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.

 

Did We Learn Anything at Advertising Week?

Now that New York Advertising Week is over, we can go back to dismissing many of the predictions made there. (Just kidding). Some of these predictions will come true, of course, but not very quickly. Others are upon us already.

Vertical video, for instance, is already accepted by users, who grew up on Periscope and Vine. It’s not a big stretch to think that advertising will use it more fruitfully in the near future and should have been doing so already. Ogilvy is experimenting with it now. Its creative director, Tham Khai Meng, believes that constraints force agencies to take creative leaps and do great work.    He spoke on a panel about storytelling last week.

We can grab the highlights about everything else that’s barreling toward us from a report by PSFK called, no less, “The Future of Advertising,” in which the agency reminds us that consumers are no longer content to be spoken to by brands, and want to have a value-based relationship with any brand asking for their attention. (This has been said since “The Cluetrain Manifesto”). PSFK reminds us that the human attention span is moving steadily downward, from 12 seconds in 2000 to 8 seconds in 2014, and that ad blocking went mainstream in 2015, with 121 million people downloading ad blockers. Millennials spend more time in messaging apps than on social networks now, so targeting must also change.

And perhaps worst, 59% of online traffic stems not from humans, but from query-focused bots.

Sounds terrible, doesn’t it?  But the news is not all bad. Although the industry is changing, 50% of brands think advertising is more important than ever, even if 56% of those brands think agencies are less so, and 44% agree that media outlets are fading in importance. 80% of media outlets think the agency is less important than before. In this survey of 150 professionals across 14 countries from brands, agencies, and media outlets, the most obvious conclusion is that the agencies are in more trouble than anyone else in the business.

At the end of the day, PSFK’s report says what we all know: consumers are motivated by reward, utility, loyalty, entertainment, status, novelty, or convenience. What’s amazing is how often we forget to trigger those motivators in advertising.

While we all need to concern ourselves with the typical digital media issues in the near term — fraud, lack of viewability, and the use of artificial intelligence against us by bots — some of the farther out predictions are exciting.

For example, Virtual Reality. Although Apple didn’t give us the big VR/AR announcement we expected when they launched the new iPhones, the company did introduce its developer platform, ARkit, which forced Google to launch one as well. And in the industry, experiments are already under say to use VR as an advertising tool. Mark Lore, CEO of e-Commerce for WalMart in the US said that in WalMart’s tech lab store number 8 they are already testing virtual reality that takes you to a virtual lake to test out fishing gear.

We predict that virtual reality isn’t something that will overtake the industry next year, but will eventually compromise a large part of advertising’s creative as better glasses and better applications are released. In the meantime, augmented reality will be the most useful tool.

 

 

 

 

 

 

 

Advertising Week 2017 First Thoughts

This is New York Advertising Week, and it’s time for advertisers to begin thinking about their brands again. As Digiday points out,

Railing against how much of digital advertising is in a black box is in fashion, and it should be the big issue at Advertising Week this week as many major marketers gather in one place.

We’ve already heard major CMOs like Mark Pritchard (P&G) and Gary Friedman (Restoration Hardware) talk about how much of their advertising spend is misplaced, and how they have, or are going to, cut back.

And we agree that perhaps they should. Consumers are not turned on by ads that are based on data alone. Most of purchasing decisions are made on the basis of emotion, and for a brand to be both top of mind and beloved, it has to go back to the basics of brand strategy.

After all, what is a brand? Fundamentally, a brand is a promise a company makes to its customers about its product or service. A good clear brand will answer some questions in the customers’ minds that they may not even know they have.  They’d like to know why you went into business in the first place (your corporate story). More important, they want to know the benefits they can expect from interacting with your brand — what’s in it for them? Increasingly, customers also want to know your corporate values, because more and more shoppers are seeking to align with brands whose values they share or respect.

Most important, what’s their net positive value from interacting with your brand?

Every consumer, either consciously or subconsciously, performs an equation when they consider making a purchase or getting otherwise involved with a brand. They subtract what they expect to spend (in time, money and energy) from what they expect to receive (in benefits). If they end up with a net positive result, they will consider making the purchase. Save them time and possible miscalculation by highlighting, in simple terms, how their purchase investment will be a lucrative one.

