates, as well as invalid traffic and time spent.

The report also provides breakdowns related to these numbers based on media destination (i.e., premium publisher vs. media aggregator) and device (i.e., desktop, mobile, tablet and connected television [CTV]). Here’s what we found in 2018 that’s likely to gain force in the years ahead.

CTV Overtakes Mobile as Video Advertising’s Growth Engine

According to market research firm eMarketer, CTV use has soared to about 190 million users as consumers seek out new or additional ways to view TV content on their terms and timelines. That means more than half (57%) of the population has migrated from linear TV to devices like Roku and Apple TV, as well as ad-supported streaming services. Advertiser uptake has not been as robust as that of consumers. eMarketer says CTV represents only a small piece of overall digital ad spending today. However, the spend is enough to shake up the share of impressions being earned across devices and destinations.

For example, mobile dominated video ad impressions in 2017, peaking with a 39% share in Q4 vs CTV’s 16%. But in a year’s time, that number had grown to 44% of impressions. That represents a stunning 193% increase.

On the other side of the coin, the share of impressions served to desktops and tablets has continued to shrink every quarter since Q1 2016.  More specifically, we saw declines from Q4 2017 to Q4 2018 of 36% and 54%, respectively, for desktop and tablets.

CTV Impacts Multiple Metrics for Premium Publishers

As viewers gravitate to CTV, premium publishers are moving there too. In Q4 2018, more than half the impressions served by Extreme Reach to premium publishers ran on CTV platforms, an increase of 154% from the 21% that ran on CTV in Q4 2017.  CTV is having a halo effect on other metrics important to advertisers including ad length, levels of invalid traffic and video completion rates on premium sites.

Regarding ad length, 6-second ads seemed to be positioned to be the next wave, given their performance in the first two quarters of 2018 and all the media coverage they earned at that time. But the declines in mobile and desktop consumption drove a 78% decrease in impressions for 6-second spots from Q4 2017 to Q4 2018. Instead, as first noted in Q3, the rise in CTV seems to be causing a resurgence of longer ads, with 30-second spots increasing their proportion of impressions and more than doubling from Q4 2017 (28%) to Q4 2018 (58%). However, 15-second spots, which held the majority of impressions throughout 2017, declined by 43% from Q4 2017 to Q4 2018.

It’s not surprising then that with 30-second ads taking the lion’s share of impressions last year, the average time spent with video ads increased by 35.3%, from a low of 17-seconds in Q4 2017 to 23-seconds in Q4 2018.

For advertisers, directly-bought CTV remains relatively insulated from non-human traffic. This provides marketers with the brand-safe environment they are increasingly demanding. Video completion rates are also very high on CTV, likely a reflection of the level of commitment consumers bring to content on the channel, as well as the inability to skip the ads.

While video completion rates are up for all devices, CTV is the winner in the category with 95% of ads playing all the way through. Premium vendors, who charge premium prices, are investing in CTV and providing the performance advertisers expect.

Win-Win for Advertisers and Audiences

So what do the 2018 metrics mean for the future? Given how quickly and dramatically video advertising has moved from a mobile to a CTV focus it’s difficult to predict how much more change CTV will bring in the year ahead. But with audiences so focused on CTV, it’s reasonable to assume that more major media companies will enter the CTV market via new launches, partnerships and acquisitions, making the market even more competitive. But overall, these developments seem to bode well for both viewers and advertisers alike. 

Visit Extreme Reach’s interactive video benchmarks report to review complete findings for Q4 and the full year.
Perspectives

5 steps to protect your website from digital ad fraud

There are many estimates for how much the digital advertising industry loses to ad fraud every year. Whether the number is $6 billion or $60 billion, fraud is a critical issue that causes advertisers to waste their ad spend and digital publishers to miss out on revenue that is stolen by fraudsters.

There are steps that everyone in the supply chain—including publishers—can take to protect their businesses against fraud. Here are a few suggestions to reduce your website’s risk for becoming a target for ad fraud.

1. Don’t Purchase Traffic

Legitimate publishers work hard to create quality content and drive audiences to that content. There are vendors that sell a fixed number of website visits for a fixed price. If the promise of generating a fixed number of website visits for a few dollars seems too good to be true, that’s because it probably is. A publisher might not know that the traffic is robotic because it was designed to pass through fraud detection as human. The best way to keep bots off your site is to avoid buying sourced traffic. Drive human audiences to your website through legitimate marketing activities such as email campaigns, sponsored social media posts and search engine marketing.  

2. Separate Humans from Bots  

There are some easy-to-implement preventive tools publishers can use to increase human interaction and limit bots. Encourage users to register for website access or implement a paywall. CAPTCHAs are another method that give users simple tests that only humans can answer. Newer CAPTCHA programs are efficient at determining whether a visitor is a human with little or no user input. Another non-intrusive technique to detect bots is referred to as a “honeypot,” which is an invisible image or form field on a webpage. While humans can’t see it, bots parsing through the html code will interact with it. Once identified, this nonhuman traffic can be filtered out of site measurement reports.

