Month: June 2018

The New York Times’ top brass and journalists were out in force at the Cannes Lions festival this week to meet with marketing clients and support its ads business. Digiday caught up with Meredith Kopit Levien, evp and chief operating officer of the Times, at the Martinez Hotel to discuss why the General Data Protection Regulation is a positive step, how the title’s podcasting success gave it confidence to push into TV and its plans to market itself more aggressively in Europe. This conversation has been edited and condensed.

Will GDPR complicate international operations and expansion for the Times?
In the short run, GDPR has presented quite a bit of complication. An enormous amount of effort has gone into ensuring we’re compliant. That took a lot of time and energy. In the long run, the general push to do more right by consumers is a very good thing for organizations like the Times who are in the business of trying to scale direct relationships with consumers, and to do so in a way that honors consumer choice and expectations and privacy.

Some US publishers pulled their ads from European sites on May 25. Did you?
Our European ads business is completely compliant. We are taking a much more deliberate approach and showing a mix of advertising in Europe. We are still running advertising in Europe, but not allowing anything that isn’t compliant.

How did that approach affect your digital ad supply chain?
If you think of that original Lumascape, what GDPR is putting in stark relief is much of the middle of that market between marketer and publisher must go away. The idea that there are many companies that took a tax in between the two organizations trying to exchange value — the marketers and publishers — we’re seeing a dramatic reduction in that. Our work to be compliant for GDPR took into account the need to dramatically reduce the number of companies we use, and that’s not a bad thing.

How many ad tech vendors did you cut?
I don’t have the number at hand, but in general, you will see us continue to work with a smaller number of players in the middle. One of the ways we’re advantaged is we already have so many direct relationships with consumers via our subscriptions. We think we will make a bigger, better, higher-quality ad business by scaling direct relationships with consumers. That means the continued reduction of any players in the middle who can’t adhere to all these standards of what we want on our site and the privacy standards of what we want for consumers.

So you’ll have fewer but stronger relationships with ad tech partners?
I’ve long believed that a much smaller number of relationships with partners that can integrate with us on a number of platforms is better. A lot more of our ad ecosystem is tied up with Google than it used to be, as it’s easier for us to do it that way. It [Google] provides services to us today where maybe three or four companies did before. So you’ll see us continue to reduce.

What’s your take on Google’s approach to GDPR?
It is really hard to play in an ecosystem with exceedingly powerful and large counterparties, but it is the reality. Our work is to make the best of it, while minding our own business strategy. We have managed to do that genuinely well with Google. It’s not perfect, but they listen well and are responsive. We’d be putting our heads in the sand if we didn’t attempt to work in the ecosystem we have, trying to run the strategy we believe is the best one.

What’s coming up on the product front? 
We just sold the rights to a TV show called “The Weekly,” to FX and Hulu, that will launch early next year. We’ll look at international distribution for it. We weren’t born from TV, but our inspiration and self-confidence to go out and say we’re making a TV news show for next generations — to reinvent TV news — came from our “Daily” podcast. “The Daily” didn’t exist 18 months ago and last year was the No. 1 podcast in the U.S. It has 2 million more listeners every day than the weekday newspaper ever had subscribers. And it has changed the way we think about news. It has put The New York Times into new parts of people’s lives we weren’t in before.

Will you extend that strategy internationally?
We have a huge international footprint that we’ve undermarketed. You’ll see us get a lot more aggressive about international. We have 32 bureaus, but we intend to do much more. We see our market as the whole world.

Download our complete guide to GDPR. 

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When Bark, the company behind the dog-treat subscription service BarkBox, sought to cut its Facebook spending and launch its first TV spot last November, it faced a quandary. Although BarkBox does all its creative in-house, it didn’t have the expertise to do national media buys in a brand-new channel like TV. So it turned to an ad agency.

Bark isn’t alone. Direct-to-consumer companies that were born online and long relied on digital marketing, especially Facebook, are hiring ad agencies as they seek to reach wider audiences with other media types.

