Understanding Gen Z’s media experiences and entertainment preferences is a priority for publishers because they provide a proxy for the future of digital media. Already, according to a McKinsey analysis, Gen Z accounts for 40% of global consumers while a Barkley US report estimated that they hold $143 billion in spending power.
To gain insight into this generation, Digital Content Next (DCN) commissioned Seidmon Associates to research Gen Z’s attitudes, values, and behavior regarding digital content. Through a 20-minute online survey, they queried 1,556 respondents aged 16-40 between May 14 and June 5, 2021. Approximately half (792) of respondents fell into the Gen Z demographic, ages 16-24, and the remainder (764) into Gen Y, ages 25-40. DCN’s goal in conducting this research is to help their members better understand the way that Gen Z experiences content to build audience reach and engagement. Note that the research included a Gen Y sample to offer a contrasting perspective and a better understanding of Gen Z.
Attributes and access
High quality is the most important attribute that influences digital media brand loyalty among both generations. Trust is the next most significant attribute among Gen Z and Gen Y. And privacy and authenticity also matter a great deal to both generations.
For both Gen Z and Gen Y, mobile rules – with nearly half of both generations saying their phone is valued above all else. DCN’s research found that Gen Z values video more than any other media platform – by a margin of roughly 2-to-1 over social, gaming, music, or Google search. Both generations have more paid subscriptions for video than any other content type (a little over three each).
In terms of devices and hardware, the mobile phone is clearly most valued, followed by gaming consoles and devices. However, videogame consoles are second in importance among Gen Z, while laptops are second among Gen Y.
Video and attention
There’s a significant intersection here, as video is highly accessible at all times, given these consumers’ tendency to view it on mobile. Both generations see video as part of their social fabric and say that it is part of their daily conversation. According to DCN’s Vice President of Research, Rande Price, “That means that major marketing campaigns aren’t lost on them. Big announcements like of Marvel series drops on Disney+, the reintroduction of chess due to Queens Gambit on Netflix, etc. – these are all part of their social conversation.”
The research finds that, in general, both generations prefer shorter-form content. Gen Z attributes this to their “short attention span” while Gen Y value short form as a time filler. YouTube, Instagram and TikTok are most popular with Gen Z, while Gen Y prefers YouTube, Facebook, and Instagram (in that order). Both Gen Z and Gen Y prefer user-generated over company-produced digital media content by a 2-to-1 margin. In particular, Gen Z respondents felt that user-generated content was “more authentic, honest, and relatable” than professionally produced content.
As the report concludes, Gen Z are digital natives, born into a world with it all – social media, instant messaging, video games, live streaming, traditional TV and movies. Therefore, “understanding Gen Z’s media experiences and entertainment preferences is a priority for publishers because they are the future.”
The full report also covers a wide range of topics including Gen Z’s rational around paying for subscriptions, attitudes and preferences on news, ethical and social considerations, and more. DCN members can access the full report here.
Current uncertainty about the tech underpinning digital media has left most of us wondering what happens when cookies disappear on Chrome. It’s easy to forget that Safari and Firefox deprecated cookies a long time ago. This, in turn, created a natural test bed for newer and better post-cookie technologies. The good news is that these changes create opportunity and prospects for a better industry. If you are a publisher, here are two truths and a lie for you to consider, and five ways to ensure your business is not disrupted.
Truth one: Don’t count on FLoCs
Google has said its FLoCs are private and can be used as a proxy for enhancing traffic with data. But, Google has only released the results of a single test on this black box technology, which has murky methodology and opaque applicability. Even Google’s publicized test showed results less effective than cookie-based advertising.
Meanwhile, Google has been hit with criticisms that FLoCs use consumer data without consent. The company postponed its testing in Europe, where the technology may not comply with GDPR. Over the summer, it became evident that Google is becoming mired in uncertainty around the technology. It’s actions also raised concerns around Google’s market dominance. Bottom line: If you were counting on FLoC, you may want to take another look at your options.
Truth two: Don’t count on context
The same can be said for those leaning towards going all in for context. These state-of-the-art circa 2006 solutions don’t just limit the breadth of data you can associate to a profile. However, they almost always curb the concept of identity to a single domain.
Contextual providers are telling you that without cookies, third-party data will vanish (which is not the case). First-party data will be much more valuable, they continue. The thesis is that first-party data is like gold, becoming more valuable when it becomes more scarce. This ignores a fundamental economic truth in marketing: A marketer can afford to pay only her target acquisition cost and not more. A dearth of data means the marketer may need to pay a lower CPM on less-enhanced impressions. If she can afford to pay $5 CPM for “women”, then $2.50 will be the max that can be paid for “people”. Those digital impressions aren’t like gold — they are more like gold-bearing ore. The value depends on the assay.
Lie: Programmatic was/is/forever will be bad
Contrary to what we often hear, programmatic has been good for non-gigantic and independent publishers. Most non-giants don’t have the scale to hire a sales force, or the traffic to attract marketers without aggregation, or enough contextual insights to sell that traffic for what it was worth. Smaller publishers rapidly adopted programmatic five years ago because it gave them the opportunity to be paid based on what their traffic did somewhere else.
Programmatic is often criticized for data leakage in the bidstream and allowing buyers to come in with more insights on traffic than the publisher. But let’s remember the volume of impressions surfaced in the auction gives sellers inherent protection against cherry-picking. If impressions are better characterized via third-party data, bidders can find that auto intender among a “lover-of-cats” crowd that had been relegated to air freshener promos. The publisher selling the cat lover should want that asymmetric knowledge in order to get the best bid.
Five ways you can prepare for a cookieless future
So how in this new and changing landscape, should publishers sustain monetization when cookies are completely gone? Here are my top five recommendations of the very real steps publishers can take to prepare for 2023.
There’s a chance that Google has pushed back the cookie deadline because it needs more time to refine its own tools, with the intent of preventing or abolishing third-party ID interoperability. Take every opportunity to be vocal about your right to bring your own tech to the party.
