In-App Advertising Must Be Interactive

In the past couple of years, more publishers than ever have pivoted to video. They did that to prepare for the big moment when TV ads would migrate to digital media, and they wanted to be ready.They made the mistake of thinking that similar formats and business models would translate. But they don’t.

MG Siegler, a Google VC who follows media, has already noticed the shift and writes about it here:

At the same time, we’ve spent the past couple of years watching content site after content site “pivot to video”. Why? Not so much because video is great — it can be great, but often isn’t the ideal format for content — but more because, to quote Willie Sutton, “that’s where the money is.” That is, large content sites have reached the bounds of monetization at scale for text. The real money in advertising, as everyone knows, is in video — because it’s the form on which television has survived and thrived.

And so everyone has been waiting for all of this video advertising — again, television advertising — to move online en masse. That was what “pivot to video” was all about. Video content just waiting there with open arms to embrace the TV ads when they inevitably make the jump.

But again, what if that jump isn’t coming? Not because these sites/services can’t provide scale — obviously they can — but because the era of dominance for that format is ending?

We’ve known for a long time that something new was coming. Perhaps it is the 6-second commercial, as several brands are attempting. But perhaps it is a combination of options including better creative in brand advertising, and better incentives to consumers for watching ads. Consumers on mobile phones using apps are a different breed of cat.

We already know that consumers are willing to sit through ads at home for live sports. It’s one of the only instances in which they will. However, eventually that, too, will stop unless advertising during live sports becomes as good as it is during the SuperBowl, in which brands reward fans with memorable creative that is often as good or better than the game itself.

But consumers have now moved to smartphones, and spend most of their time there. Not every day is the SuperBowl.

So the best way to make consumers watch ads is to reward or incentivize them, and that’s another thing advertisers are trying, especially with in-app advertising. Rewards-based ads are ads that allow a consumer to get a benefit from seeing or from interacting with an ad. Brands have used them to reward consumers with coupons and discounts.

But why just require users of an app on their smartphones just to watch a video? For brand recognition, we think it’s important that they interact with the brand. And At ZINC, we have a way.

 

2018 For the Agency Business

There’s no doubt that advertising is changing very fast and that traditional agencies must adapt. WPP has already admitted this in several different ways: first in their earnings reports, and second in the way they are buying up small agencies in order to get customers and economies of scale. That might be a mistake, since they’re only adding to their infrastructure. And even if it does work for now,  this tactic will not work forever because what is changing is the nature of advertising itself,  not just the nature of the agency.

Yes, it is true that  the agency of record concept is going away. Building a brand is difficult and requires everything from brand strategy to messaging to communications to internal training to advertising and public relations, not to mention navigating legal issues around privacy and security. As we all know the privacy rules are changing next year and there will be new standards we in the business all must follow. Most agencies don’t have equivalent expertise in all these skill sets.

Most brands know that they need more than one agency to get the job done. But that’s the symptom and not the cause. The cause is the consumers’ changes in buying habits. As an example,  Millennials do not buy goods, they buy experiences. Therefore sponsorships of concerts and other experiences, brand partnerships and infrastructure advertising are going to grow. A small agency in Phoenix Arizona that does only large format and outdoor advertising, Blue Media, has found itself suddenly a $60m company in only a few years.

Traditional media growth, not so much.  All advertising now must be contextual.

Even digital media is going to have to adapt to this rapidly changing environment. It will have to meet users where they already are without interrupting them. This is tricky.

However, It is doable. Consumers can be incentivized or rewarded to watch ads that are non-interruptive when they are playing a game or on social media. They can also watch ads that provide information on products for which they really are in the market.  The success of the New York Times’ Wirecutter blog is an example.

Contextualizing will involve better geo-targeting rather than more invasive personal information targeting. For example if a consumer is already in a Ford dealership, it’s not invasive to show them a Honda or Chevy. They can be assumed to be in the market for a car.

To capitalize on the growth of advertising, which will be a smaller subset of marketing, the agency of the future will be smaller – sorry WPP – and more nimble then past agencies, able to expand and contract more regularly because it will have more 1099 workers than employees. It will also have to know a great deal more about business and about online marketing strategies that work —  including inbound marketing and content marketing.

Hiring is an old fashion way to respond to the typical situation agencies find themselves in today, where they are working on projects and have the need to ramp up or contract almost immediately.  The best agencies will realize this, and give up some legacy infrastructure for long-term survival.

