The
best things in life aren’t free, they’re loved.
In the table-setting remarks opening the 2019 DCN: Next
Summit, I shared a publisher challenge that I strongly believe our industry is
well on its way to overcoming: “Fighting the pervasive mentality that content must
be free.”
Truth be told: We don’t know if direct revenues from the audience will suffice to sustain the industry in the broadest sense. However,
there are positive trends on all dimensions. We’re certainly seeing more
evidence across the DCN membership that people are willing to pay for premium
publisher services. It’s no longer simply the financial or national news
outlets that can garner subscription and membership revenues. Local news outlets, entertainment channels, and new bundles
are attracting consumer revenue. We’ve started to capture these learnings in DCN
research, as well as through our events on direct audience revenues.
We see three positive subscription trends happening:
If you want to differentiate a news or
entertainment service, you need to compare it to the rest of your category on
YouTube or the Facebook news feed. Your offering, your brand, needs to clearly stand out as compared to the next best user-generated
offering in the ways more and more users are discovering
it.
Every new subscription to a publisher’s product drives
more intelligence and more investment back into the product so that the next
subscription is easier to convert. In a world of more stable and dependable
payments from your audience, it’s also easier to drive a percent of the revenue
back into constantly improving the product (see trend 1) whether it be hiring
more journalists or adapting the experience to the needs of the audience.
The population that has grown up with digital devices
shops for news and entertainment with the tap of their fingerprint on a mobile
device. Subscribing to Spotify, Netflix, Hulu, Apple Music, and more is a way
of life for them. They will not hesitate to invest in news and entertainment
that they trust and value. Each successful experience drives their behavior
going forward and is more likely to bring their friends into the market of
paying subscribers.
Importance of free to Google and Facebook
Whenever the sentiment is shared that people simply won’t
pay for content in the digital age of abundance, it’s likely that Facebook or
Google is lurking around a corner. They’re a crafty pair. Often, they prop up
this notion with a truly worrying concern: that a shift to paid content will only
serve to further divide the public based on ability to pay. However, their
intention is to protect their free fortresses. An industry-wide effort and
belief that audiences will pay for content is bad business for them. Hence the
veiled efforts over the years to spin the narrative and control the outcome.
DCN has long established that the free digital content
market has mainly benefited these two companies. The math is simple, and it’s
been cited far and wide. However, it’s important to recognize how critical the
free content ecosystem is to their unbalanced equation. And you don’t have to
take our word for it. On Monday night, the UK government released the
long-anticipated Cairncross
Review, which contains over 150 pages of analysis of the
digital news marketplace.
The Cairncross Review highlights two clear problems with the
disturbing dominance of the Google and Facebook business models:
1. The first problem (that forms the foundation of the duopoly’s dominance) is Google’s control over the buying, selling, transacting, and measuring of the digital ad marketplace. As Cairncross so eloquently puts it:
“Google has ad inventory in the form of Google Search and YouTube videos, and it owns ‘demand side technologies’ (used by advertisers to bid and buy inventory online), such as Display & Video 360 and Google Ads, and supply side intermediaries (that publishers will use to sell their ad space to advertisers), such as Ad Manager and AdSense. It also owns supplementary technologies such as Chrome browsers, Google Analytics (a ‘freemium’ web analytics service that tracks and reports website traffic as a basic free service, with more advanced features that can be paid for), and the Android mobile operating system.”
It’s clear what’s wrong with this: Antitrust much?
2. The second problem that bolsters the foundation of these platforms’ superiority is Google and Facebook’s unmatched ability to collect voluminous amounts
of personal data on peoples’ everyday interests and behaviors in both the digital and physical
worlds. Again, Cairncross astutely captures:
“Publishers gather user data from their own sites, including login data for their subscribers, but this pales in comparison to the power of online platforms, which have a rich set of user data giving them significant advantage over others in the market. Whether it is search data (Google), the social networks of users (Facebook) or generally the devices, locations, interests and behaviours of users online (both), these players have an unimaginable wealth of information – valuable to advertisers and publishers – about who is coming to which news sites, and who is seeing which adverts.”
Google and Facebook are fueled by the amount of personal
data available to their heavily-controlled advertising systems. Subscriptions
inevitably create more user friction and restrict the flow of data. This means
that movement towards subscriptions also forces these companies to step outside their carefully
constructed profit guardrails. For risk-taking Silicon Valley start-ups,
they’re terrible at stepping outside their shareholder comforts. Cairncross hits the nail on the head in calling for regulatory
scrutiny (without
mincing words) of these businesses — in how they deal with
publishers, their position in the advertising market, and how their algorithms
make decisions in promoting journalism.
So, who is the knight in shining armor?
To be clear, there are also positive moves by industry and government to encourage
these developments. Interestingly, the Cairncross Review takes a similar position to the Canadian
government by recommending a tax incentive for subscribers to
news, local news, or investigative content. Again, we agree with this
recommendation and expect it would help support publishers.
To their credit, Google and Facebook have made donations to innovation, journalism
institutes and, in the case of Facebook, run seminars to share best practices
on subscriptions. Again, their profit guardrails make it impossible for real moonshots. So, while these are good efforts, they are not enough.
And then there is Apple. A company with the leadership,
the payment systems, the brand architecture, and lack of dependence on
everything in between Facebook and Google’s profit guardrails (data collection,
advertising). And, as news starts to trickle out on Apple’s plans for a
subscription news service, there is a lot to like in it. However, as I
shared with Ad Age, the reported 50% revenue share is offensive especially
if it also comes with the risk of another intermediary controlling the customer
relationship. I’m frankly surprised they would roll out with anything close to
these terms and hopeful it’s merely a head fake.
I don’t have any proprietary information, but my
back-of-the-envelope numbers on Apple’s offering means that the 100 million
monthly users of Apple News translate to approximate 10-20 million daily users.
Even if 10 million of these users moved into a subscription tier, this
is a mere $120 million in revenue. And according to what’s being reported, a
paltry $60 million would get divided between all of the participating news companies. That math doesn’t add up. If Apple has higher
confidence in their model and ability to expand the market, then they’re going
to need to put some revenue share behind it.
It’s just business. Oh, and the future of
journalism.