If you really stop and think about these core tenets of building a brand, you’ll understand why the programmatic approach of buying broadly and blanketing people with ads they don’t want, and then re-targeting them endlessly after the most basic of interactions, such as a Google search, do not work. You can’t win people over simply by tracking them and annoying them.

Yes, it has taken us two decades to get over our fascination with data, because it was such a novelty to have data at all. But this Advertising Week, we know there will be many discussions about trust. There’s no such thing as a successful ad campaign for a brand you can’t trust. And trust either comes from every single interaction you have with another human being, or is destroyed by those same interactions.

We’ve been moving in the direction of brand advertising support for a while now. We feel that’s the side of the customer, and we want to be positioned solidly on that side for the perpetuation of our own brand. In other words, you can trust us to offer you brand ad formats that work, and to be transparent about how we sell them.

In-App Video Replacing TV

The Q2 eMarketer survey tells us that

US digital video ad spending is on a faster growth track than previously estimated. It will grow at annual double-digit rates into the next decade, reaching $22.18 billion in 2021. At the same time, subscription-based services are proliferating, indicating that both pillars of digital video monetization—advertising and consumer spending—are healthy.

The younger the viewer, the more likely he or she is to favor digital video over TV. In fact, generation Z, now entering college, is predicted never to sign up for cable TV at all, which has led companies like At&T to offer a new over-the-top streaming service called DirectTVNow, which offers most of the common and premium channels for a flat fee of $50 per month. Unless you are a sports junkie, that’s good enough, and for sports or film junkies you can subscribe to HBO and ESPN for $5 each.

This will change the kind of ad formats advertisers can and should use.  Through DirectTVNow, advertisers will be able to

dynamically insert ads into live programming. But this too will vary network by network and be limited to the two minutes of commercial time per hour that AT&T can sell. The commercials that networks sell nationally will mostly remain the same.

There’s no denying the potential for TV services delivered to individual internet addresses to drastically alter the TV ad model. More data and the technology to serve ads to specific households or signed-in individuals makes TV delivered over the web an attractive opportunity for advertisers.

As of now, most of viewer’s online video is still spent on TV: 4 hours of TV compared to 1:12 on video. But by next year, TV viewing will fall to 3:57 to 1:15. Notice that the time people spend viewing video stays steady; we only have so much time after work, sleep and family, but the way video is viewed is changing. It took TV viewing a while to declines, but it did.

DirectTVNow just debuted six months ago, and will take time to catch on. But it shows where the industry is going, and if I were an advertiser, agency, or brand, I’d be looking to develop an expertise in in-app advertising targeted to specific affinity groups, such as the ones that favorite the CW network, or the ones that favorite MSNBC. These ads should be for branding, and they should engage the specific consumer.

We just happen to have one of those in our repertoire. It’s called “Watch and Engage,” and it is beginning to be adopted by the early adopter brands who understand that the future of brand advertising is not in TV, but in streaming media services.

GDPR Will Bring Fundamentally Better Advertising

If you live in Europe, you already know about the General Data Protection Regulation (GDPR), a new regulation of consumer data that takes effect in May 2018. Its objective is to return control of data to the individual consumer, and it strikes fear into the hearts of businesses, especially marketers. Even if you are not in the EU, you are likely to be affected, as you cannot always tell when you are targeting a European consumer in a programmatic buy. From Wikipedia:

The implementation of the EU GDPR will require comprehensive changes to business practices for companies that had not implemented a comparable level of privacy before the regulation entered into force (especially non-European companies handling EU personal data).

There is already a lack of privacy experts and knowledge as of today and new requirements might worsen the situation. Therefore education in data protection and privacy will be a critical factor for the success of the GDPR.

The European Commission and DPAs have to provide sufficient resources and power to enforce the implementation and a unique level of data protection has to be agreed upon by all European DPAs since a different interpretation of the regulation might still lead to different levels of privacy.

