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Perspectives

DCN’s must reads: week of June 27, 2019

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

Perspectives | Revenue

Blocked out: the dangers of overzealous keyword blocking

Brand safety has become an integral part of every marketers’ media buying strategy. One way that brands manage where their ads appear is by utilizing keyword blocking. While this can be a useful layer of protection, it isn’t a one size fits all or set it and forget it solution. Without proper monitoring, keyword blocking can create unintended—even unfortunate—consequences. 

Blocking basics

No airline wants its message to run adjacent to news about a rash of problems with a particular type of jet. One way to avoid this sort of inherently negative placement is through the practice of keyword blocking. 

Advertisers can choose to block certain categories of content — for example, anything related to drugs or adult content. They may also block particular keywords, such as “explosion,” “shooting,” or other topically sensitive terms. Of course, publishers are focused on providing relevant content to their audiences. However, they must also keep advertisers’ brand safety priorities in mind. Finding a delicate balance between the two can be tricky. 

There is no “one size fits all” approach to achieve brand safety in the world of digital advertising. But keyword blocking can be a useful tool—if handled correctly. While effective in the short term, keyword blocking lists can get excessively long or stale if not maintained properly and updated on a regular basis. And this can hurt a brand more than help. Some advertisers may find that their ads are excluded from a publisher’s site entirely due to exhaustive keyword blocklists. Thus, they inadvertently miss out on the opportunity to reach their desired audiences.

When blocking breaks

Keyword blocking alone is not an optimal solution, but it can provide a layer of protection for conservative buyers. To make the most of this approach, however, it is important to revisit blocklists at least once a quarter. This is especially important given that words or phrases associated with a particular incident that was controversial news in March, for example, will have likely changed significantly by June. 

Integral Ad Science recently reviewed keywords that were deemed as unsafe in the past due to breaking news, but that now may be acceptable. Remember the Las Vegas mass shooting that took over your newsfeed in 2017? IAS data uncovered that advertisers reacted to that breaking news story by blocking against “Las Vegas” and even “Mandalay Bay,” where the infamous shooter rented a room. Nearly two years after the incident, more than 120 advertisers are still blocking “Las Vegas.” Approximately 40 are still blocking “Mandalay Bay.” 

The unintended consequence it that publishers promoting travel deals to the strip or tips on where to catch the best fourth of July fireworks are losing out on revenue opportunities due to dated keyword blocking. And at the same time, marketers who want to reach these travel-hungry audiences are deprived of the opportunity. 

Better blocking

Ensuring brand safety is harder than ever, and there likely won’t be a catch all solution anytime in the near future. However, it is important to recognize that with keyword blocking, a “set it and forget it” mentality will not work. In fact, the entire process must be approached carefully from the outset and subject to regular review.

If your buyer insists on maintaining keyword blocklists as a key part of their strategy, then it is critical to reinforce good list hygiene. Too many blocked keywords limit distribution and will cost ad revenue. And ill-conceived or outdated block lists will deprive marketers from reaching the audience you are able to provide. This is an important issue that is negatively impacting publishers and marketers alike. I encourage you to work with your ad tech vendors and directly with buyers to help spread awareness and refine the approach to keyword blocking.

Innovation | Perspectives

How adopting a product mindset can help agile organizations win digitally

The fight for talent is on all over the world. Companies need more engineering, product, user experience, QA automation, and developers than they can find and incorporate in their business. In a recent 3Pillar survey, a third of global services decision makers said they used outside partners because they didn’t have the right kind of developers or that their developers didn’t have the right skills to get the job done.

More than ever, companies are bringing in outside help to serve their customers and hit their business objectives. This is a smart move. Most organizations don’t have the resources to hire and retain the talent needed to do this in-house, and it may take too long to hire a person at a time when what’s really needed is a team. The reality is that most companies will better achieve their goals by partnering with those with a diversity of experience.

No matter what “Agile process” you use, working with a partner who understands the fundamental principles that make digital products successful can help your company create new revenue, increase your customer base and spur innovation.

This starts with transitioning from an outdated “IT mindset” to a “Product Mindset.” This means adopting a way of thinking that ensures that people at every level of an organization are making the most effective, data-driven decisions with a shared goal in mind. The most successful agile organizations are ones that are applying these three core principles to make the most of their software development approach:

1.  Minimize Time to Value

Most products fail because the team runs out of money and support before the product starts to bring in revenue or serve customers.

Value only exists in the hands of customers. Put the smallest solution to their biggest problems in their hands, monetize it, and learn what to do next. A successful digital product is one that creates dollars, instead of saving pennies.

Partnering with an external technology provider can help agile organizations create a product that furthers learning and starts earning revenue quickly.

2.  Solve for Need

Every day, consumers choose certain digital products while failing to choose others. A company must deliver what the customers want and need most, so that customers continually choose to pay for what the company is offering.

Many companies are driven by internal forces. This could mean building products based on what management is asking for or products that reflect what they think customers want.

