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.

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.

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.


Could Blockchain Technology End Ad Fraud?

More often than not disruptive changes in an industry come from outside, rather than from within an industry. People inside the industry tend to tinker at the margins, not trying to alienate any of the existing constituencies. In that way, industries are like democracies. But just as innovations in healthcare came from outside the industry, innovations in the digital media ecosystem are beginning to come from outside as well.

One place we predict will change how advertising is bought and sold is the fairly new cryptocurrency space. Over the last five years or so, people have become familiar with Bitcoin, digital currency units that are created out of bits and bytes and fluctuate like the securities market or the currency exchange.

Bitcoin, like other cryptocurrencies, relies on an underlying technology called the blockchain, which is a decentralized network of personal computers. Being part of a blockchain network requires connecting to the blockchain through software, almost like connecting to a social network. People on the network can add new records  (assets) through their computers, and the new records are double-verified and added to a ledger of all other blockchain transactions around that asset.

Unless you’re speculating in Bitcoin, you don’t care about any of this. But there’s a related cryptocurrency, Ethereum, that was developed specifically to transparently facilitate contracts. And that’s where advertising could get disrupted.

Blockchain technology through something like Ethereum contracts could monitor ad placements and conduct real time audits of ad delivery. That would solve the problem of transparency in programmatic media buys. Each digital asset ( ad) could be located in real time.  Blockchain’s advantages could include

 verification of ad delivery; immutable contracts with consumers; handling consumer data in a way that is completely transparent; and verifications about products’ authenticity that track from the point of origin, like sustainable fishing. Shanghai-based Vechain is using blockchain tech to authenticate fashion products, as well as provide background info on the items.

Last year, MediaPost similarly pointed to blockchain opportunities for managing huge numbers of consumer relationships, settling of multiparty payments and user ID verification.

Other observers have suggested global payment systems and, especially, smart contracts that are secure and transparent, available throughout a network even as they get modified.

Blockchain technology could also be used to decentralize transaction data, which would offer clients and agencies security and anonymity benefits.

I’m sure there are more exciting uses of blockchain technology than to monitor ad fraud and track wasted digital media ad expenditures, but since this technology has already graduated well beyond the buying and selling of illegal drugs on the Silk Road web site (see Nick Bilton’s terrific new book American Kingpin) and is now being investigated by the big banks to change the way the entire financial system works, we think there will be a day when someone builds a platform that truly brings the advertising industry into the 21st century.

How to Get Creative in the Feed

We were listening to a podcast about creativity in the feed, and we realized there is something VERY new happening in advertising.  Because most advertising now takes place in the news feed, there are new opportunities and challenges for brands.

There is no such thing any longer as an ad campaign based only on traditional ad “units.” Instead the future will consist more and more of branded emojis, stickers and chatbots communicating with the consumer in entirely new ways that are more contextually relevant. Those “ad units” of the future are in messaging apps, which go well beyond just the feed.

For creatives, the fact that larger ad units have disappeared, creates a narrow but potentially very appealing possibility. But first the advertising industry has to get rid of the “muscle memory” it developed back in the day when two thirds of what people consumed was controllable by the media industry. Now, a switch has been flipped and only a third of what people consume is controllable, because there’s so much consumer preference and so much user-generated content organic.

We used to try to change consumer behavior with communications platforms. Now, instead, we have to change brand behavior. We used to be able to invade consumer spaces with repurposed TV ads, but consumers have told us in no uncertain terms that they don’t want to be invaded, though they may still be willing to get engaged.

Advertising needs to be invited into people’s feeds. Consumers are far more judicious in what they want to see in their feeds, and they only want to see a brand that is accretive to their lives in some way — perhaps learning or educational, a utility, commerce, or entertainment. If it doesn’t fall into those buckets, people are not interested.

The brands that are going to be invited into the feed are going to be minimal if we follow those dicta, so brands will also have to figure out how to “crash” the feed. And here Rob Norman, the host of Tagline, had something very telling to say: if you are going to crash someone’s feed you have to be like the crasher at a party — the guy who wasn’t invited but gets very drunk and is allowed to stay because he’s very funny, rather than the guy who crashes the party and ruins it.

