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Business Insider Navigates New Ad Environment

Henry Blodget, chairman and founder of Business Insider, is an acknowledged expert on the media business. And he says advertising is here to stay — with a few caveats.

A former journalist, he became a financial analyst during the dot-com boom, taking home millions. However, after the dot com bubble burst, he was  barred from Wall Street forever for publicly touting stocks he referred to internally as dogs.

Not knowing what to do after his public disgrace, Blodget put together a small online publication called Silicon Alley Insider. Eight years later, he sold its expanded successor, Business Insider, to German publisher Axel Springer for $343 million. Axel Springer is a company that was built on journalism, really cares about it, and was making its entry into the American market with its acquisition of Business Insider.

That could have been a story with a totally happy ending, except that Blodget’s deal included staying around and running Business Insider, which after its sale in 2015 endured some of the toughest conditions in online media — the shift to programmatic by  premium American publishers. The American digital advertising business shifted almost completely to programmatic during 2016, while Germany stayed about two years behind. Yet Axel Springer is a public company for which quarters count.

On a recent episode of Recode Media, Blodget was interviewed by host Peter Kafka, his former employee, and talked about the recent challenges in the industry and how he thinks things will come out. Blodget said 2016 was the year in which premium direct was replaced by “robots selling advertising to robots,” a change that also affected companies like Yahoo.

While he admitted that programmatic is efficient for both the advertiser and the publisher, Blodget said there was a huge difference in revenue for publishers, where $1 in revenue is now about 25 cents, cutting the top line faster than expected.

This was a shock to Axel Springer, which had to sit back and watch Business Insider miss its numbers in two quarters while changing its business model to accommodate these market changes.

“The market is bifurcating into what we call the barbell,” he added, meaning that Business Insider has two kinds of business now: programmatic advertising and high end custom work, or sponsored content. The part of the business that is growing fastest is the latter.

Blodget spoke about further changes to come: he plans a fully dual revenue stream split between advertising and subscription. Business Insider now offers what it refers to as “an ad-lite version,” which is very much faster and can  take care of  people who download ad blockers. That costs $9.99/mo and is still in the testing stages.

 

 

 

 

 

 

 

 

 

 

 

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.
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Brands Need Better Data for Attribution Models

Last year brands learned that taking programmatic in-house was more difficult than most of them realized. Many of them found out that they had to hire for skill sets they found unfamiliar. At the same time, they came to the conclusion that programmatic maybe wasn’t the end-all and be-all of media buying. Programmatic does provide efficiency; however, human interaction must still take place for the buys to be brand safe and effective. That’s the part agencies are still able to provide.

Agencies not only know the media better than brands do, but also ad operations and billing. Once you get into the media buying process, there’s a lot of complexity, from trafficking the ads to interacting with the publishers to make sure the ad is served, is viewable, and that the traffic reported is accurate and not fraudulent. Add in the new force in the market — ad blockers — and spending marketing dollars effectively becomes even more complex.

Thus it isn’t so simple to take it all in house, and many brands have decided to continue working with agencies, only with new, more transparent contracts.

One of the functions agencies and brands still debate about is how to get better data for attribution models. Retailers like Walmart are trying to figure out what data is most important to get from consumers and shoppers. Online retailers like Amazon have always collected everything they can, and with the trending popularity of Echo and Dash Amazon will likely be the winner in the consumer data wars. When you tell Echo, “Alexa, send me more Tide,” you are telling Alexa that you are buying on brand and not on price. But Oracle and Adobe also know how consumers buy, and there will be myriad data sets coming together to understand where and how to place brand and shopper dollars.

Another data supplier for brands is the third party measurement provider. Companies like ComScore and Nielsen measure audiences and advertising for both publishers and advertisers. And now relative newcomer MOAT, which got its start certifying viewability, will share the stage with the more entrenched measurement providers because it is an expert in measuring mobile video.

Advertisers are also demanding more data from walled gardens like Facebook. It’s really difficult to have a complete look at an ad buy that may include Facebook and Amazon without having insight into both of them. However, they have promised their customers that they won’t sell data, so they will have to make major changes to their terms and conditions if they begin to share in aggregated ways. It’s currently pretty impossible to develop an attribution model from Facebook ads if you advertise anywhere else.

The movement of dollars from TV to digital will also accelerate the demand for marketers for a unified view of their media buys.

We predict that the demand of brand marketers for a unified view across all their channels, coupled with an increased emphasis on privacy and security for consumers will continue to cause rapid change in the industry for a few more years.

How Programmatic Works with Creativity in Branding

As programmatic progresses from being just a workflow tool to automate formerly manual processes to an integral part of a branding campaign’s creative thrust,  it’s good to keep in mind that for branding, programmatic works best paired with creativity.