Co-creating with a development partner that prioritizes solving for need can challenge a company’s entrenched thinking and push back against “requirements.” This kind of partnership will ultimately generate new ideas and can help companies focus on outcomes, instead of attempting to solve challenging technical problems. Technical problems are often an impediment to releasing a successful digital product quickly.

3.  Excel at Change

Great digital products are never done. Companies must embrace changing customer needs and a changing marketplace in order to succeed in the digital economy. Often, having an outside partner can spur agile organizations to be more adaptable to change.

This may mean implementing vital elements such as continuous integration/continuous development, automated testing, and development and operations. It may also mean adoption of new tools or new technologies, like robotic process automation or virtual reality.

These partnerships enable technology management to be more adaptable. Software leaders often tell us that their firm’s sourcing policies and contracting rules slow them down. They want to try out interesting software from new providers or an open source community but must wait while their procurement colleagues argue about what are, in their opinion, unimportant legal details. An outside partner that pushes to keep change at the forefront, however, can play a critical role in a company’s success.

Partnering with a software development company that has product-oriented and outcome-driven goals can accelerate the successful delivery of digital products, and help agile organizations compete and win in the digital economy.

About the author

Jessica Hall is Vice President of Product Strategy & Design at 3Pillar Global and is the author of the Product Mindset: Succeed in the Digital Economy by Changing the way Your Organization Thinks (available fall 2019).  

Featured Post | Perspectives | Revenue

As podcast advertising grows, big advertisers await better metrics

There’s no doubt that podcasts are a growing business, as measured by audience and ad dollars flowing into the space. U.S. advertisers spent $479.1 million on podcast advertising in 2018, up 53% from $313.9 million a year earlier, according to a report released earlier this month by the Interactive Advertising Bureau and PricewaterhouseCoopers.

Those who have advertised on podcasts are often pleased. “Podcasts are a phenomenal opportunity for brands,” said Michael Duda, managing partner at Bullish, a creative agency and consumer investment firm. “We’ve seen tremendous results for our early-stage brands who conduct marketing programs that are synergetic to their target profiles.”

But many advertisers—particularly large, established ones—still feel they need more solid metrics to justify their spending. Groups like the IAB work to address these concerns through initiatives like the compliance program it launched in December, which certifies that companies are adhering to its technical guidelines.

Measurement challenges

According to the IAB announcement, podcast advertising lacks uniformity in measurement systems and metrics. Their statement also notes that “meaningful measurement has been thwarted by an inability to connect, track, and analyze user requests; measurement products that use dissimilar, proprietary algorithms; and a lack of an agreed-upon set of metrics and their meanings.”

Though standards exist, marketers say podcast advertising generally performs better for burgeoning direct-to-consumer brands and other early-and mid-stage advertisers versus the multinational, established stalwarts. “The early and mid-stage brands do better with podcast advertising because they can measure it more effectively,” said Steve Shanks, partner at Ad Results Media, an ad agency specializing in audio and podcast advertising.

The top five business categories of audio and podcast advertisers were direct-to-consumer brands, followed by financial services, business-to-business, entertainment, and telecommunications brands, according to the IAB report.

Common currency

But larger, more established consumer brands need additional reassurance from a metrics perspective if they are going to invest more heavily in podcast advertising. “The reason some larger brands don’t get into it is because with their media mix models they don’t know how to effectively buy this medium, and therefore the direct-to-consumer brands are smarter in the way they approach it and take advantage of the channel,” said Shanks.

“What the industry needs is one common currency of how we count downloads and making sure that all networks and shows are abiding by it,” he said. He added that the best standard now is IAB’s, “but not every network or show is abiding by those standards. If a download means something different depending on who you’re speaking with, it’s going to be hard for some of the larger brands to trust this space.”

Although some podcast networks may not adhere to these standards, Shanks said he’s noted that several of them “are making the effort to switch over.”

Hurdles to accurately provide universal metrics standards are numerous. The IAB’s standards note that “the ability to track podcast content and ad playback largely depends on the player requesting the file” and that only a sliver of “the market share enables client-side tracking as it exists in other forms of digital advertising.” The IAB also said that the Apple Podcasts app, for instance, commanded about 50% market share for podcast players, and yet prevented any client-side tracking or even the ability to count a “play.”

Targeting Improvements

Marketers also have a need to better target their desired audiences on audio platforms. Spotify wants to prioritize advertising around podcasts, and we’re beginning to see what that looks like. This week the company announced that advertisers can now target ads based on the podcasts people are listening to, according to the Verge.

Though these ads won’t be inserted in the shows themselves (they will run in between songs on its free service), advertisers can now “target based on the category of podcast they consume, which is likely going to be much more specific and fruitful for the advertisers.”

Test marketers for the new targeting service were Samsung and 3M. With this new ability, Samsung can, for example, target people who listen to tech and business shows, versus the previous targeting which was by age, gender, and music genre.

Audiences abound

Still, podcasts represent the opportunity for brands of all types to reach a growing audience. The IAB/PwC report projects that podcast ad revenue in the U.S. will generate $1 billion by 2021.