Thus brands and agencies have to think about how to be valuable.  Facebook, Google and the other large platforms feel like the key to this puzzle is relevance, which is determined by artificial intelligence in programmatic buys that take place in trillionths of seconds. In that context, how does a creative agency determine what message will get the most relevant ads surfaced most frequently?

This is where chatbots come in. For example, in a successful recent NFL campaign for Bud Light,  a bot asked two simple questions in a messaging app, “where do you live” and “what’s your team,” and then disappeared until two hours before game time, when an ad in the feed appeared for BudLight along with a link to a beer delivery service. That’s probably the best contextual use of bots and ads we’ve seen in a while.

We’d welcome your ideas for other creative ways to make consumers more comfortable with ads in the feed. Put your comments here, or on the   Twitter.



It’s the Quality, Not the Ad’s Length That Matters

As the use of video ads grows, the time we spend paying attention to them seems to shrink. Your video ad now has about 8 seconds to make an impression  Researchers in Canada “surveyed 2,000 participants and studied the brain activity of 112 others using electroencephalograms (EEGs) and found that since the year 2000 (or about when the mobile revolution began) the average attention span dropped from 12 seconds to eight seconds.”

Why then are video ads so effective? There is quite a bit of conflicting information on this, so let’s look at a few opinions. And believe us, these ARE opinions.

Ad Age believes video ads are effective because they can tell more of a story in less time. According to this article, there are two ways ads affect a viewer: the central route and the peripheral route.

The central route refers to situations whereby the consumer is invested, in the sense that they want or need the product, and thus can make thoughtful decisions based on facts and logic.

The peripheral route is where the receiver does not think carefully about the communication itself, and instead makes decisions based on superficial stimuli, also known as “cues.” Cues can include colors, music, storytelling and more. In the peripheral route, content and facts may be ignored or overlooked.

Even a short video can generate more emotional cues than a photo, as we all learned from the existence of Vine, the site where people could watch 6-second videos. Some of those videos gave enough emotional cues in that 6-second time frame that their authors became “stars.” Some of the funniest Vine videos have been saved to YouTube here, and you can see their power. In a very short amount of time, they can tell a pretty good story. But how does that work for an ad?

Videos trigger the central route for some people and the peripheral route for others, two avenues that eventually converge with a common goal: to sell a product or service by selling an underlying idea. It’s ideas that evoke specific emotional responses: joy, pride, sadness, anger, laughter, nostalgia, etc. These emotions fuel passion, and drives human behavior while building a brand relationship with an audience.

While Google originally began selling 30-second and 60-second preroll on YouTube, it has been so roundly rejected that they’ve been largely replaced by 15-second spots. However, an experiment Google performed with Mondelez also found that some people will watch longer videos — as long as 3 minutes –if there is a really good developing story.

However, since it only takes 15-seconds to generate brand recall, why take the risk and spend the extra money?  Geico won video ad campaign of the year in 2016 with its “unskippable” campaign, a series of 6-second videos that introduced the brand in the first five seconds, and told viewers they didn’t have to skip the ads because it was already over. The ad had awesome creative, however, which is often missing from less well-tolerated ads.

Once again it all comes down to the quality of the creative, not the length of the ad.

Mobile Acceptable Ads Standards Part Two

Two weeks ago we began discussing the Coalition for Acceptable Ads’ new standards. Although there’s nothing surprising to us in them, because we always put ourselves in the shoes of the consumer before we begin designing a format, and we always test with partners before rolling anything out, there are many marketers to are still demanding ads that we already know will anger viewers. Snapchat especially is still experimenting. It’s Discover and story partners use many of the formats the Coalition’s research found offensive.

We’ve been around long enough (and been burned hard enough) to know how much consumers hate popup ads. Our ad server began serving them in the early years of this century when marketers demanded them, and we took the brunt of consumer ire. It taught us to choose our partners and customers more carefully, and now we carefully guard our own reputation, although it sometimes means we sacrifice profits.

