Month: April 2019

A British white paper suggests requiring tech giants to remove content that’s “harmful,” as well as illegal, a far-reaching proposal for a western democracy.

“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media. Today’s column is written by Ellen Houston, director of applied data science at Civis Analytics. Marketers are increasingly shifting to performance and optimizing their investments with the right audience to drive business growth. This is… Continue reading »

The post Uplift Modeling Can Reveal Alternative Paths To New Customers appeared first on AdExchanger.

By Dan Fennell, vp of publisher development

A handful of publishers are taking a novel approach to selling ad inventory: using fewer exchanges and SSPs and forging direct connections with DSPs. In doing so, they’re anticipating the needs of brands looking to cut out the middleman. It makes sense, but publishers need to be careful not to cut ties with the SSPs and exchanges that offer real value.

The logic does seem sound: With fewer SSPs and exchanges, there are fewer fees — which means more cash to put toward bids. “Advertisers will say, ‘This way more of my dollars are going toward my bid in the auction,’” explained Phil Bohn, svp of sales and revenue at the ad management firm and online publisher Mediavine.

Another expensive problem is that buyers often receive the same impression from multiple exchanges being used by a publisher. This costs DSPs extra money since they have to listen to duplicative bid requests. With fewer exchanges representing the same impression, both buyers and publishers could save money.

It’s not just about saving money. Advertisers and publishers covet transparency, and worry that exchanges and SSPs create layers of murkiness between the initial bid and the eventual placement. Then there’s the issue of trust: Some SSPs have set unnecessarily high price floors, and some exchanges have trafficked in fraud and low-quality inventory.

Many advertisers are starting to take the path of “supply-path optimization,” a trend that involves buying through as few exchanges and other middlemen as possible. And some publishers, recognizing the value of a select few exchanges and SSPs, are leaning toward a middle-ground approach known as “demand-path optimization” — i.e., working more directly with advertisers and with a smaller group of SSPs and exchanges.

But advertisers and publishers looking to trim the Lumascape face pitfalls. First, there are huge obstacles to forging direct DSP connections at scale. While mid-level DSPs might be up for partnerships with mid-level publishers, major DSPs are different. “A major DSP may not be willing to work with a mid-level publisher right away,” explained David Park, senior director of publisher partnerships at GumGum.

Given that such DSPs already boast an abundance of existing partners, they may have little incentive to devote resources and manpower to such a partnership. Things aren’t likely to change until individual publishers are able to dedicate resources to direct integrations with DSPs — and until DSPs create tools that allow those integrations to take place. The integration process could be especially onerous for publishers if they’re left to do all the heavy lifting; publishers and DSPs alike need to make organizational changes for direct relationships to be less costly and laborious.

And it’s not just a question of operational challenges. Even amidst a landscape littered with untrustworthy and ineffective platforms, some exchanges and SSPs bring unique value to the table. Culling the field makes sense. Torching it doesn’t.

How exchanges can stay in the picture

Some less-than-reputable platforms have already folded or lost influence. While SSPs and exchanges aren’t about to go the way of the dodo, the market continues to consolidate around a handful of providers. The ones that want to stay relevant need to bring unique value to the supply chain.

First and foremost, they need to offer unique demand. “Publishers often simply maximize their current relationships,” explained Park. “So it’s important for exchanges to bring unique demand sets into play.” Exchanges need to offer publishers unique brand partners, and they need to offer advertisers unique inventory.

Some exchanges also offer unique formats. GumGum, for example, uses an “In-Screen format,” which keeps ad placements in view even as users scroll, as well as an “In-Image” format, which places contextually relevant ads within the bottom third of an existing image. Those are powerful differentiators from traditional display ads.

Exchanges can also differentiate themselves by offering unique data — for instance, data that aids in brand safety. No airline wants to find itself next to a news story about a plane crash; no soft drink company wants an ad appearing next to that of a competitor; and nobody wants an ad appearing next to violence or hate symbols. Many brands worry that an overreliance on automated exchanges weakens their control over such matters.

That’s why directly integrating safety protections that combine contextual, video, and image analysis can set an exchange apart. Advertisers are likely to pay for third-party brand safety tools one way or another. Folding the technology directly into the exchange cuts out an extra step. It also provides reassurance that brands can access the unique demand provided by the exchange without risking their reputations.

