P&G Should Allocate TV Budgets to Digital Branding

Last quarter, Proctor & Gamble eliminated $100  million in digital media spend without any noticeable change in revenues. This led P&G to decide that perhaps all of its digital spending was useless. And perhaps it was, if what the company was doing was programmatically and randomly buying impressions. The company needs to change the way it creates and buys ads, and the goals for its digital advertising dollars. TV dollars never were devoted to performance, but to brand. And now that TV is slowly going away, digital is the only place left to do branding.

“We got some data that said either it was in a bad place or it was not effective,” Mr. Taylor said of the digital cuts. “And we shut it down and said, ‘We’re not going to follow a formula of how much you spend or share of voice. We want every dollar to add value for the consumer or add value for our stakeholders.”

After cutting back on certain digital ads, “we didn’t see a reduction in the growth rate,” said Mr. Moeller during the call. “What that tells me is that the spending we cut was largely ineffective.”

P&G also said it reduced overhead, agency fee and ad-production costs in the quarter.

These numbers tell us that the performance advertising side of digital advertising wasn’t working for them, and that’s right. Performance advertising in digital is very tricky, as well as being plagued by fraud. But that’s not what P&G should be using its digital spend for.

Instead, it should be using most of its digital dollars, outside of the e-commerce dollars it allots to sites like Amazon, to branding. You see, in the future Amazon, and maybe Wal-Mart, will own all the e-commerce dollars, because that’s where people actually go to buy things. But 99% of the time we are on the web, we are not trying to buy anything! P&G was also smart enough to lower its spend to targeted consumers of Facebook, because Facebook is not a place where people go to buy either.

A company like P&G should realize this, and use its online dollars for building brand, which is ever more important in the age of discounts and bargains. We have to have Tide top of mind at all times, or when we DO go to buy something, we’ll select the least expensive product. We will only buy a brand if we are really engaged with the brand.

And that’s how CPG companies should be using their dollars: they should be taking them away from TV, which they use for branding now, and which they feel used to work very well, and putting them into digital video on sites consumers visit every day, like premium publishers, or in apps consumers use regularly, like casual games.

They also should be spending their creative dollars on interactive formats like our “Watch and Engage,” in which the consumer is rewarded for interacting with a brand, producing both a positive impression and a reason for engaging.

The Future of Advertising

Advertising was born as a way to introduce consumers to new products. It was placed in a mass medium through which consumers got both information and product knowledge. Because consumers had to go to a store to buy, advertising was often separated from the buying experience by hours, days, weeks. The goal of traditional advertising was to keep the name of the product in the mind of a consumer until that consumer was ready to buy. That was called branding.

However, today information about products is everywhere, especially on e-commerce sites like Amazon. You may want to ask whether we even need advertising in a world so full of product information.

We do. We need it to distinguish between one product and other in the same space. And we still need it to keep the names of products top of mind until we are ready to buy. 99% of the time people are online, they’re not there to buy anything. That’s the big mistake digital advertising made in its early years. Every time an ad appeared, it tried to sell someone something. This annoyed the non-purchasing visitors.

We are entering a different world for advertising. The app store now has 2,000,000 apps that have been downloaded 130,000,000,000 times. $50b has been paid by Apple directly to developers. There are now four separate Apple platforms, each of which is world changing, and each of which has its own apps. And we haven’t even talked about Android, which has the lion’s share of the mobile market.

Every app developer is a publisher, and each is competing with traditional publishers for attention. If you are playing Candy Crush, you are not consuming news. And if you are consuming news, chances are its curated within an app. The open web has lost ground to the application economy. The audience is fragmented beyond belief.

What does this mean for advertisers? It means many opportunities to bring a message to potential customers, but in a different environment with different affordances. It’s not about the masses anymore, it’s about the niches.

To reach niches, engagement is key. Advertisers need to be clever about how they attempt to engage people who are not online to buy. Their goals need to be changed from performance to branding, and their strategies altered accordingly.

That’s why brands are beginning to buy our Watch and Engage interactive sponsorships. They’re the future of advertising.

Advertising with a Human Touch Will Win

In the advertising industry we sometimes lose track of the fact that consumers aren’t users;  they are human beings.  They’re not an audience that wants to be shouted at with no input. The best brands know this. They treat their customers with respect online and off.  That means they don’t foist ads on customers at inappropriate times. It means they use every customer interaction as a way to help a consumer rather than bludgeon her.

