Helpful Metrics Still Elude Marketers

Just ahead of last month’s IAB Annual Leadership Summit, IAB released its third quarter numbers for digital advertising.The TL;DR is that Q3 2016 marked the highest third quarter for digital advertising spending on record, and represented a 20 percent increase over the same time period in 2015. It also accounted for a 4.3 percent increase over Q2 2016. So digital advertising is still rising like a hockey stick.

But if you are a marketer about to spend some of the $17.6 billion that was spent in Q3, you would probably want some assurance that you are not wasting your money. After all, there are ad blockers, there’s ad fraud, there’s fake news, and there are all manner of other distractions that might prevent you from getting ROI. And at least on TV you knew where your dollars were going. Nielsen could always tell you, right?

Now it seems as if Nielsen, too, is having trouble figuring out how to tell marketers to spend their money. A new syndicated product from Nielsen, Total Content Ratings, was expected out on March 1, in time for the upfronts and the newfronts. According to Ad Age, that release date was scrapped by the parties to the data. “The syndicated product, which would show the public the results of cross-platform measurement for every network that implemented the technology, will have to wait. No new target date to syndicate the data was established.”

In other words, cross platform measurement isn’t ready for prime time, according to the people who participated in its development. We translate that as some networks not being as happy with their results as others.  Those that aren’t happy are telling Nielsen they’re not happy with the Total Content Ratings methodology or the amount of labor it takes to deploy it. However, some networks actually are happy, so Nielsen is saving face by allowing those networks to share data.

So Nielsen is letting each network choose the numbers it wants from the data, and marketers won’t be able to compare one network to another.

 

All sides of the TV industry are closely watching Nielsen’s effort to deliver a new ratings system that counts all viewing no matter where it takes place, including streaming platforms and mobile devices, in the hopes that they will rediscover some of the consumers that have disappeared each year from traditional TV audiences. But that goal continues to elude them.

The bottom line is that this data will not help marketers make good decisions during the upfronts season. We may talk a lot about the goodness of big data, but that’s only until we really try to use it.

Has Targeting Ruined Advertising?

As we draw closer to the day of the Super Bowl in the United States, old advertising hands can’t help but remember the glory days when Super Bowl ads went viral and memorable creative was the norm. Those were the days when people didn’t hate advertising.

Why didn’t they? Because TV ads were bought to reach a huge audience, and they were only roughly targeted. Oh sure, in the early days the brands that bought ads tended to appeal to males, but even that went away as marketers realized most Super Bowl parties were coed.  What’s more, most of the ads did not expect you to act on them during the game; no one could imagine a consumer leaving the game to go to the store, much less change her insurance.

They were brand ads, and expected only that you would think favorably of a brand the next time you went into the store.

Digital advertising changed all that, because advertisers could pay only for clicks, or nowadays on CPMs.But if a customer doesn’t click on an ad, does that mean the ad was useless? Intuitively, we know that is wrong, because we remember about brand advertising. And if as an advertiser you pay the lowest CPM, are you doing your brand any good?

The traditional metrics of CTR and CPM are increasingly meaningless as mobile customers block ads and stop clicking because they are tired of being data points, targeted and retargeted when it might be as inconvenient to interrupt their activity as it is during the Super Bowl. What has happened to marketers, they ask, when all they’re concerned about is stalking me to make me buy?

Data has removed the nuances of marketing, favoring only the numbers. This has totally changed for the worse the way consumers think about brands. Almost all brands are now thought of as potentially interruptive and dedicated to gathering and using consumer information for nefarious purposes.

It’s sad, because brands have always used consumer information to influence purchase decisions, but the consumer perceptions have changed and things have backfired.

We have a suggestion; why not try a philosophy of ‘less is more” as your mobile strategy. Use banner ads that don’t slow pages down or auto-play audio, and get  yourself some kickass creative. Buy only premium sites, and measure by attention or engagement, not by sheer reach or micro targeting.

This is the year to stop the mad stampede of consumers away from digital advertising. We need to win back trust.

The Outline: What Exactly Are Better Ads?

The Outline, Joshua Topolsky’s newest venture, wants to run unusual long-form content. For example, a recent article that drew raves even from KellyAnne Conway, was titled “Diet Coke Is Not Killing  You,” and another was called “Why Do We All Have Balls on Our Hats.” Today, you can read the explainer “What is Hygge.” You get the idea.