“You’ll see a rush toward agencies,” said Jay Livingston, CMO of Bark, which is using Havas Edge, the performance marketing arm of Havas, for its TV buying and planning. “To put an integrated campaign out there and buy across media, it’s complex and expensive. Most [direct-to-consumer companies] cannot do that internally. Agencies help you with that.”

Like Bark, many DTC companies will keep handling their digital marketing themselves. When it comes to traditional channels like TV, radio, print and out of home, they’re using agencies for media-buying, creative or both.

Chad Crammer, director of client services at Havas Edge, said the agency has seen a 40 percent rise in the number of DTC clients in the past year, in categories including delivery services and insurance.

“There’s a lot of online entrepreneur clients who are saying, ‘OK, we’ve squeezed as much juice as we can out of digital. Where can we go next?’” he said.

Some DTC companies are spreading their needs across a few agencies. Erectile dysfunction startup Roman used Havas Edge to plan and buy a TV spot in May, but used Circus Maximus for the creative. “We’ve found that different agencies have different specialties,” said Rob Schutz, co-founder and chief revenue officer at Roman. “For our TV spot, we loved Circus and their tone around Roman and our story, and how to communicate it to the world. When it came to [direct-response TV] buying, we went with a media-buying agency with deep experience in direct-response TV.”

DTC companies have different needs from agencies than traditional companies. Having grown up online, DTC companies have a bigger learning curve when it comes to the offline world. As far as creative, results-driven DTC companies are most drawn to direct-response TV ads, whose goal is to educate the viewer about the products and drive orders with deals and a visible URL. Bark, for example, which went with a DRTV campaign, measures the success of the ads by looking at the number of subscriptions they drive within five minutes of appearing on TV, Livingston said.

DTC companies, which typically rely on online sales, also are more vulnerable to Amazon’s might than non-DTC companies are, something their agencies have to keep in mind, said Ryan Kutscher, founder of Circus Maximus, who has also seen a rise in the number of the agency’s DTC clients.

“Traditional brands have to play shelf games,” he said. “DTC brands not only have to get noticed, but have to convince users to continue the experience month after month, while convincing users that a direct relationship with their brand is in some way more valuable or unique than something arriving from Amazon.”

As for the agencies, the growth in DTC clients is a bright spot for those that are seeing some of their larger clients taking their media buying and creative in-house.

“We need all the business we can get,” said one executive at a medium-sized ad agency, speaking anonymously. In a Digiday survey conducted in February, more than half of 30 industry executives from major brands across the U.S. said they planned to move more marketing in-house.

“Any agency would say more clients are better than less clients,” said Crammer.

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On the first morning of VidCon, about 100 marketing industry people assembled in a room in the Anaheim Convention Center to learn about the business of being a creator today. To one panelist, a solution for the hundreds of creators wandering the floors below lies in blockchain technology.

“The power is not on an arbitrary decision-maker,” said Jake Branzburg, head of marketing at YouNow. “On YouTube, Facebook, Twitter, [creators] can be demonetized overnight. [The benefits go to] content creators, developers, and frankly, the users that are supporting them.”

VidCon, the annual conference for the digital video industry, may have started with stars who build a business on YouTube. But YouTube’s brand-safety efforts have demonetized smaller channels, and even YouTube’s top creators saw their ad revenue drop over the last year. The continued unease has led creators to look beyond YouTube for growth. Some creators have entered the blockchain frenzy by working with platforms like YouNow and Brave. Others are growing their personal brand by creating and selling merchandise.

“Creators are increasingly acting as entrepreneurs,” said Zach Blume, co-founder and managing director of digital studio Portal A. “This begins with their massive following on YouTube, but is extending to new areas such as original IP, book publishing, apparel and merchandise sales, launching their own production companies, live events and much more.”