The preferred ad type for podcasts remains host-read ads, representing about 63% of U.S. podcast ads in 2018. Just over half of U.S. podcast ads are still direct-response ads, though that has decreased since 2016 from 73% as brand awareness ads grow in popularity.

Dynamically inserted ads continue to grow as well. In 2018, they accounted for about 49% of ads, up from 41.7% in 2017. Host-read ads, whether baked-in or programmatically inserted, tend to perform more efficiently than produced ads, said Shanks. He said this can be looked at like ads on influencer channels. When executed well, these provide much more value for listeners and advertisers, assuming pricing is the same.

Services emerge

In addition to Spotify’s efforts, we’ll continue to see more companies develop solutions to bring hefty ad spend to podcasting. This week in Cannes, audio platforms, media companies and agency networks are touting new audio and podcasting services to take advantage of the rise of streaming audio and bring more advertisers into the fold.

WPP and iHeartMedia announced a new venture called Project Listen, which will offer “creative consulting and media planning covering multiple platforms, including broadcast radio, digital streaming, podcasts, smart speakers and live events,” according to Ad Age.

“Project Listen is about tapping into the scale of audio and moving from the traditionally transactional radio business to the future of audio advertising where insights and ideas lead the way to growth for brands,” iHeartMedia CEO Bob Pittman said in a statement.

Pandora is planning to promote Studio Resonate, “a consulting arm that aims to help brands navigate tasks like creating a ‘sonic logo,’ which is a tune or sound that listeners associate with any given brand,” according to Ad Age.

So, while established brands may only be cautiously wading into the shallow end of the audio advertising pool, a slew of players are testing the format. And new solutions are being developed from all sides of the ecosystem so that the marketing and advertising opportunities sound as good as the podcasts themselves.

About the author

Maureen Morrison is a consultant and writer, working with agencies, startups, publishers and brands on marketing, editorial and communications strategies. She previously was a reporter and editor at Ad Age for 12 years, covering agencies, digital media and marketers.

Perspectives

DCN’s must reads: week of June 20, 2019

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

Perspectives

The war on ad fraud: Why publishers need an armory to win the battle

It’s difficult to track the true cost of ad fraud, with estimates varying from $5.8 billion to $23 billion in 2019. But no matter what the estimate, fraudsters are taking advantage of the programmatic ecosystem’s complexities to funnel ad dollars to fake websites that should be going to legitimate publishers.

Yet digital publishers have power in the fight against ad fraud. In fact, the websites that are doing everything right can be a major part of the solution to the digital ad fraud problem. Publishers can take steps to reduce fraud and get rewarded for their quality content and audience.

The impostor problem

Media buyers have thousands of sites to choose from when buying ads programmatically. Their problem isn’t a lack of options; it’s having assurance that the sites are legitimate with human audiences. Fraudsters can create bots to look like humans, and fake sites to look like premium sites.

That’s where the fraudsters are winning. They enter the advertising ecosystem with an army of bots that look legitimate enough to fool media buyers into believing they’re placing an ad in front of their target audience at a lower cost than a premium site. Quality sites end up competing with illegitimate sites that look legitimate, though they don’t offer advertisers human audiences.

Fake websites and fake users give advertisers no return on their investment. Both publishers and advertisers lose because the money intended for a legitimate publisher is diverted into the pockets of bad actors.

One solution isn’t the solution

There are many valuable anti-fraud tools available today including fraud detection software and inventory/seller verification initiatives such as ads.txt. While it’s important for publishers to incorporate accredited solutions into their anti-fraud arsenal, it’s also important not rely solely on any one solution.

For example, the 2019 ANA/White Ops Bot Baseline report revealed that less than half of all ad impressions are able to be fully, transparently validated by measurement tools. Fraud detection companies use different methodologies that produce varied results whether the ad campaigns or the publishers’ pages are tagged.

As another example, sourced traffic may be engineered to pass through fraud detection technologies. A publisher may think that the ad fraud detection tools they have in place are preventing fraud from occurring on their website, but sourced traffic may introduce bots unknowingly.

Since there are many angles to the ad fraud problem, it takes a multi-layered, integrated approach to confront the problem as well. Publishers have opportunities to go beyond current solutions and stand out as quality publishers.

What publishers can do

It’s important that publishers use a holistic approach to ad fraud prevention and detection that incorporates a variety of solutions to ensure all aspects of a website are covered from traffic sources to ad delivery. There are several steps publishers can take to limit their exposure to ad fraud and reduce the risk to their media buying clients.

Follow best practices for driving traffic to your site

Take advantage of your content that attracts human audiences and promote it through legitimate marketing methods such as paid ads, e-newsletters or social media. Don’t source traffic, which can invite invalid traffic to your website. Monitor traffic sources to identify any suspicious patterns. Filter traffic from bots and data centers to prevent ads from being served to invalid traffic.

