Happy Holidays!

As we close out this frenetic year of 2018, we can’t help noticing how the bulk of the digital ad industry is located on the east and west coasts. And yet, the bulk of consumers, especially for b2c brands, are located in what we variously refer to as the heartland or the flyover zones.

As we have learned from extensive election polling and voting trends, politicians have paid a big price for ignoring those populations. How can we make sure the advertising industry doesn’t do the same?

We don’t think it’s just a matter of targeting, of artificial intelligence, of programmatic buying, header bidding, or any other jargon word.

Rather, it’s time for the people who create and buy advertising to get to know other Americans — ones who don’t necessarily share our beliefs but also buy toothpaste and toilet paper, cars and coffee. Once we know our fellow Americans we will make fewer mistakes with our targeting, and we’ll produce better creative that respects the people it is aimed at. It’s the one way we can reach back into the past for the positive things about advertising — the way it drew Americans together and created unified experiences that have since become fragmented.

I’m not saying any amount of advertising can heal the wounds opened during the past year. But as we rejoin our families and begin to celebrate the joyous festivals that are Christmas and Hanukkah, we also ought to think of and consider the Muslims among us, the Hindus with their Diwali, and indeed those of no particular religious belief.

We ought to take this season to draw them to us, and to begin a process of acceptance and healing that comes from The Golden Rule. Do not do anything to someone else that you wouldn’t want done to yourself. That’s a paraphrase, because the rule is stated slightly differently in every religion.

Advertising can help rebuild bonds with its creative; this is what advertising is good at. The need for brand advertising never goes away, not even at Christmas, so let’s bear in mind that the right creative can work for the public good, making a win-win that could start 2018 on the right foot.

We at ZEDO and ZINC wish you and yours the happiest of holiday seasons, no matter which ones you celebrate, or choose not to celebrate.

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.

 

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.

 

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.

 

 

 

 

 

 

 

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:-)

 

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.