When it comes to merchandising, Amazon has been making its pitch. The e-commerce giant was a sponsor at this year’s VidCon, and for Amazon, it’s not about touting Prime Video. Merch by Amazon offers creators a way to produce and sell branded merchandise on demand. YouTube-focused creators such as Hannah Hart and Shane Dawson create both T-shirts and PopSockets. Amazon’s pitch to creators is there are no upfront costs or inventory risk, as in they won’t end up with a bunch of unsold products in a warehouse.

“The creator gets paid when something sells. You build this great selection and have no great expense in doing so. It really builds a long-standing relationship,” said Ivan Lopez, Amazon’s head of strategic partnerships, on the panel.

Indeed, fans at VidCon donned creator-branded T-shirts, hats and pins. Creators also wore their own, apparently not a faux pas among the YouTube community.

You see, my fellow jokers (and joker-ettes!!), the joke here is that many Youtubers already wear their own merch, especially at conventions such as these. Enjoy the chuckles and keep those goofs and gags merry!
Xoxo
Your ol’ Uncle Jack

— jacksfilms is vidcon (@jacksfilms) June 20, 2018

“A lot of YouTubers sell crap,” said actor Olan Rogers on a panel about merchandising. “I remember someone sold a shirt that said, ‘Yes.’ I try to reach out to designers and make something that I would want to wear. If you’re not going to buy something that you sell, don’t sell it.”

“I sell hoodies, and I wear them all the time,” said Dean Dobbs, of YouTube channel Jack and Dean, during the same panel.

Beyond ad revenue and merchandise, some creators are benefiting from subscriptions through platforms like Patreon. Wyatt Jenkins, vp of product at Patreon, said that for those who create on a regular basis, “they now have the option to turn their passion into a career by creating a membership.”

Yet platforms in attendance at VidCon pitched themselves as fair partners to creators. Instagram and Snapchat each lured creators into their exclusive spaces at the event to chat up their new tools and other strategies for creators. Meanwhile, livestreaming app LiveMe hosted a booth on the show floor, where every hour, they shot actual cash out over the crowd. Indeed, LiveMe creators thrive from in-app tipping rather than an ad-supported model.

With all the grievances about YouTube, creators to marketers didn’t call for the end of the platform. During the blockchain panel, Rhize CEO Marie Leaf pointed out the platform’s democratic nature.

“I hate the Uberization of stuff, but the taxicab service, it was all centralized,” Leaf said. “What Uber did was allow the average driver to come onto the system. I would liken that to what YouTube does today — the average person can become a creator.”

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For all the attention media and advertising companies pay to YouTube, Facebook, Snapchat and Instagram, the ultimate arbiters are their teen and young adult target audience. Thirty thousand of them are in Anaheim, California, this week to attend VidCon, a Comic-Con for the digital entertainment industry. Here’s a sampling of what they had to say about what they’re watching and where.

On ads on YouTube
“I mean, it helps the people that are making the videos, so I guess that’s cool. And they make them skippable so you don’t have to watch the whole thing.”

“Very few times am I interested in the ad.”

On paying for YouTube’s ad-free, subscription service YouTube Red (recently renamed YouTube Premium) and the original shows on it
“I’m on the family plan, but I probably wouldn’t pay for it on my own. I think the creators they push on the platform are not some of my personal favorite creators. If some of my personal favorite creators had an original show, I would probably check it out.”

“I don’t. I wait for the free episodes to come out and just watch those.”

“I have YouTube Red. I would say primary reason No. 1 [is] definitely ads. The YouTube Red stuff is a fringe benefit; it looks like it’s becoming more and more beneficial as they ramp up their content. And then Google Play Music is also another nice benefit.”

On watching videos on Facebook
“I come across a lot of videos on Facebook. But once you find those videos on Facebook, you can actually search up those types of videos on YouTube, and they provide even more content because Facebook usually is limited to one video in one group or something like that, one genre, and you can connect that to YouTube and find even more videos of that genre and you can enjoy it more.”

“Sometimes I’ll transfer from Facebook to YouTube to watch videos because sometimes on Facebook they will show the videos, but it’s not the whole thing. On YouTube, it’s more convenient because it’s like everything.”

