to keep up with the latest plays in the streaming game? You practically need a
scorecard and the guidance of a fast-talking play-by-play announcer to keep up.
For proof, consider just some of the latest streaming service bombshells to hit
the news in the past few weeks:
All of these moves speak, of course, to a larger and evolving trend: Anybody and everybody in the media business seems to be getting in on the OTT act. The idea is to take their product direct to the consumer via an AVOD or SVOD (subscription-supported video on demand) model. And that’s creating an increasingly crowded field of competitors.
It will be fascinating to see who else
enters the fray and who will survive and thrive in a crowded OTT world where consumers
only have so much viewing time. To help make better sense of all the market
chaos—and understand what streaming services will need to do to stand out from
the crowd—I spoke with several industry experts.
Why more media players
want in on streaming
It’s no big surprise why news and
entertainment companies are jumping in and jostling for position in an already
congested OTT pool: Consumers crave streaming content.
“They don’t want the same bundle of
channels they receive today. And they don’t want the same, scheduled experience
they’ve had for decades,” according to Peter Naylor, senior
vice president/head of advertising sales for Santa Monica-based Hulu, which now
has 25 million subscribers. “Consumers want choice and control in their TV
experience. In order to continue to reach consumers, TV must move from a
business ruled by cable and satellite gatekeepers and by a traditional schedule
to a model where the consumer truly gets to choose.”
Billy Nayden, research analyst
for Parks Associates in Dallas, agrees. “Younger consumers are watching
traditional television at decreasing rates. In order to reach them with video
content, internet video is a necessity. A dedicated streaming service helps
facilitate delivery of that video and gives consumers a centralized place to
access content,” Nayden says.
Offering a direct-to-consumer streaming
service also provides some unique benefits.
“Broadcasters and content companies are
able to collect data on consumption and their audience, which is often not
available through over-the-air broadcasts or pay-TV providers. Direct offerings
also provide a hedge in pay-TV licensing negotiations, allowing networks to
reach consumers even when blackouts occur on pay TV,” adds Nayden.
However, experts caution that fragmentation
of content sources, changing viewer habits, multiple direct competitors, and
rising content costs make competition in streaming extremely difficult.
“The number of streaming services
available globally has exploded in the past few years, and they are now
competing not just with other streaming services but also pay TV,
user-generated content like YouTube, and digital entertainment options like
video games for consumer time and eyeballs. Standing out and innovating in a
crowded ecosystem is a major challenge,” says Nayden.
Laura Martin, senior media analyst for New York City-headquartered Needham and Company, says discovery and clutter are huge problems. “Roku has nearly 4,000 video apps of free TV and about 1,000 apps of SVOD that the 28 million connected TVs in their network can choose from,” she says. “That’s many more choices than the 200 channels you typically have in a linear pay TV bundle.”
Additionally, to succeed long-term in the streaming space you need deep pockets, says Dan Rayburn, principal analyst at Frost & Sullivan in New York City. “Think about who’s behind the big services today—Sling TV is owned by Dish, Direct Now is owned by AT&T, and Hulu is co-owned by Disney and Comcast” (as well as Fox and AT&T), Rayburn points out. “A lot of these services can’t stand on their own as a profitable platform because the costs to license and create all their content is too high.”
You also need a deep library of content to
compete effectively, per Alan
Breznick, cable/video practice leader for Light Reading in Toronto. “Although,
if you’re a niche player going after a specialized market, like wrestling fans
or hobbyists, and no one else has such a channel yet, then you don’t
necessarily need a huge library of old content,” says Breznick.
Another huge hurdle? Retention. “You’ve got to worry about churn rates and how
to keep your customers as well as keeping the cost of acquiring customers
down,” Breznick adds.
Plus, “it’s going to get harder for the
smaller companies because so many of the big competitors entering this space—like
Sinclair, NBC and Disney—have free marketing opportunities. They have other
media outlets with unsold ad inventory they can use to promote their streaming
services,” says Martin.
A myriad of models
In the OTT space, there is no such thing as one size fits all. A variety of service models and pricing tiers exist that often make it difficult for analysts and consumers alike to compare apples to apples (see Sidebar for an overview of the major services). Some brands strictly follow a direct-to-consumer formula while others also partner with a pay-TV service (by, for example, offering authenticated streaming apps). And some services run ads while others don’t.
“Ads have always been in the mix for many of these subscription channels because the cost to make and license the content is still too high—you can’t make enough money on subscription alone,” says Rayburn. He notes that ad-free Netflix—despite its 139 million paying subscribers—still expects a negative cash flow of $3 billion in 2019. This is likely a big reason why it recently raised (and will continue to raise) its subscription fee.
“It’s tricky. We’ve had this mentality as
consumers that content should be free for a long time, thanks to YouTube and
others. Now, we’ve got several channels charging up to $15 or more per month
and live services like YouTube TV charging $40 and up monthly,” Rayburn says.
“The question is, how much higher can streaming services push their prices
before consumers say no?”