Artificial intelligence (AI) is part of today’s decision-making process. It’s used when companies identify the value and risk of issuing credit cards or forecasting unemployment benefits. It’s also used in employee recruitment and the college admissions process. Since AI is based on machine learning, each small decision impacts larger ones. Unfortunately, AI algorithms, especially among those conducted in black boxes, may include discriminatory practices. A biased outcome may not necessarily be the intent of the algorithm, but it can easily be a by-product.
Frederik Zuiderveen Borgesius, Professor of Law at the Institute for Computing and Information Sciences (iCIS), Radboud University Nijmegen, addresses issues of AI bias in his new report Discrimination, artificial intelligence, and algorithmic decision-making. Borgesius analyzes the AI process to better understand how unfair differentiation can be produced. He wrote this report specifically for the Anti-discrimination department of the Council of Europe. However, it is an important read for anyone involved in or thinking of using AI in decision-making.
The AI Decision-making Process
It’s important to first understand the basics of an AI
decision-making program. AI involves machine-learning to find correlations in
data sets. It uses algorithms to identify the relationships in a set of related
attributes or activities, also known as class labels. The class labels separate
all possibilities into mutually exclusive categories. When building a machine
learning tool, programmers use class labels to predict a derived outcome or
what is called the targeted variable.
To understand how this is works in a common application, think
of a spam filter. The spam filter is an AI program that sorts through email
messages and identifies those that are “spam” and “non-spam.”
The program uses archives of older emails labeled as spam or non-spam to help
identify the characteristics (a certain phrase, an email address or an IP
address) of each.
Professor Borgesius references the
work of Solon
Barocas and Andrew D. Selbst, two academic research experts, who
identify five ways in which the AI decision-making process can lead
unintentionally to discrimination.
How AI Leads to Discrimination
1. Defining the target variables and class labels
When defining target variables and class labels, it’s
important to think beyond how they are defined. For example, let’s say a
company wants to define an “engaged employee.” A variable assigned to an
engaged employee is someone who is never late for work. Unfortunately, this
could negatively impact employees who do not own a car and depend on public
transportation. Car ownership can also reflect higher income while reliance on
public transportation can connote lower income. Therefore, this class label of never being late creates a bias against
lower income employees. Mindfulness in the usage and creation of class labels
is important to prevent built-in biases.
2. The training data: labelling examples
AI decision-making also offers discriminatory results if the
system “learns” from discriminatory training data. All training data
should be scrutinized to ensure against biases. For example, a medical school decided
to use AI decision-making in its application process. The training data for the
programs included old admission files from 1980. Unfortunately, the acceptance
policy in the 1980s was heavily weighted against women and immigrants. While the
AI program was not introducing new biases, it included those inherent in the
admissions process of the older applications.
3. Training data: data collection
The sampling process of the data collection must be free of
biases. If the sampling process is biased, it will train the predictive models
and reproduce the biases. For example, the number of police officers sent to
patrol a neighborhood is often dependent on key variables such as neighborhood
size or density, etc. If a larger number of officers patrol a neighborhood and
report a high level of crime, we need to understand the factors involved. Otherwise,
the data amplifies a high crime rate in this neighborhood when it could be that
was a higher ratio of officers to see more crimes in progress.
4. Feature selection
A programmer selects the categories or features of data to
include in their AI system. By selecting certain features, a programmer may
introduce bias against certain groups. For example, many companies in the U.S. hire
employees who graduated from an ivy league university. An ivy league education
cost significantly more than a state university. If a company uses ivy league
universities as part of their data features, they are establishing a bias against
individuals of lower income. Data features must be fully accessed to ensure
characteristics do not introduce bias in the results.
5. Proxies
Sometimes measures to make a relevant and well-informed
decision may lend themselves to a biasness. Zip codes are often used as a
neutral criterion to provide socio-economic information for decisions on loans,
credit cards, insurance, etc. However, if a zip code is used as proxy to
identify people of a specific race or gender, it will impact business results.
Summary
Importantly, transparency of AI systems and the decision-making
process is necessary. Borgesius, as well as other academic scholars, advocate
for the development of transparency enhancing technologies (TETs) to drive
meaningful transparency of the algorithmic processes. AI decision-making can
result in negative consequences for people, especially protected member classes.
Caution must be used in algorithmic decision-making to ensure AI does not pave
the way for discrimination.
Of the millions pieces of content that are
published online every day, only 10% are ever seen.
If that shockingly low statistic makes your heart sink, you’re certainly not alone. Publishers across the globe are fighting the increasingly difficult battle to get their articles in front of the right people – or even just real people. From fake ad impressions to the death of organic traffic, the digital maze that your content needs to navigate its way through before appearing on the newsfeeds of your target audience is becoming more and more complex.
This crowded, often disingenuous advertising landscape
has brought the industry to something of a crossroads. Quality engagement is
both publishers’ most valuable and scarcest commodity. It’s also more expensive to achieve than ever
before. So how do publishers give advertisers more of what they want without
spending themselves into the red to deliver it?
Perhaps the greatest obstacle to winning the fight for engagement is the CPM, or cost per thousand impressions, model. Only by tossing this outdated method of ad performance measurement out the window can the industry move forward. But what’s so bad about CPM, and what should be called upon to replace it?
Out With the Old…
The CPM model was created during a time when banner
ads and impressions reigned supreme. Getting an impression on a banner ad only required
a reader to open the webpage and view the ad for a second, which is fine when
you’re raising awareness of a shoe sale or a flight deal. But it simply doesn’t work for content. Whether
that content is an article, a video, or a social post, its power comes from
engaging readers or viewers with a story for an extended period of time, during
which they become aware of your values and develop a connection with a brand’s
voice. Scrolling past a sponsored headline on your homepage just doesn’t
deliver the same result.
The mass publisher shift towards branded
content and content marketing arose out of a desire to forge more meaningful
relationships with customers — and when was the last time you made a
connection with someone in a second? For this reason, selling on impressions
and praying you succeed doesn’t work. This model also doesn’t put value on the
thing publishers are best at: crafting an engaging, powerful story. Content
needs a new measurement (and pricing) strategy that better reflects its
strengths and rewards publishers for their efforts.
… And in With the New
If you’re seeking guaranteed, meaningful interactions with your stories, one possible solution could be the Cost Per Read (CPR) model. Where CPM measures split-second impressions better suited to display ads, CPR bundles the content with a number of high-quality reads, so advertisers know exactly what to expect.