Topolsky is a well-respected tech editor, having first been editor-in-chief of Engadget, and after that a co-founder of The Verge. He left there for a stint at Bloomberg, from which he was unceremoniously fired by Michael Bloomberg himself. After a while, he was able to raise $5 million to launch The Outline. It wasn’t easy, as we in the industry know about the business model problems for digital publishers.

Topolsky proposes to fund The Outline through advertising, but a better form of advertising. He’s been quoted as saying he plans to run “better ads.” In the issues I’ve read so far, the major advertiser, who really is more of a sponsor, has been Cadillac.   Cadillac ads appear in two formats: as snippets of Cadillac-related history and statistics between stories, and mi-story as a trilogy of cards that draw attention by moving from askew to in a row. The cards are odd, but you do see them, and at least one other earlyadvertiser, Method, is trying them. As for the Cadillac-related “branded content,” or “native advertising,” or whatever you’d like to call it, that occurs between stories in a large block, easy to mistake for another story.

There is no question these ads are visible. And I suspect there’s no question consumers recognize — at least after a while — that they’re advertising. But in the industry, there’s quite an uproar about how openly branded content is labeled, and although the mid-story ads are labeled “advertisement,” that label is in very small type and in light gray. Easy to miss. Not only that, but there’s no way to close out a piece of native advertising; you just have to scroll past it.

From the advertiser’s perspective, it’s perhaps more troubling that the landing page has no ads at all, and ads only appear when you click on the Read More. The site is very design heavy, and the stories are presented in an infinite scroll. Cadillac has clearly paid the most for its sponsorship, because it’s content is baked into the design of the site.

Obviously the jury’s out on whether this will work. On a recent Recode Media podcast, Jessica Lessin said it’s pretty easy to get the initial four advertisers to commit to trying a new digital media site. The trick is whether any publisher, including Topolsky, can get them to come back repeatedly. If Cadillac were to continually commit, and the traffic grows on the site beyond the initial readers curious about what Topolsky is doing next, perhaps they and he can build an effective brand partnership.

That, however, would depend on how much Cadillac knows about its customers and Topolsky knows about his traffic.

 

Verizon and AOL Shift Strategy

It looks as if  the phone company formerly known as Verizon is taking some steps to bring itself into the digital world in more than name only.

Verizon is the fifth largest ad spender in the US, and controls about a quarter of the wireless industry’s total spend. Most of its spending is on traditional TV,  however,  over on the ZEDO blog we discussed its use of augmented reality in ads for its phone service. The carrier commissioned the building of a cellular network within the game of Minecraft, which allowed players to make phone calls from within the game. And now Verizon’s AOL media platform is experimenting with new video ad formats for 2017.

On Thursday at CES AOL rolled out several non-intrusive formats in line with the IAB’s L.E.A.N. standards for combatting the rash of ad blocker downloads that have characterized the past few years.  One of them is an alternative to pre-roll, which  is simultaneously one of the most coveted ad buys in digital video, and one of the most hated formats by consumers. Traditional pre-roll holds the viewer back from the video for 15, 30, or 60 seconds and measures in terms of completions. But AOL’s new PlayerUp 

is a suite of consumer friendly ad experiences that provide an alternative to preroll and consists of 3 primary ad experiences: 1. Bumper – Short 3-7 second, non-disruptive preroll video that sets the stage before quickly transitioning to the publisher video content 2. Watermark – Consumer-friendly experience offering advertisers the opportunity to extend their brand’s exposure beyond preroll by displaying an interactive overlay during playback of publisher video content. The Watermark unit can also be interactive and may expand upon click/tap to reveal a suite of interactive content while pausing the underlying publisher content. Upon closing the expanded Watermark, publisher content resumes playback 3. Pause – Advertisers have the option to incorporate subtle brand messaging each time the publisher video content is paused by the consumer.

In addition, Verizon has not said it will withdraw from its deal to buy Yahoo, although it has commented that it will try to get a better price on the deal. Yahoo still has a billion monthly users, and in is effort to become a digital media player, both Yahoo’s technology and Yahoo’s customers could be instrumental. And last summer, Verizon bought Complex Media in partnership with Hearst. Complex Media owns properties that can deliver millennial men to Verizon’s other businesses.

So Verizon is positioning itself for the shift to digital advertising, the commoditization of data pipes, and the slowing growth in cell phones by becoming a platform that can produce a large audience and some interesting ad formats to serve that audience.