As a real life example of how a successful brand operates I offer you Starbucks, one of the most beloved brands of this century and the last. I have been to Starbucks all over the world, and am always treated as if I mattered.

Can that be translated to online behavior? Shouldn’t it be?

This morning I ordered from my usual Starbucks using my mobile app. I frequent the same store every day, and they know me. I used to order in person, but now I order online. I order the same drink every day. This could mean I’m no longer a face, just a data point. A “Doppio” at 6:30 AM.

This morning I changed my order.  With a typical brand, this factoid might go into a database somewhere, and be part of a later calculation. But Starbucks is different because there’s still a human interface, and my deviant behavior  apparently threw my baristas into an existential crisis.  Had I made an error? Or was this a real change? They responded by preparing two drinks: the one I had ordered and my “usual” drink. I could not have been more impressed. Clearly I’m not a data point to Starbucks, even though my commerce with them has increasingly become digital.

Let’s take this with us into the world of in-app advertising. When someone is using an app — to play a game, to pass the time, or to pursue a passion, an in-app ad can be distracting and unwelcome.

But we’ve developed a form of interactive sponsorship that can be part of whatever the player is doing at the time, will help rather than interrupt them, and will also help an advertiser who wants branding that’s remembered. We think this is a fair exchange for game players that is not just one-sided.

This is not easy to do, and has involved years of research into changing consumer sentiment about online advertising.  We have learned from industry organizations, from discussions with thought leaders, and with tests on consumers.

As a result, we do none of the things with our formats that consumers hate about advertising: we do not retarget, we do not track, and we do not hold data. Instead, we try to offer online visitors a fair exchange for their time and attention.  It isn’t technology that governs our ad formats, it is respect for humanity.

 

 

 

 

 

 

 

 

CMOs Growing into New Roles

Through most of history, marketing was that touchy-feely part of an organization. with no data to defend itself. As a result, its budget was always the first one cut. That’s not longer true. Marketing leaders in every vertical are now laser-focused on precise customer insights that they can use to implement and measure the success of their marketing plans. That doesn’t mean the CMO budget is bigger; it means CMOs must do more with less. They must deploy against the right data, make the right media buys, and be prepared to provide attribution numbers.

This isn’t just a budget issue; it’s also a brand safety issue. Companies are becoming more careful about where to run advertisements, for example, knowing that their ads could run alongside an offensive message or one that simply does not align with the character of the brand they represent.

So what are the best CMOs doing? They are investing in martech.  Martech, at the very least, is a cover-your-butt technology that can help show the boss they made the right spend and the campaign worked. Most experienced CMOs who know their brands and their customers have really good intuition, but intuition is not enough anymore. It also helps to have predictive analytics.

According to Forrester Research, marketers who have adopted predictive analytics are twice as likely to exceed their revenue targets. On the other hand, most martech is not “mature” yet:

We didn’t quite find a solution that provides boatloads of intelligence about new or existing targets, reveals purchase timing, demonstrates built-in intuition about optimally designed content, and delivers that content via a customer’s desired channel – all provided with “set it and forget it” automation. Delivering on that vision is still off in the future.

But we did find that predictive marketing analytics has a place in a balanced B2B marketing technology portfolio since the category powers three distinct but core responsibilities: ongoing nurture for known accounts, cultivation of anonymous contacts at unknown accounts and, and finally, identification of new accounts showing signals of interest in a firm’s portfolio of services and offerings.

Right now, predictive analytics can only provide good buyer profiles and perhaps a sense of the propensity to buy. There’s still a big problem in using technology to find those customers who will buy:

Yet, predictive analytics are only as helpful as their data inputs, and the data sets marketers can access at this time are still fairly rudimentary when it comes to tracking true indicators of influence. Neuroscience has uncovered that decision-making is almost completely emotional, rather than rational. However, our data collection methods are not yet mature enough to provide meaningful emotional analytics at scale.

Eventually, technology will advance to the point that it can recognize and analyze physical responses tied to emotion, such as the heat I emit from my hand into my phone, or the expansion of my retina in response to a compelling piece of content. Until machines can make systematic sense of the complexity of human emotional response, we will not have tapped into the full potential of predictive analytics.