The
rapidly growing and evolving digital advertising landscape also demands a greater
degree of flexibility and control over content. To cover the reach limitations
of models like CPM, publishers often tack on things like banners, social posts,
and e-newsletter mentions in order to drive engagement. These tactics (and
their associated costs) can earn pushback from advertisers who want to see as
many of their hard-earned dollars go towards content as possible. To better
reflect this modern mindset, the CPR model focuses solely on drawing in quality
views to a piece of content, making investing in branded content less risky and
removing ambiguity around campaign deliverables.
How the Death of Organic Traffic Killed the CPM
CPR also puts publishers back in the driver’s seat in terms of amplification. Organic traffic has been rapidly declining since 2014. And when Facebook swung its metaphorical axe down upon the News Feed in 2018, it seemed as though the industry would never recover. Publishers had spent years honing their Facebook promotion skills and building a larger, more dedicated audience through the platform, only to have that effort made to feel pointless. Reaching the same readers they used to reach suddenly cost significantly more, making content amplification a loss-leader for many sites.
But it doesn’t have to be. Business models
like CPR allow publishers to charge a premium on amplification. That’s because
advertisers want to leverage a publisher’s brand and audience to reach as many
people as possible. From a profitability
standpoint, it also creates an opportunity to generate more revenue on
additional earned reads. As long as you’re confident in your story and your
amplification skills, you can earn incremental revenue for every new person
reached.
Additionally,
CPR allows you to grow site traffic on someone else’s dime, because the cost of
the social amplification used to drive traffic to branded content is factored
into the pre-set cost per read. This wider readership closely aligns with your
own target audience, meaning you can connect with new readers who may someday
become a loyal part of your audience.
Digital advertising is an innovative, fleet-footed industry
that demands a great deal of adaptability from publishers, brands and agencies
alike. In the tug-of-war over audience engagement, you’ll want the business
model that favors quality attention over cursory impressions on your side.
Pooja Malpani joined Bloomberg in October 2018 as the head of engineering for Bloomberg Media. We spoke with her about her new role, in which she leads the team responsible for Consumer Web, Media & Marketing engineering. This includes supporting Bloomberg.com, consumer mobile applications, and the systems that deliver marketing-moving news, data, audio and video to consumers and syndication partners – among other Bloomberg websites. The conversation – which covers her background in technology, technical challenges faced by the media industry, and diversity in the tech sector – was edited for length and clarity.
What’s your professional background?
I earned my bachelor of technology in computer science from Model Engineering College in India and my master’s in computer science from Indiana University. After completing my degrees, I worked at a few small companies before joining Microsoft as a software design engineer. I worked there for 9 years and spent most of my time on Microsoft Lync and Skype. Most recently, I was a senior engineering manager at HBO, where I oversaw subscription management for HBO video streaming. This included integration with several affiliates on HBO GO and paywall support in HBO NOW to ensure that HBO streaming could acquire new users and authorize existing users to browse and watch content. When millions of users logged in concurrently to watch a show like Game of Thrones, my team ensured that the back-end user services could handle that load gracefully.
What interested you in technology and engineering?
As a young girl in India, I loved mathematics, logic, and problem solving and wanted to be a logician. In my teenage years, I learned about computers and programmers and discovered that software engineering and coding was a natural fit for me. I was fortunate to find a booming tech industry and a career that was so well aligned with my interests.
How has the technology changed since you started in the field?
Today’s problems are more complex and we use different tools and languages to develop solutions.
Since starting my career, there’s been an evolution in messaging – from the ICQ client (released in 1996) to Yahoo! Messenger (released in 1998) and Skype (released in 2003). Facebook and Gmail were also launched, creating a platform for users and data to grow over the years, which resulted in an evolution of storage and retrieval technology. The world has become more connected than ever, with more than 2 billion smartphone users. Tech companies that noticed this trend became early adopters and employed mobile-first strategies. Today, there are emerging technologies – including virtual reality, augmented reality, autonomous vehicles, home assistants, location-based services and voice recognition – which are creating unique user experiences.
Many businesses are dealing with data on a scale they haven’t experienced before. For example, WeChat, a popular instant messaging client in China that’s also used for banking, shopping and playing games, now has about 1 billion users, and Facebook has about 2.5 billion users using at least one of their apps, including Facebook, Instagram, WhatsApp, and Facebook Messenger. Advancements in technology and cloud services have evolved to support horizontal and vertical scaling to address large data.
How has the development of technology solutions for the media industry changed since you started in the field?
We’ve gone from analog to digital video and from DVDs and CDs to internet streaming – more than 50% of young American adults use streaming to watch TV as opposed to subscribing to traditional cable packages. Media companies are launching their own over-the-top (OTT) applications that stream content directly to consumers rather than only relying on linear subscription models.
For Bloomberg Media, users have direct access to content through Bloomberg.com or our mobile app, and our machine learning algorithms curate content to create a personalized experience for users. Breaking news on Bloomberg’s live blog can cause a spike in web traffic, and the right technology and investment are necessary to ensure that our systems can manage varying traffic patterns in a resource-efficient manner without adversely impacting user experience.
Our OTT offering has been part of our strategy for many years and it is available across multiple platforms, including Roku, Apple TV, Google TV and Samsung Smart TVs. The Bloomberg channel on the Roku platform offers the best of OTT, Video on-Demand and Live TV viewing experiences. Bloomberg Media was also one of the first media companies to offer OTT through Amazon Fire TV and was first to partner with Amazon for an Alexa Skill.
What are some of the key technical challenges that Bloomberg Media is faced with?
We have to be very mindful as we cater to different audiences, and each audience wants to consume their news in different mediums, such as digital, TV, radio, print or live events, as well as different formats, like a summary versus long-form article. In supporting these different formats and mediums across audio and video, there were a number of technical challenges that we overcame by building tools and processes to support the editorial teams. When editors are creating their stories, we provide them with a rich toolset to take advantage of different mediums without complicating their workflow, as well as provide them with flexible systems that render stories in different formats. In addition, we have built sophisticated edit dashboards and data visualization systems that the newsroom relies on for creating, curating and tagging stories. Bloomberg prides itself on speed, and as we accommodate our segmented audience, we must make sure latency is kept in check.
What do you see as the future of the media industry and what role does technology play?