Ian Wishingrad, creative director/founder of BigEyedWish in New York City, says the formula for sustainability and profitability in the streaming market is simple. “Have award-winning content. ‘The Handmaid’s Tale’ legitimized Hulu and ‘House of Cards’ legitimized Netflix. You also need the right price. If you’re good and your price is right, you’ll get hits,” says Wishingrad.
Nayden seconds that sentiment. “To
maintain subscribers, services must offer a variety of compelling content
exclusive to their particular service,” says Nayden.
That’s why, according to Naylor, “over the
last year, we’ve focused a lot on adding more content to the service, including
full series runs of shows like ‘ER’ and ‘Lost,’ and new originals like ‘Castle
Content may be king, but so are customers,
insists Breznick.“You really have to know your customers and the market you’re
Offering your patrons more choices—in
programming as well as pricing—can go a long way, too. “Convenience to the
consumer is the new service. Giving options makes you flexible and cool, versus
‘this is the rule, take it or leave it,’ Wishingrad adds.
Ask Martin and she’ll tell you that the
best way forward for OTT services is to “have at least two revenue streams,
such as subscription-supported, ad-supported, eCommerce, micro-payments,
And, as mentioned, partnering with pay-TV
providers could bring increased visibility and exposure to your service, “especially
among consumers who otherwise would not have known about the service,” suggests
Nayden. “Until recently, the operator set-top box has remained one of the few
in-home connected devices that OTT video services were unable to penetrate. The
pay-TV set-top box is often used daily. Being available on that box is a big
boost to user convenience.”
A booming market
Virtually all of the media giants have launched or announced an impending standalone streaming service by now. But there are others poised to make a splash, and legacy video brands are far from the only players looking at the streaming opportunity.
Nayden foresees major print media brands entering the fray eventually, too. “While print media has found it financially difficult to transition to the new digital marketplace, I think the space for news-based OTT services represents a significant opportunity for content creators,” Nayden explains. “Cheddar and Newsy give us an example of what is possible. If a traditional newspaper like The New York Times or Wall Street Journal could partner with a video content creator and build a service that combined access to premium print and video content, I think it would attract a significant amount of paying news junkies.”
Breznick also envisions a day coming soon when college sporting programs—like Notre Dame football—roll out their own streaming service. “And at some point, every single broadcast channel out there is going to have to think about it,” adds Rayburn.
It’s fair to say that the advertising industry has embraced audience data. The Interactive Advertising Bureau (IAB) and its Data Center of Excellence released a study in December 2018 showing that companies have spent nearly $19.2 billion on the acquisition of audience data and on solutions to manage, process, and analyze this data in 2018. That’s a 17.5% increase from the prior year.
Whether it is first, second, or third-party, using
audience data to enhance campaigns is more impactful than un-targeted campaigns.
While third-party data exchanges have been widely available for over a decade,
second-party data marketplaces have sprung up, as the need for increased data
quality and questions of sourcing and transparency have also proliferated.
Data isn’t just useful for advertising. It is a necessity
across every industry. However, for many companies, figuring out how to act on this data is the hard
part. There are many reasons why companies fail to use data to drive their
marketing campaigns, including:
Lack of enterprise-level
strategy (What are we using this for
Strong corporate strategy,
but lack of internal talent to execute (How
can we get this thing to do what we want?)
Competing needs for limited
resources (My whole team is swamped!)
Turnover of employees who
manage the software (Our power user quit,
No collective ownership (It’s not my job!)
The upside of outsourcing
A study conducted in late 2018 found that 78% of the senior digital media decision-makers polled would choose to outsource their data strategy and execution. Data strategy development, management and execution require investments in talent and technology. And many organizations simply don’t have the in-house capabilities or infrastructure.
When asked what specifically they would want help with
if outsourcing their data strategy, the answers varied:
30% have some sort of
strategy in place, but need help executing the tactics
22% has a basic
understanding, but needs help optimizing their campaigns
14% need help from start to
finish in developing the actual data strategy and tactics
11% is short on resources and
needs additional support to run reports and build audiences
Clearly, there is a lack of internal resources and/or
knowledge among many of these participants. Education and knowledge are
required to maximize the value of data, from the beginning during data
collection through building and executing upon a strategy.
Using data correctly can help drive traffic and grow
audiences, which then has a cascading effect on campaign success and the value
provided to advertisers. But if you don’t have the internal resources
available, or the talent to execute, or even an enterprise-level strategy: What
are you to do?
Gain control by
If a company believes that a strong data can be a true
source of insights and revenue, then they will take the necessary steps to
achieve their goals. Really, outsourcing data strategy shouldn’t be any
different from outsourcing marketing strategy or overall sales strategy.
Consulting firms have been around for many years, but data consulting firms are
not quite as commonplace as others. 2019 is predicted to bring many changes to
the publishing industry. And I believe the proliferation of data consulting and
outsourcing of data strategy is just one piece of this puzzle.
The publishing industry is facing enough challenges.