3. Continuously Monitor Traffic

It is important for publishers to understand where their site traffic is coming from and to continuously monitor traffic sources. A critical part of every digital marketing campaign is setting up the landing page URL to determine which campaign is responsible for traffic. A publisher might drive traffic by running a social media contest or sending an email blast. These types of marketing activities can be easily identified in web analytics. However, if the source is unknown or if the traffic exhibits suspicious characteristics such as spikes at unusual times or if it’s coming from one location or device type, these are red flags that the publisher needs to address. Publishers can take the proactive step of protecting media buyers by filtering traffic from bots and data centers and encourage their advertising partners to do the same. This prevents ads from being served to nonhuman traffic and increases exposure to real viewers.

4. Don’t Rely Solely on Fraud Detection Companies

Ad fraud detection services are a significant part of how the market transacts because they measure general and sophisticated invalid traffic and add friction to combat fraud. There are, however, limitations to any technology and different methodologies used, so it’s important to implement good business practices and human intervention to guard against bot traffic on your site and help minimize the risk of fraud.  

5. Follow Best Practices

Quality publishers do everything possible to minimize the risk of exposing their clients to fraud. By adhering to best practices, you can assure advertisers that you are taking necessary steps to attract human audiences and eliminate bots.

  • Work with accredited vendors you can trust (and make sure those vendors do the same).
  • Establish good business practices for monetizing your site such as those mentioned above.
  • Educate your staff to make sure they know that they are responsible to follow best practices.
  • Keep up with current and upcoming industry solutions. Publisher adoption of ads.txt, for example, helps demand-side platforms detect unauthorized digital sellers. With the release of OpenRTB version 3.0, which includes “Ads.cert: Signed Bid Requests,” the industry is taking the next step to improve transparency and security in the buying and selling process by ensuring that bid requests cannot be tampered with by downstream parties.
  • Engage in an independent, third-party audit to identify areas for improvement and show advertisers that you are taking steps to provide transparency and a safe place to reach their target audience.
Learn more about what you can do to help minimize ad fraud by downloading the AAM white paper: Three Truths That Help Confront the Digital Ad Fraud Crisis.
Innovation | Perspectives

Not just for news: HBR’s evergreen approach to newsletters

The first successful American newspaper was founded in 1704 by a postmaster named John Campbell. Called the Boston News-Letter, it was not unlike many email newsletters today: Campbell wrote “a summary of the most noteworthy items of information that passed through his post office and circulat[ed] that newsletter to a small group of friends.” As journalism historian Christopher Daly writes in his book Covering America, Campbell “filled his paper with stories that he lifted from London newspapers – supplemented by letters from his friends, news of the comings and goings of ships, public announcements, and some paid advertising.” Campbell didn’t have access to Substack or TinyLetter, but his product – a prototype for American newspapers – should sound familiar to subscribers of modern email newsletters.

As media companies and the public have grown more skeptical of social media platforms over the past few years, email newsletters have seen a resurgence. Publishing companies are being built around them, new publishing tools are gaining momentum, and we’re seeing countless experiments in editorial style, format, and more. But for all that experimentation, much of publishers’ effort around email newsletters has focused on what’s new. That makes sense, given that reporting the news is journalism’s central charge, but it’s only one opportunity that email provides.

Evergreen Approach

At Harvard Business Review, we recently launched a newsletter designed around more evergreen content. We wanted to blend the focused, short-run, “finishable” nature of pop-up newsletters with a more educational, course-like approach. We were inspired by how online learning platforms convey a sense of progression and by The Economist’s Espresso app, which offers the feeling of having completed the day’s news. The result is our 8-week email series on Managing Data Science.

When we started thinking about this project in early 2018, there were already lots of excellent newsletters devoted to data science and machine learning. Many of these, though, focused on technical, business, and societal perspectives. We wanted to cover the challenges that organizations face in actually managing data science work and teams.

A Must Read

HBR was inspired by how online learning platforms convey a sense of progression and by The Economist’s Espresso app, which offers the feeling of having completed the day’s news. The result was an 8-week email series on Managing Data Science.

Based on the success we’ve had with other curated products like our Must Read book series, we hypothesized that readers would prefer a finite series of carefully selected content over an ongoing weekly or monthly newsletter. We interviewed numerous data scientists to better understand the biggest management challenges that they were facing on their teams and to get their feedback on the concept. Then we commissioned and edited eight digital articles that became the heart of our email series. The articles were written by professional data scientists who’ve worked at companies including Google, Apple, Netflix, Stitch Fix, and Coursera. Each email in the series focuses on one theme (like the different types of data scientist), with all eight amounting to something of a mini-course on managing data science.

Following on the newsletter success that publishers including Axios and DealBook have had, we designed our email series to be more than a collection of links to content. Each issue links to one of the eight articles, but also contains what we think of as a “mega-summary” – a 400-word version that basically gives you the gist. It also includes further relevant reading from HBR and other sources, as well as a more lighthearted stat or chart at the bottom to reward readers who make it all the way through.

So far, Managing Data Science has been a success. More than 38,000 people have signed up for the email series, and our open rate is over 40%. We expect the audience to grow substantially throughout 2019.

Popping the Popup Bubble

In our experience, the evergreen-series approach to email has significant advantages in terms of product development, user acquisition, and editorial resourcing. Unlike an event-based pop-up newsletter, we didn’t face pressure to drive signups immediately at launch. We were able to stagger promotion over several months, testing and gathering feedback. This ultimately allowed us to make improvements to the design of the newsletter before promoting it to a larger audience. We’re now able to continue promoting the series and driving engagement with our readers without endlessly creating new content. Instead, we can focus on incrementally improving the series for new subscribers.