Educate your clients

Communicate how your quality content gives media buyers a greater return on investment. Inexpensive ads may generate lots of clicks at a lower CPM than ads on premium websites, but nonhuman clicks will never convert into paying customers. Quality content attracts human audiences. Next time you have a client meeting, simply ask, “Are you sure you are advertising on quality sites?” An educated advertiser will understand the value of investing in human audiences and quality publishers will get rewarded for their hard work.

Implement industry solutions

While no one solution can solve the entire ad fraud problem, integrating multiple tools into your overall fraud protection plan can go a long way. Adopt tools such as ads.txt, IAB Tech Lab’s OpenRTB Version 3.0, and accredited ad fraud detection software.

Engaging in an independent, third-party website audit can identify areas of risk and help publishers make improvements. A website audit also assures advertisers that steps are being taken to provide them with the highest level of transparency and a safe place to reach their target audience that will provide a greater return on their media investment.

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.

Perspectives | Revenue

The future of content is sponsored – but maybe not in the ways you think

Brands have long supported the creation of content, whether through traditional advertising or by more direct means such as brand tie-ins, product placements, and brought-to-you-by sponsorships.

But moving forward, their support may be more critical than ever.

With Facebook and Google cannibalizing publishers’ ad dollars over the last 10 years, myriad new revenue streams have emerged to help publishers sustain their businesses. Among them we find banner ads, e-commerce, and sponsored content.

Sponsored by

Sponsored content is defined as any material in an online publication (written, video, etc.) that resembles the site’s editorial content but is paid for by an advertiser. The content is often intended to promote the advertiser’s product or values. In contrast, editorial is independently created by a publication and posted on their site, with the goal of educating, informing, or entertaining their audience.

Letting brands fund the creation of sponsored content is an arrangement that benefits both parties. This kind of content allows brands to leverage the reach and influence of publishers. At the same time, publishers earn the revenue necessary to continue both their editorial and advertising programs.

Marrying the two can produce outstanding (and better funded) results, but many worry about the slippery slope. While editorial and sponsored stories often exist in their own worlds, opportunities for overlap are everywhere. Beyond simply producing thinly-veiled content that ties into a brand message, these days brands are working with premium publishers to create quality content that might not otherwise make it to the market. In fact, the success of sponsored content has supported the growth of a new model: brand-supported editorial.

Devil and angel, church and state

Let’s step back for a second.

Although sponsored content as we understand it is a relatively new phenomenon, journalists and content creators have been disagreeing about the ethics behind it for decades. As far back as 1975, American essayist E.B. White expressed outrage when the Xerox Corporation announced that they had commissioned Pulitzer Prize-winning reporter Harrison Salisbury to write a piece for Esquire Magazine.

He remarked, “Sponsorship in the press is an invitation to corruption and abuse. Wherever money changes hands, something goes along with it — an intangible something that varies with circumstances.”

There have been other problematic instances of sponsored content in the past. In 2013, The Atlantic published (and quickly removed) a piece of sponsored content titled “David Miscavige Leads Scientology to Milestone Year.” The article extolled the virtues and accomplishments of Scientology’s venerable leader. Blowback was immediate, with industry leaders criticizing the publication for publishing content antithetical to its journalistic principles.

The problems aren’t siloed to sponsored, either. We’ve seen how the relationship between advertisers and publishers can affect editorial content, too. Some sites will promise advertisers an editorial story promoting their business if they buy a real ad; others will refuse to cover stories if they don’t. While the pervasiveness of this practice is still up for debate, it raises real questions about the durability of the line between church and state, sponsored and editorial.

Sent from above

It’s not all bad news, however. There’s also been a lot of social good brought about by sponsored content.

One of the best examples comes from Variety’s campaign “Abilities Unlimited,” made in partnership with Easterseals. The collaboration provided illuminating research on just how underrepresented people with disabilities are in the entertainment industry. Featuring interviews with high profile actors, directors, and writers, the pieces offered tangible advice to members of the industry for how to ensure their projects are more inclusive.

Original journalism like this can be incredibly expensive. For example, ProPublica’s 2013 to 2015 “Overdose” series, which exposed the FDA’s inaction regarding a dangerous ingredient in Tylenol, cost an estimated $750,000 to produce. This is content that could save lives. But with shrinking budgets and newsrooms, publishers may lose the ability to create it.

Sponsored content can also give the public access to information they otherwise would never have seen. Last year, Siemens brought their full technological capabilities to the table in a campaign with The Economist, which visualized the relationship between fan enthusiasm and team performance.

There’s no doubt these programs have helped people, whether through information or entertainment. So how do we make sure we can have our cake and eat it too?

The future of editorial and sponsored

Even as publishers investigate subscription models and e-commerce solutions, it’s clear that branded content remains one of the most critical sources of revenue for publishers. Our research suggests that branded content will continue to grow over the next years, with 90% of publisher survey respondents saying that they expect branded content revenue to increase moving into 2020. But if this is the future, how can we ensure that it’s ethical and sustainable?