If it’s time to sink or swim, what would you be willing to give up in order to
In 2019, top media challenges include consolidation, regulation, and “fighting
the pervasive mentality that all content needs to be free and the ever-spawning
attacks on the independent press, even from the U.S. administration,” according
to Jason Kint, CEO of Digital Content Next (DCN).
In speaking to attendees of the 17th annual DCN Next: Summit
at the Ritz Carlton in Orlando on January 29th and 30th, Kint noted that mitigating
those challenges means that trust will continue to be a media company’s
greatest asset, augmented by high quality content that informs and delights,
creates a direct relationship with customers, anticipates the audience, and reflects
diversity. Diversity, as Kint put it, “is a fact and a business imperative. It
encompasses the range of ethnic, gender, economic, sexual or political identity,
geographic, education, abled-ness, and so much more.”
The event’s speakers represented a breadth of media organizations from legacy print and television organizations to digital pure-plays, upstarts, agencies, and industry watchers. This year’s Summit speakers did have one thing in common though: They were all women.
Regulation and Scrutiny
During his opening remarks, Kint referenced a prediction he made last
year of an intensification of a global policy war for big tech with its early
stages continuing to emerge in 2019 as Facebook and Google face global scrutiny
regarding transparency and accountability.
While GDPR has set the global tone for privacy protection, and
California’s privacy bill may set a foundation for the U.S., it remains to be
seen how the issue will be taken up on a U.S. national level, noted well-known
industry insider Kara Swisher, co-founder and editor at large of Recode.
Regulation is far from
the only pressing issue on media businesses today. In fact, the past year has
seen governments at home and abroad exert extreme pressure on journalists and
the media as a whole. In addressing global efforts to suppress journalism,
Maria Ressa, CEO of Rappler and 2018 Time Person of the Year, called herself
the “canary in the coal mine” as she recounted her story of answering a
subpoena to appear before the Philippines National Bureau of Investigation on charges
of tax evasion and failure to file tax returns.
Political Pain Points
A vocal critic of Philippine President Rodrigo Duterte, Ressa illustrated
the impact of social media disinformation campaigns. She showed attendees a
timeline of manufactured information social media attacks with global tentacles
corresponding to her political coverage. She also described a meeting with Facebook CEO Mark Zuckerberg
during which she implored him to understand the company’s global impact and how
experiences such as hers demonstrate the need for platforms to take more
responsibility for the role they play in disinformation and attacks on
In response to attacks from the U.S. administration, The New York Times continues its focus on “good journalism.” The company is emphasizing transparency in its processes by showing consumers the great lengths to which reporters go to put together a story before publication through its TV marketing campaign, noted Meredith Kopit Levien, COO of The New York Times Company.
While attacks on journalism and emerging regulations have set the stage for 2019, brands also are placing a high priority on how to sustain their mission of building trust with consumers through offering high-quality content, connecting with audiences and monetizing the effort.
“The New York Times is so far ahead of most in the industry. What they
have done is so compelling. The relationships they’ve built from a business
standpoint with consumers continues to impress,” said Wenda Harris Millard,
Vice Chairman of MediaLink. “Publishers are understanding that relationship is
In addition to continuing to produce its high-quality news content, she
pointed out that The New York Times also is responding to consumer lifestyle
habits by expanding its popular crosswords into a games business. It is also offering
subscriptions for specialized offerings in the cooking and parenting spaces.
Additionally, two million listeners tune in each day to The Daily,
which has become the nation’s most
Podcasting plays an increasing role at NPR, says Anya Grundmann, the
company’s senior vice president Programming and Audience Development. Its Fresh
Air ranks fourth on the most downloaded podcasts and its flagship Planet Money
podcast is also among the top 20. Interestingly, some NPR podcasts start as
radio shows while some radio shows have grown from podcasts so the legacy and
digital ecosystems feed one another. Grundmann says that NPR also is committed
to becoming a leader in audio this year in the voice search smart speaker
environment, Grundmann said.
While audio offers
emerging opportunities for media companies of all types, digital video
maintains its popularity. The Guardian’s Oscar-nominated ‘Black Sheep’
documentary – a story of a black teenager who befriended racists – is part of the
company’s strategy to deliver journalism through written, filmed, and spoken
formats. As Evelyn Webster, CEO U.S. & Australia, Guardian News & Media
argues “good journalism can be good business.”
The company has three revenue streams: a trust reserved for economic
downturns and advertising revenue. But rather than deriving revenue from
subscriptions, the Guardian has been successful using the reader voluntary
contribution business model. The company also crowdfunds initiatives to support
Reaching Audiences Far and Wide
Organizations like NPR,
The New York Times, and The Guardian are known for serving audiences at a
national and even international scale. However, local remains a point of
concern for many in the media business.