New identifiers emerging in the marketplace will promise scale and interoperability — but you’ll need to test any solution early. Real interoperability is elusive, but out there, so exercise caution.
The industry may see great value in the 40% share of the browser market that Chrome doesn’t own. You can start testing solutions with Safari and Firefox today.
Delaying the adoption of new identity solutions may simply prolong the headaches from the third-party cookie model. Third-party cookies are costly to sync, carry privacy risks, and take more time to show ROI than newer technologies. Don’t hope for Google to provide another reprieve.
Definitely use context in your strategy. It’s data. You have it. Use it. Context should be part of the monetization equation. However, be realistic that context alone won’t save you. It simply can’t compete with technology that delivers richer information across domains. Don’t get hung up on old solutions just because they’re familiar or wrapped in a sexy new buzzword like “edge computing”.
It’s not all doom and gloom for publishers in the next two years. For independent publishers, the cookieless future is filled with opportunity. Just don’t embrace the false narrative that your traffic is inherently gold. You need the right tools to make sure your assay is strong, realizable, and increasingly lucrative.
Digital Content Next (DCN) commissioned Seidmon Associates to research Gen Z’s attitudes, values, and behavior regarding digital content. The goal of this research is to help DCN members better understand the way that Gen Z experiences content to build audience reach and engagement.
A 20-minute online survey was conducted among 1,556 respondents aged 16-40 between May 14 and June 5, 2021. Approximately half (792) of respondents fell into the Gen Z demographic, ages 16-24, and the remainder (764) into the Gen Y demographic, ages 25-40. Note that the research included a Gen Y sample to offer a contrasting perspective and a better understanding of Gen Z.
Research highlights include:
High quality is the most important attribute that influences digital media brand loyalty among both generations. Trust is the next most significant attribute among Gen Z and Gen Y. And privacy and authenticity also matter a great deal to both generations.
Gen Z values video more than any other media platform – by a margin of roughly 2-to-1 – over social, gaming, music, or Google search. Both generations have more paid subscriptions for video than any other content type (a little over three each).
In terms of devices and hardware, the mobile phone is most valued, followed by gaming consoles and devices. However, videogame consoles are second in importance among Gen Z, while laptops are second among Gen Y.
Both generations prefer shorter-form content. Gen Z attributes this to their “short attention span” while Gen Y value short form as a time filler.
Full research report for DCN members only. Log in or Register to download. The link will appear immediately below.
Even before Google sent brands and publishers slow-walking to wean themselves off third-party cookies back in early 2020, both the buy- and sell-side had a data problem.
The issue has been that publishers and brands have historically managed audience data in siloed systems. Therefore, critical information surrounding ad revenue, subscriptions, content engagement, and customer profiles is all stored separately.
However, to create truly relevant experiences for consumers, any digital businesses must be able to tie all this data together in privacy-compliant ways to achieve a full picture of the customer journey. The IT department no longer governs data and analytics to the degree that it once did. So, commercial teams like marketing, sales and finance now have the opportunity to more heavily influence these areas than ever before.
Time to get your data analytics in order
Next year will be the last full one brands and publishers have before third-party cookies expire. So it is the perfect time to fully get your data analytics in order. Here are nine criteria to consider when rethinking your strategy.
1. The ability to customize your data model
To begin piecing together data from multiple touchpoints, it’s important to first introduce a unified data model approach across the organization. A tailored data model that covers the entirety of a business’s objectives as well as those of the different company stakeholders provides access to a reliable 360-degree view of customer data. This enables any team that needs to tap into the data to create immediate value, improving speed to market and the ability to react to trends faster.
2. Access to live, quality data
Whether you want to integrate with other technologies or enlist your data science team to work on a special project, you want to ensure you have streamlined access to fully denormalized, real-time data. This reduces query time and improves targeting and personalization, while avoiding the costly joining of disparate databases.
3. Enriched data that does deeper
Make sure you can automatically correct, enhance and remove data based on third-party metadata and advanced processing rules, with no retagging necessary. This will allow you to do more with your behavioral data to explore different perspectives that can inform your business decisions.
4. A universal tag for data hygiene and cleanliness
Tag health is critical for proper data cleanliness and consistency. Many businesses have multiple tags running. That increases the number of server calls and overall time spent on tag management. By instead leveraging one universal tag, you can duplicate traffic across various sites to a virtual site with 100% accuracy and for half the cost.
5. No data sampling
Data sampling is the practice of analyzing a subset of your traffic data, which is used to estimate the overall results. Instead of gathering all the data, you only get access to a limited sample. That means that any analysis you carry out after that will be an assumption based on existing patterns. Having a complete set of data to analyze boosts accuracy and canunlock previously undiscovered audiences.
6. Compliance with all privacy regulations
This might seem like a no-brainer, but with evolving and emerging laws, it’s easy to fall into violation when it comes to data privacy. Ensure whatever tool you work with is compliant across all of the global privacy regulations and that you can tweak your consent model as needed.
7. Integration across your stack
Your data is only as good as it is useful. If you are using disparate systems to manage and activate it, there is a chance of data loss, inaccurate customer views and privacy non-compliance. Ensuring interoperability across all systems streamlines execution and management while reducing business risk.
8. Democratization of data
Once you know your data is clean and accurate, make it available to everyone in your business who needs to act on it. You want to keep the end user experience in mind when choosing the right tools. Whether you use dashboards, data exploration tools, smart alerts when anomalies occur or direct API feeds for personalization, make sure they are user-friendly.
9. Professional services help
Even if you have an in-house analytics team, ensuring all of your data flows through your systems well might require additional support. The best technology vendors will have robust professional services teams that can help you implement your analytics strategy. This includes determining your KPIsand measurement approach in addition to best practices that drive both compliance and results.
It’s prime time to harness the true power of all the data at your disposal. With the right technology and talent, you can fast be on your way to turning insights into action that drives additional business value — more website traffic, subscriber, and revenues.