First, if we want to retain the value of sponsored content, editorial content must be prioritized. Sponsored content works due to its association with a publisher’s journalistic standards and high-quality content. It’s a matter of pattern recognition. When we see a brand partnering with a reputable publisher, our brains take that as a signal that the company shares the same values and reputation. Keeping a ratio of content that prioritizes editorial over sponsored content, not just on-site but also on social feeds, will help maintain that authority, benefiting both advertiser and publisher in the long term.

Second, we need to embrace brand support in the newsroom. This doesn’t mean letting Coca Cola write your next feature or interviewing BP as an expert on oil spill mitigation. It also doesn’t mean deciding what stories to pursue based on an external party’s agenda (or conversely, ad budget). But it does involve partnering with companies to fund important stories — including those couldn’t be told otherwise.

Third, publishers need to say no — as frustrating as that is for advertisers. Say no to partners that don’t share your values, no to ad dollars tied up with editorial promises and no to content that doesn’t benefit your readers. Otherwise, you risk losing your readers’ respect, which translates to less traffic and fewer ad dollars.

And fourth, we need to constantly question what stories we’re telling, why we’re telling them, and who we’re telling them for. The line between sponsored and editorial is such a polarizing and emotional topic, so it’s important to unravel it — no matter how many knots we find along the way.

Featured Post | Revenue

Thinking inside the box: A look at news, niche, and inspired subscription strategies

For the foreseeable future, publishers are pinning their hopes on digital subscription, on reigniting the direct relationship they initially lost in the initial pile into digital publishing. A recent study from the Reuters Institute for the Study of Journalism found that 69% of US and European publishers employ some form of paywall around their content, with the vast majority following a metered or freemium model.

Regardless of which model of subscription or membership each outlet has deployed, they each have similar challenges when it comes to the acquisition and retention of users. In that sense they are very similar to other subscription-based products in the entertainment space, from the OTT video services to the innumerable video games subscription services that have been launched in the last year.

The challenges are especially acute for news publishers, however, since news has become a commodity. The news market is flooded with free alternatives and news is not the subscription product most consumers opt for.

Boxed goods

However, just as the challenges are similar, there are success stories around other subscription products that news publications should consider emulating in their own approach to consumers.

One of those increasingly lucrative consumer subscription products is that of the subscription box. These generally take the form of a batch of products curated and delivered directly to you monthly, sometimes in partnership with a publisher. The range of products offered spans from apparel to hot sauces to sustainably sourced fruit and vegetables. And consumers are responding: Royal Mail predicts the market will be worth £1bn by 2022, and that over a quarter of the UK population has already signed up for a subscription box.

Katie Vanneck-Smith is the founder of Tortoise, a “slow journalism” publisher with a focus on membership. She told me that publishers can take valuable lessons away from the rise of products like subscription boxes, and that publishers have “only just started to catch up with the consumer behaviours in the industry”. So what can news publishers learn from the growth of those products, particularly around engaging and retaining subscribers?

Curation as a service

The value of a subscription box lies in the fact that its contents have been specially selected for the consumer base. Subscribers trust that the brand behind the box has the expertise required to choose only the best goods to serve up. And this is doubly true when the box contains luxury products rather than staple goods. Boxes like Loot Crate and Stitch Fix trade off the fact that they have the connections and knowledge to deliver products that are relevant to the receiver. Crucially, they both play up the fact that human editors are the ones ultimately doing the curation, rather than just an algorithm.

In that sense, those subscription offerings are very similar to products from high-end publishers. This includes The Times & Sunday Times, which make the curation of stories relevant to their audiences a core tenet of products like The Brief. Both leverage the fact that, in a sea of products, there is value in having an expert pick out only the best ones on your behalf.

Churn is a fact of life, so cater for it

It typically costs around five times more to acquire a new subscriber than to retain an existing one. That’s why so many publishers are avidly focused on the development of their own internal engagement scores, to determine when people are likely to jump ship and hopefully to intercede. The Times in particular has invested a huge amount of money in reducing churn along every part of the process, but it is effectively a universal concern among subscription-based products.

However, while the quality of the provided service is ultimately the best guarantor of user retention, sometimes factors outside of a publisher’s control will inevitably cause people to consider dropping off. In that case, as with subscription boxes, publishers need to offer solutions that cater to their audience’s changing situation. Ecommerce platform Cratejoy found that customers typically gave financial reasons as the cause for cancelling a subscription box, and advises that subscription boxes offer a “downgrade” option.

Increasingly, publishers are doing the same. They offer flexible options or discounts to the subscribers who contact them to cancel. Some publishers are also considering a wider rollout of a pause option for subscribers. This has the dual benefit of keeping them within the logged-in ecosystem for marketing purposes while also negating the high cost of reacquiring a lapsed subscriber.

Have a mission

Subscription packages like ODDBOX make a social mission part of their sales strategy: much of its messaging is based around the notion that food wastage is a significant issue, and that subscribing is the right thing to do to combat a problem. Similarly, the Guardian found that the rhetoric it employed around its membership scheme had a significant impact, and that choosing to support open access to journalism for everyone was frequently cited as one of the most important reasons people chose to donate.