We’re not the only ones experimenting with evergreen content in newsletters. The New York Times has given its Smarter Living material regular space in its morning news briefing. Even closer to our experiment, The Information is offering email courses on topics like the future of mobility; Vox.com launched a newsletter on giving to charity at the end of 2018 that followed a similar approach; The Washington Post has a 12-week email series on cooking; and the Pew Research Center recently launched a two-week email course on immigration.

Engagement and Inspiration

These examples as well as our experience suggest that evergreen newsletters can become a critical part of publishers’ strategies. For one thing, email engagement tends to decline over time; short-run newsletters don’t ask readers to sign up in perpetuity. Therefore, they tend to have higher engagement. They also help publishers focus on a particular audience. And that focused relationship is between the publisher and the user, not mediated by social media algorithms. Finally, as mentioned, evergreen newsletters are a chance to take an iterative approach to improving email products. Because the content doesn’t need to be refreshed every day or week, more attention can be spent to continually improving other elements of the experience – such as the subject line – and adjusting where users would most benefit.

Newsletters are only going to become more important for publishers in the coming years. They can take many forms, and news briefings likely will (and should) be the quintessential email product. But email programs don’t always need to emphasize what’s new. They can help users learn about new topics or acquire new skills, too.

About the Authors

Nicole Torres is a senior associate editor at Harvard Business Review. Walter Frick is the deputy editor of HBR.org and will be speaking at DCN Content Everywhere on April 25.

Perspectives

DCN’s must reads: week of March 28, 2019

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

Featured Post | Perspectives | Video

Taking a bite out of Apple News+

This week, Apple announced a new suite of services including Apple News+ and Apple TV+, subscription services for news and video content respectively. It’s an interesting move for Apple, which excels at creating premium experiences, enjoys strong customer loyalty, and has the ability to potentially deliver audience scale. There are, however, serious questions about the revenue split, consumer relationship, app-market dominance, access to content, and Apple’s long-term commitment to publishers.

While few details are available at this point (particularly about Apple TV+), it appears Apple News+ will cost $9.99 per month with Apple taking a hefty 50% cut and distributing the remainder to all of the participating publishers. Tim Cook did not announce a price point for Apple TV+ but it seems likely to have similar characteristics as Apple News+, including a similar revenue split and distribution structure. 

A Lopsided Relationship

With these news services, Apple will control not only the relationship with the consumer, but will also control the data about the consumer.  It’s hard enough to build a subscription business without having another company serve as the middleman between the content creator and their audience.   Moreover, as New York Times’ CEO Mark Thompson put it, “Bundles always dilute the brand.”

More troubling is the fact that Apple runs the app marketplace itself via the App Store while simultaneously offering a media consumption app that competes with publishers’ branded apps as well as those of other aggregators such as Flipboard. An example of the inherent conflict of interest is that Apple places its own apps front and center, pre-installed on more than a billion phones worldwide. Beyond a glaring competitive advantage, controlling the marketplace and delivery mechanism of its competitors’ apps gives Apple unprecedented insights into the transactions of those companies (think Amazon selling its own brands while seeing everyone of its competitors’ transactions).

Market Monopoly

Apple forcing the reported levels of revenue splits and data terms underscores larger concerns about the dominance of platforms.  As Senator Blumenthal, who serves on the Senate Judiciary Committee has stated, “[t]here is much stronger agreement among me and my colleagues that there needs to be more aggressive enforcement action on tech companies.”  Senator and presidential candidate Elizabeth Warren (D-MA) recently called for the break-up of Apple and the other platforms. Senator Ted Cruz (R-TX) has long voiced concerns about potential bias of big tech firms. Members of Congress are concerned that big tech platforms have too much influence and are harmful to society.  Although Apple has avoided a lot of the privacy gaffes of other tech giants, the fact that Apple can boldly propose such lopsided terms shows how the landscape is perilously tilted in favor of the big platform companies.

Bringing further voice to the concerns raised by policymakers, Spotify filed suit against Apple claiming that Apple “purposely limited choice and stifled innovation.” Spotify claims that Apple uses its platform to disadvantage competitors in the music streaming business, including by taking a 30% cut of subscription revenue.  While Apple is not proposing to get into the news business, the Apple TV+ product sounds like Apple will be both distributor and competitor.

And, considering the fact that Apple has expressed concerns in how digital advertising works, it seems an ironic choice for the company to favor advertising-based business models over subscriptions for publishers.

Quick Fix or Long-term Success?

Publishers are also rightly concerned about whether Apple will maintain a long-term commitment to this initiative. Facebook famously changes their terms, goals and algorithms about every six months, which makes it extremely difficult for publishers to build a sustainable business. Other social platforms have rolled out paid incentives to content producers only to withdraw them as soon as the programs are off the ground.  Publishers have rightly grown wary of purported platform support.

At the end of the day, Apple needs to make a serious commitment to making distribution work for high-quality news and entertainment. As we have seen in Google and Facebook’s own (hardly altruistic) need to invest in the production of content that their business models undermined, building a model that sustains quality content creation is the bedrock of long-term success.

