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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.

2018 For the Agency Business

There’s no doubt that advertising is changing very fast and that traditional agencies must adapt. WPP has already admitted this in several different ways: first in their earnings reports, and second in the way they are buying up small agencies in order to get customers and economies of scale. That might be a mistake, since they’re only adding to their infrastructure. And even if it does work for now,  this tactic will not work forever because what is changing is the nature of advertising itself,  not just the nature of the agency.

Yes, it is true that  the agency of record concept is going away. Building a brand is difficult and requires everything from brand strategy to messaging to communications to internal training to advertising and public relations, not to mention navigating legal issues around privacy and security. As we all know the privacy rules are changing next year and there will be new standards we in the business all must follow. Most agencies don’t have equivalent expertise in all these skill sets.

Most brands know that they need more than one agency to get the job done. But that’s the symptom and not the cause. The cause is the consumers’ changes in buying habits. As an example,  Millennials do not buy goods, they buy experiences. Therefore sponsorships of concerts and other experiences, brand partnerships and infrastructure advertising are going to grow. A small agency in Phoenix Arizona that does only large format and outdoor advertising, Blue Media, has found itself suddenly a $60m company in only a few years.

Traditional media growth, not so much.  All advertising now must be contextual.

Even digital media is going to have to adapt to this rapidly changing environment. It will have to meet users where they already are without interrupting them. This is tricky.

However, It is doable. Consumers can be incentivized or rewarded to watch ads that are non-interruptive when they are playing a game or on social media. They can also watch ads that provide information on products for which they really are in the market.  The success of the New York Times’ Wirecutter blog is an example.

Contextualizing will involve better geo-targeting rather than more invasive personal information targeting. For example if a consumer is already in a Ford dealership, it’s not invasive to show them a Honda or Chevy. They can be assumed to be in the market for a car.

To capitalize on the growth of advertising, which will be a smaller subset of marketing, the agency of the future will be smaller – sorry WPP – and more nimble then past agencies, able to expand and contract more regularly because it will have more 1099 workers than employees. It will also have to know a great deal more about business and about online marketing strategies that work —  including inbound marketing and content marketing.

Hiring is an old fashion way to respond to the typical situation agencies find themselves in today, where they are working on projects and have the need to ramp up or contract almost immediately.  The best agencies will realize this, and give up some legacy infrastructure for long-term survival.

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.

 

Where Advertising Could Be

We recently had an opportunity to sit down with a Millennial who had  fled the advertising and media worlds of New York for the startup scene, and we asked her to reflect on her six-year career in advertising.

She had actually graduated from a liberal arts college in Ohio with a degree that prepared her for the advertising industry, having studied art, journalism, and the meaning and purpose of advertising. At her college, she told us, advertising was sold  to students as a way to change the world through art. So she didn’t just drift into it as many of her compatriots did.

However, after her first job in a small creative agency, things went steadily downhill. She drew a picture for us of a world in which agencies were turning out completely uncreative products, so as not to offend their clients. The projects she thought she would work on when she was in school — public service campaigns in which great creative actually helped people in poor communities find jobs — gave way to repetitive assignments that eventually killed her faith in the industry.  She began to wonder whether advertising still had a place in the world. After four jobs in six years, she fled to become an account executive at a tech company with a remote team that allowed her to work from wherever she wanted to live.

She immediately deserted New York.

We found this very sad, and yet easily correctable. Advertising provides many young, creative, and well-educated people their first jobs out of college. These talented people come into the workforce bringing all their enthusiasm, as well as their insights into how they feel about brands.  These customer insights, combined with data from the brand’s existing customers, should be harnessed to produce “creative” that is truly creative. It would be like letting artists interpret the world instead of making them paint existing interpretations by the numbers.

We’ve always said that the secret to advertising is good creative. Especially in the world of digital video, it’s not really pre-roll that’s the problem for consumers — it’s the bland, uninteresting and often irrelevant content of the pre-roll. Agencies have a responsibility to present “cool” creative to their clients, and brand marketers have a responsibility to go by more than just numbers. We would all be better off if this was how advertising worked. And actually, that’s how it used to work.