Notably, when the Guardian reached its milestone of a million paying users, it chose to change the messaging from one of survival to one of sustainability. Consequently, it saw its best week ever in terms of donations. This ran counter to internal misgivings that fewer people would choose to support it no longer appeared in peril.   

The fourth subscription

At the World News Media Congress in Glasgow, co-editor of the Innovation in News Media World Report Juan Senor suggested that a consumer is likely to pay for four subscription services. The first two would likely be entertainment services, the third a general news subscription, and the fourth to a niche site they have a personal interest in.

While people typically feel affinity to newsbrands, the trend towards personalization of content means that publishers can typically serve up content tailored specifically to them. Effectively, they are increasingly hybrids of the third and fourth subscriptions. For example, The Telegraph recognized that its rugby content was of particular interest to its audience. So, it recently made all its content around the sport a key part of its subscription proposition, one of only three types of article to sit exclusively behind the paywall.

When it comes to marketing that specific content, publishers could do much worse than to emulate the techniques employed by subscription boxes, which are by their nature niche. The products themselves – news and goods – are very different in nature, but the lessons around messaging and retention are universal.

Perspectives

DCN’s must reads: week of June 13, 2019

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

Industry-Research | Innovation

The future of media will be personal, according to PwC

Consumer interaction on digital platforms is a key driver of revenue for entertainment and media companies. With increasing affordability and availability of broadband, mobile continues to be a strong contributor to the growth of this segment. However, according to the new PwC’s Global Entertainment & Media Outlook 2019–2023 Report, further innovation and personalization will significantly change how we access and use the Internet.

PwC predicts that creative new offerings and business models will increasingly revolve around people’s personal preferences. New applications will involve artificial intelligence in combination with digital assistants. Media companies will strive to build products that empower consumers to set their individual preferences and curate their own context.

The PwC Outlook Report cites personalization as a central theme in overall entertainment and media revenue growth. Global spending is expected to rise 4.3% over the next five years, with revenues hitting $2.6 trillion in 2023. The report provides a strong and notable resource for revenue estimates in the both the US and global markets.I

Additional forecasts from PwC’s Outlook Report include:
  • Subscription TV revenue in the U.S. will experience a 2.9% CAGR (compound annual growth rate) decline to from $94.6 billion in 2018 to $81.8 billion in 2023. Much of the loss comes from cord-cutting and SVOD competition. Interestingly, the US remains the biggest Pay-TV market accounting for 46% of the total global revenue in 2018.
  • SVOD’s continues its popularity as more streaming services are introduced and unbundling continues to grow. Newcomers to the market will need to differentiate themselves to attract subscribers.
  • The OTT market is also dominated by the U.S., contributing to more than half (55.6%) of global OTT revenue in 2018. OTT video revenue in the US reached $14.5 billion in 2018 and is set to double by 2023.
  • The U.S. virtual reality (VR) market registered $934 million in revenue in 2018 and is expected to grow at a 16.6% CAGR to reach S$2 billion by 2023. Gaming remains the primary application of VR, accounting for 57.4% of total VR revenue in the US in 2018. VR video, however, will see the most growth in the forecast period, climbing at a CAGR of 22.4% to reach $861 million in 2023.

There’s an important effort in today’s entertainment and media marketplace to meet consumers where they spend their time and to deliver what they need wherever they are. These sorts of personalization efforts cut across OTT, SVOD, and VR. While evolving business models around customer behavior is far from new, the renewed focus amplifies the importance of placing consumers at the center of the media experience.  

Innovation | Revenue | Video

How Hotstar, India’s hottest OTT service, turns viewers into subscribers

The advance of high-speed networks and affordable data plans hasn’t only whet audience appetites for unlimited anytime, anywhere access to the content they desire. It has created ideal conditions for data-hungry streaming apps to proliferate, displacing traditional broadcast TV, and driving the meteoric growth of on-demand video. The phenomenon is global in scale, but nowhere is the impact as profound as in India, the fastest-growing video streaming market in the world. In India, on-demand entertainment services are forecast to account for more than 74% of mobile data traffic by 2020, up from 47% in 2014.

Streaming viewership is soaring, but it’s Hotstar—part of the Walt Disney entertainment empire and India’s largest premium streaming platform —that is seeing numbers climb into the stratosphere. In June Hotstar set a new global benchmark for live events. It reported a record 18.6 million users simultaneously tuned into the company’s mobile website and app to watch the deciding game of the Indian Premier League (IPL) cricket games. This sort of high-octane content has allowed Hotstar to grow the number of monthly users across app and web to 300 million, up from 150 million the previous year.

Hotstar balances a mix of blockbuster entertainment (including rights to popular movies and shows from ABC, HBO, and Showtime) with a bouquet of content aligned with India’s obsession with Bollywood and demand for local language translations. (Note that India hosts hundreds of dialects and over 20 official languages). As a result of this winning combination, Hotstar dominates India’s on-demand video streaming services market. The latest research from Jana pegs Hotstar’s total market share at 69.7%, compared to Amazon (5%) and Netflix (1.4%).