To beef up local news, Marian Pittman, Executive Vice President of
Digital Strategy and Research of Cox Media Group, says that the company seeks to
innovate on its TV side with its “garage projects.” The initiative draws
together the diverse skills of engineers, marketers, and reporters to produce
and test prototypes in an effort to appeal to consumers through different
In support of local journalism, CEO Pam Wasserstein said New York Media plans to launch The City
in early 2019, a not-for-profit initiative providing New York City news and
investigative journalism in addition to its portfolio of premium digital
Identifying underserved consumers is a business strategy Morgan DeBaun,
CEO and co-founder of Blavity used when she left her Silicon Valley career to
start a media company with her own money. Blavity targets black millennials,
which DeBaun identified as an underserved demographic in the media ecosystem. The
company is now backed
by investors who share Blavity’s value system.
Navigating Revenue Streams
While more people are consuming media digitally, there is a
simultaneous desire among consumers to connect as part of a community. That’s
where events play a key role in establishing direct relationships with
consumers. At the Summit, speakers from Blavity, The New York Times, CondeNast,
Recode, and Combs Enterprises all cited events as a significant way to connect
with consumers while deriving healthy revenue streams.
Subscriptions, events, advertising, and ecommerce all play roles in
enhancing relationships, according to Wenda Harris Millard from MediaLink. “When you really understand your consumer,
that’s where you have an advantage. You have to be thoughtful strategically.
What is it you’re building and why?”
In 2019, marketers will be focusing on trust, data security and
management and attention to disruption, noted Millard.
Marketers are concerned about safety, security and the environment in which
“In a world where marketing is so fractured and there’s a plethora of
choice of where to put dollars, the ‘F’ and ‘G’ buttons are easy to press. But it’s
not enough anymore,” she said. “We have to fight to keep that conversation
about the quality of the environment as well as context and the importance of
publishers continuing to put forward what is critically different about what
they have to offer.”
Millard cautioned attendees not to “write off Amazon.” She noted that
the rise of Amazon as a force in the ad industry represents the importance of
search – including voice search. In particular, she pointed out that Amazon has
access to an “extraordinary data trove” with the ability to push its brands
first based on its insight into consumer behavior and scale.
Millard noted that now, more content has been consumed online than on
TV, “forcing dollars into OTT versus linear television. While TV may be
important, it’s not television the box, it’s content.”
For digital advertising and marketing, Laura Correnti, Partner at Adweek
Breakthrough Agency of the year Giant Spoon, said that attention
should be focused not on “how to buy impressions, but how to make one. With
$200 billion dollars in advertising this year, that’s 200 billion ways to make
Increasingly, that impact is become more driven by values.
Adrienne Lofton, incoming Nike marketing executive and former Under
Armour CMO, said that while at Under Armour, she created a set of values that
included loving the athletes. Her emphasis was on equality, fighting the good
fight together, creating fearlessly, always connecting, telling stories, thinking
‘beyond’, and celebrating the wins.
“Values-driven marketing should be infused in everything a company
does,” she added. “Understanding what you stand for and what space you fit into
in the world is critically important.”
Armed with consent decrees, new laws and new hooks into old laws, regulators around the world appear to be fed up with Google and Facebook. With good reason. The Google Facebook duopoly continues to maintain an unhealthy dominance of the digital marketplace. Nearly all of the growth in digital advertising continues to go to these two companies.
The impact is significant. Revenue that might otherwise flow
into a healthy marketplace of known and emerging competitors instead is flowing
directly to only two uber-dominant companies. As a result, a well-known
strategy for startups was to simply position themselves for acquisition by the duopoly
but over time and big tech scrutiny those opportunities have even evaporated
resulting now in a “kill zone” where no venture capital will even invest. For
more mature businesses, the counteracting strategy has been to merge and,
thereby, try to achieve competing scale. So, it’s either get big or get bought—if
Meanwhile, devoid of any real competition, Facebook and
Google find themselves increasingly at odds with consumers. A new unappealing revelation
seems to hit every few weeks. This is not a healthy environment that fosters
growth and stability, much less any sort of ethical data framework that matches
Here come the
Recently, the French data protection authority fined Google
$50 million euro for violations of the General Data Protection Authority. In
its ruling, they took issue with the unlawful way in which Google asked
consumers for consent. Essentially, Google appears to offer a take-it-or-leave
consent to consumers with pre-checked boxes and little transparency. Particularly
from such a dominant company, the regulators said this approach is a no no.
Google’s tech lobbyists will say this ruling is bad for all of industry. But really…it’s just bad for Google. The French specifically noted that Google’s dominant market position played a big part in the ruling. The reality is that there are not very many companies whose business model (or at least the anti-competitive dominance of it) is so utterly dependent on tracking and targeting consumers everywhere they go. Not all of industry wants to be lumped in with the toxic duopoly. Nor should they. Many companies offer a value proposition to consumers (and advertisers) that doesn’t hinge on web-wide tracking.
Then, there is news that the Federal Trade Commission (FTC) is close to issuing a record-setting fine on Facebook for violating a consent decree. The FTC’s previous record fine for a consumer privacy case was in 2012 levied at (you guessed it!) Google for $22.5 million.