 

Fundamentally Better Advertising

Yesterday at the Digiday Agency Summit, Valter Sciarrillo, Head of Product Marketing at Quantcast,  gave a talk for agencies called “Differentiating Yourself Through Programmatic.”  This presentation highlighted how far behind the times agencies really are. Indeed, some are so far behind rapid industry change that they risk extinction as the industry moves past them.

Sciarrillo mentioned that only 6% of agencies actually felt comfortable buying programmatically. Indeed, 60% of agencies felt they didn’t even have a good definition of what programmatic actually is. And that’s despite the past five years of rapid growth and diversity in programmatic potential.

The problem is that when programmatic was first introduced, it was used for remnant. So a third of agency execs still think that’s what it’s for.

Not true. Programmatic is just a workflow solution, through which you can buy anything.  When you use a secure private platform like ours, you know exactly what you are getting. Our network is only premium publications, highly targeted. Especially since the introduction of header bidding, media buyers can know exactly what they are buying and they can use programmatic for branding.

Because it will take time for agencies to catch up, those who adopt programmatic for branding early have a competitive advantage in building the agency’s brand, as well as that of its clients.

Our offering, ZINC, is a better way to build brand in digital, whether you use header bidding, direct sales, or the self-service platform we have just launched for smaller agencies.
It is cost effective because actual users, not bots,  really see our ads:  they are in a better place on the page,  are a better size,  and utilize better timing. Right customer, right device, right time. We  also guarantee 100% viewablity and 100% fraud free advertising. No wasted impressions.
 We are able do this because we are a technology innovator in  ad delivery. We take the advertiser’s existing ads and in real time optimize the size, placement and timing in many ways to make sure that users see it.
That’s our secret sauce:  “fundamentally better advertising”  that only needs your existing creative.
S2

 

Back to the Future for Ad Formats

Those optimistic about advertising’s future — including us–think it depends on better creative. So let’s try to imagine what this could look like. In the current environment of hostility to tracking and data collection, it looks a lot like plain old information-sharing, which is the way advertising started.

We know advertisers love data. But how about

– Innovations that rely more on story telling and creative – like TV
– And great data inferred from sites and devices rather than tracking

Let’s say I am a consumer who owns a Ford Mustang convertible. It’s three years old,  and I’m about ready to trade it in. However, I don’t have to. It still runs, and I could keep it. What should Ford, or perhaps Chevy, BMW, or anyone else who makes a convertible do now?  What would it take to put me in the market for a new car? And why would I choose one brand?

It would take good information delivered in a non-interruptive way to a place I already visit. And by good information, I mean telling me something I don’t already know, but want or need to know. Tracking me down wouldn’t be appreciated, nor would it be necessary.

For many people, good information means a product review. That’s why Consumer Reports is so popular. Today, a “review” could be a video that demonstrates the car. Not just its beauty or its speed, but its capabilities and its price. The video could be fifteen or twenty minutes long.  It is a piece of “content” created by a brand, and placed on YouTube, where it can be found by people searching for cars.

Then ads can tell people where to find the product review. The ads can be shorter videos, banners, photos that drive traffic to the review.

The most important part of this campaign? Respect for the consumer’s time and desire. Nothing that autoplays noise. Data inferred from my devices. Useful content. No crossing the creepy line.

Although we’ve spent the past decade glorifying data, we’ve actually painted ourselves into a corner. We’ve overused it for targeting to the point where consumers are on to us and know they’re being tracked. They are voting with their ad blocking apps. If we’re not careful, we will lose the best business model that has ever presented itself for media.

And the biggest irony? All this tracking hasn’t really helped. As marketers, we are still not getting good ROI on our ad spend. Only now it’s not because we targeted incorrectly, but because we’ve opened ourselves up to fraud and made consumers angry in the bargain. We could argue that we don’t have any better an idea of who the consumer is than we did when John Wanamaker famously said that half his advertising was wasted but he didn’t know which half.

Informational creative, bought on private platforms that already have the premium audiences, are what is needed to win consumers back to trust for advertising. Our ZINC platform can provide a buying experience without data overlay gimmickery that  makes your customers angry without delivering better results.

