Month: December 2019

How big is the opportunity for addressable TV?
The reality is we’ve had three main commercial broadcasters here in the U.K. for way too long. Those businesses don’t have to innovate at speed because they’re the main places TV buyers have to go to spend money. It’s far easier for the broadcasters here, whether it’s ITV, Channel 4 or Sky, to rely on people like me to commit a certain share of my clients’ cash in exchange for discounts on TV ads. It’s the status quo that preserves the share of the spoils between the broadcasters.

Deviating from those share deals with something like addressable ads is a risk to each broadcaster’s share of the market. For now, addressable ads are a tiny proportion of what we buy for our clients because most of the inventory sits within the broadcasters’ own streaming services that aren’t innovating as quickly as they should be. Scale is the issue for addressable TV.

Haven’t the broadcasters spent a lot of money in 2019 on addressable TV?
ITV has made a lot of noise to the market this year about their addressable TV business, while Channel 4 has started working with the Trade Desk to make it easier to buy impressions on its streaming services. The problem is that those innovations are five years too late. To date, addressable TV in the U.K. is Sky Adsmart, which launched in 2013 but still has the most inventory, the best buying platform and the strongest data sets.

No one is really watching ITV’s and Channel 4’s streaming services regularly. And when people do watch those services, they’re forced to sit through as many as seven ads before the show even starts. That’s a forced view. The broadcasters say this is exactly the same experience as linear TV, but it’s not the same if I can choose to either to sit through all the ads in a linear TV break or switch to another channel and then switch back once my show starts again. The experience on the streaming services from the broadcasters is worse for the consumer.

Isn’t the prospect of more impressions up for grabs good for media buyers?
No, if the ad experience is bad, then there’s a strong chance the impressions bought won’t be effective. But the broadcasters are less concerned about the ad experience and more concerned with protecting their share of media budgets.

If Sky Adsmart is so advanced, then why aren’t addressable TV budgets growing?
It’s ridiculously expensive. I’ve been quoted cost-per-thousand impressions in excess of 100 pounds [or about $131.50] to buy addressable ads via the platform. With that amount of money, I could buy anything I want on linear TV where the CPMs can be as low as 3 pounds [or $3.95] for a standard ad during the daytime.

Yes, linear [will not] only get me the specific audience I’m after, but I can buy far more ads with the same budget I would’ve used for the addressable ad campaign, and it’s likely that within all those impressions there would be the same audience I wanted from Adsmart. That’s the conundrum we have as agencies. Adsmart is a cool product, but it’s too expensive and isn’t built for big blue-chip advertisers who consider some wastage on TV a good thing. Adsmart is built for advertisers who are new to TV and don’t know they can get the same audiences for cheaper.

If scale is the issue, how will it be resolved?
People moving away from watching TV via set-top boxes to apps will be what pushes addressable TV further up media plans. Samsung is already building an ad business around its connected TVs in preparation for this. The platform it is currently pitching to agencies in the U.K. lets advertisers buy an impression on the homepage of the menu screen of their TVs. CPMs are around 18 pounds [or about $23.70,] so it’s far cheaper than Adsmart, though Sky’s product is far more data driven.

It was a good time for readers to sign up for publications on the cheap: New York offered a 60% price cut on a yearlong subscription. The Wall Street Journal gave readers two months of unlimited digital access for $1; a month of digital access normally runs $35. Quartz offered 50% off to subscribers, as did The Information.

“The assumption is that you’re bringing in low-value customers that are only attracted to the price,” said Jason Sylva, gm of consumer revenue for New York magazine. “That’s something that I’m sure keeps everyone in this business up at night: Are you doing long-term damage to the brand by relying too much on this tactic?”

For publishers whose subscription products are newer, the big discounts help them combat larger e-commerce trends that are not in their favor. As e-commerce has turned into an integral part of the holiday shopping season, larger retailers have benefited more than smaller ones. E-commerce companies with annual revenues exceeding $1 billion have so far this year found their holiday season revenues increase at a rate more than double (or 71%) that of e-commerce companies with annual revenues less than $50 million (just 32%), according to Adobe’s calculations.

As the largest players have logged gains, the actual discounts offered on Black Friday and Cyber Monday have become more modest. Adobe’s analysis found, for example, that in the categories with the biggest discounts such as toys, clothing or televisions, retailers offered savings of about 20%. By comparison, many publishers’ discounts were much steeper.

“When you’re new, you have to come out with something that’ll get noticed,” Sylva said. “The best way to get attention is with an eye-popping sale.”