Meredith Sells Data, Not Just Content

We listened recently to the Ad Exchanger podcast with VP of Data and Programmatic Solutions at Meredith, Chip Schenck. Schenck is an experienced hand who comes from a Dutch media family, all of whom started in print. But ten years ago, while working with Amex publishing, he discovered the value of data. When he realized that the future of publishing would be not only content but also data, Schenck got a job at  DSP Krux, and then moved to SSP Pubmatic,  making sure he understood the entire ad tech process before he went back to publishing. Schenck used his forays into ad tech as an opportunity to get deep and learn, and then take the learning back to publishing.

Schenck still thinks it is necessary to learn about ad tech if you are in publishing. Now he’s an internal consultant for Meredith, building digital strategies for all the Meredith products. Meredith’s products include data assets like its PII database, which started with print, but now includes branded products like the Better Homes and Gardens Cookbook, transactional data, subscription data, media purchase registration data, and the DMP.

Because it has been around for a hundred years, Meredith probably has more personally identifiable data than most publishers. But Schenck thinks anonymized users still have significant value. PII databases can’t be updated more than once a week, whereas digital information is updated three times a day. DMPs help improve data modeling that can be done with demographic and psychographic data, and the ability to use the wealth of all the different data  sources together is where the value is realized.

Meredith’s core focus is the American woman and her four biggest interests: home, food, family, and herself. The company publishes not only Better Homes and Gardens and AllRecipes, but Martha Stewart. It takes data from all those publications, and some others, like Traditional Home, and uses it to do things like  understand that quinoa will be hot before it gets that way. Once it gathers that information, Meredith has three separate sales organizations: corporate sales, digital sales, brand sales (print). Each of them can use the same data, which means that by now, digital data is about 30% of revenue. AllRecipes is a big brand because when people cook, Meredith can tell what they’re doing and pass that information on to the right advertisers.

Meredith’s quality content engages an audience of unique individuals, which helps them build great databases. Then they take those databases and put them through their proprietary tech stack, which includesShop Nation, an affiliate software that ingests the Target or WalMart feed and makes the leap from content to commerce, as well as Index and DFP.

They then offer the information to their best customers via PMPs (private marketplaces) that are run strictly on preference. The PMP is a curated experience and   is how Meredith’s old clients are guaranteed that they’ll get more than just first look. He helps them win in a programmatic audience and understand these performs, and he teaches the big clients to go for access and engagement rather than yield.

Schenck says PMPs are for differentiation, and he has some unique creative for them, such as shoppable formats. But if the customers really wants yield, he also offers a dozen or so different heading partners for the open exchange.

His theory is that programmatic isn’t going away, and he’s going to help Meredith’s customers make the most of it.

 

 

 

 

 

A Moment of Thanks

Every year at Thanksgiving, I become reflective about the year that is coming to a close. It has been a tumultuous one for our industry, and for the world as a whole, but as the year draws to a close there is still much to be thankful for at ZEDO.

First, ZEDO’s incredible product development team.  Not only do our products  stay abreast of and even ahead of the industry, but they perform so well that when a customer gives us a chance to test against a competitor, we always outperform. This while taking the high road in an industry still fraught with malware, fraud, and misrepresentation.

Second, our sales teams, who never sell vaporware, but get us in front of the right customers so we can help people achieve their financial objectives on both the publisher and the advertiser side.

Third, our highly regarded support and implementation teams, for which we always receive compliments. We have always been known for our support, and this will never change because our customer relationships are not transactional — they’re personal.

Next, our customers, whom we prefer to think of as our partners. Indeed, some of our customers have been on a very long journey with us from ad serving at the turn of the century to serving advertisers with high impact formats on a secure platform today.

Fourth, our thirty party partners, the technologies that externally verify our ads to make certain we keep our promises.

And next, the industry associations we support, like IAB and the Online Trust Association, who keep on working to bring our industry greater professionalism, better research, and higher standards.

Last, but certainly not least, everyone on the ZEDO team who keeps the lights on and makes us who we are. When my friends ask me why I went into the ad tech business, I answer that it’s because of the great people I’m able to work with all the time — bright minds in a fast-moving business.

I hope you all out there in the audience remember to feel grateful for your families, your teams, your health, and your continued presence on this great planet whether it is Thanksgiving in your country or not.

 

 

Rewards-Based Advertising Works Well for Brands

Rewards-based mobile advertising is perhaps the most successful solution to the problem of how to monetize on mobile without violating the privacy of the mobile visitor. Mobile presents a unique set of problems, because a user has a smart phone with her all day, but doesn’t have much tolerance for interruptions and is fearful of advertising that violates the “creepy line.” So how to get a consumer on the go to interact with a brand without feeling violated?