Brands and publishers are eyeing exchanges and SSPs with distrust, and the market is shrinking. DSP-to-publisher connections may be rare, but advertisers and publishers are already paring down their slate of partners on the path to optimization. If DSPs create easier ways for publishers to integrate (and if publishers find the necessary resources to dedicate to those integrations) the trend could accelerate.

But there will always be a place for exchanges that provide unique value — whether that means unique demand, unique ad formats, unique safety protections, or a unique level of transparency and control. Publishers would be well-advised to take a hard look at the marketplace; they’ll find that some of those platforms are still essential.

The post A unique value proposition: How exchanges can survive the publisher-DSP direct relationship appeared first on Digiday.

Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. A Chance To Serve The buy-side ad tech company Adform announced an investment on Monday by GRO Capital, a Danish private equity firm. The companies didn’t disclose the size of the new round, and Adform COO Oliver Whitten tells AdExchanger that talks with GRO… Continue reading »

The post Ad Servers Plot To Scoop Up Sizmek’s Business; PE Firm Acquires Gizmodo Media Group appeared first on AdExchanger.

Fallout from Sizmek’s recent bankruptcy filing is far from over.

The company’s difficulties highlight deeper vulnerabilities in the ad tech ecosystem and how it is structured, according to ad tech sources. News of layoffs at other vendors such as mobile ad network Verve, and demand-side platform DataXu in the last few weeks, have compounded that fear. The moves have prompted further industry talk around who in the industry has potential unsustainable debt loads and whether ad tech investors are becoming more jittery. Some are even drawing analogies to the collapse of the mortgage industry during the financial crisis. Many publishers are resigned to the fact they will likely be left holding the bag with bad debts, albeit not at a scale that could severely damage them, should Sizmek default.

“As unfortunate as the Sizmek situation is, I fear it is the tip of the iceberg” said Dan Wilson, CEO of London Media Exchange. “A dozen other supply-side companies must have exposure to other DSPs that themselves have significant exposure. It’s that kind of domino effect.”

Sizmek has reportedly regained access to its cash and resumed business operations, but whatever the outcome, several ad tech sources believe it won’t be the last DSP to falter.

“The news about Sizmek signifies a decline in the ad tech landscape as we know it,” said Amir Malik, digital marketing lead at Accenture. “Martech and ad tech are colliding, so end-to-end customer experiences with strong stack integrations are driving more holistic vendor solutions.”

That will in turn make the ecosystem more closed than before and reduce the independent ad tech vendor opportunity, he added. Meanwhile meeting the terms of the General Data Protection Regulation, plus the trend of clients pushing for more visibility of their ad stacks, will require more checks and balances on the ad tech and ad network players, said Malik.

“This is unprecedented to have a DSP default like this and may not be the last time it happens,” said an ad executive at an exchange. “I expect there to be one or two other defaults in the subsequent months due to the consolidation of DSPs into very large capital companies, as well as the pressure on the third-party cookie.”

It’s a zero-sum game
In the short term, there will likely be a scramble from SSPs and exchanges to avoid any similar future risk with DSPs. Several ad tech executives predicted that buy-side teams within SSPs will begin to more aggressively call in their invoices with other DSPs — to avoid being burned should they default.

“SSPs will clamp down on their credit and manage it more aggressively with the DSPs,” said a former SSP executive. “Exchanges who expanded credit out of DSPs in the good times, there will be pressure to bring that down.” Others may start doing more in-depth credit checks on other DSP partners or renegotiate payment terms, according to another ad tech executive.

More broadly, Sizmek’s crisis highlights a deeper issue: the cost pressures of ad tech vendor pricing structures. For instance, due to the cashflow set up and lengthy payment terms between advertiser clients and their agencies, SSPs at the other end of the chain can end up acting as the float for the agency holding groups and the advertisers, according to a former SSP executive.

Typically, clients pay agencies on average, 90 days after a project’s delivery. Agencies then pay the trading desks, which pay the DSPs. Usually, the SSP has invoiced the DSP with much shorter payment terms — typically 30 days, according to sources. Those SSPs that can offer publishers the shortest payment terms will likely end up with their business.

