Category: Data-Labor-Technology Stories

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With the explosion of cross-screen TV, publishers and advertisers are clamoring for better discovery, personalization and cataloging of video content, and metadata is answering that call. Metadata, put simply, adds more context to data. Metadata in video can range from the contents of that video (e.g., colors, products, characters) to the way it’s classified (e.g.,… Continue reading »

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Vivek Shah, CEO of J2’s Ziff Davis, knows a thing or two about surviving digital transitions. He helped lead the publisher of PCMag, AskMen and IGN out of bankruptcy by betting on ad tech, e-commerce and performance marketing. Shah, who will take over as J2’s CEO on Jan. 1, talked about the opportunity he sees in Mashable, which Ziff Davis just acquired for a reported $50 million; why not all publishers will succeed at e-commerce; and why native advertising is undergoing a correction. Here are excerpts of our conversation, lightly edited and condensed.

What’s your read on digital publishing’s missed revenue goals and consolidation in 2017?
I think it’s an expectation problem more than anything else. Many of these companies are solid growing businesses, but just not at the level that’d justify the valuations. I don’t view it as a fundamental problem with the businesses. Scale has always mattered, but it really matters now. A single-title publication, it’s harder.

What’s the value you saw in Mashable?
We’ve always loved the brand and been interested in it for a long time. With venture investment, it started to expand into other areas. We’re going to return it to its core focus on digital tech and culture. We love the core. The pressure to do it all dissipates when you’re part of a portfolio.

Talk about the commerce opportunity there.
Affiliate commerce is a big part of our business. We think the opportunity for affiliate commerce for Mashable will be big. It could be a range of things. We have product reviews and roundups, which are often collections of reviews; deals. [Direct-to-consumer] product discovery, online brands are establishing themselves on social media. There’s this intersection of content and commerce, reviews and commerce. We also see audience, SEO opportunities for the brand.

You’ve been doing e-commerce for years. What do you think when you see all these other publishers piling into the business?
You need to have a brand that, when it makes a recommendation or has a review, has credibility in that space. When you think about a PCMag or TechBargains, you come to them for deals or reviews. Then, you have the business model question. Do you want to be a merchant? Do you want to be an affiliate? But you need tech, people, a long-term commitment. Just hiring a commerce editor and expecting success isn’t going to work. If you’re a vertical publisher that has some brand permission to tell me what’s a deal and you invest, it’s huge. More horizontal brands, it’s going to be harder.

What’s your take on the pivot to video?
Everyone’s like, this pivot to video is bad. I look at it as, the television ad market is $70 million. Viewership is going to move to portable screens. The dollars are going to have to flow. The question is, how much of the digital video market is going to be six- to 15-second ads, and how much will be product placement? The former is a lot more scalable. But there’s inventory challenges. The latter is where the innovation is taking place, but how scalable is that?

Part of the pivot that’s tripping everyone up is the studio business where publishers are trying to compete. A lot of publishers are saying, look at all the content checks being cut. Being a production studio is a different business. Do publishers have an opportunity in SVOD? It’s unclear. Video has been a significant part of our business, but we’re not overextending our reach. We’ve gone on Facebook Watch, but we haven’t sold anything large to a large player doing scripted programming.

You’ve been a critic of native advertising. Are we seeing the bubble bursting there?
It’s a little like video. It’s evolved. It could be content recommendations, branded video, ads that don’t look like ads. The market’s always going to value scale, ease of execution, clear measurement. For it to get to any scale, there needs to be some level of standardization. Outbrain and Taboola have done a lot there. I’m not saying it works for the user or the publisher; we let ours decide.

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Tom Petty. Gregg Allman. AOL Instant Messenger. These are just a few of the bright lights that went out in 2017. As we head into 2018, we took stock of things in media and marketing taken from us this past year.

Scout
Scout was one of the first publishers to build a subscription business on fans’ obsession with college athletics recruiting, and in a 2014 merger, it became part of a company worth $100 million. Two years later, it collapsed, undone by a costly pivot to video and a play for scale that led it to cover non-sports topics. The company’s board also ousted founder Jim Heckman. By February, it was in bankruptcy court, where a stalking horse bid CBS Sports made for the company’s assets went unopposed.