The secret lies in rewarding the consumer for watching the ad. And ways of offering rewards are limited only to the creativity of the advertiser and publisher working together.

Because much of the time consumers spend looking at their phones is when they’re bored waiting in line somewhere, or riding on some form of mass transit, during those times, they’re apt to engage in casual gaming. Game developers realized that they could advertise their own new games on their competitors’ apps and share user bases. So the first reward-based ads were game developers advertising in other games.

That’s how the game developers first learned that watching an ad in exchange for getting something seems to be tolerable for consumers.. Rewards-based in-app advertising allows users to see or interact with ads in exchange for some extra benefit –game points, getting to the next level, buying more game swag. Although the apps that have used it most as a monetization strategy are games,  other types of apps are beginning to use it, because it’s an opt-in strategy in which the user maintains control of her time and attention yet the advertiser gets a measurable view.

When game publishers advertised their games on someone else’s similar gaming app, the purpose was to incentivize a download. That’s performance marketing, and that’s how rewards-based advertising began: “you can advance to Level 3 of Game A without paying for it if you watch an ad for Game B.”

However, things have gotten more sophisticated, and the interactions can now be more subtle.  At ZINC, we have come up with a format called “Watch and Engage” in which the user is encouraged to recall the name of a brand after watching and interacting with its ad. The user is then “rewarded” with the ability to progress to the next level of the game. No downloading required; just remember the name of the brand.

We think this format has broad applications outside the realm of gaming.  Users could be rewarded with coupons, discounts, or even stickers. Anything imaginative that the user desires is fair. And for brands, there is that coveted “top of mind” awareness.

To see a demo, contact adsales@zincx.com

 

The Programmatic Baby Must Survive the Emptying of the Bathwater

We have been following all the news about fake news, Facebook, Google, Twitter, and the elections. It has produced a major backlash against media technology.  But part of the problem is not attributable to advertising at all, because it has to do with media illiteracy on the part of the consumer.  If consumers are loath to examine the provenance of what they’re seeing and reading, it’s probably not digital media’s fault. But there is still a large piece of this problem that’s directly attributable to programmatic advertising.

Yes, we know we have our origins in ad tech, but we long ago realized we have to do more than be an intermediary that takes a piece of a transaction. We had to bring some actual value to the table, and after flirting with viewability as our unique selling proposition, we decided  to take it a step further and attack the problem of ad fraud from all sides. This was after about four years of membership and engagement in the Online Trust Association, which is now part of the Internet Society. A moment of gratitude for the tutelage of Craig Spiezle.

We had shifted well before the election, and decided we would sell security.. We became a niche player in the world of private platforms, where we could control both ends of the ecosystem, and not have to risk accusations of serving malware, stacking up ads that weren’t viewable, and allowing phishing domains.

So now, as Facebook and Google and Twitter testify before Congress about how they could have sold ads to Russian operatives whose objectives were to destabilize Western democracy, we do not have to be concerned that we’ll end up in the middle of this discussion because an ad we served from a third party exchange came from a troll farm.

We’re hoping that all this controversy doesn’t force the industry to move away from programmatic, which has become a huge workflow enabler. much of the data was seek cannot be arrived at through the old methods, because humans don’t scale the way computers do. Nevertheless, here is somethings  think about: In the TV industry, there’s a function at every station called “Standards and Practices,” where ads have to pass through to see if they conform to the stations standards. Because of this department at CNN, a Trump ad about fake news featuring CNN’s own anchors was returned to its creators with the stipulation that CNN would not run the ad unless those anchors were taken out of the ad.

But TV is moving toward programmatic buying and selling. If that happens, what will happen to the Standards and Practices step in the process of airing an ad? Unless we can figure out how to write algorithms that understand ethics, we will lose this important component of the ad buying process and television ads will begin to look like online ads.

Which is only to say that online ads should probably admit some human intervention during the media buying process, if only during the political season.

Brand Advertising That Leads to Conversions

If you are wondering why Facebook is grabbing so much of the online ad spend, it’s because the company does more research into what makes ads work than most brands do, and it makes its research available to brands. But what makes a digital ad work isn’t just buying into Facebook’s targeting mechanism, which is getting the company in trouble right now and may ultimately lead to new federal regulations. It’s what we’ve always said it is: good creative.