Pop-up ads are a type of interstitial ad that do exactly what they say — pop up and block the main content of the page. They appear after content on the page begins to load and are among the most commonly cited annoyances for visitors to a website. Pop-up ads come in many varieties – they can take up part of the screen, or the entire screen.

Included ad experiences tested: Pop-up Ad with Countdown, Pop-up Ad without Countdown

Prestitial ads are another common annoyance.

Mobile prestitial ads appear on a mobile page before content has loaded, blocking the user from continuing on to the content they have sought out. These pop-ups vary in size from full-screen to part of the screen. They may also appear as a standalone page that prevents users from getting to the main content.

Included ad experiences tested: Prestitial ad with countdown, Prestitial ad without countdown.

In fact, the larger the ad is, the more consumers dislike it. Any ad density over 30% is a no-no.

When ads on a mobile page take up more than 30% of the vertical height of the main content portion of the page, the result is a disruptive ad experience, regardless of whether these ads are text, video, or static images. This includes “sticky” ads and in-line ads. This kind of density makes it very difficult to focus on text content on a mobile device, and can lead to frustrated users.

Included ad experiences tested: 50% single-column ad density, 35% single-column ad density, 30% single-column ad density.

The last consumer annoyance: flashing animated ads.

Ads that animate and “flash” with rapidly changing background and colors are highly aggravating for consumers, and serve to create a severe distraction for them as they attempt to read the content on a given page.

Animations that do not “flash” did not fall beneath the initial Better Ads Standard.

We think these are extremely useful guidelines, and we hope marketers will adopt them, and not kill the only way we have of providing free web content, which consumers have also signaled is important to them.

Digital Content NewFronts Predicted to Capture 40% of ODV Spending

The IAB has done a new study just in time for the Digital Content New Fronts. Like most IAB studies, this one is positive for the industry.

The key highlights are a prediction of ongoing strong growth for digital video, with the average advertiser spending more than $9 million annually for its grand’s digital video advertising. This represents a 67% increase from two years ago, and at present, video represents more than 50% of a brands digital/mobile ad spending. Most advertisers are optimistic about how their advertising is contributing to the brand’s success, and plan to invest more in the next 12 months in mobile and video and maintain current TV spend levels. For the first time this year, digital spending outpaced TV spend.

Agencies really like cross-platform campaigns that include both TV and online video, and those campaigns are driven the agencies, 67% of whom plan to increase cross-platform spending.

How brands and agencies spend: 

Direct and indirect buying of Digital Video are both robust: Programmatic Video buying seeing broad adoption and steady growth – accounting for 45% of all Digital Video dollars spent. Yet still more than half spend directly with premium video sites. Advertisers currently allocate digital video budgets fairly evenly across multiple channels (TV shows online, news sites, etc.) Suggesting advertisers are still in a test and learn phase and presenting an opportunity for channels to prove their effectiveness for a greater slice of the pie.

The good news is that every market sector increased its mobile/digital video spend over the past three years, although telecommunications is the biggest ad spender.

Ad spending on original digital programming has nearly doubled since 2015. In 2016, 42% of original digital video dollars went to native advertising opportunities. The perception on the part of video advertisers is that digital video reaches an audience that can’t be reached on TV, and will become as important as original TV programming within the next 3 years.

As a result of rapid changes and growth in the industry, 67% of video advertisers plan to attend the 2017 NewFronts, and those who believe in video agree that attending last year’s NewFronts encouraged them to plan ways to incorporate VR and 360 video ads into their lineups. Although VR hasn’t taken off on a mass scale just yet, 360 video and VR are already supported by Facebook and Google, which makes investment in those formats unavoidable for advertisers.  This year’s NewFronts is predicted to capture 40% of advertisers’ original digital video budgets.

Once again the winds of change are sweeping across the media landscape.



Digital Video Ad Spend Grows

Digital Video Ad Spend Growing Sharply