We’ve written about this before, but now we have a more optimistic take on it for marketers. We think that its implementation, once the kinks are ironed out, will allow not only for greater consumer privacy, but for more effective ad spend. Several companies are already trying to bridge the gap between consumers and advertisers with personal data solutions. In these solutions, the data stays with the consumer, who can then decide to share it with marketers who are relevant to her needs. It will truly lead to what Seth Godin called “permission-based marketing” a decade ago:  

Permission marketing is the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them.

It recognizes the new power of the best consumers to ignore marketing. It realizes that treating people with respect is the best way to earn their attention.

Pay attention is a key phrase here, because permission marketers understand that when someone chooses to pay attention they are actually paying you with something precious. And there’s no way they can get their attention back if they change their mind. Attention becomes an important asset, something to be valued, not wasted.

Real permission is different from presumed or legalistic permission. Just because you somehow get my email address doesn’t mean you have permission. Just because I don’t complain doesn’t mean you have permission. Just because it’s in the fine print of your privacy policy doesn’t mean it’s permission either.

Real permission works like this: if you stop showing up, people complain, they ask where you went.

Our company tagline is “fundamentally better advertising.” We try for this in every product we develop.

We’ll be writing more about personal data control solutions and brand advertising in the coming weeks. This is the most important thing to happen to advertising since the internet.

Trends in Advertising for 2017

We’re into Q3 of 2017, and the challenges of the year have asserted themselves with a vengeance. Once again, digital media proves a difficult industry in which to make money for publishers, although ad spend is increasingly going digital. As we’re all well aware most (99%) of the growth in spend went to Facebook and Google.

Even venerable media properties like the New York Times, which now counts 2 million digital subscribers, do not think of themselves as safe from the vicissitudes of the industry.The Times has given buyouts to many of its newsroom and editing veterans. Relative newcomers like The Verge and Vice are still struggling with monetization models, even as they burn through venture capital.

In addition, publishers and advertisers now have to contend in earnest with Europe’s General Data Protection Regulations (GDPR), which will take effect next year.

Despite all its shortcomings, so far nothing else has emerged to rival advertising as a way to support free digital content. In response to consumer dissatisfaction, however, advertising has had to make several changes. The savvy brands already know about these, but some less innovative companies are still demanding intrusive formats and programmatic buys aimed at quantity rather than quality.

For the innovators, the banner display ad is all but dead. Instead, we have moved to video, especially on mobile. And video can be pre-roll, mid-roll, or out stream. Video ads are better tolerated on mobile than display ads, and are typically more visible.

Going Native Advertising now wants to look more like content. Almost all advertisers have embraced the concept of native ads, although there are differences of opinion as to what constitutes native. Is it a video ad that is relevant to the surrounding content, such as a video ad for camping equipment in an article about our national parks, or is it a format that fits into the mobile feed of the site.

Sponsored Content Sponsored content is often confused with native advertising. When Digiday prints articles bylined by company CEOs in our industry, we don’t look at those as industry reporting, but as content that favors the point of view of the company who paid for it. Sponsoring an article can be a very good way to position a company as a thought leader.

More Personalized Buys. Programmatic advertising introduced a new middle man, ad tech, into the relationship between buy and sell-side. The goal of programmatic was reaching audiences at scale for low dollars, and targeting the right audience with the right ad at the right time.

Move from Scale to Engagement. This last trend is the one we find most promising. For years, digital advertising has been a numbers game. It’s been difficult to convince brands that numbers didn’t translate to sales. Consumers finally had to deliver the message: “we don’t want to see your irrelevant ads. Show us something we want.”

Measuring the Right Things. 2017 was the year that the consumers’ message got through loud and clear. As a result, metrics are changing, although the changes haven’t yet settled out.

 

How Advertising Will Survive

We’ve been writing a bit about the future of advertising lately, because it is changing very fast.  It is not, however going away. It tracks as a percentage of GDP just like it always has. However, that doesn’t mean we can sit back and pretend  things will always be the same. Indeed, they can’t be, because the canvas is being removed from ad creatives in many ways.