Ad-supported Medium
In January 2017, Medium founder Ev Williams declared that digital media’s ad-supported model was broken and needed fixing. Seven months and 50 layoffs later, Williams emerged with a subscription model, which would let paying subscribers direct their fees to whichever Medium authors they liked and even get a refund if they didn’t like what they’d read.

Facebook’s Lifestage and Groups
Facebook had its share of mobile product mishaps in 2017. Lifestage, a Snapchat competitor Facebook built to encourage people to share video, shut down in August after less than a year.

That same week, it shut down Groups, Facebook’s other attempt to grow a facet of its core product into a standalone app, after months of growing bugginess and stagnating user growth.

Yik Yak
The anonymous, location-based chat app Yik Yak tore across America’s college campuses in 2014, attracted major venture capital and a $400 million valuation. But a pivot to group messaging inflamed its core user base, and advertisers had trouble seeing the value of the app’s often controversial content. It shut down in April.

Yahoo News Digest
Yahoo was never known for its design sense. An exception was the Yahoo News Digest, an app it purchased from a British design wunderkind in 2015 for $30 million. The app had nearly 10 million downloads and won multiple design awards, but it also aggregated news instead of serving up Yahoo content, so Verizon shut down Yahoo News Digest just a few months after finalizing its acquisition of Yahoo.

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Amazon has long honed the business of being the middleman — getting brands to sell on its site, letting shoppers pay for and receive those items fast and efficiently.

But 2017 was the year Amazon started taking steps to create its own brands. If done at the right price point, Amazon will be in a strong position next year to prove it not only can help other retailers grow, it can be a retailer itself.

Amazon already has its AmazonBasics line of essentials like batteries and chargers. These items are largely commoditized, said Forrester analyst Sucharita Mulpuru-Kodali. It’s easy for Amazon to keep growing there: By bumping those products up in search results and pricing them right — which will be easy to do since Amazon owns the data — this line is poised to keep growing.

But the more interesting prospect is for private-label items that aren’t Amazon-branded. There are at least 19 brands Amazon owns and doesn’t operate under the Amazon brand name — from lingerie brand Arabella to furniture brand Strathwood. In October, Amazon rolled out private-label sportswear brands, including Goodsport (which competes with Champion), Rebel Canyon and Peak Velocity. Amazon may boasts fantastic brand recognition, but Amazon-branded panties are still a hard sell.

An October report by firm One Click Retail examined how Amazon’s private labels have performed. Amazon owns around 45 brands, and about 15 percent of its private-label sales come from those. The biggest one is women’s clothing line Lark & Ro, which had about $10 million in sales in 2017 to date when the report came out. Amazon’s Amazon Essentials clothing made about $3 million this year.

In apparel, Amazon’s most successful category with private label, L2 research found that the absence of major fashion brands that have traditionally abstained from selling on Amazon creates more room for private label to swoop in, a trend that would continue next year.

“This is the uphill battle,” said Mulpuru-Kodali. “This is dependent on leveraging data and picking the right things to develop or manufacture.”

The key is where Amazon chooses to focus. “Amazon will never be Nike,” said one merchandise head who didn’t want to disclose her name. “But it has the ability to own the lower price point in apparel and shoes, and make a lot of money that way.”

Mulpuru-Kodali agreed: “Private-label brands win because of price. Look at a Target brand or a Walmart private-label brand. They’re great value for [the] money.”

More Amazon private-label brands are coming. Late in November, Amazon moved into the furniture business — one of the last categories that people said would not be open to it — unveiling two private-label brands called Rivet and Stone & Beam. Amazon is also reportedly approaching furniture brands to sell on its marketplace.

It seems like 2018 won’t be about Brand Amazon: It can be Brand X, owned by Amazon. Unlike when other retailers make moves into private label, Amazon has control of customer data, and because of its seemingly endless amounts of cash, it can withstand some profit loss in early months or even years.

There’s another wrinkle. For smaller brands, Amazon is no stranger to looking at top-performing products and making its own to sell at a lower price. There are even small sellers who report that Amazon works with their factories.