Currently, we are witnessing a wave of media companies launching an OTT offering to complement their linear offering so they can meet their users where they are. Over the long-term, I don’t think users will want to manage and pay for more than six to 10 subscriptions. We can expect to start seeing some bundled subscriptions, either a la carte or skinny bundles to offset that overhead.
I think we’ll continue to see a decline in print news consumption, which means that digital news consumption via podcasts, video, web or apps across all devices will continue to increase over time. As users move from print to digital, advertising will follow. Engagement is going to be a key metric, so, to combat the shift to digital and user churn, many media companies are investing in user retention strategies rather than solely focusing on user acquisition strategies.
What’s something interesting that you find people often don’t know about Bloomberg and its engineering department?
I originally thought of Bloomberg as a financial services company. But, while there are journalists, analysts, and customer support agents, engineering is actually the company’s largest discipline. Bloomberg is really a technology company that builds software used by finance companies and others. Bloomberg has solid engineering rigor and some of the industry’s best software developers. Bloomberg is a very technical org and that runs deep across departments. I am constantly amazed by Bloomberg’s use and creation of cutting-edge frameworks and software. Bloomberg also uses and contributes to open source software actively.
Throughout your career, you’ve been a champion for gender diversity in technology. Are you seeing changes? What else needs to change and how can other engineers at Bloomberg and across the industry help?
Fewer women in STEM (Science, Technology, Engineering, and Math) is, unfortunately, a global phenomenon. When I pursued computer engineering at university, I was one of 17 women in a class of 60. The number of women shrinks as you move into postgraduate studies, teaching, or work your way up in the industry. While there have been advocates for gender parity all along, over the last two decades, we have witnessed the numbers grow and, as a result, gather enough momentum that this a topic that is front and center in diversity initiatives across the industry. We can find solutions to problems we understand, and the first step is to acknowledge the problem. So, personally, I am very happy to see an open dialog on the low women:men ratio. We often blame the pipeline for not having a large pool of women candidates despite women making up 50% of the world’s population. We have to get more creative to effect a change in getting more women to reach the “pipeline.”
Bloomberg supports Teach First in the UK, which recruits, trains and places great new teachers in STEM in the schools they’re needed in, as well as partners with the National Center for Women & Information Technology (NCWIT), whose “Aspirations in Computing” (AiC) initiative and community increase female participation in tech careers through mentoring and sponsorship. Bloomberg also has programs such as Returner Circles to support and engage talented women looking to return to full-time roles after a career break.
Helping women and other underrepresented minorities as they start their careers is important. Technologists can train and prep them for job interviews. Managers and senior engineers can mentor interns and minorities who work within and outside their company. Technologists can provide advice to students exploring whether to pursue computer science or STEM degrees. We need more male champions and allies to join the cause as the next generation of potential tech leaders pursue their career goals. There’s great promise when some of the smartest people in the world are working to address the gender disparity problem.
You once told the Herstory of Tech podcast that you had to get special permission from your dean and parents in order to access the engineering lab at your college in India, but your male colleagues didn’t. How have things changed since then in terms of women getting access to educational opportunities in STEM?
I was competing with two other students, in a .NET contest held by Microsoft across Asia in 2000. This was a new technology platform at the time, and the computer labs were locked at 6 PM. Male students could request late access easily, but being female, I was told by the dean that I needed written consent from my father. At the time I thought it was more unfair than outrageous. Apparently, I was the first female student to make such a request. Things are improving, and, on a positive note, investments go a long way in encouraging diversity and supporting the next generation. Efforts like the GHC Scholarships administered by AnitaB.org or the Emma Bowen Foundation Fellows Program, which provides internships for students of color, can change the education system. Just as important, women don’t need special permission to use computer labs today. We are on a good trajectory, and we need to continue moving forward.
What’s your favorite thing about working at Bloomberg?
Projects move very quickly through the ideation, planning and execution workflow to deliver new features to the customers. This is true even for the most complex initiatives that have multiple stakeholders. I love that about Bloomberg.
What’s your favorite aspect of Bloomberg’s culture?
Bloomberg prides itself on transparency. You see this in the physical office space, which has glass walls; the television and radio studios and conference rooms are also glass and all employees share an open office plan. Transparency flows through to how people work – two teams are never solving the same problem, employee calendars are shared across their teams and we don’t have redundancies because of this transparency.
One of the main
drivers behind programmatic’s meteoric growth (at least on the demand side) has
been the ability to leverage data to find and buy specific users, out of
seemingly infinite opportunities, wherever they might be online.
After all, this enabling of “audience-based buying” brought marketers closer to their long-held notion of advertising utopia: reaching the right person, with the right message, at the right time, in the right context.
Data Dilemma
It also, theoretically, went a long way to minimizing wasted ad spend and enabled significant performance gains. The ad dollars flowed. But this shift took its toll on the sell-side.
To secure programmatic
budgets (which were growing steadily and taking dollars away from their direct
IO business), publishers had to relinquish control over their hard-won audiences
by allowing cookie access to DSP partners in real time via cookie syncing. In
doing so, they allowed the buy-side to build up and store those valuable
audiences in their own platforms, reducing the need to work with publishers
directly to gain access to or insights about their users.
Regulation Matters
The rapid proliferation of user-based targeting has understandably been followed by recent increased focus on consumer privacy. The GDPR went into effect across EU member states in May of last year, limiting unfettered access to user information and the ability to share that information with multiple parties across the ecosystem.
With passage of the California Consumer Privacy Act (which really means all of the US, given California’s outsized influence) and the likely imminent passage of the ePrivacy Regulation in the EU in the second half of 2019, the push for greater consumer privacy legislation seems unstoppable. France’s recent lawsuit against Google also indicates that common industry solutions and frameworks for satisfying new consumer data collection, usage, and privacy regulations aren’t always holding up to legal scrutiny, making the prospect of sharing data widely across partners and vendors increasingly difficult in the future.
While the enactment of
these measures on such a global scale erodes the value (and calls into question
the long-term viability) of cookie-based buying, it may also open a door for
publishers to regain over their data and audiences and re-assert their position
in the advertising value chain.