But this means an SSP can carry in the high tens of millions of dollars in working capital requirements every month. Not cheap. A go-to way to shoulder that additional cost is to take out short-term loans with banks to cover the cost. Those loans wouldn’t extend to when a DSP defaults, however.

Liability hot potato
Publishers that work with SSPs that are owed serious sums by Sizmek are keeping a close eye on SSP debt, in case Sizmek should still default.

Several publishing executives said that an SSP partner has tried to recoup lost revenue by shaving it from off the publisher’s net number.

“I have a feeling it’s a sign of things to come,” said an executive at the publisher. “It looks like this will lead to a couple of legal fallings out between agencies and their DSP and SSPs and publishers.”

Some exchanges have extended their payment terms by an additional 30 days, since the news of Sizmek’s bankruptcy filing emerged, in order to buffer the situation.

Generally, publishers are resigned to the fact that should Sizmek default, they’ll be left out of pocket because SSPs will pass the liability on to them. It’s fairly standard for publishers and SSPs to have a sequential liability clause in contracts, according to ad tech and publisher sources. That means if an SSP is owed money by another company, it doesn’t have to pay its own partners until it has been paid what it’s owed.

“Most SSPs try to absolve themselves of responsibility in the event of non-payment from buyers through sequential liability,” said an ad tech executive and former publisher, “despite otherwise owning transactional relationships and playing a unilateral role in checking buyers’ creditworthiness.”

Naturally, the cost will be spread among multiple publisher partners, so won’t cause serious damage to any one publisher’s bottom line. Still, they want to be clearly informed.

“I expect if Sizmek does default, that SSPs will try and quietly pass the burden to publishers through deductions that are hidden from immediate view,” said the same ad tech executive. “Even where a publisher has signed a contract which does now allow the vendor to pass, this deduction should be declared.”

The post ‘It’s the tip of the iceberg’: Sizmek saga spells trouble for ad tech appeared first on Digiday.

Swiss news publisher Neue Zürcher Zeitung is betting on email newsletters as one of the most effective ways to drive registrations and, ultimately, subscribers so it can hit its goal of 200,000 paying readers by 2022.

The 200-year-old German-language publisher currently has 21 email newsletters, around half of which are weekly and half of which are daily. The most popular newsletter, its daily briefing, has grown to almost 250,000 readers. According to the publisher, this newsletter accounts for around 8% of the traffic to its site in the morning. The open rate on average is above 30%, beating the MailChimp benchmark for media newsletters of 22%. 

At the end of 2018, the publisher had 156,000 subscribers, 39,000 are digital-only subscribers. NZZ has over 600,000 registered users. Overall subscriptions grew by 4% last year, and digital-only subscriptions grew by 59%. But the goal is to get to 200,000 subscribers by 2022, with more than 50% of these digital only.

The publisher has a data science team of nine people working on propensity models. A recent analysis looking at all registered users over the last eight months found that those who had signed up to two or more newsletters have the highest subscription conversion rate.

Section newsletters such as “Economics” or “Digital” work best to convert people and have an audience size of 25,000 and 15,0000, respectively. During that eight-month time frame, the top newsletters had a subscriber conversion rate of less than 10%. Lifestyle newsletters have the lowest conversion rates, according to the publisher. It also found that there is a positive correlation between the number of newsletters users subscribe to and their engagement score, which is measured using criteria like recency, frequency and volume of articles read per visit to calculate a propensity to subscribe.

“Newsletters are one of the most important tools to drive registrations; we’re giving readers incentives,” said Daniel Ammann, head of portfolio management, NZZ. Primarily, NZZ views newsletters as a conversion tool, so they are available to all registered users, although there are a couple of exceptions for very niche topics.

The publisher doesn’t have a limit to launching more newsletters. If there’s a cohort it’s looking to reach, it will design a product for it. NZZ’s readership is 65% male. To try and attract more female readers, the publisher launched a newsletter aimed at younger female readers called “NZZ Personally,” last month. Each week, four female NZZ journalists select a range of stories they enjoyed the most and inform the reader why. Often, these cover a wider range of topics beyond finance and economics that are typical for NZZ and its suite of newsletters.