In a way, experts say, 2017 set up just the beginning of Amazon’s domination — changing from being less of a marketplace and into conducting more of a full assault to own every part of the retail experience.

“Amazon private label is tiny, maybe a few billion, but because it’s small, it has huge opportunity for growth,” said Mulpuru-Kodali. “They get it right and execute it, and it represents potentially high margins.” It also means that Amazon has recognized it can’t get every brand and seller in the world to sell on Amazon. “This would mean they have control of their own destiny,” she said.

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Tony Haile is making two big bets in 2018, and both of them are both shorts.

The first is that average revenues per user for publishers won’t improve. The second is that digital advertising will remain unpleasant enough that people continue to try and avoid it.

Those bets will have a big impact on how next year goes for Haile, when the founder and former CEO of Chartbeat unveils Scroll, a startup aiming to solve publishers’ problems with ad blocking and intense competition for ad revenue simultaneously, with a paid service that removes ads from users’ browsers.

Haile discussed publishers’ challenges over the phone with us. The conversation has been edited and condensed for brevity.

2017 was a horror show for ad-supported digital media, and many publishers are trying to diversify away from it. Is the era of free, purely ad-supported content over?
The platforms, with their dominance of traffic, are going toward what I call a platform tipping point. At a certain point, so much of ad spend is concentrated with two players that actually the economic costs of maintaining the infrastructure to buy elsewhere becomes increasingly inexcusable for an advertiser. I don’t think you’re going to see ad-supported media disappear tomorrow. I do wonder whether we’re going to start seeing those premiums start to shrink and disappear over time.

Ad blocking loomed larger when you started thinking about Scroll in 2015. Why do you think ad blocking was a less urgent topic of conversation this year?
Ad-blocking rates have mostly stabilized, around 12-15 percent. Then, you look at sell-through rate. There’s relatively few publishers out there that are at 100 percent sell-through rate; for direct-sold, nowhere close. So while we can talk about the projected loss, in reality you haven’t seen publisher revenues affected by it too much. Ad blocking shouldn’t be seen as this Chicken Little problem to defeat. It’s a consumer signal: You have 236 million people saying they don’t want this experience anymore. That’s the shift in thinking from “Ad blocking is the end of the world!” to something that will stabilize.

Next year, browsers will start exerting more control over the ads that sites can display. Are you worried that the browsers will compete with Scroll, with the advantage of being free?
The challenge you tend to get is you’re not going to get publishers that say, “I was making a $30 CPM on this page, and now I’m making a $5 CPM, and I guess that’s just life.” Instead, you get a game of whack-a-mole. If they don’t get the autoplay video ad, I don’t expect publishers to just go, “I guess we’ll just run that one 300 x 250 banner.”

You wrote about the lousy job Facebook has done monetizing video for publishers. Is 2018 the year publishers start distancing themselves from Facebook?
I don’t think they’re going to start distancing from Facebook because it’s still way too powerful. What’s interesting is whether Facebook can make a go of its big bet, which is Watch. Facebook has had a tough time instantiating new behaviors on their platform, outside of news feed and Messenger. If you believe Watch is make-or-break, then they will continue to throw a tremendous amount of money at that for the next year or two. Publishers are going to be attracted to that like moths to flame.

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A month ago, Donald Trump tweeted “we should have a contest as to which of the networks, plus CNN and not including Fox, is the most dishonest, corrupt and/or distorted in its political coverage of
your favorite President (me).” Now, Trump’s reelection campaign committee has launched a poll asking its email marketing list to vote to “Crown the King of Fake News.”

Content is still king. But down the road, the cost of content could be an issue as more traditional TV content providers get squeezed by higher costs and competition.

Last week, Facebook made the controversial announcement that it would drop the “Disputed” tag from stories fact checkers found to contain false information. What the platform is really saying: It will
no longer take responsibility for fake news stories – and the damage caused in their wake.

NBC says the NFL programming franchise is once again on track to be the most-viewed TV series this season, yet ratings are down from a year ago. NBC says “SNF” averaged 18.2 million Nielsen viewers
for live program-plus-same day viewing from Sept. 7 through Dec. 25.