According to the most recent research,  there are 7 elements of a good ad:

  • Focal point : The image has one obvious focal point
  • Brand link : How easy is it to identify the advertiser?
  • Brand personality : How well does the ad fit with what you know about the brand?
  • Informational reward : Does the ad have interesting information?
  • Emotional reward : The ad appeals to you emotionally
  • Noticeability : While browsing online, this image would grab your attention
  • Call to action : This ad urges you to take a clear action

These seven elements were used to rate over 1500 ads that ran on Facebook. Some of the elements were more useful to direct response advertisers, but for brand marketers the ads that scored highest were the ones that appealed to the audience emotionally, and had a clear link back to the brand. They also had to grab attention, which is not the same as being viewable.

Based on this research, conveying a clear brand story is really important, so a clear “brand link” is key. A brand logo, or in Bud Light’s case, iconic packaging, works well here. When developing online creative, a brand should know what it represents and know to leverage existing brand awareness. When it comes to “brand personality,” it’s really important that a brand understands who its consumers are and communicates with them consistently through their creative.
One consumer packaged good ad that we rated for this research lacked this brand connection, and the results suffered. The ad featured an engaging, people-focused image, but the ad copy and the image weren’t clearly related to the brand. If you saw the image from the ad, you’d have no clear idea of what brand or industry the ad came from. The creative ended up scoring 30% less than average in both “brand link” and “brand personality.” The sole element for which the creative scored higher than average was emotional reward. But that’s probably because of the excited expressions of the people in the image.
Bottom line: it doesn’t matter how precise your targeting is if you do not have a compelling brand story and content that “grabs” the attention of a scrolling reader. Yet the ad must grab attention in a positive way, not the way too many of us have been grabbing it — by forcing the viewer to watch the ad without any emotional reward.
We in the industry still have much to learn about digital advertising’s effectiveness, especially about digital video, since it’s so new. Let us show you some of our innovative brand formats.

 

 

To Avoid Fines, Buy Carefully

We recently had breakfast with the head of a regional advertising agency in the Southwest. After he finished telling us about how much native advertising and influencer marketing he was doing, he told us about how he also buys advertising beyond the social platforms to reach specific niches. Of course he does that programmatically.  These are the sort of cross-channel campaigns we read about in marketing blogs.

And yet he had never heard of the European law taking effect about 8 months from now, the General Data Protection Regulation (GDPR), that will probably change the advertising business globally. “As of next May, if advertisers have not obtained specific consent from individuals, they cannot market to them in any shape or form,” writes Ad Exchanger, one expert source on programmatic advertising. Ad exchanges, its core constituency, stand to lose most when these regulations take effect.

Although the world sometimes seems pretty small, especially to mobile Millennials, most day-to-day American advertising decisions are not made with European consumer data in mind, even though many marketers do have customer data on European citizens who have bought their products.

The EU’s new privacy rules are likely to disrupt the global digital marketing scene by preventing companies from using an EU citizen’s data unless they have obtained their direct consent. This will apply to the data of every EU citizen, regardless of where in the world their data is being used or stored. This means that US companies, such as Facebook and Google, which no doubt possess a large amount of EU citizen data, will have to pay attention to the regulation across the pond and take the same steps as everyone else to become compliant.

Come next May, if these companies have not obtained specific permission to market to individual Europeans, they will be fined heavily. The precursor to this was the $4 billion fine just levied against Google. The European Commission is not fooling around.

The easiest way to become compliant is to offer some kind of bonus to consumers who give their data willingly, and many marketers are already doing that. Business to business marketing has done it for years: “give us your email address to download this free white paper on privacy.”  But consumer brands have simply adopted automated relationship building, buying for reach across dozens of exchanges, and marketing to people they only know because the media buyer has targeted a specific demographic and the algorithm claims to deliver it.

Although every advertiser and marketer who is in possession of customer data (we are not) will be affected by these regulations, they’ll fall hardest on those ad tech companies that offer data for targeting.  This may affect how programmatic advertising is used in the future. At the very least, it will be used more carefully in specific situations, mostly as a workflow improvement  rather than as a way to guarantee reach.

The emphasis on reach, in our opinion, has nearly destroyed the advertising industry, and we can’t wait for niche advertising, based on real customer relationships and customer choice, to return.

 

Geo-Location Doesn’t Guarantee Anything

An  experiment that took place during Hurricane Harvey has given us some worthwhile data on the status of programmatic advertising on mobile.

We tend to forget that programmatic tools are still in their relative infancy, and that there’s more to advertising than simply data. But Augustine Fou’s Houston v. Bozeman test should bring us back to how much we still have to learn.