Another recently launched newsletter that caters to students is personalized based on user behavior and other factors. For students, NZZ compares the personalized feeds for that group and sends the top-10 articles to students, all of whom were signed up by default to this newsletter when it launched. Typically, said Ammann, signing people up automatically works for topics-based newsletters like its wine and travel newsletters. According to the publisher, there were no negative reactions from people who were signed up automatically, although some people unsubscribed.

Since last summer NZZ’s algorithm calculates daily each registered users’ propensity to subscribe so the publisher can adapt tests. The algorithm takes in hundreds of different criteria like recency, frequency and volume of articles read per visit and how many newsletters they read to calculate the score. The publisher is still experimenting with how to best use the propensity score with its paywall. For one experiment, it’s showing readers with a propensity score in the top 20% the payment prompt on their next visit rather than later on. According to the publisher, this has helped increase conversion by more than 80%.

For Ammann and his team of four in total, the goal over the next few months is acquiring subscribers while managing churn, as digital subscribers have monthly subscriptions so have a shorter customer life cycle. It also needs to drive more revenue per digital-only subscribers, who pay less than those who have the print and digital subscription, through selling ancillary products. The publisher is planning to launch more pop-up newsletters around key events like the Swiss federal election this October.

Like other publishers figuring out their paid content strategy, NZZ has experimented with different paid models. It introduced a registration wall in 2012 to get a better understanding of its readers and to explore the effectiveness of email newsletters as a vehicle to convert readers. It has been developing machine learning algorithms to create personalized paywalls.

“We have to make it user-friendly; the customer experience has to be good,” he said. “We need to improve the overview on how many newsletters there are so people can easily find the ones that are right for them. This is not perfect yet; we can improve.”

The post How Swiss news publisher NZZ uses newsletters to increase paid subscriptions appeared first on Digiday.

In digital media, like in real estate, it is typically better to own than to rent in the long run. But for publishers, taking ownership can often require years of accruing audiences on others’ platforms before they can try to convert them to their own, as All Def Media is currently doing.

In October 2018, All Def Media asked its YouTube audience to sign an online petition asking the hip hop culture and comedy publisher to bring back its unscripted comedy show “Roast Me” for a fourth season. The company received 10,000 emails asking for the show to return. It responded to those emails to inform its audience that the show would return in December 2018 but not on YouTube, where the smack-talk showcase’s mature language might endanger its ad revenue given YouTube’s ongoing brand-safety issues. Instead, All Def Media decided to put the new season on the show’s own site and behind a paywall.

By eschewing ad revenue on YouTube for consumer revenue on its own site, All Def Media took a risk, and so far it has paid off. Roughly, 5,000 people pre-ordered the entire season for $3.99, and 25,000 have paid for it to date, according to All Def Media CEO Chris Blackwell. Those 25,000 paying customers may pale in comparison to the 4 million subscribers on All Def Media’s main YouTube channel, but the point is they are paying All Def Media and doing so directly.

Many digital publishers have been scrambling to establish their own properties since Facebook announced in January 2018 that it would de-prioritize publisher content. The merits of a publisher owning the distribution of its content are clear. They don’t have to worry about platforms’ algorithms curtailing their ability to reach their audiences, and they don’t have to rely on platforms’ sales teams to attract enough ad dollars to make their programming profitable after that revenue is split.

However, it can be tough to convince people to go from a platform they use regularly like YouTube to get in the habit of visiting somewhere new. And it can be even more challenging to convince those people to pay for content they previously received for free. That All Def Media has been able to convert 25,000 viewers into paying customers was enough to assure the company that it was onto something, said Blackwell. Now All Def Media will try once again to pull its platform audience onto an owned-and-operated property.

Within the next two months, All Def Media plans to roll out a mobile app for its musical trivia show “Bar Exam.” That show debuted in December 2018 and tests rappers’ knowledge of other artists’ lyrics in episodes uploaded to YouTube, Facebook and Instagram’s IGTV.