“I’m not on Facebook.”

On Facebook Watch
“I don’t think I’ve ever watched [Facebook Watch]. I just watch the stuff in my feed.”

“What’s that?”

On watching live videos on social apps
“I don’t really watch live things at all. If they’re from my friends that I’m really close with, then I’m going to watch. If they’re YouTuber [livestreams], I don’t really watch them unless I really like that person. And that’s not even like 10 minutes of my time. I’m gonna see what they’re up to, and then I’m gonna quit.”

“When it comes to the creators’ livestreams on their Insta Story, I like to watch that because it’s a lot more interactive, a lot more personal, because of the comments section.”

On Snapchat’s redesign
“It’s terrible. It was so much better before. I don’t remember what it was before, but I remember it being easier to watch the person’s [Story].”

“It’s more difficult to people you want to chat with.”

“I like how they tried to revert it back to the original, but it’s still not the same. The way you message friends and look at people’s Stories is still kinda confusing. I don’t know if I’ve seen their Story or not because it’s in a totally separate tab.”

On Instagram’s new app, called IGTV, for full-screen vertical videos that can last up to an hour long
“It’s a little bit weird watching videos vertically, but I might be interested in watching that.”

“I probably would if it’s different from what’s on YouTube.”

“I feel like a lot of social media nowadays, they’re trying to one-up their competition. We like social media because they’re different from one another, and if they’re being too similar to one another, we’re gonna delete those apps because the features are already there in another app. So if you’re talking about people putting on 30-minute shows on Instagram where you don’t have that necessarily, it’s going to attract people more to Instagram, but then they’re going to ruin other businesses. You don’t need that many apps with similar features if one app is going to have it all.”

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Digital media companies are distributing their content on streaming TV companies such as YouTube TV and Sling TV with the hope of getting subscription revenue down the road. But in doing so, they’re making two risky bets: that these new services can become as big as traditional TV distributors such as DirecTV and Comcast, and that these services will be willing to pay carriage fees after enjoying content from these digital media companies for free.

Last month, Tastemade and The Young Turks Network launched linear streaming channels on YouTube TV, joining Cheddar and E.W. Scripps-owned Newsy, to be among the first digital publishers to launch linear channels on YouTube TV. And it’s not just YouTube TV. Hulu’s live TV, Sling TV and FuboTV are all distributing linear channels from digital media companies. (Cheddar, unsurprisingly, is on all of them.)

Since these are new channels from newer media companies, most of the digital publishers are willing to give their channels to the distributors for free — especially if they can get the channels included in the distributor’s base package.

That’s been the approach used by Cheddar as it tries to get distribution on these services before traditional rivals such as CNBC. In a podcast interview with Digiday earlier this year, Cheddar CEO Jon Steinberg said: “I want everyone in the United States to have Hulu, YouTube TV or one of these systems, and then we will be in the primary real estate in all those systems. If skinny bundles on OTT work, Cheddar will be there, and we will win.” Steven Oh, chief business officer for The Young Turks, also spoke at the Digiday Video Summit earlier this year about taking a free-now, paid-later approach to streaming TV distribution.

Real dollars will only come with meaningful distribution
The question becomes whether these streaming TV services can attract enough subscribers to make carriage fees a meaningful source of revenue for networks. As this chart from Variety last year shows, most cable networks command less than $1 per subscriber per month in carriage fees. This can be a lucrative business if there is enough distribution, according to three TV network executives.

Take AMC, which has established hits such as “The Walking Dead.” The channel gets 50 cents per subscriber per month and is distributed in 90.5 million households in the U.S., according to Variety. Based on that, AMC brings in more than $45 million per month from U.S. pay-TV distributors for parent company AMC Networks. That’s $540 million per year — and it’s essentially free money as it doesn’t cost AMC anything to license its channel to paying distributors.