At this point, even the state regulators are getting involved. The DC Attorney General recently sued Facebook for failing to protect consumers’ data in their Cambridge Analytica scandal. It’s a simple approach that many other attorneys general may follow.
More than Money is at
All that said, the headlines seem to focus on the amount of
the fines. However, what I’m watching most closely are the behavioral or
structural changes that come as a result. For instance, will the FTC require
tighter oversight by Facebook of their third party partners? Will the FTC
recommend that Facebook divest itself of Instagram and WhatsApp, thereby
creating instant competition in the social media space? And, how will the EU’s
enforcement of GDPR impact Google’s ability to track consumers’ every move?
As the French ruling seems to insist, Google may have to
unbundle its requests for consent which would surely lead to fewer consumers
agreeing to be tracked by Google. It’s subtler – but if EU regulators are
successful in ensuring that companies are plainly and transparently asking for
consent for secondary uses of data, will that improve the prospects of
companies which have trusted relationships with consumers?
At the end of the day, a $50 million euro fine probably
feels like an annoying mosquito bite for a company with over $100 billion in
annual revenue. The biggest benefits for consumers and the marketplace will
only come if there are changes in how the duopoly operates.
Packaged goods are typically the biggest spenders in advertising. Not only is a CPG company’s brand and product mix massive, but the competitive threats from e-commerce and direct-to-consumer brands are significant and growing. The competition has taken a toll. In the last two years, CPG sales have declined. As a result, marketers are spending billions on advertising to safeguard their market share and stay top-of-mind among consumers.
For publishers, however, the competitive marketing environment has
created a substantial revenue growth opportunity. CPGs are notorious TV
spenders, but they also spend considerably on print and online. For publishers
to compete for those dollars, it’s important for them to know these CPGs as
well as possible.
CPG Ad Intelligence
With that in mind, here’s an advertising-intelligence snapshot of three of the biggest CPG advertisers – according to annual revenue from 2018 – based on MediaRadar data.
Nestle SA – Nestle is the top CPG by revenue, with nearly $90 billion on
the year. But it only grew by 0.4%. Still, in North America, the
brand spends nearly $640 million on ads. According to our data, Nestle
invests in premium ad units, and it advertised on over 250 different media
properties in the last year across multiple formats. For publishers, this could
mean opportunities with digital video, native and other premium formats. Nestle
launched and advertised 90 new products in the past 12 months. There are nearly
125 people on file in marketing roles at Nestle, as well as over 50at their
agencies. This offers a lot of targets for publishers.
Procter & Gamble – P&G’s sales declined in 2018, down nearly half a percentage
point. Still, the company brought in more than $65 billion in sales. The
company’s marketing budget has been slashed by hundreds of millions in certain areas in an
effort to adapt to the sales outlook
of $200 million alone in digital). Still, even
with a contraction, the company is one of the world’s most prolific marketers,
pouring more than $7 billion in advertising globally. Like Nestle, our data
finds that P&G invests in premium ad units on over more than 250
properties. They launched slightly fewer products, though, with “just” 83 in
the last year. P&G’s marketing team is comparable to Nestle’s, with over
125 people in marketing roles, according to our data. We’ve also identified
nearly 130 agency people who work on P&G business. Perhaps that speaks to chief
brand officer Marc Pritchard’s push for agency streamlining and
PepsiCo – PepsiCo beat out Unilever in sales with $63 billion total on
the year. The company is one of the few CPGs to see some sales growth, with an
uplift of 1.2%. Everything from Frito-Lay snacks to its beverage portfolio have helped the company
rise above some of the stagnation experienced by its peers. In terms of where
PepsiCo is advertising, the numbers were fairly similar to those for Nestle and
P&G. All three prefer high-impact inventory and spend on hundreds of media
channels. But PepsiCo only launched and advertised 17 new products in the past
12 months. That seemed to benefit their sales (a more focused approach,
possibly). However, it likely doesn’t help publishers who would benefit from the
company’s need to promote more new products. Additionally, PepsiCo has the
smallest overall marketing team, with almost 100 people on file in marketing
roles and over 50 at their agencies.
As CPGs come under threat, they will consolidate some of their marketing spend. However, overall, these companies continue to be massive sources of revenue for publishers. A careful analysis of their growth and marketing strategies – investing in premium formats, new product launches and more – can help publishers unlock more value from existing relationships or even build new ones.
To answer that question, we need to look to the past—1440 A.D., to be exact. When Gutenberg created the printing press, it was suddenly possible to print and distribute thousands of copies of written material, all typeset so that the letters lined up perfectly every time.
Since then, the way we read text—including online—has changed very little. But that doesn’t mean it hasn’t evolved at all.
When I was living in Japan in the 90s, for example, everyone read the newspaper on the train. Japanese newspapers, unlike the papers you find in the U.S., are designed to be folded in half as you read because the trains are so crowded. You couldn’t open a Wall Street Journal arm-to-armon the train in Tokyo because there simply wasn’t enough physical space.