Olenski: Putting the customer front and center is key for ANY brand’s success. How can CMOs spearhead the creation of customer-centric organizations to increase their bottom line?

Hatch: Building data-driven marketing cultures has become a major role of the CMO, and it requires a complete rewiring of marketing operations. Designing organizational workflows and architecting technology around these data flows is the key to enabling a customer-centric marketing organization that drives business value.

The State of Digital Media 2017

Coming so soon after Mary Meeker’s presentation on Internet Trends, Luma Partners’ report on the State of Digital Media this year was a bit buried by the press. But this report was equally important to advertisers looking to maximize their dollars and and their return on those dollars. Advertisers have only recently awakened to the fact that they pay the bills and should be calling the shots.

Since last year’s Luma report, a new issue has joined the previous list of industry problems: adverse context. We know that issue as brand safety, and it joins viewability and fraud as major negatives for the industry. Other things occupying marketers’ minds are how and what to measure, how to avoid being in the clutches of the “walled gardens,”  and how to insure compliance with upcoming GDPR changes.

Luma believes header bidding, which started as a “hack” back when we began offering it, has emerged into a unique disruptive force, and will change the buying habits of advertisers by slimming the supply chain. Publishers have formed consortia (like our premium network) to provide guaranteed premium inventory, and the result will be higher CPMs and fewer choices.

Another confusing issue is measurement. The major platforms all measure viewability differently,

State of Digital Media

Issues change in importance from year to year.

and some have yet to involve third parties to generate metrics. On the other hand, the marketing side of the house is not even sure viewability is the right thing to measure — perhaps it should be engagement. But if engagement, on a platform like Snap, doesn’t result in an immediate sale, how do we account for it? It’s suspiciously blurry, just like offline advertising always has been, but now we have so much data that we think we should know more.

This movement toward greater interest in tracking the correct metric led to what Mary Meeker called in her presentation the convergence of content, ads, and purchase. The least complicated metric to track is sales, and we may find ourselves moving once again to direct response advertising, although with a more native feel to it. Yet every publisher cannot be or look like an Amazon store.

In the world those of us in advertising are inhabiting right now, it’s a day to day struggle to focus on creating value for customers, but it’s also a very exciting time when no one does the same thing day after day. The opportunity to bring creativity to the industry has never been greater.

A New Idea for Advertisers

Sometimes everything old is new again. And that’s the case with sponsorships in the advertising world. We believe they will have an ever-increasing role in advertising going forward. Let’s take a walk back in time.

In the late 1940s, radio was full of wonderful audio shows like “The Lone Ranger” and “Portia Faces Life.” These were fifteen minutes long, and they were “brought to you by” a brand, sometimes Ivory Soap (which is how they got the name soap operas), Quaker Oats or Crisco. At the beginning of the show, you were told who brought you the show. There was no other interruption, unless the sponsor had an offer, which was something like “send in a boxtop from Quaker Oats with your name and address and $.25 and receive a Lone Ranger glow in the dark plastic ring. Or send in the label from a can of Crisco and receive a recipe.

That’s how customer information was collected and “tracking” was done. If you liked the offer, you participated and gave your address. If not, no one followed you.

By the 1950s when TV became big, the shows were an hour long and quite expensive to produce. So there was Milton Berle, brought to you by Texaco. To see Berle, you had to sit through an opening song by four men in gas station uniforms:

Oh we’re the men of Texico,
We work from Maine to Mexico
There’s nothing like this Texico of ours.
Our show tonight is powerful.
We’ll wow you with an hourful
Of howls from a showerful of stars
We’re the merry Texaco men
Tonight we may be show men
Tomorrow we’ll be showmen
Tomorrow we’ll be servicing your cars.

 

 

The opening jingle, really an ad, was live and ran for 1:29. But it wasn’t even seen as an ad. There was, of course, no tracking.
And yet, 65 years later, I still sing that song to myself and think kindly of Texaco for bringing me Milton Berle, as other big brands like Procter and Gamble (now P&G) and Philip Morris Cigarettes brought us “I Love Lucy.” I still remember the bell boy in his uniform yelling “call for Philip Morris” as if he were paging a guest in the lobby of a hotel.