Not every publisher decided to go discount happy on the two special shopping dates. The Daily Beast, which this year drastically changed the pricing strategy for its membership program Beast Inside, opted to not offer anything beyond its standard discount. Mary Cullen, the Daily Beast’s marketing director for memberships, said her company’s research found that deeper discounts tend to result in higher churn. Consequently, the news publisher avoided any further price cuts.

But even though Black Friday (or Cyber Monday) discounts are available to any consumer, most of the publishers that offered them made sure to target prospects who had shown engagement ahead of the offer launch. Some publishers credited their gains on the work that they did ahead of the two mega shopping days.

Karl Wells, the Journal’s gm of membership, subscription sales and marketing, pointed to his publication’s brand campaign that ran at the beginning of November, as well as a three-day “open house,” when the Journal dropped its paywall entirely.

Those two elements, he said, brought in a large number of new readers and enabled the Journal’s data science team to identify a large pool of prospects who might be amenable to a Black Friday deal. “Suddenly, four weeks out, you’re going, ‘We’ve got a big pool of people who aren’t ready to pay for us yet but who are interested,’” Wells said. “On the Wednesday of Black Friday week, we knew we were going to have a really good weekend.”

While most publishers that offered discounts put the offers in front of readers in as many places as possible, the channels that brought the most conversions differed among the news providers. For New York magazine, Instagram ads delivered the greatest number of subscribers over the weekend. For The Wall Street Journal, site visitors hitting the paywall — which was set to be more easily triggered — delivered the greatest impact, Wells said.

While reducing his product’s price by more than half might seem risky, Sylva perceives it as a way to tap into a customer’s current mindset, he said. “Whatever state of mind that person’s in, we try to match that with the pricing,” Sylva explained. “At a time when we’ve seen that customers are really taking that moment to buy a bunch of stuff, the currency in that moment isn’t value; it tends to be price-led.”

“TripAdvisor is going through its next phase,” said Christine Maguire, vp of advertising revenue for TripAdvisor. “We’re hitting our 20-year mark in 2020. There’s a lot that we’re trying to do to grow and diversify the platform, our audiences, our marketing strategy and ultimately how we can better serve marketing partners.”

In 2018, TripAdvisor’s media advertising revenue was $153 million. The company believes that its platform has been “under-indexed.” That’s why TripAdvisor is now more seriously pitching advertisers — not only the airlines, cruises, experiences and restaurant brands that have been its bread and butter but also beauty and CPG companies — on the ability to reach its approximately 460 million monthly users at a time when those users are “already in a buying mood,” according to the network’s website, as well as its targeting capabilities. The TripAdvisor Media Manager offers advertisers the ability to target users based on location, browsed destinations or recent travel planning activities on the platform with ad formats that include banner ads and native listing ads. Buyers did not share an estimated CPM but said that some of the company’s products are sold that way.

While the company’s media business has existed for the last decade, it has become a much bigger priority for the company this year and TripAdvisor has been steadily working to bolster that business over the last year. The company has not only added the self-serve ad platform and new ad products but added to its team. Maguire’s position as the head of advertising revenue was newly created for her when she joined in April 2019. She leads a team of 170 currently and the company plans to continue to add to it, but it is unclear how big the team will get. “We continue to make investments in the business commensurate with what we believe will be the revenue opportunity moving forward,” the company said in an emailed statement.

“We have a brand-safe environment, we have massive global scale where we can touch consumers in many different places, and, ultimately, people don’t want to spend all their money with Facebook and Google,” said Maguire. “Right now, we’re way under-indexed in what we should be getting.”

That TripAdvisor is working to get a bigger piece of the pie by building out its offering makes sense to media buyers who believe it could be an attractive offering for advertisers. “They have the traffic of an audience that’s got disposable income,” wrote Bharad Ramesh, managing director, U.S. digital marketplace at PHD, in an email, adding that the ad business has “mature offerings” and that the company has “shown the ability to come up with net new ad offerings and bring advertisers along (cruise landing page) as well as have decent offerings for endemic brands (Metafeed search placements).”

That said, TripAdvisor is pitching advertisers more seriously and looking to boost its ad revenue at a time when more retailers like Target, Walmart, BestBuy and Wayfair, among others, are pitching similar first-party data and targeting capabilities to advertisers to not only compete with Facebook and Google but Amazon. “The pitch I have been getting lately surrounds the concept of legally compliant, online receipt data becoming more desirable in a world where cookie targeting is shrinking and offline receipt data is still not sexy and does not have high match rates,” wrote Ramesh.