Perspectives

Shakespeare, meet Einstein—Making the leap from data insights to artificial intelligence for content marketing

There isn’t a company leader out there today who doesn’t realize that their ability to harness and interpret data will make or break their business. When it comes to data analytics, the bar is constantly being raised. What was a theoretical concept just one year ago is now mainstream practice in major tech companies. Leveraging data to become more AI-driven is (or should be) on every CEO’s mind.

In fact, research suggests that by 2020, 30% of digital commerce revenue growth will be attributable to Artificial Intelligence (AI) and analytics.

As a content marketer, imagine if you were able to microsegment your readers in the moment and understand which content to best show them to drive subscriptions (or continued subscription). If that sounds appealing to you, read on.

First Party Data

Just look at the renewed importance of first-party data (data you own). In the past, third-party data, or data collected from aggregators, was considered the best way to market  to customers. However, privacy concerns (it includes things like purchase and browsing history) have made it less viable.

First-party data, on the other hand, includes website traffic statistics, owned email marketing data, e-commerce data, and the content you publish and promote on your site. The best part is that it’s completely within your control. Also, it builds on itself over the years, which gives you deeper insights than you could have obtained through third-party data alone.

Today, content companies that leverage first-party data are better-positioned to make content recommendations and provide better customer experiences. But to give your customers, users, and readers what they want, you need to be able to process and react to data in less than one second.

And assembling, analyzing, and interpreting the data is no small feat.

From Data to Intelligence

According to 2018 data from Nielsen, Americans spend more than 11 hours consuming various forms of media. And adults between the ages of 18-34 spend as much as 43% of their time reading and viewing media on various digital platforms—a number that’s almost certainly higher today.

All of which is to say: There’s more first-party data up for grabs than ever before.

However, today’s users also expect that content to be relevant. That’s why the most effective content providers not only need to provide content that readers care about, but also content that’s highly tailored to their experiences in that moment.

And in the era of digital transformation, where AI-driven businesses are poised to take in close to $3 trillion, you need a data strategy that performs efficiently.

AI, combined with traditional analytics, can help your company comb through huge amounts of data in real time. And every day you put it off, the data set grows even larger and harder to manage.   

Here’s how to harness the power of the data you already have and deliver the content your users want:

Data scientists are often too bogged down with grunt work to focus on what matters.

Today’s tech clutter (the average business today uses roughly 129 apps) creates data silos that make effective communication nearly impossible.

According to a Deloitte survey, 52% of respondents said they couldn’t make information-backed decisions because the data they needed is trapped in siloed departments. When data is isolated, it’s hard to wrangle and figure out how to analyze it. So data scientists find themselves spending 80% of their time on mundane work like figuring out which data to use, managing data movement on and off the Cloud, and understanding what attributes make the most sense to use in your models.

And after all that grunt work, there just isn’t time to do the high-value analysis.

So when you ask your data science team to tackle a portion of data, you may not understand there are many different moving parts that have to come together besides the analytics. And just because your data scientists have PhDs in mathematics or statistics doesn’t mean they have the expertise in data engineering and management to get it all done.

All CEOs need to make sure there’s a programmatic and structured way to enable data science to be ingrained in the data culture—not an afterthought. This means prioritizing building and updating the infrastructure so that there’s time for the most important analysis.

A strong data science platform makes room for truly valuable analysis.

A lot of the businesses we work with at my customer engagement company, LiftIgnigter, say it’s the operationalizing or the engineering part of data analysis that’s the most time-consuming.

It is easy to become overwhelmed by the challenge of turning data into an integral component of business operations—companies often don’t know where or how to begin.

To access the value of your business’s data, your data science team needs to develop not only a clear data strategy, but also find a programmatic way to make this second nature. Typically, this requires either building a platform or leveraging a third-party platform. A third-party platform helps data science teams aggregate the data, ultimately making data analysis a much more democratic process.

But it’s equally critical that the platform is built and fine-tuned for your company’s specific needs. A generic platform may give you lots of different options to run model testing, but at the end of the day, you need to focus your effort on modeling that is the most likely to yield meaningful insights.

However, with the right platform, which typically combines data science and machine learning, a team of five people can be effective as a team of 50. Imagine how much more efficient your team would be if they could focus their time on higher-level analysis.

AI augments the work your data science team can do, in real time.

With AI becoming increasingly ubiquitous, people are worried it will take their jobs. But AI isn’t replacing the data scientist. It’s actually making them that much more effective.

Here’s why: Training user targeting models is one thing. But then your team has to figure out a way to operationalize the continuous updating of the data.

For example, a large publisher company with 40 data scientists can still take several days to do all of the analytics that their editorial or product teams are demanding in real-time. They can hire 1,000 people—but that’s not cost-effective. The data science team is often called on to find compelling nuggets in your data in real-time. They’re constantly bombarded by your revenue team and marketing teams to come up with the perfect segment that will help drive greater revenue.

Large media companies like Facebook have a keen advantage because they have armies of data scientists to dig through their mounting data and figure out what’s relevant. And this is where AI comes in.

In order to compete, your business needs to make that process as standardized, real-time, and with zero wasted effort.