“You’re not creating multiple networks; you’re programming the same network and giving it to everybody,” said Freddy Flaxman, chief operating officer of The Weather Channel television network. “The economics of subscriber fees are incredibly attractive because of that. Even modest fees can be incredibly lucrative.”

Except the streaming TV services, where the digital publishers are placing their bets, are still in growth mode. At the end of last year, Dish Network’s Sling TV had 2.2 million subscribers; as of April, DirecTV Now had nearly 1.5 million subscribers; a few weeks ago, Hulu CEO Randy Freer said Hulu’s live TV service had crossed 850,000 subscribers; and as of a CNBC report in January, YouTube TV had 300,000 subscribers. Compare that to DirecTV’s traditional pay-TV business, with nearly 24 million subscribers.

The math, as it stands right now, does not equal meaningful revenue from streaming TV services. (And that’s not even considering the fact that these streaming TV services are all losing money, as they pay more for programming than they are charging customers for the services, according to a recent report from Bernstein Research.)

“There is an expectation that [subscriber numbers] will quadruple or quintuple in the next three to five years, which will in turn make them more meaningful drivers of revenue,” said Alan Wolk, co-founder and lead analyst of consuming firm TVRev. “It’s on the Cheddars and The Young Turks of the world to prove their worth, and they’re banking on the fact that once people see their stuff, they will gravitate to their programming and make it hard for the distributors to cut their services from the lineup.”

Big networks have more leverage 
Other shifts in the TV industry work against digital media companies. The pay-TV market is consolidating, gives remaining distributors greater leverage over programmers in carriage fee negotiations. AT&T owns DirecTV and DirecTV Now. Dish Network owns Sling TV. Charter Communications owns Spectrum, which used to be Time Warner Cable.

Meanwhile, with cord cutting on the rise, networks are pruning their weaker channels. Last year, NBCUniversal shut the lights on Esquire Network and crime-drama channel Cloo. And as a greater number of consumers opt for “skinnier” bundles, TV networks will negotiate hard to get as many of their channels as they can into these packages.

This can be a tough environment for a digital publisher, especially if they’re trying to poach a TV channel slot that belongs to an existing network. (If a distributor wants USA Network, which is the most expensive cable channel in the NBCUniversal portfolio, then they might also have to take CNBC or MSNBC.)

“The negotiating leverage the [established] networks have makes it a steep hill [for digital publishers] to climb,” said Flaxman.

Will distributors pay?
Of course, all of this comes with the caveat that YouTube TV, Sling TV and other streaming TV services — and even traditional TV distributors — would be willing to pay for content that they were previously getting free.

One top TV network executive expressed skepticism about a distribution strategy that involves digital publishers giving their programming away.

“Why on Earth would [digital publishers] not charge [YouTube TV] a fee if they’re going to be part of a package that YouTube is charging [customers] for? I don’t see how YouTube would suddenly be willing to pay when they didn’t have to before,” said the exec. “It’s a risky game to play. At the end of the day, you have to create content that people want to pay for and start charging for that as soon as possible.”

Ultimately, since digital publishers with TV ambitions are unproven as TV channel programmers, they don’t have the clout to demand subscription dollars from distributors from day one, said Wolk. In this scenario, the model being employed by Cheddar, The Young Turks Network and Tastemade might be the only way forward.

“It’s in their interest to work with distributors to be in as many places as possible,” said Wolk. “The more places they are, the bigger and better they’ll look to advertisers and distributors.”

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Cannes is slowly winding down. Rollerboards are popping up on the Croisette, final parties are being readied and more people are sporting limps. Cannes is often a reflection of a moment in time in the global media and marketing industries, with this year symbolizing a return to reality with a subdued Cannes. Here are our takeaways from the week.

The industry is in reset mode
The total attendance at Cannes has not been released, but most estimates are that 25 percent fewer people are here. There is less bustle on the Carlton terrace and plenty of space at marquee events like The Killers performing at Spotify Beach. Even the Gutter Bar is tame. Several media CEOs skipped the festival altogether: Vox Media CEO Jim Bankoff, BuzzFeed CEO Jonah Peretti and Condé Nast CEO Bob Sauerberg. Vice’s Shane Smith is holed up in his villa in the hills around Cannes, according to multiple sources. The ad tech marina was noticeably less crowded with boats.