In addition to making the media buying process more efficient, brands now know that programmatic, used correctly, can also improve targeting. Ad tech can help reach the right person on the right channel, and even at the right moment. But what’s the good of that capability of the messaging is wrong?

That’s where creativity enters the equation. People who measure these sorts of things (insofar as they can be measured) insist that high-quality creative can drive up to four times the response as low-quality creative. When Kellogg evaluated the success of its advertising programs as an entirety, the company decided to bring the programmatic buying function in-house:

The ability to harness and protect data came up several times. Fetters, director of the Insights and Analytics Solutions Center at Kellogg Co., said that Kellogg’s in-house operation brought the company into better touch with its “first party” data (meaning: its own). “We’ve learned a lot about the value and power of first-party data,” he said, citing customer relationship management tools and a brand’s own website as sources of important information ready to be tapped.

Using its own data, Kellogg has improved its targeting and the viewability of its online ads. It has even investigated optimal online ad sizes.  But at the end of the day, “thirty percent is the media; seventy percent is the creative, as far as I’m concerned,” said Jim Kiszka, the company’s Senior Manager for Digital Media, North America.

Kiszka has decided that, while programmatic technology still surpasses its art, it’s best to start with the brand and the consumer, and not the programmatic buy.  What does the consumer need, and how can the brand provide it? How do consumers use the brand now?

Only then does Kizska move on to finding the right channels, the right time, and the right level of investment to bring an effective message. Because we are moving on from a one-size-fits-all approach to a highly targeted, individualized advertising world, marketers are going to have to think about how to take the individualized data they have about customers and deliver creative messaging and images that still work programmatically at scale. For example, it is probably not appropriate to reach a middle-aged man with a beer ad while he’s in his doctor’s waiting room. You may have the right demographic and the right channel, and even the message, but…

Programmatic offers the power of one-to-one marketing, but only when the creative complements the contextual environment.

 

Digiday and Technorati Programmatic Scorecard: Gentleman’s C

Neither the open market nor private marketplaces get more than a barely passing grade from buyers and sellers, a survey by Digiday and Technorati said on a webcast we listened to recently. Both advertisers and publishers gave the open bidding programmatic process only a C. Publishers cited low eCPMs and difficulty with integration as reasons not to work with more partners, and advertisers were disappointed because they saw the same inventory from multiple supply side platforms.

This wasn’t surprising, but the private marketplaces fared little better. Private marketplaces are customized, invitation-only marketplaces where publishers can make their premium inventory and audiences available to a select group of buyers. About 67% of buyers and sellers use them, and they make up about 15% of digital ad spend. But publishers complain they can’t find enough buyers to enter these deals, and if they do it’s difficult to ensure that they’re actually buying. From the buyer side, inventory discovery falls short of expectations.

And both sides complain about inefficient deal negotiation mechanics.

Improvements will need to be made to align what buyers actually value with what sellers think buyers value. This is where greater transparency comes into play.

For buyers, the highest value is first party data segments, followed closely on by viewability. First look or exclusive access are only in third position, followed by context, frequency capping, and ad seizes or formats. Sellers, however, think buyers value first look/exclusive access, followed by context, followed by ad sizes and formats, and viewability not so much.

Right now, the marriage between buyers and sellers is on the rocks due to poor communication. But this marriage can be saved, because both sides are in agreement that inventory/demand discovery, deal negotiation, and industry packaging need attention most. Budget fulfillment, campaign setup, and streamlining delivery seem less important.

Buyers told the survey that floor prices were too high for sufficient ROI. There is also a perceived lack of transparency over ad context. Publishers don’t realize that advertisers are usually looking for audience, rather than specific domains. To make up for the opaqueness of the process, 75% of buyers use in person meetings with publishers to educate themselves about the qualities and unique capabilities of a specific publisher’s inventory.  Surprisingly, 45% use trade press. Only 22% rely on Nielsen or Comscore.

Private marketplaces could easily improve with more accurate and descriptive packaging of inventory. Publishers would have to trust them and present their valuable, premium inventory, and deal negotiation has to go smoothly.

Clearly programmatic has a ways to go before either side is satisfied. Nevertheless, both publishers and advertisers expect their participation to increase.

 

The State of the Video Industry 2014

Premium video is going programmatic. So says Adapt.tv’s fifth annual study of marketers and advertisers, “The State of the VIdeo Industry.” As you can probably guess, video ad spending has been growing for the past five years, and mobile video has given that spend a big push. The “extra” money to buy online video ads is being shifted from both cable and broadcast TV budgets.

This year, for the first time,, more than half of publishers said they planned to make their premium inventory available programmatically. Did they do it by choice? Not really; they did it of necessity, because buyers have already shifted to programmatic. Brands said a full 60 percent of their online video ad spending has gone programmatic. Agencies are behind the curve here; only 40% of their spend is programmatic. Agencies who have made the investment to make programmatic one of their core competencies will win here, as the shift intensifies.

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