But today, the way we consume content is not restricted in that way. We’re much more likely to read the news on our smartphones and laptops.
Instead of holding the physical paper in our hands, we scroll away on phones or tablets. But we’re still attached to some old-school tactics that make less sense today. Things like above-the-fold, which is a vestige of newspapers that were folded once they hit the stands so that only the top half of the paper was visible to the passers-by. This basic format remains the same for digital content, but it no longer serves much of a purpose.
Since the advent of the printing press, technology has enabled us to deliver more content more quickly to more people than ever before. As digital technology continues to evolve at an increasingly rapid pace, it’s time authors and publishers rethink how we present digital content. Just as a Japanese newspaper was designed to create the optimum experience for reading on the train, we have to evolve the way we present online content to give users the best experience.
Your users live in a digital world. Here’s how to meet them there:
It’s time to ditch trees, categories, menus, and the like.
Navigation is among the most important elements of web design.
The original navigation favorite was the tree structure, which was popularized with the explosion of Yahoo and its original navigation. It presents a hierarchical view of information, in which each item (or “branch”) leading to a number of subitems. Any branch can be expanded to reveal subitems, or collapsed to hide subitems.
However, with the rise of mobile devices, the once common tree structure is falling out of favor. Designers are creating new and improved ways of navigating websites. They have stopped. forcing users to navigate a tree, a giant list of categories, or even think of search terms. Instead, they are thinking of ways to create a digital user experience that is responsive in real-time.
Just as Google’s search engine rendered Yahoo’s original navigation approach obsolete, AI is pushing out traditional web navigation. An AI-driven site design that can pick up on and infer user signals and direct them accordingly is much more user-friendly. Before long, all websites will be creating menus, landing pages, and content generated dynamically in response to user understanding.
Ideally, prebuilt navigation should be as streamlined and minimalist as possible. When done right, it allows users to open your website or app and find what they’re looking for instantly.
Otherwise, users will become frustrated and sign off—and that’s the last thing you want.
User engagement is at stake.
Today’s consumers are less patient than ever.
According to a 2015study from Microsoft, the modern American brain loses concentration after eight seconds, a result of our increasingly dependent relationship to technology. “Heavy multi-screeners find it difficult to filter out irrelevant stimuli,” the report read. And they’re “more easily distracted by multiple streams of media.”
Today’s customers expect instant gratification. They want to be met where they are, with an article or product recommendation that’s relevant for them at that exact moment, regardless of the channel or device in use. Real-time customer engagement requires knowledge of past purchases, specific preferences, and situational context to make instant recommendations.
Without it, your customers will go elsewhere.
Data shows that modern real-time companies that embrace this type of real-time responsiveness see double or triple level of user engagement. If it’s a content site, that means up to three times more people watching videos or reading articles, or becoming paid subscribers. On a product site, it means tripling the number of people buying your stuff.
If you’re not leveraging AI to give users a better experience already, you’re leaving money on the table and users in the dark.
Soon, it won’t be enough to just show users a few options based on past purchases. The next iteration of digital experiences is content presented based on behavioral and external cues.
Rappi, or what I like to call “the Uber Eats of Latin America,” is a great example of this next generation UX and a customer of my company, Liftigniter. The app determines what you’re interested in eating and delivers it to your door—whether it’s a four-course meal prepared by a restaurant, fast food takeout, or ingredients delivered from a grocery store for you to cook on your own.
They use our AI engine to make individual determinations based on such signals as users’ behavior in their app. It understands what devices they’re using, where they are, and what time of day it is. Using this information, they can make behavioral and environmental inferences. This allows them to determine whether you’re interested in something healthy or comforting, quick or slow, fancy or casual. When it’s cold out, they’ll suggest even suggest a warm holiday soup.
If you can create a website or some sort of digital experience that can determine the user interests without them telling you, why wouldn’t you? The only conceivable reason is habit. It’s natural—and easy—to cling to the status quo.
However, the printing press no longer reigns supreme. And it”s time online publishers shake off the vestiges of an archaic user experience.
“Alexa: What’s the news today?” That depends. If a consumer wants to get news from a voice assistant such as Amazon Echo or Google Home (or the hundreds of devices that support them), the process isn’t always easy and the results are inconsistent. People have complained that the news reports on voice assistants are too long, or don’t answer questions accurately, according to a recent Reuters Institute report.
But the devices aren’t going away. In fact, they are multiplying like rabbits, if last week’s Consumer Electronics Show (CES) was any indication, with more voice assistants in U.S. households and more of them built into other “smart home” devices such as refrigerators, mirrors, home security and yes, “Intelligent Toilets” (“Alexa, flush!”). So: What should publishers do? Experiments so far have been mixed, but that doesn’t mean giving up is an option. Instead, publishers need to fight to get better deals for content. They also need consider new types of business models such as product placement, as Meredith is doing.