The future of digital advertising might just revolve around the matter of trust. But before publishers take on that question, they should consider this one: Why is Big Tech working so hard to build trust in their respective walled gardens?
Take Amazon (please!). They’re rumored to be creating a universal identifier restricted to their ecosystem. Google’s proposed FLoC targeting, presented as the evolution of 3rd party cookies, might be reimagined before it even launches over privacy concerns. But surely whatever takes its place will only serve to strengthen its monopolistic hold on advertising. Apple is pushing to present their core OS’s as privacy-focused — all while maintaining their typical “advantageous” relationships with the app developers that build and support large parts of their ecosystem. All are effectively fortifying the garden walls while working to convince the public of their respective trustworthiness.
This new-found obsession should come as no surprise to publishers: Trust is a key ingredient in the secret sauce of ad revenue growth.
Anecdotally, we know this to be true, and the numbers don’t lie. Privacy is the #1 driver of influence and engagement on social media platforms. Brands and agencies are cutting advertising budgets due to trust issues: Of those who decreased ad spend on one or more major ad platforms, 35% cited concerns over ethical handling of user data.
A shining opportunity for publishers
In a new trust-based world of content and advertising, publishers start with a few crucial advantages.
First, publishers enjoy implicit goodwill from their audiences, which converts to business. More than two-thirds of consumers are more likely to engage with an ad in the context of a publisher they know and trust. Second, publishers have the advantage of knowing the types of content readers want to engage with. Most notably, publishers own the new “oil” of advertising: 1st party data.
What is the opportunity for publishers? It’s a chance to differentiate themselves from Big Tech as the embodiment of stewardship with regards to consumer data. In short, publishers must buck the status quo and adopt a strategy where the audience is no longer for sale. Sell the site and sell the content. Maybe even leverage audiences on the backend to improve content experiences or implement new rate types. But no matter what, protect audience’s trust in publishers audiences by implementing a privacy-first approach.
Capitalize with balance and control
Successfully seizing this opportunity will take balance and control.
Balance subscription and ad-supported strategy.
A paywall that is too high limits exposure and hamstrings new audience gains. However, too much advertising hurts a brand’s value and, most of all, the audience’s trust (that they won’t be constantly blasted with ads).
Control the quality of the user experience
Ad clutter diminishes trust by reneging on the promise of a good user experience. But control also means an increased cognizance of demand sources. Due to its inherent reliance on 3rd party cookies, programmatic demand should be a last resort. And these demand sources should provide the tools necessary to preserve brand-safe environments.
Trust is the answer (and the question)
How does the industry enable publishers to build and maintain trust? The simplest solution may be to step aside and let publishers create quality content. The role of industry tech platforms, in turn, is to support publishers without adding complexity. All the while, brand safety is table stakes: Any digital distributor should guarantee it (full stop).
Of course, tech platforms must enable publishers to meet their business objectives. They should support multiple pricing models and offer broad customization options for demand sources. Again, this is because publishers know best in a new world of 1st party data and heightened demand for sophisticated content. (Read: the opposite of standard display).
The guiding principle? Trust. The differentiator from Big Tech? Trust. Our final thought? Trust us on this one.
Although the pandemic has revolutionized many of our media consumption habits over the past 18 months, one thing has become increasingly clear: podcasts are not going anywhere. Even as new work-from-home regimes supplanted daily commutes at the height of the pandemic, audio programming continued to find its way into the ears of its consumers.
According to The Infinite Dial, an annual report released by Edison Research and Triton Digital earlier this year, over eighty million Americans ages 12 and up (roughly 28% of the U.S. population) are weekly podcast listeners. That’s a 17% increase in listenership, which is sizable compared to the 9% increase recorded from 2019 to 2020.
Source: Edison Research/Triton Digital
“Let me be the first to admit — the increase from 24% to 28% year-over-year did surprise me,” said Tom Webster, SVP of Edison Research and co-author of the report. “In a year in which absolutely nothing was normal, podcasting grew even more than it had the year before.”
Once society enters a truly post-pandemic era, Edison Research’s Webster is confident that listenership will remain loyal, particularly with the resurgence of the daily commute. “Habits are habits. And when people go back to the office, we’re going to see a lot of these habits stick.”
A formidable playing field for ad spending
Advertisers are banking on this habit retention and focused audience attention. The podcast advertising market continues to rise steadily, quarter after quarter. By next year, the global podcasting industry is anticipated to reach $1.6 billion.
Source: Magellan AI
While leading podcast providers like Spotify have reported less users than they projected for the second quarter of 2021, their advertising sales are up 110% from last year. Congruently, their ad revenue has jumped from 10% to 12% in the past 12 months.
“It’s clear to me that the days of our ad business accounting for less than 10% of our total revenue are behind us. I expect ads to grow to be a substantial part of our revenue mix,” Spotify CEO Dan Ek told investors in a conference call last month.
According to research conducted by Magellan AI, podcast spending in the second quarter of 2021 rose by a sizable 22% from the first quarter of this year, a 40% increase year-after-year. It’s worth noting that, according to Magellan AI, sports podcasts added the most new advertisers in Q2 than any other genre.
Source: Magellan AI
Impactful advertising
Which brands packed the biggest ad-spend punch? For longtime podcast listeners, direct-to-consumer brands like HelloFresh, Casper Mattresses, or BetterHelp may come to mind. Although, in recent months, larger corporations have risen to the top of the list of biggest ad spenders.
What makes the podcasts so valuable to advertisers, especially the behemoth brands that seemed to have gone “all in” on podcast advertising in recent months? (In particular, what’s in it for those like Amazon or Geico, which seemingly have no lack of demand for their products/services?)
“When you look at that [podcasting] audience, that audience is typically more affluent, more educated, has a higher disposable income. So, it’s very attractive to advertisers,” according to Damian Radcliffe, digital media analyst and professor of Journalism at the University of Oregon. “The other big factor here is that podcast advertising tends to be pretty limited & there’s a value in that exclusivity for podcasters which is quite appealing.”