We already know that print is gone. We don’t mean the same things by “newspaper” that we used to mean. Our guess is that newspapers, who were our original publisher partners, will fall into disuse as a vocabulary word in the next generation. Young people born today may never read a newspaper. Which does not mean they won’t still consume news. It may, however, have a different business model.

The same thing is happening to television this year. Time spent watching both network and cable TV is falling dramatically. However, video content is still being consumed — only it is being consumed on Netflix, without ads.

And then there are the ad blockers being downloaded by people who do watch ad-supported content, but refuse to look at the ads.

So here’s what advertising has to do: it has to get better. If we’ve said this once, we’ve said it a hundred times since this blog started in 2011: advertisers have to bring more and better creative to digital advertising.  As the founder of ZEDO, I’ve been all over the world giving talks on how  there is no reason digital advertising can’t be as good as TV advertising was at its best.

The only reason we’re in this mess today is that we took the wrong fork in the road: the fork toward direct response and direct marketing instead of taking the one that led us to branding. That led us down the track to emphasizing data and metrics at the expense of the consumer. That is why digital advertising has such a poor reputation: none of it is designed to delight or even educate. It’s designed to hew to some metric that may not even be the right one for the brand.

All that should stop right now, before we do ourselves and free ad-supported content any further damage. If we recognize that brands want top-of-mind awareness is an increasingly noisy world, and if we leave the direct marketing to the Amazons of the world, we can transform our industry yet again and keep that $600 billion in spend as part of the GDP in the US.

And will that work in other countries? It will work even better. It will automatically comply with the GDPR, and when the rest of the world comes on to the internet, it will not have to endure the bad ads and retargeting that we’ve faced for the past twenty years.

I am indebted to Andrew Essex, author of “The End of Advertising: Why it Had to Die and the Creative Resurrection to Come” for some of the ideas in this book. And by the way, he admits that’s a clickbait title and what’s really dying is BAD advertising:-)

 

MRAID 3.0 Promotes User Control of Ads

One of the biggest problems accompanying the shift to mobile computing, specifically to phones, was the sheer number of different handsets, each with its own special quirks. This required marketers to product new creative for each system. To fix this issue, the MRAID (Mobile Rich Media Ad Interface Definitions) specification was developed in 2011.

According to IAB, “This specification has provided in-app advertising the means to create compelling rich media ad experiences at scale. The promise of MRAID allowed ad designers to write a creative once, and have it run in any application on any platform that was MRAID capable.”

We are now at MRAID 3.0, which aims to improve the user experience for consumers as well as for ad designers.

Some of its important features include:

  • Viewability support that now allows the creative to measure viewability as per industry standards and tailor its display for the best user experience
  • Audibility measurement that allows the creative to understand the user’s context and use audio in ads in a non-disruptive manner
  • The standardization of the close button for expanded ads and interstitials, removes ambiguity, and ensures that the user always has the option to exit an ad
  • Ads can now inform the host ad container if they encounter an error, and initiate a graceful exit, preserving a clean user experience
  • Ads can now access basic information about the environment like SDK, IFA, COPPA etc., which enables them to prepare the creative in advance of rendering
  • Reduction in the ambiguity in implementation by providing stricter events implementation sequence to ensure the ad and the host container are in sync
  • Guidance for pre-fetched ads, which ensures that an ad is presented to a user only when it is determined that it has its assets loaded and ready to display
  • Location data, when allowed by the user and the app publisher, allows ads to seamlessly use the location data for personalization of creative messaging with MRAID version 3.0
  • Video advertising being among the fastest growing formats, select VPAID events are now fully integrated as part of MRAID 3.0 to ensure uniform reporting and measurement of video creative

View the final version of MRAID 3.0

You will recognize these definitions as largely in alignment with new theories of digital advertising that place a larger emphasis on transparency, on metrics (although they may not yet be the correct ones), and on user control of video and audio. A big issue over the last year has been the standardization of the close button, which now must be visible and unambiguously placed, so users can get accustomed to being able to close unwanted ads.

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.