What’s our point? It’s that brand advertising works, and produces long-lasting brand awareness in a way that modern digital advertising doesn’t. We need that break-out creative person to design something like the opening Texico jingle or simply the “brought to you by brand name and tagline.” Looking back at these old ads, which we remember from our own childhoods, we realize how successful they actually were, and yet they were non-interruptive

We have pre-roll formats that could and should be used by advertisers for brand advertising. We’re all for pre-roll, but only if it’s worth looking at. The creative could look like a sponsorship and instead of being called an ad, these should perhaps indicate that they are sponsorships. Perhaps that would be a way to earn back the trust of consumers who are fed up by the aggressive techniques of modern digital advertising.

Can a Strong Brand Be Like a Religion?

Why has digital advertising taken such pains to ruin something as wonderful as how people feel about the brands they love by assuming that brand ads don’t work online and only interruptive, painful calls to action do?  The direction taken by many in online advertising seems to fly in the face of the last decade of neuromarketing research,  and is about to cause advertisers to shoot themselves in their collective feet. There is no evidence that consumers don’t want to see brand ads, and tons of it to show that they are both tuning out and turning off ads that the industry regards as “performance.”
Our emotional engagement with strong brands shares something with our feelings about religion. This  truth was revealed to me as I was reading “Stealing Fire,” a book about how altered states of consciousness are being used by both business and the military to bring about “flow states,” those states in which people show extraordinary creativity and team work.  Burning Man, the large art festival in the Nevada desert, is an example of how an entire city can be created by self-managed teams in flow states.

However, the fact that engagement with strong brands lit up the same brain centers as religious experiences still took me by surprise, and it illuminated for me many of the things that are wrong with digital advertising, and some that the industry could easily get right.

In 2007 a collection of the world’s biggest brands, including Apple, Sony, and Coco Cola, Nike, Samsung, and Ford, put up $7million to fund a study into the neuroscience of buying behavior. They wanted to study whether there were more effective ways to influence behavior than what they were using, and saw this study as a way to replace old-school focus groups with brain scans.

A marketing consultant named Martin Lindstrom teamed up with a neuroscientist, Gemma Calvert to conduct the study. Lindstrom later wrote Brandwashed. They used functionalMRI  and electroencephalograms to scan the brains of people as they made buying decisions, discovering along the way that product placement in movies and TV shows rarely works, and that shopping and spirituality share the same neuronal activity.

Of course there was a backlash, since no one wants to think of themselves as being manipulated. But that doesn’t mean creative departments and marketers can’t strive for stronger brands and better brand experiences. Bought and executed correctly, ads for strong brands can produce similar feelings of joy, love and serenity to those produced in religious people by religious iconography — an emotional engagement for which marketers strive. And with the right platforms and media buying policies, we can even do this programmatically.

So let’s not ruin it by creating ads that merely ask for the sale, and don’t provide worthy experiences.

 

ZEDO Makes Online Trust Alliance Honor Roll for 5th Consecutive Year

For the fifth year in a row, ZEDO and its subsidiary ZINC have made the Online Trust Alliance Honor Roll. The Online Trust Alliance (OTA), is an Internet Society initiative with the mission to promote best practices for online trust. The 2017 Online Trust Audit & Honor Roll – is the de facto standard for recognizing excellence in online consumer protection, data security and responsible privacy practices.

“Data is the ‘oil’ of the Internet economy. It is fueling innovation, growth and revenue. At the same time, if abused there is a risk of data spills, negatively impacting user expectations and ultimately the Internet at-large,” said OTA Founder and Chairman Emeritus, Craig Spiezle. “The OTA Trust Audit & Honor Roll underscores the urgency to embrace responsible security and privacy practices. Failure risks a long-term impact to the Internet.”

OTA observed the emergence of an alarming three-year trend: sites either qualify for the Honor Roll or fail the Audit. In other words, sites increasingly either take privacy and security seriously and do well in the Audit, or lag the industry significantly in one or more critical areas.

Although ZEDO is not a consumer-facing site, we participate in the Audit to be sure we’re doing the best we can do for our customers and partners. If you read the press release notes, you will find that if ZEDO were an actual consumer-facing site, it would be among the top 50 in security and privacy protection. Ironically, the banking community scores lowest in best security practices.