Third-party platforms enable businesses to create, tune, and refresh high performing models efficiently. Whether it’s generating demographic data for audience creation, or live streaming user behavioral signals to train a targeting system, a third-party platform can do a lot of the heavy lifting for you.

If you can create a unified strategy across your organization, optimize the data you have, and work only with trustworthy third-party partners—you’ll be prepared to navigate this new landscape.

Industry-Research | Revenue

Paywalls and events are among the many strategies publishers are taking to diversify revenue

Innovation is the key driver of sustainability and financial viability. This is why successful publishers are developing and testing new products, offerings and revenue models. A new report, 50 Ways to Make Media Pay, by Professor Damian Radcliffe of Oregon University in partnership What’s New in Publishing, offers an overview of 50 different revenue opportunities. It’s a collection of strategies—from paywalls to advertising tools, events, and commerce. Some are new ideas while others are not. It’s the collection and the variety of the revenue diversification options and the links to publishers executing these strategies that make this report so valuable.

Professor Radcliffe highlights the pivot to paywalls and a focus on reader revenue as a new norm. The New York Times, The Washington Post, The Financial Times, The Wall Street Journal, The New Yorker, and Bloomberg are some of those offering subscription products. Following its move to put Wired behind a metered paywall, Conde Nast has announced plans to follow suit with its other magazine brands.

One thing that paywalls offer (in addition to recurring revenue) is the opportunity and flexibility of real time learning.

Paywall Types

Publishers are experimenting with a number of different types of paywalls:

Hard paywalls will not allow consumers access to content without a subscription. Both The Financial Times and The Wall Street Journal use hard paywalls.

Metered paywalls allow users to read a set number of free articles before the user must pay the publisher (subscribe). Reducing the amount of content that audiences’ accesses for free is one way to try and drive consumers into paying for the content.

Hybrid paywalls offer some free content to users while other sections are secure behind a hard or metered paywall.

Vertical-only paywalls allow subscribers to pay for a standalone access to a vertical like sports, entertainment or food section.

Geo-location paywalls use IP addresses to identify users’  locations. Different locations may have different paywall limitations. A local audience may have more access and free articles than a user outside the local (target) area. This type of audience identification is often attractive to advertisers targeting a local audience.

Print and digital bundling began as a method to build digital subscribers. Originally, it offered loyal print subscribers, especially newspaper, a discount for digital access. Now, the tables are turned. In order to get the print product in front of more eyeballs, many offer free (or heavily discounted) print access to digital subscribers.

Online surveys offer a trade-off of user information for free content. There’s a consumer willingly to answer questions about themselves for free access. User information is a valuable commodity, especially to advertisers.

There’s also the pay-as-you-go strategy of micropayments. This approach enables readers to consume content one article at a time. Blendle, a journalism startup in the Netherlands, partners with many leading Dutch publishers to offer a micropayment plan.

Memberships offer new opportunities for publishers. It’s particularly relevant to a mission driven publication. Memberships offer the newsroom a chance to build a closer relationship with its members (readers). Memberships often offer access to bonus content and special events. Slate Plus is successful using this membership model.

Events

In addition,events are a solid revenue source for publishers. They can also act as a great marketing tool to attract new audiences and subscribers. Events allow for live interactions between the publisher and its audiences. A number of publishers are quite good at hosting an invite only industry offering with high level networking opportunities. (Think of Digiday’s Recode and FT’s Ignition.)

Live events and recordings include big ticket interviews of industry or popular icons (e.g. Hillary and Bill Clinton and Michelle Obama). Popular radio show events offer consumers the chance to watch a taping of the show in a live studio setting. Two radio shows, This American Life and Radiolab, completed successful live tours across the U.S.

Happy hours and socials are great vehicles to attract and build an engaged reader community. At these events, attendees have an opportunity to talk to journalists about a relevant and/or current topic. Events can be lucrative for small publishers too. Billy Penn, a Philadelphia based digital news outlet, reports that events constituted 80% of its revenue.

Publishers need to evaluate the brand relevance and potential of each revenue strategy. What works for one publisher, may not work for another. Experimentation is key to learning the best approaches for publishers to monetizing their content and first party relationship with their audiences.

Advertising | Perspectives | Revenue

Spring is in the air for advertisers and premium publishers. But we need to cultivate the opportunity for revenue growth.

Maybe this is true everywhere. But in the northeast, we’ve reached the time of the year when nearly everyone has had just about enough of winter and is eager for warmer days. And, with OTT buds starting to bloom and brand safety and other concerns driving brands to invest with trusted partners, premium digital publishers may also be wondering if their long cold winter of online advertising could see signs of warming.

A recent report from MediaRadar, indicated that programmatic ad spend from a number of advertisers shrunk year-over-year from 2017 to 2018. While some brands may have become more reluctant to spend money in programmatic, directing funds out of the programmatic ecosystem is typically a temporary measure. Advertisers are building their internal expertise and seeking ways to get the benefits of programmatic (such as automation and the ability to leverage their increasing store of customer data) without the downside of low or unknown media quality. Emarketer has predicted increasing momentum towards private marketplace or programmatic direct deals through 2020. This reflects advertiser expectations that trusted publisher partnerships will best meet the demand for quality inventory.