On Monday morning [August31], the torrential rains and flooding caused by tropical storm Harvey gave Houston residents plenty to worry about. Yet that didn’t seem to keep them from using photo-filtering and music-discovery apps between 4 a.m. to 5 a.m. local time—largely the same rate as did people who were out of harm’s way some 1,500 miles northwest in Bozeman, Mont.

At least that’s what it looked like when programmatic digital buys were placed across 18 exchanges early Monday in a test conductged by cybersecurity researcher Augustine Fou of Marketing Science Consulting Group. Buys in the two cities went to the exact same group of 15 apps, despite the very different circumstances.

Fou’s experiment showed that fraudulent traffic came in equal numbers to a forest fire public service  announcement from both cities, despite both time and weather differences. The ad ran on 18 exchanges, and the traffic came from  fake devices through data centers such as Amazon Web Services and Microsoft Azure, using proxies indicating it had come from various residential IP addresses.

the test showed all the geo-located traffic he bought … was fraudulent. Even though [Fou] didn’t specify by type of device, 100% of the buys came from Android mobile apps. The traffic was proportional to the relative populations of Bozeman and Houston despite all the power, cellular service and evacuation issues in the latter. And none of the ads generated a single click, despite the fact that accidental “fat thumb” clicks always occur when human traffic is involved, Fou says. “Common sense,” he adds, “says this cannot be real.”

All the fake data came, however, from Android mobile apps, and none from iPhone. There’s plenty of awareness about the security leaks in the Android system, but the numbers are so large that the ad buys are attractive for brands that need scale. The lesson here is that there’s a big difference between “scale” and “real,” even with ge-fencing.

It’s not that geo-fencing never works. It’s just that we’re not at a stage yet where fraud detection has much visibility on mobile apps,and geo-fencing isn’t a guarantee. Advertisers may pay higher CPMs for geo-targeted data, but they still have no guarantee that they will get good data.

Most fraud detection systems were designed to work on desktops, and despite the fact that most advertising dollars have now shifted to mobile, fraud detection hasn’t yet caught up. It will. It must.

The good news is that the major apps, like Google Maps, Facebook, and Foursquare are not among those sending the fraudulent data.

 

The Advertising Agency Business Must Change

The advertising business as we know it is outmoded for the world we live in today. Think about it: it was founded to get messages to consumers who were scattered over many different forms of media: print, TV, radio, billboards. We did not have a very good idea of where those consumers spent their time, so companies like Procter and Gamble and Ford outsourced the reaching of customers to advertising agencies. Advertising agencies developed relationships with many different media outlets to get the best “deal” for their clients on a media buy. It wasn’t a core competency of a CPG company to spend its time buying media, so that became the agency function.

Simultaneous with the buying of media came the growth of the “creative” function, or the design of messaging appropriate to each different media outlet. As companies grew bigger, their agencies had to become bigger as well, and when they went global, their agencies went with them. Brand building on a global scale was a difficult job, aggregating many different media outlets, messaging changes, and even language problems. Most of you aren’t old enough to remember the big mistake Chevy made when it tried to introduce its Nova vehicle in Latin America: it was ignorant for the fact that “Nova” meant “No go” in Spanish.

But then came the internet, and for the past two decades the internet has been aggregating consumers in the same way ad agencies used to do. The aggregation was speeded up substantially by the growth of Google as a universal search engine, and then by Facebook with its two billion users.

So much of the advertising dollar is already spent with Google and Facebook that ad agencies are going to have to redefine their purpose. It is no longer to aggregate consumers through widespread media buys: advertisers who are looking for reach can now go directly to Facebook and Google.  And those who are trying to build brands can take their creative function in house.

That’s why WPP reported such mediocre results on its latest earnings call, and also why it recently made an investment in Gimlet Media, a podcast publisher.

Another problem for traditional ad agencies is that their largest clients have always been consumer products (CPG) and retail, and both of those industries are changing. As they move to digital, brand building will become the most important aspect of advertising, and agencies will have to re-ignite their creative capabilities and try to find a way to make money from them, rather than from media buys.

Agencies that began as digital pure plays, and don’t have the legacy infrastructure that goes along with print and TV, will have less of an adjustment. But if you think about it, what’s going to happen in advertising is what already happened on the publisher, or content side: many agencies that are top heavy and can’t restructure fast enough will go away. WPP’s entire business model was built for a pre-internet world. The big behemoths won’t go away for a while, but their revenues will come mostly from their digital side, and they will have to learn to build digital brands.

Who has built a digital brand so far? Facebook. Google. Amazon. Digital companies. The rest will have to struggle to catch up.