Source: MagellanAI
A season of exclusive brand extensions
As the podcast industry continues to rise in listenership and sponsorship, we can also expect a growing wave of corporate partnerships and exclusive podcasting networks. This month, HBO Max and WWE both announced they would be launching exclusive podcast programming for their subscribers.
HBO Max will be producing a number of ad-free podcasts as in-app exclusives to subscribers, beginning with “Batman: The Audio Adventures,” a scripted series featuring the voices of A-list actors Jeffrey Wright and Rosario Dawson. HBO already has over 25 network-specific podcasts that expound upon its programming including “The Chernobyl Podcast” and “Allen vs. Farrow.” However, “Batman: The Audio Adventures” will be the first audio program exclusively available to HBO Max subscribers beginning this fall.
WWE has teamed up with The Ringer, a subsidiary of Spotify, to create an exclusive audio network specific to wrestling-related content, in what will be a multi-year audio content partnership
“I think this is a model we’re going to start to see also in the podcasting space,” explained Radcliffe. “Instead of this content being available and distributed via an RSS feed to any number of podcast platforms it’s going to be locked in, behind a paywall. The only way [listeners] are going to be able to access it is by taking a subscription to that platform.” Radcliffe also points to an interesting development that’s emerged over the last couple of months, the ability to subscribe to specific shows with a paid relationship.
As media Goliaths and corporations continue to expand their purview to the podcasting sphere, brands across every industry are finding ways to appeal to even the most obscure of consumer niches. Considering that some podcasts have as much listenership as prime-time television viewership, there is no lack of ‘big fish’ in the podcasting pond. All advertisers need to do is find ways to reel them in.
Best practices for embracing the ‘podvertising’ future
Focus on presenter reads
The Super Listeners 2020 study from Edison Research found that 48% of respondents reported paying greater attention to podcast ads than any other form of media advertising. A big reason for this is due to presenter reads.
“If you look at things like presenter reads as a format…It is seen as a very effective way to reach an audience because it feels more integrated into the show, a more seamless part of the content,” explained Radcliffe. “It doesn’t feel as intrusive as ads coming in the same way as pop-ups, banner ads online, or TV advertising.” Radcliffe added that when it comes to presenter-read advertisement, tone matters. If advertisement copy is read casually and informally, it has a tendency to be less obtrusive to listeners.
Select podcasts that make sense for your brand
According to Radcliffe, “As [podcast advertising] continues to grow and as we see more specialized content being offered, that creates more opportunities for targeted advertising.” Although, Radcliffe was quick to emphasize an overlap in listeners and brands’ target consumers. “There has to be a cultural fit there. A fit in terms of style and content.”
Benchmark ROI with listener discount codes
If you’ve ever listened to a podcast, you may have heard advertisements that provide discount codes to listeners of the show. Not only do these discounts incentivize potential consumers, they are “quite a quick way to get a benchmark of ‘Is this advertising working? Am I actually converting listeners into consumers of my product?’ which matters a lot to advertisers,” said Radcliffe, adding, “They know exactly where that consumer has then come from.”
For larger brands, small conversion rates can still be valuable
“Because the reach of a lot of these shows is large, brands don’t need a large percentage of conversion,” Radcliffe articulated. “Their equivalent ‘open’ rate could be small but because brands have got scale in terms of that audience reach. That could still be very valuable for them.”
How many publishers do you have a paid subscription with? While you may be a paid subscriber with one or two digital publishers, you remain a “never-subscriber” from the lens of the next publisher. The 2021 Reuters Digital News Report states that the majority of people pay for one subscription (for content from publishers and local papers), and that the median number of subscriptions for U.S. consumers is two.
To digital publishers, never-subscribers mean lost revenue. But in today’s digital-first world, where ad revenues are unreliable and subscription fatigue is mounting, should never-subscribers remain a lost revenue opportunity? The answer lies in implementing dynamic paywalls.
A typical dynamic paywall journey looks like this: Place a first-party cookie so you can track user visits. Then, give the visitor access to a few pieces of metered content. After a set number of articles, it’s time to show a registration wall. Then, as soon as those views are up, it’s time to show the “all you can eat” subscription paywall/offer.
Many users traverse this journey but for those that don’t subscribe, publishers tend to “rinse and repeat” the same journey. Some publishers might try discount offers for “all you can eat” subscriptions or even suggest custom-bundles at lower price points before allocating dead end users to the “rinse and repeat” pool.
Untapped revenue opportunities
Despite visit recency and frequency metrics, there are users who defy registration, subscription, or custom-bundle offers even after relentless efforts by the publishers. These dead-end users are your never-subscribers. And there are hoards of them. There are also those users who churn after the subscription trial period is over, or sleepers who churn at the beginning of the month when they evaluate their credit card bills. All of these users offer an untapped revenue opportunity.
Putting never-subscribers (dead end users and churned users) back in the “rinse and repeat” bucket is hardly a strategy. However, there are a few questions that needs answers before a real strategy for never-subscribers can evolve:
Who are the dead end users?
What are the additional options available beyond discounting or custom-bundles?
If users were given additional options, would fewer users subscribe?
If users were given additional options, would there be fewer sleepers?
If users were given additional options, would it accelerate subscription churn?
Dead end users could be visitors with high visit frequency who subscribed elsewhere. They might be casual visitors referred via social media. Or perhaps they are low frequency visitors from international geographies. The mix differs for each publisher, but retrospective analysis of user journey data should yield quick segmentation of never-subscribers.
Extending the user journey with discounted subscriptions or custom-bundles are good options for users approaching a dead end. But how do you know how much discounting would suffice? Or what custom-bundle offers will work for the user?
Unbundling solutions
To get this understanding, publishers have to unbundle the existing content pool to evaluate the true worth of each piece of content. Extending to unbundling solutions such pay per content provide insights for custom-bundles. They also provide substantial revenue streams for the long term.
Understanding the direct impact of unbundling solutions on the publisher’s existing subscription business requires sustained experiments and aligned goals between departments. For example, subscriber numbers dominate reader-revenue headlines.