 

 

 

Fake News is Only Part of the Problem

The bigger problem is brand safety in general. Several years ago, we partnered with a company whose major selling proposition was the ability to determine whether a potential site was brand-safe by machine reading its content — in 60 languages. That company could not find enough advertisers who were willing to pay to have that determination made, and it was sold to a larger company and probably shut down. Years later, the problem of brand safety not only still exists, but got exponentially bigger last fall with the emergence of a new category of publishers: fake news.

Advertisers should have learned by now, but they haven’t. Many media buyers are still buying audience, that is, numbers, rather than content. The grossest evidence for this is how large a percentage Facebook and Google control of the ad spend. Buyers would rather put their faith in the targeting of Facebook and Google to get big numbers than buy against the right content for their targeted consumers.

On the face of it, this seems ridiculous. Why wouldn’t a buyer want to buy “deep” — on a niche site data has already told you is a site your customers visit –rather than buy “wide” on a bigger array of sites in the hope you will catch her on one of them.

Why? Because buying deep requires more work. It requires making a white list and enforcing it, or choosing a vendor who has already cleaned its network of fraudulent sites. It requires knowing what you are buying, and from whom. And it also includes buying and enforcing frequency caps.

A recent article in AdExchanger described the problem for media buyers;

The second change we must make is that brands must remember that there is a finite number of people on Earth. Media buyers would much rather get high volume at low prices than limit their media buy to an accurate number of real people at higher CPM. Rather than accept the normal rules of an economy with scarcity, media buyers have fooled themselves into buying audiences at high frequencies on low-quality media. Context and frequency caps go out the window as soon as a media buyer sees that a campaign might not deliver in time. This encourages media spending on click-bait content that is forwarded and viewed at high volume, but of very low value. If brands were to stick to frequency caps with their advertising, they would be less likely to fund low-quality content that simply exists to game the system.

There are many industry initiatives under way to make this possible, including the certification systems of the Trustworthy Accountability Group, and the code of conduct just released by the German industry group BVDW for people who buy and sell programmatically. Central to all of them is knowing who your vendors are and knowing what you are buying.

We spent the past year cleaning our private platform of publishers who were not premium and delivered us useless or fraudulent traffic. At least there’s ONE place we know you can buy safely for your brand.

Programmatic Direct Catches On

It’s been a pleasure for us finally to see the rise of programmatic direct in 2016. It means media planners are more certain of what they want to buy and they want to be sure they’re able to buy it at the right price and the right time.  They’re not leaving as much to chance (or rather automation) as they did when they were first buying programmatically. We think programmatic direct will be the future of video ad buys.

Why? Because this form of buying takes advantage of automated work flow, but allows the targeting of specific premium audiences — for example, New York Times readers, or Car and Driver visitors.

Historically (and it’s difficult to believe this has already become part of history) if you bought programmatically, it was from an open exchange, and it was done through RTB (real time bidding), an auction system that drove digital ad prices through the floor and convinced many premium publishers not to participate, except with their remnant inventory. In addition, RTB meant that buyers didn’t really know what they were buying, and were often victims of fraudsters.

Now we’re trying to take the best of the programmatic environment — its ability to target carefully, to scale, and to digitize media buying work flow — and extend it to more careful buying. In the past, we were more of an open exchange, while now we’re more into header bidding, Deal ID, and programmatic direct.

You will want to buy programmatic direct when:

1)you want to eliminate the possibility of fraud and malware

2)You want to guarantee the inventory you receive

3)you want to ensure brand safety

4)you still want the efficiencies of buying through an exchange.

Michael Kuntz, Senior VP of Digital Revenue at USA Today captures this change:

I think lots of clients have woken up and they’re saying, ‘We understand there are efficiencies in buying through an open exchange, but I’m not so confident my ads are showing up in the right environment,” Mr. Kuntz said. “I think the pendulum is starting to move away from just buying the right eyeballs in real time to, ‘Yeah, we want to do that, but we also want to make sure our ads are showing up on the right content and in an environment we’re comfortable with.'”

One of the problems slowing the acceptance of programmatic direct is uncertainty about semantics. Digital advertising is full of terms that have been invented to describe small changes in supply or demand side technologies that are supposed to make things easier for the buyer.

For example, at ZEDO we use a private platform to serve our ZINC ads. This makes it secure end-to-end, and allows us to do programmatic direct deals as well as header bidding with our premium supply.  On the publisher side, we carefully choose the publishers that are on the white lists of major brands. We may refer to our deals sometimes as programmatic direct, or we may just say we’re a secure private end-to-end platform.