Amazon Alexa vs. Google Assistant, Part 2
If you want to understand how big the voice wars have become between Amazon and Google, you just need to go to Las Vegas for the Consumer Electronics Show. Last year, Google was the upstart taking on the incumbent at Amazon. This year’s battle was more evenly matched. Google plastered ads all over town and even had an “It’s a Small World” Disney-style ride as part of its booth. Amazon opted for a lower key approach with “Works with Alexa” tags on all the associated products.
Amazon touted selling more than 100 million Alexa devices. But Google shot back by saying it had 1 billion devices with Google Assistant – though that includes all Android phones sold with it built-in. While CNET had its writers decide who won the Amazon vs. Google voice war at CES (Google got the nod), the real question is how can publishers use this battle to their advantage? Will the tech companies ever give more credence to news and information on voice assistants, and what will that value be in the long run?
What People Want
Before we answer, we first need to understand how people are using voice assistants in their everyday life. People typically use these omnipresent devices in the morning and evening. And people mostly want them to play music, answer general questions and get weather updates. In an analysis of the Reuters Institute report, Nieman Lab’s Laura Hazard Owen noted that people love using smart speakers, but not really for news. Even though 42% said they used smart speakers for news, only 1% said news was the most important feature for them.
Users also have a lot of complaints about news on voice assistants: The updates were too long, they aren’t updated enough, many use synthesized voices to read the news, and there’s no way to skip or select stories. Even worse, when people asked specific questions related to news stories, the answers were inaccurate and inconsistent.
While people do use the devices to stream live radio (19% of all NPR online listening happens on smart speakers), they aren’t keen to listen to longer form audio or podcasts. Maybe that’s just a factor of podcasts being an on-the-go commuting format, while smart speakers are in the home.
What Publishers Can Do
In the wake of Reuters Institute study and many experiments by publishers, how can they better reach consumers via voice assistants? As with all new formats, publishers must understand how people use the devices and tailor their content appropriately. The New York Times announced a new briefing for Alexa-enabled devices based on “The Daily” podcast. It is in a much shorter format for smart speakers and they are promoting it through the print edition of the paper. The Times has developed a weekly News Quiz taking into account the popularity of trivia quizzes on the devices.
As The Verge’s James Vincent pointed out: “Audio content won’t necessarily drive subscriptions, but it could be a relatively easy way for the paper to reach millions of new listeners before — maybe — turning them into readers.”
Meanwhile, Meredith announced its new Innovation Group at CES. The new division includes a Voice Network that brings together all of the company’s audio, voice, and podcast products under one umbrella.
Meredith has experimented with “content-to-audio” where someone reads story content. However, what’s most interesting is their initiative to create skills or actions for smart speakers. One example would be using Alexa to open an AllRecipes skill with an option to order ingredients for a recipe. “The skills are actually the best place to do the product placement and direct links to commerce,” Meredith’s head of innovation Corbin de Rubertis told Folio.
Publishers are still feeling their way to what works best on voice assistants. (And the payoff is difficult to envision right now.) However, growing use of these proliferating devices means that publishers can’t dismiss them. Instead, they need to start with shorter briefings, try out some new interactive skills, and as the platforms become more mature. And perhaps they can even get compensation for offering the most up-to-date relevant answers for users.
The calendar has flipped to a new year. Strategies formulated in are being put into action. CES has wrapped in Las Vegas. Gaudy digital advertising forecasts have been delivered by prognosticators. And advertisers are jumping up-and-down and complaining about fraud, brand safety, transparency, and viewability.
Actually, not so fast on that last point.
Favorable reports issues by several analyst groups – some of which have a vested interest in marketplace chaos and inefficiency – suggest progress is being made on thorny issues that have plagued the digital advertising category for years. Specifically, there appears to be improvement in the area of viewability, which is considered a bellwether metric by many in the business. One report by Integral Ad Science’s found that overall desktop display ad viewability rate across buy types was 60% in H1 2018, up from 55% in H2 2017.
Clearly, there’s a long way to go to get the issue under control. It’s widely acknowledged that billions of dollars will continue to be wasted this year, the market appears to be stabilizing. Marc Pritchard, the Chief Brand Officer at Procter & Gamble – and unofficial industry spokesperson for all things related to digital advertising problems – summed up the state of affairs neatly at CES this week when he described the situation as “largely finished with round one.”
Double-Edged Sword For Publishers
This market trend has a few different implications for publishers specifically, especially as more granular aspects of the trend are examined.
For example, while publisher-direct advertising continues to outperform programmatic across most categories, the performance gap is closing. Programmatic made a bigger improvement during the time period. That’s an angle that will be celebrated by the duopoly (Google, Facebook) and big media agencies alike (agencies generally prefer programmatic because of its ability to scale).
On the other hand, the display advertising category hasn’t had much positive news to share in recent years – if any at all, with FBI probes and such dominating headlines. And these overall improvements help the sales pitch for everyone competing in the sector. Display advertising remains a relatively new and oft-misunderstood channel, and these developments will resonate with increasingly skeptical media buyers (and, as importantly, their financial backers).