Data Diligence
Here are three tips for publishers looking to capitalize on the moment:
Limit access to your
pages
A quick Ghostery check
across a number of premium sites shows just how easy it is for 3rd-parties to
build pools of data on a given publisher’s audiences. Publishers should be
constantly evaluating who has access to their users, and what they’re doing
with the data they’re collecting. Partners who add value, either by enhancing
audience segments with additional data, or providing analytics and attribution
services, should be prioritized. Others, who may be packaging up and reselling
data, should be de-prioritized or even culled. An added benefit to this pruning
process: faster page loading for users.
Use your data to
enhance deals with buyers
Creating greater
audience scarcity (enabled through the culling process mentioned above) opens a
door for publishers to work more closely with advertisers looking to gain
access to their users (and maximize the yield they see from those users).
Striking guaranteed and non-guaranteed deals directly with advertisers based on
1st-party audience segments gives publishers the ability to more closely link
the cost of media to the value of audiences, and thereby extract greater
revenue from their inventory, while also benefiting parties up and down the
supply chain. Advertisers enjoy the confidence of targeting audiences using the
most recent and accurate data pools. And DSPs and SSPs executing the deals
incur less waste (and listening costs), because the inventory is pre-filtered
to match only the audience the buyer wants.
Let advertisers bring
their own data
More than just
building and monetizing their own audiences, publishers should start allowing
advertisers to bring their first-party data to the table. One of the main
benefits to this strategy is that buyers are able to trust the veracity of the
audiences they’re buying. From a publisher’s perspective, it opens up new
options for inventory segmentation that may not have existed within their
proprietary audience pools. Overlaying additional data will always limit scale,
by matching cookies at the source of origin rather than through DSP and SSP
intermediaries. And publishers and advertisers can at least maximize match
rates, minimize data loss, and decrease the risk of inefficient decisioning
down the line – thereby offsetting scale issues to the greatest extent possible
(while also commanding very premium CPMs).
Audience First
Consumer privacy legislation is pushing us to the point where the party closest to the consumer – typically the publisher – will increasingly enjoy exclusive access to those audiences as well. When we add the unique ability to know who that user is and what their interests are, the value soars. Couple this with the decline in quality and scale in the open exchange and what you have is publisher data that hasn’t been this valuable since programmatic began to take off.
Following these three steps will help publishers maximize that value. It will also deliver greater efficiencies and performance to advertising partners as well as privacy consideration to valued users.
About the Author
Mike Pugh is a Senior Solution Consultant at IPONWEB where he acts as the intermediary between clients and IPONWEB’s design, delivery, and engineering teams to create custom ad tech projects. He is responsible for bringing client-specific solutions to market and ensuring a successful execution of the solution, strategy, and opportunity. Mike is currently the team lead on the TrustX SSP as well as other strategic business accounts. Prior to joining IPONWEB, he led a team of 14 programmatic traders at Accuen, Omnicom’s trading desk. Mike has experience managing programmatic buying campaigns across the Autos, Retail, CPG, Financial, and Pharma verticals on most major DSPs. Mike graduated from the University of Iowa with a Bachelor’s Degree in Economics and DePaul University with a Master’s Degree in Economics & Policy Analysis.
Want
to keep up with the latest plays in the streaming game? You practically need a
scorecard and the guidance of a fast-talking play-by-play announcer to keep up.
For proof, consider just some of the latest streaming service bombshells to hit
the news in the past few weeks:
All of these moves speak, of course, to a larger and evolving trend: Anybody and everybody in the media business seems to be getting in on the OTT act. The idea is to take their product direct to the consumer via an AVOD or SVOD (subscription-supported video on demand) model. And that’s creating an increasingly crowded field of competitors.
It will be fascinating to see who else
enters the fray and who will survive and thrive in a crowded OTT world where consumers
only have so much viewing time. To help make better sense of all the market
chaos—and understand what streaming services will need to do to stand out from
the crowd—I spoke with several industry experts.
Why more media players
want in on streaming
It’s no big surprise why news and
entertainment companies are jumping in and jostling for position in an already
congested OTT pool: Consumers crave streaming content.
“They don’t want the same bundle of
channels they receive today. And they don’t want the same, scheduled experience
they’ve had for decades,” according to Peter Naylor, senior
vice president/head of advertising sales for Santa Monica-based Hulu, which now
has 25 million subscribers. “Consumers want choice and control in their TV
experience. In order to continue to reach consumers, TV must move from a
business ruled by cable and satellite gatekeepers and by a traditional schedule
to a model where the consumer truly gets to choose.”
Billy Nayden, research analyst
for Parks Associates in Dallas, agrees. “Younger consumers are watching
traditional television at decreasing rates. In order to reach them with video
content, internet video is a necessity. A dedicated streaming service helps
facilitate delivery of that video and gives consumers a centralized place to
access content,” Nayden says.
Offering a direct-to-consumer streaming
service also provides some unique benefits.
“Broadcasters and content companies are
able to collect data on consumption and their audience, which is often not
available through over-the-air broadcasts or pay-TV providers. Direct offerings
also provide a hedge in pay-TV licensing negotiations, allowing networks to
reach consumers even when blackouts occur on pay TV,” adds Nayden.
Overcoming
multiple challenges
However, experts caution that fragmentation
of content sources, changing viewer habits, multiple direct competitors, and
rising content costs make competition in streaming extremely difficult.
“The number of streaming services
available globally has exploded in the past few years, and they are now
competing not just with other streaming services but also pay TV,
user-generated content like YouTube, and digital entertainment options like
video games for consumer time and eyeballs. Standing out and innovating in a
crowded ecosystem is a major challenge,” says Nayden.
Laura Martin, senior media analyst for New York City-headquartered Needham and Company, says discovery and clutter are huge problems. “Roku has nearly 4,000 video apps of free TV and about 1,000 apps of SVOD that the 28 million connected TVs in their network can choose from,” she says. “That’s many more choices than the 200 channels you typically have in a linear pay TV bundle.”
Additionally, to succeed long-term in the streaming space you need deep pockets, says Dan Rayburn, principal analyst at Frost & Sullivan in New York City. “Think about who’s behind the big services today—Sling TV is owned by Dish, Direct Now is owned by AT&T, and Hulu is co-owned by Disney and Comcast” (as well as Fox and AT&T), Rayburn points out. “A lot of these services can’t stand on their own as a profitable platform because the costs to license and create all their content is too high.”