Even though they are making a more serious push to court ad dollars at a time when retail media is growing and advertisers are getting more first-party data pitches, the audience that TripAdvisor’s media business offers is likely in a different mindset than that of retail media. And, given the size of their monthly active user base, with over 460 million, according to the company, the business is commensurate with its competition for ad dollars. “They’ve got potentially super valuable data,” said Marcus Pratt, vp of insights and technology at Mediasmith. “But [the company needs to be careful as it grows as] there’s a risk that if they clutter up the environment: The user experience won’t be so good and people will go elsewhere.”

Essence’s Deborah King observed of Reddit, “Communities is what they base their targeting clusters on” and “the focus is on community, conversation and shared interests.” King, who serves as vp of media activation and paid social for her agency’s Europe, the Middle East and Africa operations, said, “It’s on par with Pinterest for the consideration phase [of the customer journey], so we’re closely monitoring that.”

Reddit’s topic-based communities — focused on topics like gaming, health, beauty, politics, parenting and baking — encourage comments and discussions. This can be appealing for managers seeking to inject brand mentions into contextually relevant conversations. The company has been maturing its ad offerings in the U.S. and its site is emerging as a more serious contender to other social platforms operating in the U.K.

When contacted for this piece, a Reddit spokesperson said it’s worked with a number of agencies in the U.K. for some time without an office. “Our efforts and a recent in-market visit was and will continue to be a part of understanding our partners in the U.K. as we continue to grow our business and meet the needs of our clients keen to connect with our users,” said the spokesperson. “We look forward to building an outpost in the region in 2020.”

“For most advertisers, there is normally a more efficient place for digital ad spend,” said Oli Booker, chief of social for IPG Mediabrands’  Reprise UK. “But Reddit is a great way to target communities where the more traditional social channels struggle to reach them,” he added. “Nutrition and health also appear to be a lucrative space where individuals are looking for advice around fitness or nutrition; there are a lot of the big players in the space, like Huel who are spending big,” Booker said, referring to the food replacement purveyor.

For now, U.K. agencies must book their campaigns with Reddit’s U.S. team as part of a managed service, a more time-consuming process. But according to agency sources, Reddit is gearing up to expand its self-serve ad offering. This would make ad rates more cost-effective and automate the buying process, putting Reddit’s service more in line with other biddable platforms like Facebook’s.

“In terms of targeting, [Reddit is] on par with Facebook — if they have the U.K. audience size and get the biddable platform right,” said King.  And with the opening of a U.K. office, Reddit could serve as a viable alternative to Facebook for campaigns, she added. “It’s good to have alternatives and diversify outside of Facebook.”

For all of Facebook’s talk of its focus on groups and communities, the main objective behind a lot of effective Facebook ads is driving direct response rather than conversations. “Facebook ad posts allow comments, but it wouldn’t be best practice; the focus is on call-to-actions,” said King. “On Facebook, commenting is a byproduct [of an ad], whereas on Reddit it’s the core product.”

This week Reddit announced it has 430 million active users each month, mostly in the U.S., but also in Canada and the U.K. That’s more than Twitter’s 330 million active users each month across the globe. Statista has provided an estimate of 293 million for Snapchat’s active monthly users worldwide. But before piling on to Reddit, agencies will want to know how many users it has in the U.K.

As it runs more brand campaigns on its platform, Reddit is shaking its reputation for providing a hostile ad environment. But there’s still nervousness: Some user communities have been downvoting ads so as to neutralize Reddit’s attempt to profit from paid advertising. One subreddit community, with 180,000 members, roots out ads disguised as content, tagging them as “r/hailcorporate,” said Diego Chicharro, senior strategist at social agency We Are Social.

“Reddit’s influence over the rest of the internet is incredible; what happens on Reddit will then spread to Facebook and Twitter,” he said. “But advertising is in its infancy; to create impactful campaigns you can’t rely on what they offer in terms of paid-for ad formats, you need to collaborate with them and share their willingness to push campaigns.”

Reddit’s ad revenue is expected to reach $119 million (or 90.5 million pounds) in the U.S., according to an eMarketer study released in March. That’s a rise from $76.9 million (or 58.5 million pounds) in 2018. But if Reddit follows the example of other companies with maturing ad platforms, it needs more granular measurement capabilities and brand-safety assurances to keep its revenue growing.

Advertisers are in a permanent state of anxiety about brand safety and the suitability of their ads, and Reddit’s self-moderated pages, community rules and voting system have not to date provided clients rock-solid reassurance.

“Most of our clients would want to see more than that,” King said.

In one step to respond along these lines, in June Reddit announced a partnership with Oracle to build a context-led brand-safety tool for user-generated content.