Market Pressure

In addition to the growing sophistication of buyers, other trends in the marketplace are also conspiring to shift advertiser spend to premium publishers. Increasing consumer interest in privacy and data governance, kicked off by initiatives like GDPR and the California Consumer Privacy Act, will make it harder for lesser-known inventory providers to use targeting and consumer data to win brand dollars.

The rise of OTT gives premium publishers a unique carrot for digital ad buyers. This makes it difficult for lesser-known publishers to access inventory at scale across this new channel, unless there are significant changes to the ecosystem that empower smaller players. Given that publishers see the nascent OTT market as the first major bulkhead in winning the dollars currently devoted to linear TV, it’s unlikely that we’ll see the market open up to anywhere near the degree we have seen with mobile or desktop advertising. The winning platforms – companies like Apple, Amazon, and Roku – and the winning publishers – the major broadcasters and other household names for video content – are likely to keep the market under tight rein.

Value Matters & Values Matter

However, the wild card in this whole equation is the degree to which advertisers can feel confident that they are getting what they pay for. This applies not only to audience reach, but also a quality playback experience, meaning a viewable, brand-safe, and non-fraudulent impression. Without transparency on inventory quality, advertisers will continue to seesaw between investing in digital and pulling back spend to put it into other channels, as we have seen over the course of the last few years.

Transparency lays the foundation for trust between buyer and seller, and it is difficult for buyers and sellers to work together to establish this trust if they are relying on numbers from two different sources. All too often, publishers measure using one set of numbers while advertisers are using another. This inevitably results in discrepancies. It is difficult for publishers and advertisers to work together to support a transparent marketplace when they are measuring using two different methodologies. Standardizing on a single set of numbers on the buy and sell-side could also reduce the number of calls to supporting vendors’ ad code. It also makes it easier for buyers and sellers to work together to streamline the technology, reducing latency and other issues.

Standards and Issues

The good news is that the industry has never been in a better position to solve the problem of transparent cross-screen measurement. We as an industry have for the first time introduced measurement-specific ad standards. Most notably, these include the Open Measurement initiative, including the Open Measurement SDK, and Open Measurement for web. Prior measurement efforts piggybacked on technical standards like VPAID and MRAID, which were introduced to support rich media, not to provide accurate reporting on inventory quality. Having a standard designed expressly to support measurement that works across all devices is a great development.

We need to move the industry towards a single technical standard for measurement. We must get publishers and advertisers on board to utilize a common methodology to measure inventory quality. And we need to tackle measurement issues head on when they arise. This proactive approach is surely preferable to finger pointing and fighting over makegoods.

Now we are at the point where it’s either springtime or more cold lean years for publishers whose content deserves better. We can let dozens of competing proprietary approaches fragment the nascent digital TV ad industry. Or we can agree not to let that happen and work together to align the buy-side, sell-side, and the standards used for measurement. The outcome of that decision could mean the difference between five years to a fully digital ecosystem – or 15.

About the Author

Michael Tuminello is VP of Publisher Products at Integral Ad Science. He works to ensure premium publishers inventory achieves its full value potential. He plays an active role in helping to develop and improve industry standards. Michael is a two-time winner of the IAB Service Excellence award (2015 and 2019), as well as the MMA Smarties award for individual contribution to the mobile advertising industry. He was previously a Product Leader at Innovid, Sizmek, and Unicast. 

Perspectives

DCN’s must reads: week of March 21, 2019

Featured Post | Perspectives

Breaking up the tech giants? How that could affect publishers

The drip, drip, drip of ideas to regulate tech companies continues. And when it comes to privacy, even the tech giants realize that regulation is coming and want to help craft those regulations. But 2020 presidential candidate Sen. Elizabeth Warren went even further, calling for the breakup of large technology companies with her Medium manifesto and a #BreakUpBigTech hashtag.

Her idea in a nutshell is to make any company with a marketplace of goods or ideas and $25 billion in revenues into a “platform utility” that cannot participate in the marketplace with its own goods or services. “Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law,” Warren writes. “Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.”

That means Facebook would lose Instagram and WhatsApp and Google would lose Waze, Nest, and DoubleClick.

Whoa. Does that mean that suddenly publishers get their online ad mojo back? Not exactly. Those independent companies would still wield outsize power, and this campaign manifesto has a loooong way to go before it becomes real-life public policy and legislation.

Breaking Up is Easy to Love

But before we come down to Earth and reality, let’s look at just how attractive this #BreakUpBigTech idea is to so many people in media and public policy – and how it even crosses ideological boundaries. After Warren released her plan, she gave a keynote at the South by Southwest Conference in Austin on March 9. To say it was a phenomenon would be an understatement. The SXSW conference had already been trending against big tech, and Warren’s proposal and keynote lit the match for even more heated discussion and argument.

She won converts such as high-profile investor Roger McNamee, an early Facebook investor who slammed the company in his new book, “Zucked.” At SXSW, he said that, “I think Warren’s proposal is brilliant. There’s a behavior that’s rampant in the industry of people owning a marketplace and then participating in it. They do so in the detriment of competitors.”

And it wasn’t just the Democrats and those on the left cheering on Warren’s proposal; she also gained some strange bedfellows on the right who have been suspicious of the growing power of tech giants. Their arguments have not typically been about economics but about how social platforms are biased against speech from conservatives.