You also need a deep library of content to
compete effectively, per Alan
Breznick, cable/video practice leader for Light Reading in Toronto. “Although,
if you’re a niche player going after a specialized market, like wrestling fans
or hobbyists, and no one else has such a channel yet, then you don’t
necessarily need a huge library of old content,” says Breznick.
Another huge hurdle? Retention. “You’ve got to worry about churn rates and how
to keep your customers as well as keeping the cost of acquiring customers
down,” Breznick adds.
Plus, “it’s going to get harder for the
smaller companies because so many of the big competitors entering this space—like
Sinclair, NBC and Disney—have free marketing opportunities. They have other
media outlets with unsold ad inventory they can use to promote their streaming
services,” says Martin.
A myriad of models
In the OTT space, there is no such thing as one size fits all. A variety of service models and pricing tiers exist that often make it difficult for analysts and consumers alike to compare apples to apples (see Sidebar for an overview of the major services). Some brands strictly follow a direct-to-consumer formula while others also partner with a pay-TV service (by, for example, offering authenticated streaming apps). And some services run ads while others don’t.
“Ads have always been in the mix for many of these subscription channels because the cost to make and license the content is still too high—you can’t make enough money on subscription alone,” says Rayburn. He notes that ad-free Netflix—despite its 139 million paying subscribers—still expects a negative cash flow of $3 billion in 2019. This is likely a big reason why it recently raised (and will continue to raise) its subscription fee.
“It’s tricky. We’ve had this mentality as
consumers that content should be free for a long time, thanks to YouTube and
others. Now, we’ve got several channels charging up to $15 or more per month
and live services like YouTube TV charging $40 and up monthly,” Rayburn says.
“The question is, how much higher can streaming services push their prices
before consumers say no?”
Strategies for
success
Ian Wishingrad, creative director/founder of BigEyedWish in New York City, says the formula for sustainability and profitability in the streaming market is simple. “Have award-winning content. ‘The Handmaid’s Tale’ legitimized Hulu and ‘House of Cards’ legitimized Netflix. You also need the right price. If you’re good and your price is right, you’ll get hits,” says Wishingrad.
Nayden seconds that sentiment. “To
maintain subscribers, services must offer a variety of compelling content
exclusive to their particular service,” says Nayden.
That’s why, according to Naylor, “over the
last year, we’ve focused a lot on adding more content to the service, including
full series runs of shows like ‘ER’ and ‘Lost,’ and new originals like ‘Castle
Rock.’”
Content may be king, but so are customers,
insists Breznick.“You really have to know your customers and the market you’re
going after.”.
Offering your patrons more choices—in
programming as well as pricing—can go a long way, too. “Convenience to the
consumer is the new service. Giving options makes you flexible and cool, versus
‘this is the rule, take it or leave it,’ Wishingrad adds.
Ask Martin and she’ll tell you that the
best way forward for OTT services is to “have at least two revenue streams,
such as subscription-supported, ad-supported, eCommerce, micro-payments,
etcetera.”
And, as mentioned, partnering with pay-TV
providers could bring increased visibility and exposure to your service, “especially
among consumers who otherwise would not have known about the service,” suggests
Nayden. “Until recently, the operator set-top box has remained one of the few
in-home connected devices that OTT video services were unable to penetrate. The
pay-TV set-top box is often used daily. Being available on that box is a big
boost to user convenience.”
A booming market
Virtually all of the media giants have launched or announced an impending standalone streaming service by now. But there are others poised to make a splash, and legacy video brands are far from the only players looking at the streaming opportunity.
Nayden foresees major print media brands entering the fray eventually, too. “While print media has found it financially difficult to transition to the new digital marketplace, I think the space for news-based OTT services represents a significant opportunity for content creators,” Nayden explains. “Cheddar and Newsy give us an example of what is possible. If a traditional newspaper like The New York Times or Wall Street Journal could partner with a video content creator and build a service that combined access to premium print and video content, I think it would attract a significant amount of paying news junkies.”
Breznick also envisions a day coming soon when college sporting programs—like Notre Dame football—roll out their own streaming service. “And at some point, every single broadcast channel out there is going to have to think about it,” adds Rayburn.
DCN recently released insights from the DCN Direct Audience Revenue Case Studies Report
conducted in partnership with The Lenfest Institute. This media strategy
research, exclusively for DCN members, offers actual publisher lessons and case
studies in building subscriptions and memberships for digital publishers.
A few key strategies include (the full report only available to DCN members* and contains additional strategies):
Build a digital marketing team whose primary focus is to increase digital subscribers.
Test price increases on tenured subscribers, balancing the risk of some increased churn with the greater revenue yield that comes with a higher subscription price.
Create bonus content and experiences (such as behind-the-scenes, extended interviews, etc.) that offer your readers extra value and bring them into the process and culture of your organization.
Measure, test, and experiment to understand what kind of content deeply engages your members — and segment your audience based on engagement levels.
DCN is uniquely positioned to provide insights into how publishers are building diversified revenue strategies. *If you are interested in learning more about this report and other DCN research, please contact Rande Price, DCN’s Director of Research.
Americans are spending more time than ever viewing content, be it paid or free, from linear TV to streaming video devices. According to the new TIVO Video Report, based on Q4 2018, the average household now uses 2.75 services, a 26% increase in service usage compared to the same time last year. The TIVO Video Report interviewed close to 4,500 adults 18+ in the U.S. and Canada.
TV viewers subscribe to multiple services in order to watch the
content they want, when they want it. Top consumer bundles include
subscriptions to Netflix, Prime Video and Pay-TV (10%), Facebook, YouTube and
Pay-TV and YouTube, Netflix and Pay-TV (both 8% each). With marketplace fragmentation
continuing, the question remains, how long will consumers maintain subscriptions
to multiple services?
Essential viewing
More than half of the respondents (53%) report Netflix as an
essential entertainment source, followed by free YouTube (46%), and cable-TV
(40%). Interestingly, just over 40% of consumers also report cable-TV as
supplemental to their entertainment sources, suggesting consumers are equally
as committed to cable TV as they are non-committed. The distinction consumers
make between essential entertainment services and supplemental is an important
one. It will eventually determine the services consumers keep and which they
cancel.
While Netflix may hold the largest audience share as an
essential entertainment source, Live TV dominates total viewing time (self-reported).