However, All Def Media is not looking to put that series behind a paywall. Instead, the show’s mobile app — which the company is developing with digital studio Culture Genesis — will be a free companion product. Similar to HQ Trivia, the “Bar Exam” app will feature a weekly interactive live game show for people to test their own lyrical acumen and compete for prizes, such as cash and merchandise.

All Def Media decided to develop an app for “Bar Exam” after seeing that “probably 95%” of the show’s viewership across YouTube, Facebook and IGTV was happening on mobile devices, according to Blackwell. That mobile-dominant viewership could help All Def Media to convince people to download the app. Once the app is available, the company plans to attach links to episodes distributed on YouTube and Facebook that people will be able to tap on to install the app through their phone’s app store, Blackwell said.

To generate revenue from the app, All Def Media plans to sell sponsorships against these games, said Blackwell. All Def Media already sells sponsorships against “Bar Exam” episodes, but the company sees an opportunity to do more with marketers inside its app than on its YouTube channel, where the sponsorship elements are largely limited to the video’s content and must adhere to YouTube’s sponsored content policies. “Once we have the app experience, we’ll have more control,” Blackwell said.

The post How All Def Media uses YouTube to drive paying subscribers appeared first on Digiday.

Disney, WarnerMedia and other media giants are going “direct to consumer” with new subscription streaming services. And with Disney and WarnerMedia expected to spend billions on their services — Apple, too, for that matter — a lot of attention has justifiably gone to the looming battle over subscription streaming video.

But here is another, messier battle still looming in streaming video: the battle for the $70 billion that still goes toward TV advertising.

According to Magna Global, OTT accounts for 29% of TV viewing but so far has only captured 3% of TV ad budgets. And as consumers increasingly flock to internet-connected TV devices, a wide range of players — from tech giants, to device sellers to TV networks and more — are building services to capture a share of the ad dollars that will inevitably flow into the OTT ecosystem.

But while, the potential of the OTT ad market is enormous, success for most video programmers is anything but guaranteed.

OTT advertising is on the rise
With more video consumption headed toward internet-connected TV screens, advertisers are naturally following.

OTT-based advertising hit $2.7 billion in revenue in 2018, which represents a year-over-year growth of 54%, according to estimates from Magna Global. That’s actually higher than Magna’s original estimates, which projected OTT ad revenues to hit $2.2 billion in 2018. Magna’s revised forecasts include growth of 39% in 2019 to $3.8 billion and 31% in 2020 to reach $5 billion.

The two current market leaders in OTT advertising, Hulu and Roku, have already built sizable ad businesses. Hulu reached $1.5 billion in ad revenue in 2018, a growth of 45% year over year. Roku, meanwhile, generated roughly $416 million from “platform revenue,” which mostly comes from advertising.

“We know that a growing percentage of ad impressions are being generated by people consuming through connected TVs,” said Vincent Letang, evp of global market intelligence for Magna Global. “We can see it in two ways: from the actual ad sales of OTT specialists such as Roku, as well as through the growth of ad formats that are only visible in OTT environments such as connected TVs.”

An executive at one U.S. cable network said that the network expects its OTT ad revenues to surpass digital subscription revenues this year.

“You know the landscape is going to change as soon as these massive [subscription streaming services] come out to challenge Netflix,” said the cable exec, referring to upcoming streaming services from Disney and WarnerMedia. “But SVOD is still a huge question mark for us. We are putting together our budget forecast for the next five years on what SVOD growth might be, and we’re being very conservative on what that growth looks like after next year. With AVOD, though, it feels like there’s a much cleaner path of growth.”

The market is being flooded
While Hulu and Roku command a huge percentage of ad dollars currently going into OTT, newer entrants have been emerging.

YouTube, for instance, has been telling marketers how people are spending more than 200 million hours per day watching YouTube on TV sets. The TV screen has become central part of YouTube’s ad pitch heading into upfront season, which includes separating out YouTube TV inventory for advertisers for the first time. Amazon has also been ramping up its efforts to collect more TV ad dollars, including hiring dedicated people to sell its video inventory, bidding for live sports rights and building free, ad-supported video streaming apps for entertainment and news.

