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.

 

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.

 

 

 

 

 

 

 

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.

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:-)

 

P&G Should Allocate TV Budgets to Digital Branding

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

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

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

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

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

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

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

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

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

The 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.