Even Ted Cruz supported Warren’s idea on Twitter: “First time I’ve ever retweeted @ewarren But she’s right — Big Tech has way too much power to silence Free Speech. They shouldn’t be censoring Warren, or anybody else. A serious threat to our democracy.” He was referring to Facebook actually taking down some ads Warren ran on the platform to promote her #BreakUpBigTech ideas – though they blamed the takedown on her use of Facebook’s logo.

Criticism from Tech and Media Pundits

But of course: the devil is in the details. Warren’s broad plan was an easy target for tech pundits like Ben Thompson to point out its shortcomings. Thompson notes that “the reason why all of these companies have escaped antitrust scrutiny to date in the U.S. [is that] here antitrust law rests on the consumer welfare standard, and the entire reason why these companies succeed is because they deliver consumer benefit.” In other words, they remain free services that people largely like, and it’s not realistic that Apple would sell you an iPhone without apps or an App Store.

From the right, the National Review’s Rich Lowry says Warren has hit on the perfect catnip for liberals and conservatives by calling for the breakup of tech giants, but her prescriptions wouldn’t work and are too draconian. As Lowry wrote for Politico, “Their business practices aren’t above scrutiny. But any real offenses should be addressed with fixes addressing specific conduct, rather than with a massive politically imposed reorganization across the industry.”

And in the media and journalism world, an anti-trust breakup wouldn’t really move the needle for smaller local publishers who are dealing with much more intractable issues. As Free Press director Tim Karr told Sludge, “Even under a scenario where the largest online platforms are broken into their component parts, digital advertising will remain under the control of non-news media; newsrooms will continue to be shuttered and reporters laid off.”

While Warren’s proposal is a great thought experiment that builds more momentum to regulate tech giants, it is mostly a half-baked proposal that needs more details and a better way to support independent media outlets. Yes, it’s nice to dream about a more level playing field when it comes to online ads, privacy and trusted information, but we also have to realize that tech giants have armies of lobbyists and change will happen incrementally.

Industry-Research | Innovation

Smart speakers offer publishers new revenue opportunities

Publishers are using voice technology, such as smart speakers (e.g. Alexa and Google Home), to create new connections with their audiences, particularly younger consumers. It’s also a great way to develop new revenue opportunities. According to the new INMA report, Audio Opportunities for News Media, publishers are building audio resources to allow dynamic content or ads insertion into voice-enabled devices.

The report includes a number of market estimates of ownership and media usage. For example, according to the International Data Corporation, smart speaker adoption will grow worldwide from 99.8 million in 2018 to 230.5 million in 2022.

INMA’s research also cites TMG Media, which reports that one-third (33%) of those owning an audio device, own more than one. Media habits of audio device owners show that 45% are listening to less radio, 38% are using their smartphones less, 32% are reading fewer magazines and newspapers and 29% are watching less TV.

In addition, Edison Research and NPR found that 43 million Americans own a smart speaker. This audience is open to new media experiences. In fact, 81% of them are open to new smart speakers features created by brands. Twenty-two percent of these users also like brands that create skills/features on smart speakers, stronger than any brand activity on TV, radio, and podcasts.

Case Studies

A few news publishers are building their audio assets internally or using third party on-demand audio platforms to distribute their new content to audiences (full detailed case studies in report).

The Financial Times

    The Financial Times (FT) debuted its News Briefing, a daily news offering, optimized specifically for smart speakers. They also produced an interactive documentary, FT Hidden Cities Berlin, in partnership with Google and available exclusively on Google Home. FT estimates at least 60% of their listeners are non-subscribers to their print and/or digital products. FT views the usage of smart speakers as a new opportunity to experiment with content to grow subscribers. Further, smart speaker listeners are a younger audience, often a difficult segment for FT to target.

    Alastair Mackie, head of audio for commercial at the FT believes that creating content for the smart speaker allows FT to be innovative and engaging while present itself as a digital first’ media company.

    The New York Times

    The New York Times’ T Brand Studio produces ad-sponsored and stand-alone podcasts. It launched The Daily, a 20-plus minute daily news podcast and radio show, in 2017. It’s widely popular and a strong advertising vehicle in the marketplace. New audio content in the works at The Times includes a daily flash briefing, an interactive news quiz, and enhanced coverage of its Sunday newspaper. Sebastian Tomich, global head of advertising and marketing solutions, thinks smart speakers offer a great opportunity to test audio content and learn about audience engagement while generating revenue.

    The Times is also investing in teaching consumers how to use audio commands with step-by-step instructions.

    Audio smart speakers are changing consumer habits and news media companies are beginning to invest in audio tech to produce on-demand audio content. They believe it offers great branding and marketing opportunities and can help generate additional advertising revenue. It’s a ripe time to invest in audio content as smart speaker owners are spending more time listening to on-demand news, music, podcasts, and books.

    Perspectives

    My data, my rules

    Recently, Facebook CEO Mark Zuckerberg published a new company manifesto called “A Privacy-Focused Vision for Social Networking.” In it, Zuckerberg acknowledged Facebook’s poor privacy track record: “frankly we don’t currently have a strong reputation for building privacy protective services.” Who knew he had such a gift for understatement?