The pivot to reality takes hold
The big rumor of Cannes was around AT&T’s reported bid to acquire AppNexus. The surprise: The price most often mentioned — it was most often somewhere between $1.6 billion and $2 billion — would mark a lower valuation than AppNexus’ last round of funding. This matches the gossip on the Croisette about highly funded digital media companies like Vox Media, BuzzFeed and Vice. The consensus: There are no media unicorns. Without hope in profits and funding shut off, the options will go from bad to worse.

Creativity is more diffuse than ever
Cannes is slowly returning to its roots of championing creativity. But it is now clear that creativity is no longer mostly, much less solely, the preserve of ad agencies. Johnson & Johnson CMO Alison Lewis spoke on Thursday about how the marketer has rearranged its agency model to create an “agency of the future” that will allow J&J to plug in creative specialists. LeBron James became perhaps the first pro athlete to win a Cannes Lion, as his Uninterrupted media entity took home a Bronze Lion. Many marketers spoke to their focus on influencers, tapping into both their creative prowess and distribution. Finally, Sebastian Tomich, head of advertising at The New York Times, said the days of fighting the platforms for scale are over; instead, the battle is over creative ideas.

Agencies are under siege
Ad agencies have long been under the gun by forces conspiring to take away their privileged middleman position. Many of these appear to be coming together. The biggest threat looms from consulting firms, which used Cannes to flex their muscles. But another looming issue is the propensity for clients to take more marketing in-house. The shift in priorities to first-party data means clients will inevitably have more direct control of their marketing as it becomes more programmatic-led. That positions consultancies — they’ve for years advised on tech implementations — well to usurp agencies.

GDPR is having an impact
Visit NYTimes.com in Cannes, and you will get a bunch of house ads. That’s because of the General Data Protection Regulation, according to Tomich. Right now, there are no plans to turn back on programmatic, with the Times instead adopting a wait-and-see approach. GDPR is also a factor in the thinned ad tech flotilla. And one persistent talking point: GDPR is a headache, but the California ballot initiative underway could very well become a nightmare. The reality is a privacy revolution has begun that will result, in an ideal circumstance, in less but better data in media and advertising. — Brian Morrissey

The Real Cannes Awards
It has long been known that the real action during the festival happens away from the Palais. It goes down in the hotels around the Croisette and at parties on beaches. It goes down, if you will, in the DM. As a nod to that reality, Digiday has compiled its own list of winners at this year’s Cannes Lions.

Best comeback
Martin Sorrell, with a fiery appearance on Thursday, plus a main stage session and a news conference scheduled for today, who called his departure from WPP like being “hit by the bus.”

Best party
News UK’s summer garden party at the Château de Garibondy, featuring Idris Elba, Kylie Minogue and Fatboy Slim. (Word was Kylie cost over $500,000.)

Best grown-up party
Live Nation and Citi at Villa Alang Alang with Green Day’s Billie Joe Armstrong.

Best surprise
Kylie Jenner showing up to support her boyfriend and Spotify performer Travis Scott Wednesday night.

Swankiest villa
Alang Alang (which hosted events for Live Nation and Vox)

Best cautionary tale
Snapchat with a lower key presence this year — no Ferris wheel, just a sound installation tucked away on the Croisette.

Best sign of the times
MediaMonks charging €5 ($5.81) for a drink at its Wednesday night party. “Times are hard, man,” lamented one attendee.

Best pivot
Philip Morris International with a beach presence on a mission to “create a smoke-free world.”

The New York Times shortens its ad tech supply chain for GDPR
Digiday spoke to Meredith Kopit Levien, evp and chief operating officer of the Times, at the Martinez hotel to discuss how the Times’ conversations with marketers have evolved, how it shed vendors to get compliant for GDPR and the title’s plans to be more aggressive in Europe.