 

 

 

Industry Initiatives Take Hold as Advertisers Cut to Quality

It’s been an interesting first half of the year for the media industry. So much has happened in a short period of time that those of us who are busy growing hardly have a moment to look back to see where we’ve been; we only know where we are going. We’re in an entirely new and different — and we think better– media market now.

          We all know how quickly consumers gravitated to mobile last year. That shift made many other changes inevitable.

Here’s how it looks from our side of the fence:

1) Display ads are down if not out. Yelp announced last week that it was phasing them out in favor of native and local ads. Long time ad networks selling banner ads are going out of business. Sad to see but inevitable. Local.com out. Beanstock out. Others down.

2) And then there are also standards, brought about by industry initiatives: the MRC’s emphasis on viewability and the Trustworthy Accountability Group’s collaboration to put an end to ad fraud, malware, and piracy. These fraud and viewability initiatives are taken seriously by brands who got tired of wasting their ad spend. They have created a r to quality on the part of advertisers who are no longer willingly buying junk impressions, blind impressions, fraudulent impressions or bots. 

3) Advances in media buying technology have been coming fast and furiously to support this.  DoubleVerify developed their pre-bid technology. Brilliant move. Now DSPs aren’t bidding on and buying junk and fraudulent impressions. They only bid and buy good stuff. DoubleVerify is now in the powerful position of deciding who is good and who is bad. Be nice to them.

4) Facebook led the charge in accustoming users to video, especially on mobile. Where in the past users might post a video on YouTube and send a link over to Facebook, this year all that changed, and Facebook became a real contender as a video hosting platform. Video ads benefit too

5) The technical changes begat content changes, as both brands and agencies began to figure out what kinds of video consumers wanted to see. This led to the rise  of native ads, consisting of content appropriate to the site where they run. For some, this has been a two-edged sword; journalism purists fear the future of a media industry that generates  content by and for advertisers.

The good news is that this cut to quality actually means a lot of the lower quality high volume players in the market are going out of business, while digital ad spending is growing. That means more money spent on ZINC High Impact Formats, and an increase in CPMs for high quality inventory; something we’ve seen happening in the first half of the year across both our display and video HIF formats. It’s been a long time since we saw increasing CPMs like we are now, and we have to admit it makes us happy.

Transparency in the Advertising Business

No wonder it has been so difficult to establish transparency in the advertising industry. From its very inception  advertising’s business model was based on secrecy. A history of more than 150 years is difficult to erase.

The first advertising “agent,”  Volney Palmer, opened a shop in Philadelphia in 1843. Palmer essentially worked as a lead generation service for local publishers, sending ad copy written by the advertiser along with collected payment to the newspapers for which it was intended. There was no copy-checking, and no “truth in advertising” standard, and no creativity. If you paid for the space in the newspaper, the ad ran.

Palmer did not work on behalf of the advertiser at all. However, some time later, a man named Samuel Pettingill opened an agency in New York and changed the model to one of an independent space broker, taking his payment as a commission on the fees paid to publishers. Naturally the agent wanted to buy space from the publisher as inexpensively as possible and sell it to advertisers for as much as possible, without revealing the numbers to either party.

Because of this lack of transparency, neither side trusted the advertising agent in the 19th century. In The Mirror Makers , Stephen Fox says that the early agents only “owed their lives to the fact that their was a law against killing them.”!

For the publishers, the ad agent was a nuisance to be tolerated; newspapers then derived about a third of their revenues from advertising and national magazines even less. For the advertiser, things were even more murky; a business risked its credit rating by advertising. It was seen as a sign of potential financial weakness. Only suspect businesses advertised.

To compound ethical doubts about advertising, many of the early advertisers were the 19th century equivalent of pharmaceutical companies, only they were patent medicines like Lydia Pinkham’s vegetable compound whose claims had never been tested. The biggest advertisers at the end of the century were “quack” doctors who advertised their preparations in the newspaper and traveled the country holding events at which they sold directly.