At the end of the day, all the vendors who are trying to clean up the industry are going to be doing somewhat the same thing, despite the often confused nomenclature.

Changes at Group M Reflect Industry Shifts

Brian Lesser, who runs Group M in North America, is a great resource to talk about how the agency business is going to change. He arrived at Group M five years ago when it acquired his firm 24/7 Media, and then got promoted to run Xaxis, the Group M Trading Desk. After he built that to a billion dollar business, he moved on to run all of Group M, which although it has tremendous power, is only thirteen years old itself — a symbol of how quickly the ad industry has already changed with the advent of online advertising.

No wonder traditional industry executives are still pulling their hair out. You can imagine how they must feel when someone like Brian comes in and changes the game, the rules, and the compensation schemes. It’s Lesser’s view that although agencies used to gain leverage from the size of their ad spends, they now will only gain it from the quality of their customer data. That’s why GroupM is changing itself from a holding company that sits on top of a group of agencies to a platform that sits underneath all of them and provides the new infrastructure for leverage — better consumer data.

One of the reasons for this is what we’ve been talking about — the changing definitions of reach and frequency. Nielsen, which measures both digital and TV advertising has discovered that younger people will not accept the same ad load that their elders sat through. Although that’s not surprising, having the data allows both brands and networks to see the magnitude of the change. Younger people been brought up on ad skipping technologies in the TV world, and as they shift to OTT, they do not want to see many ads. Of course many would rather see no ads at all.

Nielsen is trying to develop basic metrics for the OTT industry the way it has for TV. Digital sites have been slow to come on board Nielsen’s measurement system, preferring to claim differentiation based on their internal customer data, but they’ve been forced to allow in third party measurement by advertisers and agencies.

The big question is about how sales outcomes get linked back to advertising spend: to media impressions or any other proxy. Nielsen is trying to find a way to link media buys to sales ROI. Part of that effort involves an investment in Nielsen Catalina, which provides ROI measurement against retail store purchases. An agency that doesn’t have the technology, either internal or through partnerships, to measure real ROI (sales) will quickly lose its ability to get and keep accounts that are becoming more and more sophisticated about how to measure their online advertising efforts.

–For much of the information discussed in this post we are indebted to AdExchanger’s new podcast series AdExchanger Talks, which is excellent. You should be listening to it if you aren’t already.

 

CES and the Future of Advertising

As we speak, the future of advertising is being debated in Las Vegas at the Wynn Hotel by a cast of characters including Sir Martin Sorrell, WPP Global CEO, Brian Lesser, North American CEO of Group M, and Brian Gleason, [m]PLATFORM Global CEO. In the past few years, marketers and advertisers have had an increasingly large presence at the Consumer Electronics Show, signaling the pervasiveness of technology in marketing efforts.

But perhaps CES and the agency world isn’t where the discussion needs to happen. Perhaps it needs to happen at the marketer level. After all, programmatic techniques have allowed individual marketers to exercise the same media buying power they used to have to outsource to agencies. Back in the good old days, before people hated advertising, media buyers had to use agencies because the agencies had better buying power than any individual brand, and they got the best prices.

Not so anymore. Or if they do, they don’t pass those prices back to the customer. Last year, in the face of the ANA report,  some forward-thinking companies began to build their own attribution models and take some of their buying in house. They also began advocating for transparency into their media rates.

Although the ANA report didn’t appear to make much of a dent in last year’s buying trends, it has slowly been building momentum in the minds of advertisers, because at the end of the day they pay the bills. Besides, the more they know about how their own media buying works, the more strategic their planning can become.

The report, conducted by research firm K2, disclosed:

  • Cash rebates from media companies were provided to agencies with payments based on the amount spent on media. Advertisers interviewed in the K2 Intelligence study indicated they did not receive rebates or were unaware of any rebates being returned.
  • Rebates in the form of free media inventory credits.
  • Rebates structured as “service agreements” in which media suppliers paid agencies for non-media services such as low-value research or consulting initiatives that were often tied to the volume of agency spend. Sources told K2 Intelligence that these services “were being used to obscure what was essentially a rebate.”
  • Markups on media sold through principal transactions ranged from approximately 30 percent to 90 percent, and media buyers were sometimes pressured or incentivized by their agency holding companies to direct client spend to this media, regardless of whether such purchases were in the clients’ best interests.
  • Dual rate cards in which agencies and holding companies negotiated separate rates with media suppliers when acting as principals and as agents.
  • Non-transparent business practices in the U.S. market resulting from agencies holding equity stakes in media suppliers.