3 questions for Nick Law, global chief creative, Publicis Groupe

You’re in Cannes.
I am. Was a smooth jury and judging. I run a tight ship.

How’s Marcel?
Marcel is now getting into beta. I was here at Cannes when it was announced last year, and I was highly skeptical. I barely knew what Publicis was. I was coming from a company where I had built software. And I knew you don’t announce software before you build it. But I spent six months with [Publicis CEO] Arthur [Sadoun] while I was talking about it. I know people working on it, which comforts me. We’ve got our own expertise. The thing with something like Marcel is it builds over time. A lot of the community here in Cannes and on Madison Avenue are habituated for the rhythms of campaigns. But for software, it’s going to take a while for it to mature. Machine learning is a big part of Marcel. It needs data. I imagine the advertising community at least is just going to be really impatient. They’re going to keep saying, “It isn’t real, is it? It doesn’t have a Lion yet does it?”

The other part of it I love is this quote from Arthur that “we needed to burn the boats.” I do feel like there is a strange lack of urgency even though there are a lot of issues. There was a lack of urgency, and things started to go down. And lack of urgency has been replaced by a strange fatalism. The industry needs to take some risks. And you don’t do that by telling a different story. Change is a design problem.

Is the concept of a holding company in trouble?
It’s being called into question. And it’s being called into question by us. Distinct brands are fine, and there is a value in connecting a full stack of capabilities. But it’s difficult to do that in one company. And it’s hard to scale in one company. And where the structure or the assets of holding companies can be leveraged … the problem with the merger mindset is that you solve for synergies, but then you destroy culture.

The Digiday Podcast Cannes Edition hosts Complex Networks’ Rich Antoniello

Digiday held a live podcast at the Dentsu Aegis Beach House with Complex Networks CEO Rich Antoniello. For Antoniello, the pivot to reality couldn’t come soon enough.

“In a big sailboat, when the wind stops, there’s so much momentum that unless you’re the person who looked up and saw there was no wind in the sail, you’re slowing down, but you don’t feel it,” said Antoniello. “That’s exactly what happened about a year ago in the media, when all the margins started compressing and the revenue started compressing. All these people who had stopped raising capital, and had been unprofitable and had been sucking it down thinking it’s going to get better? It’s not a pivot to reality. The reality happened — it’s just a late realization of it.”

Read more excerpts and listen here.

Starting Out: Cannes Edition
On this week’s Starting Out, we talked to Edelman CEO Richard Edelman, who is setting out to evolve the company’s offerings beyond public relations into advertising, consulting and even media — and thinks holding companies are outdated.

“We’re the only ones of size who are still private, independent and family-held. All the other PR firms sold out to WPP, Omnicom or others for the reason of synergy. We would have been choked by the holding companies,” said Edelman. “They demand high margins; they force big layoffs. We don’t. We focus on long-term growth. Economies of scale work to a point. It works for us because we can serve our clients anywhere. But beyond a certain size, you get diseconomies of scale because you get slow and bureaucratic.” Read more excerpts and listen here.

Famous last words of Cannes
“Let’s just go for one in the Carlton.”

“I’ll do it when I get back to the hotel tonight.”

“I’m going for a run in the morning.”

“Breakfast at 8:30 sounds great.”

“I’ll be there in five minutes.”

Till next year
Thanks for reading this year’s Cannes newsletter. We’re already looking forward to next year — after we get some much-needed sleep.

The post Cannes Briefing: A quieter, more pensive week in the Riviera appeared first on Digiday.

The mobile ad-blocking threat is growing, albeit slowly.

Use of ad-blocking software has largely been a desktop issue, and while still costly, ad blocking has leveled off as publishers have asked or required visitors to disable their ad blockers in order to see content. On mobile, though, mobile ad blocking is creeping up.