    Zuckerberg outlined a new approach for the company, in which Facebook will build services that allow people to communicate privately. Apart from acknowledging the extreme examples of “child exploitation, terrorism, and extortion,” Zuckerberg doesn’t say how he will address the very real concern that he may be enabling the more problematic aspects of Facebook’s effects on society to flourish without scrutiny. Nor does he say that he is changing Facebook’s basic model of hoovering up data about its users and monetizing it through marketing.

    However, Zuckerberg is clearly responding to growing concerns about how the digital world impacts our privacy. I share these concerns. I also have a suggestion for how they should be addressed.

    The Problem With Privacy Policies

    Let me start with two questions. Have you ever read a company’s terms of service or privacy policy all the way through? Have you navigated through the bowels of your social media service’s privacy settings to establish what data they can collect and how they can use it?

    If you are like most people, the answer to these questions is “no.” According to Deloitte, 91% of us don’t read the terms of service. Most of us are not equipped with the knowledge base or willing to spend the time needed to navigate through privacy policies and privacy settings. In 2008, one study estimated it would take a typical internet user 244 hours a year to do so! And it is surely worse today.

    The Cost of Free

    We sort of get that when we use a “free” service, the real “cost” of that service involves giving a company access to data about ourselves. But we only sort of get it because we don’t really know what we are giving up, and therefore we are not in a position to assess whether it’s a good deal or not. Spoiler alert: it’s not.

    For starters, the value exchange between consumers and service providers is completely opaque, with only one side of this transaction really understanding what is going on. Without knowing the terms of a deal, how can you be sure it’s fair?

    As my colleague Pooja Midha says, with transparent value exchange, everybody can win. Before the rise of the internet, the value exchange for all advertising was relatively clear: The ads were the cost (or part of the cost) of access to the content. If you wanted the content, you “paid” for it by giving your time and attention to the ads. Sure, we can turn the pages of the magazine, or grab a sandwich at a commercial break, but that behavior was expected and factored into the price. Both consumers and marketers had a pretty clear idea what they were getting and what they were giving up.

    The Data Dilemma

    With the internet, that all changed. Free services like those offered by Facebook and Google didn’t offer content, they offered functionality. And they offered it in exchange for consumers’ time and attention paid to advertising. Or, at least, so it seemed. But the unique, bi-directional nature of internet-based services allowed for a second source of value to flow to a service provider – data. And data is where the real money is.

    A recent survey asked consumers whether they would be willing to share their data for a price and what price. A majority (57%) said it was worth a minimum of $10, while 43% valued it at less than $10. The higher the income, the more likely they were to want more for their data.

    This stands in stark contrast to the true value of their data. Facebook’s average annual revenue per users in the US and Canada was reported to be near $112 in 2018. Think about that. US consumers think their data is worth $10 or less, and just one company is generating $112 from their data.

    Regulatory Restrictions

    Transactions where consumers are faced with huge information imbalances are often targets for government regulation. It is no surprise to see the GDPR efforts in Europe and the activity happening in California with the passage of the California Consumer Privacy Act, and the Governor’s recent call for a data dividend to be paid to consumers. While renewed interest in privacy and more transparent value exchange is great, it doesn’t address the core issue. Let me explain.

    Today consumers have to choose whether or not they are willing to abide by the myriad privacy policies of all the different companies they engage with over the internet. In my view, that is exactly backwards. It puts the burden on the party with the least information, and in the worst position to understand the details of what they are getting into.

    Personal Control

    I have a better idea: My data, my rules. Imagine if you could go to a central site and establish what data can and cannot be collected from you, and at what price. This becomes your personal privacy policy. It follows you around the web, and any service you interact with has to abide by it. If you set your privacy policy to be too restrictive a service may not be willing to work with you, or work with you for free. But that’s ok! The value exchange is completely transparent. You both know what you are giving up and getting – unlike today.

    This would be a huge step forward, empowering consumers, and making the digital world easier to navigate effectively, and the costs of doing so more transparent.

    In a “my data, my rules” world the consumer is empowered and the value exchange is clear, with information and understanding similar on both sides. In a “my data, my rules” world, marketers can be confident that the data they are using is permissioned. This will reduce their exposure to brand damaging charges of “surveillance capitalism.” Like marketers, in a “my data, my rules” world, technology companies can engage with consumers more safely, knowing that the data they are collecting is permissioned, reducing the risk of ugly articles in the New York Times, and political fallout.

    Personal Data Protection in Practice

    There are two ways this change can happen. The first is government regulation. Think of it as the ‘do not call’ list on steroids. It may well be that this is the only way to flip current practice.

    But there is another way. All it would take would be for a few key players to adopt this policy and refuse access to their platforms for any entity that doesn’t abide by a consumer’s stated privacy policy. For example, what if Apple or Google established rules that no app could be available in the app store unless it abided by the user’s stated privacy policy? Or if a large network operator like Comcast, Verizon, or AT&T required that everyone engaging with their customers abide by that customer’s privacy policy?

    With one large player having established this as standard operating procedure, it would be hard for other companies not to follow. What consumer wants to use a service that refuses, as a matter of policy, to follow their preferences?

    It is time for a change. Let’s stop hiding behind opacity and complexity. Instead let’s all live by a simple principle on the internet. My data, my rules.

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