However, they fail to focus on subscriber retention or revenue. Marketing teams could be focusing on increasing pageviews without any consideration about the quality of the audience which converts into subscriptions. The editorial team on the other hand could be working in a silo without any revenue linked objectives.
Playing the long game to win
Improving audience engagement and customer-lifetime-value are high level goals that every department’s KPI should be linked to. For example, changing the KPI to net new subscribers and average revenue per subscriber are better health barometers of the reader-revenue business. New subscribers per-1,000 pageviews focuses the marketing team’s efforts on quality audiences. And, average time spent per page allows editorial teams to focus on quality content for their audience.
No publisher can escape the fact that subscriptions are a long game. The Google News Initiative reader revenue playbook carries an ominous message:
“For some of the [news] organizations we’ve worked with, the transition can take years if not decades. But it’s achievable. For many news organizations, converting just 3-5% of readers into paying subscribers or contributors can support long-term sustainability”.
Therefore, understanding never-subscribers and the monetization opportunities that lie within is a long game too! But why is it that publishers are ever so quick to dismiss the never-subscriber cohort and bring them back into the “rinse and repeat” pool for subscriptions? It turns out that extending the user journey with unbundling options might bear more fruit.
About the author
Abhishek is a Co-founder & CEO of Fewcents, fintech-for-publishers that brings incremental reader revenue from “Never-Subscribers.” He is a seasoned business leader and technology product manager. He has worked in management consulting with PwC and Altman Solon in Boston, USA before moving to Singapore permanently. In Singapore, he started his own venture, Shoffr, a digital marketing solution that provides online to offline attribution for digital marketers. In 2019, Abhishek sold Shoffr to Affle, a publicly listed ad-tech company in India. After solving the advertiser’s offline attribution problem, Abhishek has now set his eyes on solving the content monetization problem for online publishers.
Following years of growing adoption, Connected TV (CTV) consumption took center stage in the last year as consumers overwhelmingly shifted toward remote work. In fact, IAS research has shown that 90% of consumers have access to a CTV device. And 66% of them say their CTV consumption increased as a result of the pandemic.
Advertising dollars are also shifting in that direction, too. CTV ad spend for the U.S. is expected to grow nearly 50% in 2021, surpassing $13 Billion, according to eMarketer. And while there remain some hesitations about advertising on CTV, these environments are rich with opportunity.
New horizons create fresh starts and CTV is no exception. CTV environments connect advertisers with highly engaged audiences. They also put publishers, specifically CTV Channels, Virtual MVPDs, and Web/Mobile Publishers, in a strong position to facilitate those connections.
Let’s unpack that.
How publishers can make the most of CTV
Create exceptional ad experiences
From weekly releases to bingeable drops, and ad-free to ad-supported services, the streaming experience comes in various shapes and sizes. With more than 200+ streaming services to choose from globally, consumer attention is easily fragmented yet important to capture. Facilitating meaningful connections between advertisers and viewers starts by creating an exceptional ad experience.
And when it comes to CTV, consumers are already in favor. IAS research found that 90% of consumers think there are features of the CTV ad experience that make it better than linear TV.
Publishers should lean into consumer preferences by optimizing and maximizing the quality of the advertising experience. In particular, publishers should consider working with a partner that helps streamline the delivery process and provides the highest quality experience to the end user. Publica is a great example of one such partner by utilizing Server-Side Ad Insertion (SSAI) technology. SSAI stitches the ad into a single high-quality stream. This minimizes lag time and avoiding content disruption, which allows publishers to foster positive connections between consumers and brands while delivering a seamless streaming experience.
Leverage first party data
Publisher first party data has often been underutilized. When it comes to CTV, publishers have unique insight into what users are watching, when they’re watching, and how often. When leveraged in a privacy-compliant manner, this information is essential for effectively packaging and selling valuable CTV inventory.
Insight into consumer preferences and behaviors allows publishers to create audience segments and streamline the buying process for their advertisers. Additionally, publishers can work directly with advertisers to access advertiser first party data and match it to their own for increased accuracy.
Finally, publishers who work with third party partners with audience management capabilities and integrations, such as Publica, typically see increased yield by having deeper insight into buyer performance metrics and the ability to optimize as needed. This is a win for both viewers and advertisers. That’s because viewers are less likely to skip contextually relevant ads on CTV. IAS research found 42% of CTV users are likely or very likely to view an ad to completion if ads are contextually relevant.
Optimize for programmatic
CTV is still in the early stages of developing efficient optimization for programmatic inventory. This means there’s an opportunity to streamline the process as though it’s (almost) brand new. Working with a partner who can hold a unified auction can help drive efficiency, transparency, and optimization throughout the programmatic buying and delivery process.
Unified auctions allow publishers to offer inventory to multiple ad exchanges, removing the cumbersome need to integrate directly into an ad server and result in increased yield for publishers. Publica, for example, is built for scale and allows publishers to offer inventory to multiple sell side partners at the same time, via a single tag integration, and allows real-time bidding, opening up more demand.
Bottom line
In the last year, CTV has reached ubiquity in U.S. households. Not only do nearly 9 in 10 consumers have access to a CTV device, but most prefer the CTV ad experience to that of linear TV. With nearly 50% of workers planning to continue some remote work, it’s likely that CTV will continue to grow. And it will eventually usurp the role of family hearth once held by linear TV and radio before it. In the meantime, publishers have the rare opportunity to forge a new path and optimize for excellence.
Researchers continue to prove that ads viewed within a premium publisher environment drive greater advertising effectiveness. Each of the studies (here, here and here) offers insights and empirical data proving ad performance is better in premium content environments.
A new study to add to this notable library is the second phase of The Benchmark Series, the largest cross-media advertising effectiveness study conducted in Australia.