Close to two-thirds of respondents’ report (65%) watching one hour or more of
Live-TV per day, 52% watch one hour or more of OTT/Subscriptions services per
day, 51% watch recorded content (e.g. DVR) and 46% watch one hour or more of
live sporting events (which may factor into the 65% Live-TV viewing).
Live TV remains popular
Free video content is also popular with nearly one-third of
respondents (31%) reporting use of a free video service. Top free video
services include YouTube (58%), Facebook (44%), Twitch and Pluto TV, each
rounding to 18%. Interestingly, network TV mobile apps show limited appeal. Nearly
60% of respondents do not use any TV network apps. Of those using a TV network
app on mobile, the top downloaded include: ABC (10%), A&E (9%), CNN (8%), Cartoon
Network (8%), and CBC (7%).
In addition, more than one-fifth of respondents (22%) access
Pay-TV via a streaming device. In fact, 26% report replacing their set-top-box
(STB) with a streaming device. The top five streaming devices include a smart
TV (27%), gaming console (19%), Roku (18%), Amazon Fire Stick (16%), and Apple
TV (13%).
Consumer fatigue
Breaking up cable TV packages and going a la carte is an
option for consumers. However, with so many programming and device choices
today, the a la carte option is losing favor with only 71% of respondents
stating interest compared to 81% in 2017. Further a full 29% of respondents are
no longer interested in the a la carte option at all.
The TIVO Report clearly shows that consumers have numerous
choices when it comes to content, services and devices. Too many options can
leave consumers overwhelmed, while too few options can lead to low levels of
satisfaction. Industry players need to help consumers discover valued-content and
a positive user experience to continue building consumer satisfaction and
engagement.
It’s fair to say that the advertising industry has embraced audience data. The Interactive Advertising Bureau (IAB) and its Data Center of Excellence released a study in December 2018 showing that companies have spent nearly $19.2 billion on the acquisition of audience data and on solutions to manage, process, and analyze this data in 2018. That’s a 17.5% increase from the prior year.
Whether it is first, second, or third-party, using
audience data to enhance campaigns is more impactful than un-targeted campaigns.
While third-party data exchanges have been widely available for over a decade,
second-party data marketplaces have sprung up, as the need for increased data
quality and questions of sourcing and transparency have also proliferated.
What’s the
problem?
Data isn’t just useful for advertising. It is a necessity
across every industry. However, for many companies, figuring out how to act on this data is the hard
part. There are many reasons why companies fail to use data to drive their
marketing campaigns, including:
Lack of enterprise-level
strategy (What are we using this for
again?)
Strong corporate strategy,
but lack of internal talent to execute (How
can we get this thing to do what we want?)
Competing needs for limited
resources (My whole team is swamped!)
Turnover of employees who
manage the software (Our power user quit,
now what?)
No collective ownership (It’s not my job!)
The upside of outsourcing
A study conducted in late 2018 found that 78% of the senior digital media decision-makers polled would choose to outsource their data strategy and execution. Data strategy development, management and execution require investments in talent and technology. And many organizations simply don’t have the in-house capabilities or infrastructure.
When asked what specifically they would want help with
if outsourcing their data strategy, the answers varied:
30% have some sort of
strategy in place, but need help executing the tactics
22% has a basic
understanding, but needs help optimizing their campaigns
14% need help from start to
finish in developing the actual data strategy and tactics
11% is short on resources and
needs additional support to run reports and build audiences
Clearly, there is a lack of internal resources and/or
knowledge among many of these participants. Education and knowledge are
required to maximize the value of data, from the beginning during data
collection through building and executing upon a strategy.
Using data correctly can help drive traffic and grow
audiences, which then has a cascading effect on campaign success and the value
provided to advertisers. But if you don’t have the internal resources
available, or the talent to execute, or even an enterprise-level strategy: What
are you to do?
Gain control by
giving up
If a company believes that a strong data can be a true
source of insights and revenue, then they will take the necessary steps to
achieve their goals. Really, outsourcing data strategy shouldn’t be any
different from outsourcing marketing strategy or overall sales strategy.
Consulting firms have been around for many years, but data consulting firms are
not quite as commonplace as others. 2019 is predicted to bring many changes to
the publishing industry. And I believe the proliferation of data consulting and
outsourcing of data strategy is just one piece of this puzzle.
The publishing industry is facing enough challenges.
If it’s time to sink or swim, what would you be willing to give up in order to
survive?
In 2019, top media challenges include consolidation, regulation, and “fighting
the pervasive mentality that all content needs to be free and the ever-spawning
attacks on the independent press, even from the U.S. administration,” according
to Jason Kint, CEO of Digital Content Next (DCN).
In speaking to attendees of the 17th annual DCN Next: Summit
at the Ritz Carlton in Orlando on January 29th and 30th, Kint noted that mitigating
those challenges means that trust will continue to be a media company’s
greatest asset, augmented by high quality content that informs and delights,
creates a direct relationship with customers, anticipates the audience, and reflects
diversity. Diversity, as Kint put it, “is a fact and a business imperative. It
encompasses the range of ethnic, gender, economic, sexual or political identity,
geographic, education, abled-ness, and so much more.”
The event’s speakers represented a breadth of media organizations from legacy print and television organizations to digital pure-plays, upstarts, agencies, and industry watchers. This year’s Summit speakers did have one thing in common though: They were all women.
Regulation and Scrutiny
During his opening remarks, Kint referenced a prediction he made last
year of an intensification of a global policy war for big tech with its early
stages continuing to emerge in 2019 as Facebook and Google face global scrutiny
regarding transparency and accountability.
While GDPR has set the global tone for privacy protection, and
California’s privacy bill may set a foundation for the U.S., it remains to be
seen how the issue will be taken up on a U.S. national level, noted well-known
industry insider Kara Swisher, co-founder and editor at large of Recode.
Regulation is far from
the only pressing issue on media businesses today. In fact, the past year has
seen governments at home and abroad exert extreme pressure on journalists and
the media as a whole. In addressing global efforts to suppress journalism,
Maria Ressa, CEO of Rappler and 2018 Time Person of the Year, called herself
the “canary in the coal mine” as she recounted her story of answering a
subpoena to appear before the Philippines National Bureau of Investigation on charges
of tax evasion and failure to file tax returns.