So meeting at CES to discuss the future of advertising had best begin with a fundamental change in business practices between agencies and their clients. So many trends threaten the future of advertising that now’s not the time for agencies and marketers to be working at cross-purposes.

 

A Happier New Year for Advertisers

Last year the IAB Leadership Council, which holds its meeting early in the new year, was all about ad blockers. This year, the theme for that annual conference is Publishers and Platforms: What’s Next, from which we’ve gathered that people are more worried about Facebook, Google and Snapchat than about the death of the entire industry. How quickly we forget, although not much as changed.

Last month IAB released a study on ad blocking in Australia and found that, as in most other parts of the world, about 28% of Australian customers used ad blockers. Although that was a higher number than anyone had anticipated, if you read down further into the study you will find that only 6% of mobile users had installed them.

Australia is both similar to, and different from, Europe, North America, and Asia. It’s got similar numbers of ad blocking consumers, but it has one big difference: the reason why Australians install ad blockers.

Critically different and thus important, one in five people in Australia are only . blocking ads because they’re afraid of viruses and malware rather than because the ads are intrusive. The Australians seem not to mind seeing advertising messages. So it’s not surprising that when asked by a site to turn off their ad blockers 44% of consumers did so, and still more consumers whitelisted the site.

Of the 70 per cent who have been asked by a site to turn off the technology to access content, 62 per cent have either turned off or deleted their blocker, or whitelisted a site in response.

This should give advertisers and publishers a pretty happy new year, because IAB’s conclusion is that what’s needed to put the ad blocking apocalypse to rest is communication from a publisher to its visitors. In other words, teach the visitors a bit more about how the industry works, and they will make the decision to preserve free content and turn off their ad blockers.

While we are obviously happy about this news, we also think something more is needed: less intrusive advertising formats and more highly targeted messages to the right audience at the right time. We’ve been talking about the changing definition of “reach” — from reach out to everyone we can find who might be a buyer, to reach in to people whose choice of site visits has already indicated their interest in the marketer’s message. That’s on the messaging side. And on the format side, we of course recommend our “polite” outstream offering, InArticle, which consistently outperforms the competition.

Is Facebook Taking Too Much Credit for App Installs?

One of the last missing pieces in the online advertising puzzle is ROI. How can you decide whether your ad campaign was really successful? In the case of app developers, this would seem to be a simple matter, because in theory you can use Facebook’s own tools to track your app installs, and then backtrack to figure out your cost of customer acquisition and run your numbers from there.
Facebook has developed some very sophisticated methods of attribution, especially for app installs, since it is the primary advertising mechanism for app developers. For example, its App Event Optimization will let app advertisers target people by bidding on one of 14 possible actions users have taken, like added an item to a shopping cart or a wishlist, initiated a checkout, purchased something, viewed content or unlocked an achievement.
Facebook believes that because so many people engage with its ads across Facebook, Instagram and the Facebook Audience Network, it’s uniquely able to determine whether someone is likely to take action based on historical data and people with similar characteristics.
And it has also partnered with some tracking companies such as Apps Flyer and adjust,  that specialize in measurement and business intelligence.
AppsFlyer introduced a special Facebook integration last year, which it claims solves the problem of mobile Facebook ROI for app install ads:

By combining in-app activity and lifetime value data with ad cost and other campaign details from Facebook, AppsFlyer can deliver real-time ROI reports on Facebook app install campaigns.

However, there may be something still lacking in the analytics available to app developers: information on whether all ads on Facebook are viewable by all Facebook visitors. We know, for example, that some Facebook users run ad blockers, and that Facebook strictly controls the number of ads within a user’s feed.

Since Facebook counts impressions, rather than viewable impressions, it counts any app installs as driven by Facebook whether the installer has seen the ad or not. If the ad was somewhere on Facebook– even if the user never saw it–and the user later installed the app, Facebook takes the credit and charges for it.

We found it unusual and amusing that Facebook was counting actions taken by users who might not have even seen an ad and charging for them. This used to happen in the old Wild West days of online advertising, where an advertiser paid when an ad was served. Lately, on most other publisher platforms, brands can buy on guarantees of viewability.

To sort this out will take more complex analytics involving mobile ad viewability because almost everyone who installs apps is also on Facebook. In the mean time, it is wise to monitor your campaigns carefully to see if they are really working.