It’s important to note that the first phase of research showed that ads in premium environments offer 1.8 times better recall and 2.8 times the brand lift than short-form video on run of the internet. Further, ads in premium content also deliver 1.8 times higher recall than Facebook video. It appears that the brain processes ads differently depending on where an ad is seen. When people see ads in an environment that helps contributes to memory encoding, ad effectiveness is maximized. Premium editorial sites offer this context.
This new research supplies a unique perspective on advertising performance in premium long-form using Broadcast Video on Demand (BVOD). The VOD broadcasters’ included were 7Plus, 9Now, and 10 play. The study compares BVOD to YouTube, Facebook, and run-of-the-internet sites. It uses core ad effective measures likeability, brand recall and lift.
Both phases of the study were conducted by MediaScience, which is well-known for their expertise in neuro-measures (i.e. biometrics, facial expression analysis, eye tracking and EEG) methodologies. It included more than 5,350 participants and campaigns ran across 252 websites in Australia.
MediaScience defines premium content as:
Professionally produced content.
A media brand that people know and trust.
Brand safe environment.
Meaningful scale for advertisers.
Overall, the new research shows that ads that appear in BVOD are more effective and outperform video advertising across YouTube, regardless of whether the ads align with short or longer-form content.
Recall
Ads in BVOD environments are remembered better (1.3 times) than ads aligned to YouTube videos of any length. Further, when ads in BVOD are compared to YouTube videos shorter than 9 minutes, they generate 1.5 times greater unprompted recall.
Further, BVOD advertising delivers better unprompted recall (4.7 times) than Facebook video ads and 2.5 times better recall than run of internet short-form video.
Likeability
In terms of likeability, ads in BVOD generate 15% greater likeability compared to YouTube short-form. Dr. Duane Varan, CEO of MediaScience explains, “advertising in premium long-form video environments benefits from the content the ads sit alongside with premium content boosting their impact.” He adds, “The content is priming you for certain emotions and that benefits the ads that follow.”
The research shows that not all digital video environments are equal when it comes to advertising performance. Quality content environments matter when advertising and there’s plenty of research to support this statement. The reality is that it’s long overdue for advertisers to reevaluate where they place their ad dollars and their micro-targeted ad campaigns.
Mobile is a massive opportunity only heightened during the pandemic as audiences turned to their smartphones for the comfort food of apps and entertainment. Significantly, though, throughout this period consumer tastes and appetites changed. Users had both the time and the desire to discover new apps and content, a dynamic that allowed many niche apps and content creators to gain mainstream appeal and profits. In some markets, it created a perfect storm of opportunity for hyperlocal news and entertainment that meets consumers where they are.
Continuing with our series of industry interviews [video below], I talk to Jani Pasha, Founder and CEO of Lokal, who is harnessing hyperlocal content in a play that has the potential to make it the NextDoor of India. With a model built on monetizing connections and transactions at the intersection of community, content, and commerce, Lokal is making the most of a booming opportunity.
The model is smart and replicable in other markets. However, Lokal also benefits from a seismic shift in the fabric of its addressable audience. For the first time, India now counts more Internet users in rural areas than cities. And rural users typically aren’t as interested in national and international news developments. Instead, they crave information about civic, political and social issues that impact their towns and villages.
But India isn’t the only country experiencing these shifts. The explosion in the number of Internet users, accelerated by the pandemic, reveals opportunities in regions such as Central and South America. While we might think that growth has slowed, in the last 12 months alone, the total number of Internet users globally has grown nearly 8% to reach 4.72 billion. That’s more than 60% of the world’s total population.
From silver surfers to app initiates, new users in these regions rely on mobile and apps as their personal lifeline for news and information (even education). They turn to them to make daily decisions about how they live and what they buy. Tapping that potential requires companies to micro-segment audiences and tailor content to the needs of towns and communities, not cities. It also helps to focus on fundamentals.
Understanding that new users are likely to be low on the learning curve, Pasha made a bet on voice that paid off. Bypassing bell-and-whistle tech features for a dead-simple interface like voice fast-tracked new users to frequent app use and interaction. Ease of use also increased trust in the app. And that trust allowed Lokal to acquire new users easily through the most effective advertising on the planet: word-of-mouth.
Voice also empowers every user to make a contribution. This enabled Lokal to grow its ecosystem at minimal cost. Users call in stories about developments in their local towns, creating the content that keeps other users engaged and loyal. They rely on the app to learn about offers and events nearby, sparking conversations that end in commerce conversions.
And this is where Lokal’s strategy to be a local content platform, not a content provider, makes business sense. By positioning itself as a super app — one that allows a user to access several services in one place — Lokal establishes itself as the trusted middleman in interactions and transactions. What’s more, Lokal drives in-app activities it can monetize. And let’s not forget that first-party data is gold.
In our interview, Pasha shares how Lokal is training creators to ensure its content is fresh, relevant and relatable for audiences who crave hyperlocal content on their terms. He also weighs in on the future technologies and opportunities local news apps and outlets everywhere should embrace to grow their revenue streams.
WATCH OR LISTEN TO THE FULL INTERVIEW
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Jani Pasha, Founder and CEO of Lokal:
Peggy Anne Salz: The pandemic had a massive impact on local media. In the U.S. alone, more than 300 national newspapers closed their doors. Local newsrooms also shut down contributing to the growth in news deserts, that is, cities where people depend on one local news source, if any at all.
But one company is bucking the trend big time, Lokal, a hyperlocal news app in India is not just growing its user base, it’s also making money. It’s a new twist on monetization. And we get the inside track here on Digital Content Next. I’m your host, as always, Peggy Anne Salz, mobile analyst, content marketing consultant, and frequent contributor to DCN, which is a trade association serving the diverse needs of high-quality digital content companies globally. And in this series, we shine a light on the people pushing the envelope. That’s why I’m so excited to have Jani Pasha, Founder and CEO of Lokal. Welcome, first of all, to Digital Content Next, Jani.
Jani Pasha: Hi, Peggy. Nice to be here.
Salz: Absolutely. And coming to us from a very hot Bangalore today, I understand.
Pasha: Yeah, right. It’s very hot, actually.