“Despite ratcheting up the criteria needed to qualify for the 2017 Honor Roll, it was encouraging to see the highest percentage of recipients since OTA began the Trust Audit nine years ago,” said Spiezle. “While OTA congratulates all Honor Roll recipients, many others have a long way to go to ensuring and embracing acceptable security and privacy practices.”

Industry Highlights
From best to worst performing industries:

Consumer Services: This industry was again the best performing with 76 percent making the Honor Roll this year. This segment accounted for 26 of the top 50 consumer-facing sites (52 percent).
Internet Retailers: Fifty-one percent of the top 500 Internet retailers made the Honor Roll, a significant improvement over last year’s score of 44 percent. This segment accounted for 10 of the top 50 consumer-facing sites (20 percent).
News & Media: Forty-eight percent of news and media sites made the Honor Roll this year, the most significant improvement over the previous year across all industries. In 2016, media and news sites were the worst performing sector with only 23 percent making the Honor Roll. This segment accounted for three of the top consumer-facing 50 sites (6 percent).
ISPs, Carriers, Hosters & Email Providers: Forty-six percent of companies in this new 2017 category made the Honor Roll. This segment accounted for seven of the top 50 consumer-facing sites (14 percent).
Government: Thirty-nine percent of audited U.S. federal government sites made the Honor Roll. This was a significant decrease from 46 percent in 2016. 60 percent received failing grades
FDIC 100 Banks: The percent of FDIC 100 banks making the Honor Roll saw the biggest drop in 2017, going from 55 percent in 2016 to 27 percent. This sector had shown consistent, significant improvement in their Honor Roll score up to 2016 before plummeting this year predominantly due to increased breaches, low privacy scores and low levels of email authentication. 65 percent received failing grades.
“OTA’s Audit continues to drive awareness and recognition about the importance of responsible data security and ethical privacy practices,” said Internet Society Chief Internet Technology Officer, Olaf Kolkman. “The increase in sites embracing end-to-end encryption shows it is becoming the norm for site traffic.”
To qualify for Honor Roll status, a website must receive a composite score of 80 percent or better and a score of at least 60 percent in three categories: 1) domain, brand and consumer protection, 2) site security and resiliency and 3) data protection, privacy and transparency. Failing any one category automatically caused a site to fail overall. OTA expanded the 2017 methodology with additional criteria, telemetry and data fidelity addressing today’s security threat and privacy landscape. OTA analyzed websites between mid-April and the end of May 2017. It estimates that it analyzed more than 500 million email headers and approximately 100,000 web pages.

The 2017 report was funded in part by grants from Symantec and Verisign. Data providers included Agari, DigiCert, Disconnect, Distil Networks, Ensighten, High-Tech Bridge, Infoblox, Malwarebytes, Microsoft, Risk Based Security, SecurityScorecard, SiteLock, Qualys SSL Labs, Symantec, ValiMail and Verisign.

About OTA:
The Online Trust Alliance (OTA) is a non-profit with the mission to enhance online trust and user empowerment while promoting innovation and the vitality of the Internet. Its goal is to help educate businesses, policy makers and stakeholders while developing and advancing best practices and tools to enhance the protection of users’ security, privacy and identity. OTA supports collaborative public-private partnerships, benchmark reporting, and meaningful self-regulation and data stewardship. Its members and supporters include leaders spanning the public policy, technology, ecommerce, social networking, mobile, email and interactive marketing, financial, service provider, government agency and industry organization sectors.

Could Blockchain Technology End Ad Fraud?

More often than not disruptive changes in an industry come from outside, rather than from within an industry. People inside the industry tend to tinker at the margins, not trying to alienate any of the existing constituencies. In that way, industries are like democracies. But just as innovations in healthcare came from outside the industry, innovations in the digital media ecosystem are beginning to come from outside as well.

One place we predict will change how advertising is bought and sold is the fairly new cryptocurrency space. Over the last five years or so, people have become familiar with Bitcoin, digital currency units that are created out of bits and bytes and fluctuate like the securities market or the currency exchange.