Using data to differentiate the customer experience

At first glance, it’s remarkable that large global players with deep pockets continue to struggle in the Indian market—despite significant investments to ramp up local content. But look under the hood, and you may be surprised. Hotstar’s success may start with broadcast rights for live premium sports paired with high-quality vernacular content that attracts record numbers of viewers. However, it’s driven by a strategy that harnesses personalization, recommendations, and psychographic segmentation to keep them coming back. 

Finding the right balance between acquisition and retention is crucial for a company like Hotstar, which thrives on live events. It pays to spend millions of dollars to acquire audiences at scale—but only if users don’t leave in droves when the event is over. Hotstar turned a potential problem into a massive opportunity by mapping individual user journeys to move audiences across the funnel from freemium viewers to paid subscribers.

How Hotstar moves viewers from fremium to subscription

In an exclusive interview, Mihir Shah, VP of Product & Marketing Growth at Hotstar, distills the company’s data-driven approach into the four fundamentals companies must get right to turn casual users into committed fans.

1. Personalize the entire user experience

It’s important to look beyond demographics to gain a deeper understanding of who your user is, what job your product solves in their lives, and how they use your product, Shah explains. In this scenario, actions are just as important as inactions to develop relevant engagement and re-engagement strategies. How many times has the user opened the app or viewed the content? How long has it been since the last interaction? How quickly or slowly is the user moving through the funnel, and what “nudges” might convince and—ultimately—convert them? Shah says these are critical questions marketers can only answer if they get a firm grasp of behavioral segmentation models aimed at understanding and predicting user attitudes and outcomes. “Once you establish a degree of predictability around how your users behave, the way is clear to progress users through the funnel with the help of content that is packaged and promoted based on a deep understanding of user personas and psychographics,” he says

2. Recommend your content along the customer lifecycle

User acquisition burns money if audiences don’t stick around to explore and consume the breadth of content available on the platform. This can be a major marketing challenge, and why a big part of Shah’s job revolves around “converting the sports fans who come to our platform—about 70 to 80 million daily for live events like IPL—to start watching more of the entertainment we offer. And, ultimately, get them to commit to a subscription.”

Achieving this objective requires the ability to identify and segment users based on digital details, including their browsing and viewing history, content consumption patterns and other preferences. “Based on a collaborative filtering method, we recommend entertainment titles that other sports viewers watch,” Shah says. “If the user is a free user on our platform, we move them through the funnel by recommending content from our Premium library that they are most likely to appreciate—content suggestions based on freemium viewership patterns. The relevant recommendations are then delivered to users off-platform as part of an omnichannel campaign strategy that spans push notifications, social and programmatic.

3. Messaging must be personal and perfectly timed

Keep up the momentum with campaigns that seek to influence user behaviors, not just move metrics. Shah illustrates using the example of users who have streamed live cricket matches. “We know that sending them push notifications based on the actual game event will encourage them to relaunch the app and view the game in progress.” In practice, he says, this means “delivering over 100 million push notifications tailored to the moment and timed perfectly within a very small window of just a few minutes.”

It’s a critical timeline that Shah says Hotstar reaches with the help of CleverTap, a customer lifecycle management and engagement platform that is capable of delivering more than 25 million push notifications a minute/ Shah says it was essential to reach Hotstar’s app install base of over 250 million. Significantly, “event-centric” campaigns appear to resonate most with audiences, boosting engagement and the average watch time per session by 12% and more.

“As we cross-sell entertainment content, let’s say a movie, to our sports viewers, our marketing creatives bring out a connection between the sport and the entertainment content, thus making the content more appealing to a sports fan.” But making the connection is just part of the strategy. Shah stresses it’s also a good idea to pinpoint the days and times of the week that different user segments are the most active and receptive to push notifications. Hotstar used these insights to optimize send times, increasing click-through rates by 3x in the process.

4.  Engaging with users in real-time is a game-changer

RFM (Recency, Frequency Monetary) analysis is a behavioral segmentation model that examines user activity to identify how recently and frequently they performed a key action. To make sure the effort marketers invest in this model also drives returns, RFM also looks at the monetary value of the action (such as purchasing an item or, in the case of Hotstar, subscribing to programming). Shah is a huge proponent of RFM, a framework his company has harnessed to bring context to user engagement campaigns and, more importantly, predict churn. In both cases, Hotstar segments users in real-time based on certain actions or inactions they undertake within the app.

Imagine a scenario where users who were watching a particular episode of a series simply leave the app for some reason. “We see that as a trigger and send them a customized push notification encouraging them to come back to finish viewing that particular episode at precisely that moment.” Similarly, users who have seen previous episodes of a series but not the latest one, are sent a contextual push notification as soon as the latest episode is released. The outcome, he adds, is “more conversions and increased content consumption.”