Salz: So let’s start with Lokal. You have described it as a hyperlocal Tinder because it cuts out the middleman in finding a date or partner. But it’s also a news service. It’s much more than that. So tell me about Lokal and, above all, the user experience.
Pasha: Yeah, Peggy. So we are not just only the Tinder of that place. We do quite a lot. But I’ll tell you the backstory of how we started. So essentially, if you take India, it’s a very diverse country with 90% of its population living in tier-2, tier-3 cities, and towns of India. And these people, most of them, have not traveled further than their adjacent district, because it’s so diverse that with every 50 to 100-kilometre radius, your food habits change, cultures change, language change quite frequently.
So they are staying in those locations of their towns and cities generationally with their parents, grandparents, their homes, and businesses. So naturally, they’re so curious to know about what is happening around them. And there is one more factor that kicked in, in 2016, Jio, a mobile operator who has reduced the prices of internet drastically to make India the cheapest place for 1 GB data for you to use mobile internet.
So then we have this, all these 90% Indians who didn’t have access to internet previously suddenly had access to internet. But essentially, these users are new internet users who are not comfortable in English language. And so then what will they do with the internet, right? So Lokal is the platform which we started it as a platform to deliver hyperlocal content, which is extremely useful for them. And that is the gateway of how they’re adapting to the internet to use internet more usefully in their life. So today, if you take this 90% Indian audience who are new to internet, they are using internet prominently for entertainment, either to… You know, we used to have TikTok. We don’t have it anymore. It is banned by the government. So there are many TikTok parallels and YouTube and Facebook. And then they use WhatsApp for communication.
Apart from that, they can’t use internet meaningfully. And Lokal is actually being that platform giving them the content that they can use and that is of importance for them. Then naturally, making them use internet for multiple use cases. And as at a location, our density of usage increased. We evolved as a platform. So you rightly said we evolved as a Tinder, a place where people find other people to get married. It’s a place for businesses to advertise about their businesses to local community. It’s a place for businesses or people to actually sell their properties. And all this is happening in their native languages of Telugu, Tamil, and Kannada. We are expanding across the country. And we have seen because we have a lot of density in that location, users are adopting platform like crazy with more use cases coming up almost every day.
Salz: But, of course, internet penetration alone doesn’t spell the profits that you’re getting. Part of it is also the experience. You talked about ease of use. You talked about local languages. What are some of the innovations in the UX and UI design that contribute to your success? What does an app with local news need to look like and offer?
Pasha: Very interesting and relevant question, Peggy. So when you talk about these new users right, so all the smartphones have the keyboards in English language. So one challenge when we’re trying to build Lokal was how can you make the content creation easy on Lokal, especially that of text format.
Like, a lot of information about what are the vegetable prices in that location to what are the updates happening in that town, not everything can be captured on video. So they have to be typed. How can you make that easy? So, the first thing that we did, or we built was, making this creation easy, where the user will input the content by voice instead of typing. So they are using voice to actually create the content. And once we started doing that, we realized that creation with our voice is much more convenient than typing on a keyboard because you have to… It’s not natural, right?
Like humans, we speak to each other. So that’s a major shift, right? So if you go on a website today like on Amazon, you have multiple navigation. There are filters, there is sorting, there are multiple pages, multiple categories, but for an interaction, like the natural interaction for a shopkeeper in our location is to go and ask to a small retail shop owner that, “You know, what is the cost of this item? And how can I get it?” It’s natural voice-based input. In India, a lot of businesses are SMEs, sort of small and medium businesses unlike in U.S. where you have a Walmart. You go and then you select. It’s a voice-based communication. You ask, the shopkeeper goes and gets the information, and we’re replicating the same because the technology has caught up.
Salz:Interestingly enough, you were talking about how your audience is very focused on local content. I mean, hyperlocal is really hot in India right now. It’s fascinating that local newspapers, right, newspapers are growing at a double-digit rate. Now, you also have impressive growth results. Now, I’ve seen numbers growing 25% roughly month on month, that’s the last I’ve read, and that’s because of your monetization model. So one is the content, but it’s also a very smart approach to how you generate revenues. Tell me about that.
Pasha: We have built a playbook, via which we launch a location, and we get local content creators in that location to create content, which is very relevant to that community, very, very hyperlocal in nature. And then you get a density of users using the application. And once you have that critical mass of density at a location level, then it becomes a platform where everyone…like, everyone relevant started coming onto the platform, and then they start doing a lot of things, which are monetizable.
Even this is true for people in the West also. Newspapers used to be the place for everything, right, at a location level. You want to do real estate, you want to do jobs, classifieds. Everything used to happen on newspaper. Internet came in. All the small, small parts became large businesses, right? Craigslist, Airbnb, they’re all part of this local newspaper, right? Had these newspapers, you know, are technology-friendly or had they been…had they had that vision or foresight, they would have been the super applications that everything is happening on them.
It’s just that the news publishers migrated their digital publishing online, but they left the rest of the parts for others to pick. In India, we have that opportunity right now, where it’s a very new audience. Internet is being built for them in their native languages. And Lokal is trying to do that with our approach of delivering hyperlocal content. So we don’t consider ourselves as a local news platform. We consider ourselves as a local content platform. So that is the different approach that we are taking compared to newspapers, Peggy.
Salz:That is fascinating because you’re showing that there is a great deal of benefit to being a fast follower here. I mean, you have purposely… It sounds like you have thought this through, Jani. How to be a content platform, keep the social media, keep the connection for yourself and not give it over to the big tech giants or the big social media platforms. That’s the focus. That’s the essence of your strategy. How do you keep the momentum? Because, of course, you’re on a growth trajectory, all of India is on a growth trajectory. And high growth usually means high competition. And how are you keeping these large companies literally from eating your lunch?
Pasha: Our competitive advantage that comes in is based on how hyperlocal we are and how much our team understands the nuances of India, which is very difficult for a tech platform sitting in the U.S. or sitting in some other place to understand and build for it. And these are very new behaviors Peggy. So, as I told you, right, how does a business establish trust digitally? What happens on Amazon is that you go and list on Amazon their ratings, and those are the places how you do it. But how will it happen for a new internet use case, right?