Bitcoin, like other cryptocurrencies, relies on an underlying technology called the blockchain, which is a decentralized network of personal computers. Being part of a blockchain network requires connecting to the blockchain through software, almost like connecting to a social network. People on the network can add new records  (assets) through their computers, and the new records are double-verified and added to a ledger of all other blockchain transactions around that asset.

Unless you’re speculating in Bitcoin, you don’t care about any of this. But there’s a related cryptocurrency, Ethereum, that was developed specifically to transparently facilitate contracts. And that’s where advertising could get disrupted.

Blockchain technology through something like Ethereum contracts could monitor ad placements and conduct real time audits of ad delivery. That would solve the problem of transparency in programmatic media buys. Each digital asset ( ad) could be located in real time.  Blockchain’s advantages could include

 verification of ad delivery; immutable contracts with consumers; handling consumer data in a way that is completely transparent; and verifications about products’ authenticity that track from the point of origin, like sustainable fishing. Shanghai-based Vechain is using blockchain tech to authenticate fashion products, as well as provide background info on the items.

Last year, MediaPost similarly pointed to blockchain opportunities for managing huge numbers of consumer relationships, settling of multiparty payments and user ID verification.

Other observers have suggested global payment systems and, especially, smart contracts that are secure and transparent, available throughout a network even as they get modified.

Blockchain technology could also be used to decentralize transaction data, which would offer clients and agencies security and anonymity benefits.

I’m sure there are more exciting uses of blockchain technology than to monitor ad fraud and track wasted digital media ad expenditures, but since this technology has already graduated well beyond the buying and selling of illegal drugs on the Silk Road web site (see Nick Bilton’s terrific new book American Kingpin) and is now being investigated by the big banks to change the way the entire financial system works, we think there will be a day when someone builds a platform that truly brings the advertising industry into the 21st century.

How to Make Consumers Want to Engage with Ads

We are a technology leader, and we have been struggling with how to make advertising effective and non-intrusive on mobile devices. We think we have come up with something that will not ruin the user experience for publishers and will also allow advertisers to build a brand, which has been very difficult to do in digital advertising up to now.
It’s useful to remember what a brand really is. A brand is a repeatable experience, a promise you made to a customer about your product. If you are Starbucks, the brand promise is that the coffee will be the same in Rotorua,  New Zealand as it is on Madison Avenue in New York, and so will the service. If you are BMW, your brand is that your engineering will be superior to everyone else’s–the ultimate driving machine. Brand managers know that the holy grail for a brand is top of mind awareness. That’s why it costs so much to build a strong brand. First comes a good product, and then comes a big awareness campaign.
Brands were originally built through print advertising in  newspapers and magazines, and then began to be built on TV. But a combination of factors have interfered with the ability to build a brand through digital advertising.
The first is an over-emphasis on metrics  and numbers even if we are measuring the wrong things.  That’s fine for direct response, but brand metrics have to be a softer number.
Then  came the commodification of creative, since all we were after was scale. Surely somewhere among those huge numbers now reachable would be our target customer. Early banner ads were all about incentives, and that’s why they were successful. Click for a MacDonalds special, click for a coupon.
But we’re now banner blind, and audiences click on nothing.  The plain fact, as Doc Searls reminded me, is that 99% of the time we’re on the web we don’t want to buy anything. Rather than acknowledge that and stick with brand advertising, consumer reluctance only made advertisers seek out more and more intrusive ad formats and more and more scale.
They forgot about incentivizing the customer. And they determined that building a brand was too difficult, so the focus shifted to tighter and tighter targeting.
We have always been a technology leader, but our leadership isn’t based on tracking consumers or selling personalized data.We are more interested in building engaging advertising formats that don’t destroy the user experience at a publisher site, and that encourage consumers to watch and complete a video ad.
Our newest format, Watch and Engage, incentivizes consumers who are playing games. It’s a short in app video ad that runs only at the end of the game, not interrupting play.  At the end, it incentivizes the consumer to do something. We have had outstanding completion rates with this format in the first few weeks it has been rolled out, and we’re looking to find more brand managers to try it out with us.
This is not an ad that can or will be blocked, because it offers the consumer something that she wants. Because it’s our proprietary format, we can’t give too much detail in a blog post, but we have shown it to enough ad execs to know that they are enthusiastic about its results for top of mind awareness.
For a private demo, contact us at adsales@zedo.com.