But in the 20th century all that changed when emphasis shifted from the publisher side and the size of the budget to the quality of the ad itself. That’s when agencies began to get creative, and the modern agency format evolved — the one in which an agency was a trusted counselor to advertisers. J. Walter Thompson invented the account executive and we all know the rest. The job of the account executive was to keep the advertiser happy and keep him spending.

Unfortunately, ad tech so far has not served to uncloak the mystery of ad budgets — where they go and what ROI they produce. In fact, because there are now so many vendors between buyer and seller (the buyer now being the agency) things have only gotten more obscure. In the early days of programmatic, many media buyers didn’t even know where their ads were appearing.

But things are looking up. More and more testing and reporting mechanisms have evolved, and it’s now possible for someone who really wants to know what things cost, who gets a piece of the action, and whether that cost is ultimately “worth it”  to examine the data and arrive at an opinion. Vendor consolidations in the space this year and next, along with stiffer requirements by the people with the money (marketers) to know where and how that money is spent will yield better information and better decisions by marketers.

 

 

Will You Read and Act on This Ad?

The age-old problem of what causes a consumer to buy hasn’t been solved. In print ads and TV ads, the idea of attribution didn’t really come up, as it was assumed that the entire campaign was viewable and successful (or not). However, the advent of “big data” created some new expectations among brands — among them the idea that it was possible to attribute a consumer purchase to a specific event, ad or campaign simply by crunching the right numbers supplied by the right vendors.

Therefore, we predict that in 2016 or shortly thereafter the buzz word of the year will have moved on from “viewability” to “attribution.’

This is a move in the right direction. In a post for Ad Age, Managing Editor Ken Wheaton asks the question “so what if the ad is viewable.”

While it’s not apples to apples, marketers pay a lot of money for TV and print ads and don’t seem to obsess quite as much on viewability. Sure, you buy an ad onMSNBC, it’s going to be 100% viewable — to Chris Hayes’ immediate family and the Elizabeth Warren Fan Club. A print ad is 100% viewable — to that bored guy in the waiting room.

Viewability is important. I’m not denying that. But it’s the bare minimum of what publishers and marketers should be striving for. That it’s even up for debate should be embarrassing for all involved. Marketers should pay a fair price and at least admit they’ve paid a lot more for a lot less in the past. Publishers should quit discounting ads and then trying to make up the difference by charging for things at the bottom of the page.

Viewability, then, will become table stakes. The more important question should be “did this ad convince someone to buy something?”

So of course the ad tech industry has come up with attribution technology, sold either as a consulting service or as a piece of software. Last year Google acquired Adometry, which purports to tell you which parts of your marketing spend are really worthwhile. Convertro, now part of AOL, says in its CrunchBase profile that it

provides clients with recommendations that empower them to confidently reallocate marketing from unprofitable sources to more profitable ones by means of its algorithmic attribution models that meld marketing cost and conversion data, including in-store, with customer marketing exposures captured at the most granular level.

And for brands that don’t think AOL and Google will be impartial and will favor campaigns run on their own platforms, there are several platform agnostic startups. The startups are also targeting companies that can’t afford the money for analytics from Convertro or Adometry, but should be even more concerned about the effectiveness of their smaller, more precious marketing spend. And just last week Nielsen rolled out its own cross-channel attribution solution.

The entrance of all these players means the next step for brands and agencies is to do a better job of attribution modeling.

 

Hispanics Prove Desirable Target for US Advertisers

Diversity has come to the forefront of the advertising world, especially in this year’s TV Upfronts.  The success of shows like “Latina” and “Blackish” have reminded both producers and advertisers that shifting demographics mean Caucasians will one day be in the minority in the United States, as they are in most of the world. In some cities, minorities already constitute over 50% of the population, and in the western US, Hispanics are 25% in cities like Phoenix.

In the research summarized below, we’ve taken a look at Hispanic Marketing Trends and illustrated with numbers how much time Hispanics spend on their smartphones and how best to reach them. The research also shows they’re much more likely than whites to respond to advertising.

  • [embeddoc url=”http://www.zincx.com/files/2015/05/US-Hispanic-Marketing-Trends-20151.pdf” height=”500px” viewer=”google”]

 

Research by Arjun Vazirani, ZINC Sales Planner