For these very new people where the trust on internet is low, right? How will you do that? It’s a new challenge that we will solve probably for a small business to establish trust very quickly on our platform, and how they can do it. So it’s just that, the nuance, I would say. I would like to summarize that the nuance is very difficult for someone to understand. And hyperlocal in general, is a network effects business, right? You have large density using your platform for multiple use cases, someone coming and replacing it would be difficult.
Salz:It’s interesting that you started monetizing wishes. Tell me about that.
Pasha: It’s just crazy. We never expected all this to happen. We just thought we’re solving a problem of local content not available digitally. When we started creating content, people started coming. So that is the nuance. Like, in India, you have this behavior.
In the small town of India, especially in the southern part, this is very prominent, so that south Indian part, that if Peggy you were a friend of mine and I want to wish you a happy birthday, and I want to do this in a way that everyone in the community would know that I care for you, and we are actually close friends. And how will I do that? I used to either buy advertisement on newspaper with your photo, my photo coming and I’m wishing you happy birthday. Or I am sticking a big banner in the city or town center wishing you a happy birthday.
So the same behavior has been adopted on Lokal now, where the same people who used to do that are posting their wish, like I’m wishing Peggy happy birthday. So there is a standard template where your photo, my photo, will come and I’m broadcasting it to 10,000, 15,000 people in the town, the same purpose they wanted to accomplish previously, now, they’re accomplishing on Lokal. And they have that data to see also that how many people are actually looking at it. So this is being monetized on Lokal. And this is a very, very interesting, unique use case, Indian use case that we are monetizing. And we are seeing a lot more use cases coming like this, and we’re super excited for that.
Salz: You’re also speaking very much as the maker of a content platform. And, of course, a content platform needs creators, needs citizen journalists. It’s all local. So it’s probably very much just about empowering individuals at the local level to grow your business, how do you do that? How do you find them? Train them? How do you make it possible for them to contribute to your platform?
Pasha: The prominent content distribution platforms used to be newspapers like how it happened in the West also. And over the last three, four-, or five-decades time In India, large news publications, this content distribution platforms, have created a lot more content creators in these locations by training them, by informing them, by letting them know what is happening.
And most of these creators in this town used to work for this large distribution platforms like newspaper or television for free, most of them. Why? Because I told you, right, how important these small locations and communities are for these people.
So if I am a creator who can get the word out in a big distribution place like a largest newspaper, I get invites to events happening in the town. Anything big happening in the town, I get to know about it first. So I’m an influencer in that location. So then we have these influencers across India, hundreds of thousands of them. What we simply do is that we have this network of people. We have this digital crunch of hyperlocal content; we just connect them. And that is how we are getting this content.
Salz: You are more than a Nextdoor in India, you’re a content platform, news platform connecting, making business possible, helping merchants. And the reason I have you here today on Digital Content Next is because there are lessons here for publishers everywhere. What do they need to pay attention to if they want to succeed in hyperlocal news?
Pasha: My take is that technology is evolving very rapidly. Publishers should be open to work with new technology coming in. Like, Substack is a great platform where publishers are able to monetize their content. So there are a lot more innovation that is coming. So publishers should be thoughtful and be open to experimenting with these technology players because these new platforms are coming in. And with the creator economy coming in, I’m also very hopeful of how publishers becoming much more important than what they used to be before.
Salz:We started off by talking about the situation particularly in the U.S. where local news, local newsrooms, they are declining, there’s no question. What would be some advice to those that are there to say, “Here’s what you can do to up your game. Here’s what you can do to be sustainable and successful?”
Pasha: I think for small-level publishers, I think what is working for us is being hyperlocal and having a plan. And for us, it’s about figuring out that playbook of how you can get or make the things work at a location. So I think for publishers, especially individual publishers, I think hyperlocal play is going to work, with them also having…who are open to work with, new technology players, which essentially are tools and not platforms possibly.
So Substack is a tool for you to distribute your content. It’s a tool, right? And essentially, for payments, you can use a tool. So someone who is more open to work with these technology platforms and having hyperlocal focus would be able to build sustainable businesses. That is what our belief is. And I can’t compare clearly India to U.S., but in India, specifically, because of how the market is, the maturity of the user towards internet interest, it’s going to be very, very large play in India, especially the focus of hyperlocal.
Salz: So very, very much about being a platform, which is what you’re doing connecting people, connecting businesses, that’s what local content can do really well. The monetization model currently is about classifieds. What’s it going to be going forward as you try to be more and more a super app?
Pasha: So, yeah, Peggy, we are today connecting people, and monetizing on that for the sake of making money, for the sake of selling property, for the sake of improving…giving deals to people, small businesses advertising about their offerings. As the trust increases among these people, we would eventually go into a place where we will enable commerce as well. So that is what the plan is.
We will enable commerce. We will enable these local economies much more digitally. And we are a user-focused company, Peggy. So we have a creator who creates content, and we always think about how we can empower him or her, how can we make their lives easy. Similarly, we have businesses and how can we better help them to get more business. In that, the natural next step is to enable commerce on the platform to have additional revenue streams for them. So we will figure out how we will monetize. But we want to build that use case on our platform. It can be search, it can be something else, we’ll figure out. It’s too early right now. Probably in a year or two, I can tell you a lot more about it.
Salz: Great, Jani. And I think I’ll be back to hear it as well. Thanks so much for sharing your story at Lokal with me today.
Pasha: Thank you, Peggy. And nice talking to you too.
Salz:And thank you, of course, for tuning in and taking the time. More in this series about how media companies like Lokal are taking charge of change in their business. And in the meantime, be sure to check out digitalcontentnext.org for great content, including a companion post to this interview, and join the conversation on Twitter @DCNorg. Until next time for Digital Content Next, I’m Peggy Anne Salz.
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