Publishers’ Marching Orders
In the wake of recent news and developments, publishers have myriad opportunities for consideration in the wake of improving market conditions.
Start Spreading The News
Media buyers are overwhelmed with pitches from all directions: Google has stepped up its outreach efforts. Companies sprout up daily with new ways to execute online advertising. And their clients (internal and external) are constantly demanding increased ROI on ad spend. “In spite of all the talk of how ‘easy’ it is to advertise online and the incredible level of investment in the marketing automation sector, I’ve never see the ad business as complex or noisy as it is today,” says Karen Moked, vice president of marketing at Digilant, a programmatic ad company. As a result, reaching media buyers through the haze of activity swirling around them isn’t easy, but getting to them and helping them understand how viewability is evolving and the increasing role it can play in their operations in light of improving effectiveness is critical, for obvious reasons.
Minimize Friction in the Buying Process
Perhaps the biggest obstacle publishers have to engaging with advertisers is the fact that their customer experiences are not always optimized. In fact, it can be downright difficult for consumers to purchase some publishers’ ad products. New market developments such as increased viewability can be used as a talking to point to help jump start internal discussions around how to streamline the customer buying process. Given that most publishers can’t invest hundreds of millions of dollars into the automated systems that Google and Facebook have in place, some creativity is required.
Performance Close the Loop with Compelling Reports
Media buyers spend half their time planning and executing programs, and the other half creating reports. Publishers are well-served by providing post-campaign analysis and reporting support in two ways. First, it helps advertisers understand the performance of their investments, and premium publishers have a great story to tell around engagement and audience quality. Second, when done effectively, performance reports it helps streamline the buyer’s workflow, which is always a welcomed offering, and by extension positions the publisher favorably for the next campaign.
Opportunity is Knocking
For the first time in recent memory, the digital advertising community is headed into a new year demonstrating optimism about its state-of-affairs, specifically in relation to pressing issues related to viewability, fraud and brand safety. This environment should translate to attractive new opportunities for top-tier publishers. This is not just because a rising tide lifts all boats, but also because of the group’s differentiated value propositions vis-à-vis the duopoly’s. Realizing new successes is by no means a foregone conclusion and will require savvy execution, but 2019 is poised to offer favorable conditions for high-end publishers.
New times call for new hybrids. In the fragmented, highly competitive, and fast-paced world of content, publishers cannot rely on a single source for anything. Social media and network monetization are barely bearing their weight as one of the three legs on the revenue stool. Subscriptions are gathering steam and have serious potential as a second leg (given the emergence of OTT). But this leg is still a bit wobbly. Remember that there’s only one content company that rhymes with Get Trix that relies solely on subscription revenue. Advertising in all its forms, especially sold direct, sponsored and native, is the third leg. Right now it bears 20%, 40% or more of the revenue load for top tier subscription-based content companies.
Ad Experiments Emerge
As advertising is coupled with subscription in the business of content, it will become increasingly important to identify and maximize what I refer to as the consumer tolerable revenue threshold (CTRT). This requires entirely new ways of thinking and advertising. A total ad payload optimizing revenue needs to be defined and delivered across total content consumption time that is tolerable to each type of viewer (subscriber or free viewer).
Today, the predominate form of video advertising is instream. This takes the form of programmed commercial breaks during live streams or pre/mid/post rolls in video on-demand (VOD) content. Compare this to the traditional TV ad model, which averages 8 minutes of commercials for every 30 minutes of content watched.
Viewer’s attention dwindles as content and screens proliferate. Going forward, the digital model will need to adapt and evolve. As a result, new ad models and formats are being invented to maximize CTRT beyond instream. In order to create a new hybrid in OTT, CTRT requires more flexibility in ad load and controls for ad exposure for a viewer’s content journey in the totality of their time spent with subscribed content. The methods of optimizing CTRT today will need to evolve beyond ad selection and rotation instream to managing user experience across different ad forms and sponsors throughout the interaction with content.
Adapt to Survive
As new formats emerge, content companies will need to be flexible in order to experiment and manage CTRT to maximize ad revenue with subscription revenue. Every moment a viewer spends with content needs to be seen as an opportunity, including when the content is paused. For example, displaying commercial messaging in between viewers pausing streams for their own breaks while an increasing amount of video content is being watched on demand (VOD).
Every ad a viewer sees needs to be seen as a prospect to create engagement with a brand, including interactive ads that drive user action. For example, content providers need to come up with ways to input data from interested viewers or distribute information / coupons to the personal devices of the viewer.
Every member of a household and targetable data parameter needs to be factored in each ad experience, including viewer sentiments. Essentially, every exposure and interaction with an ad needs to be managed as part of the total user experience to formulate a new hybrid for success.
In the prevailing world order, it is not the biggest or the smartest who will prevail but those that are most able to adapt. In the emerging opportunity of OTT, along with diversifying revenue sources with subscription and advertising, the publishers that prevail will be the best and most nimble in experimenting and adapting new models with viewer experience in mind. The optimal CTRT will create the most profitability, for all.