Maria Ressa
Political Pain Points
A vocal critic of Philippine President Rodrigo Duterte, Ressa illustrated
the impact of social media disinformation campaigns. She showed attendees a
timeline of manufactured information social media attacks with global tentacles
corresponding to her political coverage. She also described a meeting with Facebook CEO Mark Zuckerberg
during which she implored him to understand the company’s global impact and how
experiences such as hers demonstrate the need for platforms to take more
responsibility for the role they play in disinformation and attacks on
journalists.
In response to attacks from the U.S. administration, The New York Times continues its focus on “good journalism.” The company is emphasizing transparency in its processes by showing consumers the great lengths to which reporters go to put together a story before publication through its TV marketing campaign, noted Meredith Kopit Levien, COO of The New York Times Company.
Meredith Kopit Levien and Jen Saba
While attacks on journalism and emerging regulations have set the stage for 2019, brands also are placing a high priority on how to sustain their mission of building trust with consumers through offering high-quality content, connecting with audiences and monetizing the effort.
“The New York Times is so far ahead of most in the industry. What they
have done is so compelling. The relationships they’ve built from a business
standpoint with consumers continues to impress,” said Wenda Harris Millard,
Vice Chairman of MediaLink. “Publishers are understanding that relationship is
everything.”
Diversification and
Experimentation
On the heels of a seven percent increase in 2018 third quarter earnings
for digital and print, Levien pointed out that there is
a long-held belief at The New York Times that a “subscription business
first is the key to a great and scaled ad business” with marketers re-awakening
to the value of context as the world comes to grips with privacy concerns.
In addition to continuing to produce its high-quality news content, she
pointed out that The New York Times also is responding to consumer lifestyle
habits by expanding its popular crosswords into a games business. It is also offering
subscriptions for specialized offerings in the cooking and parenting spaces.
Additionally, two million listeners tune in each day to The Daily,
which has become the nation’s most
downloaded podcast.
Podcasting plays an increasing role at NPR, says Anya Grundmann, the
company’s senior vice president Programming and Audience Development. Its Fresh
Air ranks fourth on the most downloaded podcasts and its flagship Planet Money
podcast is also among the top 20. Interestingly, some NPR podcasts start as
radio shows while some radio shows have grown from podcasts so the legacy and
digital ecosystems feed one another. Grundmann says that NPR also is committed
to becoming a leader in audio this year in the voice search smart speaker
environment, Grundmann said.
While audio offers
emerging opportunities for media companies of all types, digital video
maintains its popularity. The Guardian’s Oscar-nominated ‘Black Sheep’
documentary – a story of a black teenager who befriended racists – is part of the
company’s strategy to deliver journalism through written, filmed, and spoken
formats. As Evelyn Webster, CEO U.S. & Australia, Guardian News & Media
argues “good journalism can be good business.”
The company has three revenue streams: a trust reserved for economic
downturns and advertising revenue. But rather than deriving revenue from
subscriptions, the Guardian has been successful using the reader voluntary
contribution business model. The company also crowdfunds initiatives to support
special reporting.
Reaching Audiences Far and Wide
Organizations like NPR,
The New York Times, and The Guardian are known for serving audiences at a
national and even international scale. However, local remains a point of
concern for many in the media business.
To beef up local news, Marian Pittman, Executive Vice President of
Digital Strategy and Research of Cox Media Group, says that the company seeks to
innovate on its TV side with its “garage projects.” The initiative draws
together the diverse skills of engineers, marketers, and reporters to produce
and test prototypes in an effort to appeal to consumers through different
platforms.
In support of local journalism, CEO Pam Wasserstein said New York Media plans to launch The City
in early 2019, a not-for-profit initiative providing New York City news and
investigative journalism in addition to its portfolio of premium digital
brands.
Identifying underserved consumers is a business strategy Morgan DeBaun,
CEO and co-founder of Blavity used when she left her Silicon Valley career to
start a media company with her own money. Blavity targets black millennials,
which DeBaun identified as an underserved demographic in the media ecosystem. The
company is now backed
by investors who share Blavity’s value system.
Navigating Revenue Streams
While more people are consuming media digitally, there is a
simultaneous desire among consumers to connect as part of a community. That’s
where events play a key role in establishing direct relationships with
consumers. At the Summit, speakers from Blavity, The New York Times, CondeNast,
Recode, and Combs Enterprises all cited events as a significant way to connect
with consumers while deriving healthy revenue streams.
Subscriptions, events, advertising, and ecommerce all play roles in
enhancing relationships, according to Wenda Harris Millard from MediaLink. “When you really understand your consumer,
that’s where you have an advantage. You have to be thoughtful strategically.
What is it you’re building and why?”
In 2019, marketers will be focusing on trust, data security and
management and attention to disruption, noted Millard.
Marketers are concerned about safety, security and the environment in which
they’re marketing.
“In a world where marketing is so fractured and there’s a plethora of
choice of where to put dollars, the ‘F’ and ‘G’ buttons are easy to press. But it’s
not enough anymore,” she said. “We have to fight to keep that conversation
about the quality of the environment as well as context and the importance of
publishers continuing to put forward what is critically different about what
they have to offer.”
Millard cautioned attendees not to “write off Amazon.” She noted that
the rise of Amazon as a force in the ad industry represents the importance of
search – including voice search. In particular, she pointed out that Amazon has
access to an “extraordinary data trove” with the ability to push its brands
first based on its insight into consumer behavior and scale.
Millard noted that now, more content has been consumed online than on
TV, “forcing dollars into OTT versus linear television. While TV may be
important, it’s not television the box, it’s content.”
Values-Driven Marketing
For digital advertising and marketing, Laura Correnti, Partner at Adweek
Breakthrough Agency of the year Giant Spoon, said that attention
should be focused not on “how to buy impressions, but how to make one. With
$200 billion dollars in advertising this year, that’s 200 billion ways to make
an impact.”
Adrienne Lofton
Increasingly, that impact is become more driven by values.
Adrienne Lofton, incoming Nike marketing executive and former Under
Armour CMO, said that while at Under Armour, she created a set of values that
included loving the athletes. Her emphasis was on equality, fighting the good
fight together, creating fearlessly, always connecting, telling stories, thinking
‘beyond’, and celebrating the wins.
“Values-driven marketing should be infused in everything a company
does,” she added. “Understanding what you stand for and what space you fit into
in the world is critically important.”
/ An inside look at the business of digital content
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