The future is interactive

As Hotstar continues on its impressive growth trajectory, Shah says, the company is ready to take on one more bet: that “the future of all sports streaming will be social.” As he sees it, there’s no reason to limit the flow of content to push or pull. “Why should content consumption be one way?,” he asks. “Why can’t it be immersive and interactive?”

To enable two-way exchange, Hotstar is laying a new layer on top of its platform. Last year it introduced Watch`N`Play, a game that challenges users to guess cricket gameplay and outcomes, as well as social features and streaming using virtual reality (VR) to make the match more immersive. This year Hotstar is going one better, adding “another layer of chat” to the platform, allowing fans to invite their friends from their Facebook account or phone book contacts to the platform.

Effective user acquisition ends in advocacy, and that means meeting and anticipating needs that consumers themselves might not be able to identify. “It’s becoming increasingly clear that customers are hungry for more, even though they don’t know what they are looking for,” Shah explains. It’s up to companies like Hotstar to pave the road for this future, building a platform and adding what he calls “unique, inevitable and incremental experiences” that go beyond just entertaining content.

Advertising | Perspectives | Revenue

How publishers can unlock outcome-oriented advertising models

For anyone working in ad tech for more than a few years, the publisher monetization challenge comes as no (major) surprise. Ever since the ecosystem divided itself into demand-side and supply-side with the “impression” as the primary currency traded over automated exchanges, it was only a matter of time until the side “closer to the money” would overshadow the other.

While digital-native publishers quickly embraced these models and optimized their traffic for automated buying, traditional publishers (typically in print negotiating the “digital transition”) faced a different story. Most assumed that brand and editorial quality would ensure buyer competition to lift prices. However, this intersection of traditional and digital publishing ultimately diluted the value of these brands given the surge in digital inventory and resulted in disappointing “fair market value” in a CPM world.

Publishers are now in a race to (re)create value for their content, as we see two main trends emerging:

1. Creating alternatives to platforms by aggregating scale and data

To better compete with the scale and data capabilities of the Google-Facebook duopoly, premium publishers in various global markets, including the US, have formed alliances. The jury is still out on whether this model will ultimately succeed, forcing competitors to work together while balancing “infighting, lethargy ,and incompatible data and systems.”

2. Aligning business models with editorial expertise – content and experiences

Publishers have recognized that advertising revenue is not linear with content “quality” particularly with the emergence of programmatic buying as quality has given way to reach and data targeting. Therefore, publishers are diversifying their revenue and incorporating subscription models to be paid on their own definition of quality.

Beyond creating various flavors of paywalls for their readers, something deeper is happening. Publishers are rethinking their approach of the digital ecosystem to their advantage.

The next generation of publisher direct sales

Similarly, on the advertising front, publishers can now leverage technology, data, and AI to unlock new opportunities and empower their sales teams to better compete against the duopoly and challenge legacy ad transaction models.

Publishers can and should move beyond the traditional CPM model and move towards advanced outcome-centric models (i.e., CPCV, CPiV, vCPM, etc.) to compensate for intrinsic scale limitations while better meeting the true goals of their advertising clients. Combined with premium context which results in better ad performance and engagement, these new models should become part of publishers’ core strategy to reinvigorate their advertising revenue and maximize the value of their content.

How do we move towards this new model?

Moving “closer to the money” and further up the value chain requires publishers to start a deep, cooperative discussion with advertisers. They will then need to create packaged, scalable solutions to address their specific challenges. To succeed with highly qualified but limited footprints, these solutions need to leverage all possible optimization levers towards advanced, advertiser-centric KPIs (i.e. leads, completed video views, etc.).

For example, to run a successful CPCV (cost per completed view) campaign, optimization starts with the creative itself (along with the data set, user-definition and targeting) to AI that will model reader behavior to identify the most probable combinations that will lead to video completion (which ultimately limits inventory waste).

Looking beyond the supply side view

Unfortunately, most publisher ad tech stacks solely aim at optimizing the supply-side view of the world, while most of the high-value operations occur on the demand-side platforms. Publisher technology typically stop at the “CPM wall” leaving out most of the optimization levers that help drive the most conversions from a given impression.

Publishers need to adopt tech stacks that use AI to also compute demand-side data-points, similar to those used by DSPs to extract the most value from their inventories. In addition, these tech platforms also need to support outcome-centric optimized transaction models beyond CPM.

Only a limited number of ad tech companies have a comprehensive vision that spans across both demand-side and supply-side visions of the world. And even fewer have the scale to make their capabilities relevant or share them directly with publishers instead of to their own benefit. The publisher ad tech stack of the future will ensure that advertisers can deliver advanced KPIs while preserving and optimizing the publishers’ inventory.

About the author

Federico Benincasa is SVP Product for Publisher Solutions at Teads leading the Teads Publisher Suite initiative, a full-stack solution leveraging all the company’s proprietary technological assets. Former adtech entrepreneur, Federico is a recognized industry veteran and recently led the Product team for the StickyAds video SSP before becoming SVP of Product for Freewheel’s Digital Video full stack.

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