Various TV programmers are also investing in ad-supported OTT. CBS has a network of streaming apps which include three free video streaming services for news, sports and entertainment news, as well as an ad-supported tier for its CBS All-Access subscription service. These services combine to generate “hundreds of millions” in annual ad revenue for CBS, according to a previous Digiday story. Viacom, meanwhile, spent $340 million earlier this year to buy Pluto TV, a free video streaming service that offers more than 100 linear-programmed channels. Viacom has been pitching Pluto TV to cable and satellite distributors as an add-on for broadband-only subscribers — a “key” part of Viacom’s distribution strategy, according to Viacom CEO Bob Bakish in an interview with CNBC after the Pluto TV acquisition.

Other key ad-supported video streaming services include Xumo and Tubi TV, as well as branded services from TV manufacturers such as Samsung and Vizio. And this doesn’t even include the virtual live TV services from Hulu, YouTube, DirecTV and Sling TV.

“Four years ago, [the TV industry] had the option of going slow; they don’t have that option now,” said Scott Rosenberg, svp and gm of Roku’s platform business. “They have to follow consumers — and those consumers are showing up on OTT.”

Platforms could exercise greater control
In digital advertising, publishers fight for scraps under the shadow of Google and Facebook. There is a fear among some video programmers and competitive video services of a similar scenario arising on connected TVs, with Roku and Amazon capturing a greater and greater share of OTT ad dollars.

Roku and Amazon have certainly been investing in developing new products focused on collecting more ad revenue. In 2017, Roku launched The Roku Channel, which offers more than 10,000 movies and TV episodes, and has become one of the top-five apps on the Roku platform, according to Roku. Amazon, meanwhile, has launched Freedive, its own ad-supported service for licensed movies and TV shows, and is currently developing a news video app for Fire TV.

In deals with TV networks and other publishers that distribute their apps on Roku and Amazon, both platforms take 30% of the ad inventory available on those apps. (Hulu, which is the biggest OTT ad giant in the U.S., sits in a unique position. The service’s size — 25 million subscribers and 55 million ad-supported viewers per month — means Hulu has the leverage to prevent platforms to sell ads in its app.)

With ambitions to grow huge ad businesses, it’s reasonable to believe that Roku and Amazon would prioritize their own competing, ad-supported services. And as the two largest connected TV device owners in the U.S. — Amazon said it has more than 30 million monthly active users; Roku said it has more than 27 million monthly users — these platforms can get their services in front of a lot of people.

“We are still in the early stages of this transition to OTT,” said Rosenberg. “We make money when channel partners make money, and we make money from The Roku Channel.”

“Job one in this ecosystem is to win marketers over to OTT and that’s where our focus is,” Rosenberg added. “Ad spend needs to catch up with consumption — that’s the real opportunity for us all in this ecosystem.”

TV networks and other video publishers that are able to aggregate scale across Amazon, Roku and other platforms can still attract a growing percentage of OTT ad dollars, said Nick Pappas, CEO of ad agency SwellShark.

“That’s why Hulu is positioned so well,” said Pappas. “It doesn’t matter if someone is watching Hulu on Apple, Roku or Amazon, because Hulu has aggregated scale and can sell cross-device, which Amazon and Roku aren’t doing as much of yet.”

What’s more, Amazon and Roku video inventory isn’t available on open ad exchanges, Pappas said. “What’s more attractive to me is a universal way to reach audiences anywhere they choose to consumer content, rather than one specific platform or another,” Pappas said. “Anyone who can aggregate video scale across multiple platforms has great upside.”

The post The next front of the streaming wars is the battle for ad-supported programming appeared first on Digiday.

Facebook has poured over $1 billion into Watch, its YouTube-like video viewing section, to little success. It’s tried entertainment shows. It’s tried daily news shows. It’s tried live sports. It’s tried Tom Brady and LaVar Ball. And while Facebook says the platform has grown to 75 million users, who spend at least one minute inside Facebook Watch every day, it is nowhere close to the billions spending time on YouTube.

But this is a fight Facebook can’t lose. Facebook wants TV-ad dollars and will continue to tinker away at a video product that can draw users and brand budgets in a significant fashion. What that leaves is a platform that is still in the midst of an identity crisis.

The post ‘It’s just not what people go to Facebook for’: Despite struggles, Facebook isn’t giving up on Watch appeared first on Digiday.