Research from AudienceProject, a company that helps publishers understand online audiences, found that 8 percent of mobile sessions detected people using an ad blocker in the U.K., up from 2 percent in 2016. In the U.S., 5 percent of sessions were blocked, up from 2 percent in 2016. In Germany, which has ranked high in desktop ad-blocking use, 13 percent of sessions on mobile were blocked. (AudienceProject had no comparable figures for German.)

Across Dennis Publishing’s U.K. portfolio, mobile web ad-blocking rates have increased from 2 percent to 4 percent over the last 12 months, the company said. For France’s Le Monde, mobile ad blocking has shot up since January, with 20 percent of mobile sessions now blocked, which is close to its desktop rate, said Pierre Buffet, head of digital at Le Monde.

Publishers’ mobile sites typically aren’t as lucrative as desktop, but as people become increasingly mobile, there’s concern that ad blocking will take a bigger bite out of their mobile business as publishers can’t monetize those audiences with ads.

“We see mobile fill rates around between 60 percent and 80 percent; that’s not comparable to desktop,” said independent publishing consultant Oliver von Wersch. “Between 1 percent and 5 percent of blocked ads, this isn’t affecting the business in any way.”

Sean Blanchfield, CEO of PageFair, which sells ad-blocking solutions to publishers, noted that mobile ad blocking is growing, but from a small base.

Mobile ad-blocking rates have lagged desktop partly because blocking ads on mobile takes marginally more work on mobile, where you have to install an app or activate a browser plugin, than on desktop. Equally, publishers, wary of making the same ad overload mistakes they did on desktop, are actively managing the number of units, size, scale, format and position. Initiatives like the Coalition for Better Ads have also cleaned up the user experience on mobile.

Growing concern over privacy infringements are spurring adoption of ad blocking, though, Blanchfield said. Data from App Annie in May found that downloads of the top five dedicated ad-blocking apps in the U.K. more than doubled in the past year to almost 70,000 times across Google Play and the iOS App Store combined.

“Of course it is a great threat for us, especially if it’s natively embedded on the browser,” said Bertrand Gié, digital director of France’s Le Figaro.

Another potential headwind for publishers will be the ePrivacy directive in Europe, requiring publishers to let consumers choose if they want to be tracked.

“Data-driven ad targeting on mobile is getting more difficult. If you’re not using data, you need different ways to measure audience and context. That’s more than putting an ad on the page with BT Sport,” said Simon Kvist Gaulshøj, vp of international at AudienceProject. “Unless we find tactics to deliver relevant ads to the right people, ad blocking will continue to rise toward the levels we’ve seen on desktop.”

“Right now, the common perception in the market is there’s no advertising without tracking,” said von Wersch. “Deactivating tracking in the browser is a de facto ad blocker. That could dramatically increase the ad-blocking problem.”

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At the Digiday Programmatic Marketing Summit earlier this June in New Orleans, we surveyed 46 client-side and agency marketers about their plans to reduce arbitrage in digital advertising. Check out our earlier research on how important it is to European marketers to address arbitrage here. Learn more about our upcoming events here.

Quick takeaways:

• Forty-three percent of publishers surveyed said they would only buy ad inventory from ads.txt-verified sellers.
• Roughly two-thirds of publishers expect ads.txt to do more to reduce arbitrage than the General Data Protection Regulation.

Arbitrage in digital advertising, whether in the media or data form, is one of the industry’s great ills. It stifles transparency while enabling middlemen to erode advertisers’ budgets by selling marked-up data and profit on a publisher’s inventory. Video advertising, which advertisers will spend $15.42 billion on in 2018, is particularly susceptible to arbitrage. Part of the issue is marketers don’t collectively back one way of combating arbitrage, according to Digiday’s research. The most common tactics marketers employ are reducing their use of third-party data and buying inventory from ads.txt-verified sellers in programmatic exchanges, both at 43 percent adoption, while only 10 percent of marketers are doing nothing.

The post Digiday Research: Marketers lack consensus on how to limit arbitrage appeared first on Digiday.

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