Less BS, More Facts, Some Opinions
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While publishers rushed to embrace distributed media models on platforms, Bloomberg CEO Justin Smith has sounded a note of caution. Ignoring platforms outright isn’t an option, but publishers should instead use platforms selectively.
For Bloomberg, Twitter has emerged as a critical platform relationship, with the Dec. 18 launch of TicToc by Bloomberg, an ambitious 24-hour live video news channel that will draw on reporting from Bloomberg Media’s 2,700 journalists scattered around the world as well as a dedicated TicToc team. The effort is an example, Smith said, of a “big idea” at a time when too many publishers are content to grouse about the chokehold Google and Facebook have on the industry.
“The answer to the duopoly for media owners is not to adopt a defensive stance and assume the situation is a permanent obstacle to growth, and we’re in permanent crisis, but to innovate,” Smith said. “I know it sounds cliche, but the only way out of this predicament is for media companies to do new things and that are really compelling to consumers and advertisers.”
Below are excerpts from a conversation with Smith, lightly edited for clarity.
Is digital media in crisis, as BuzzFeed CEO Jonah Peretti said last week, or are bad business models in crisis?
I don’t think digital media is in crisis writ large. The standalone digital advertising model of digital media is in crisis. The advertising-dependent business model is definitely in a difficult spot. It’s not a permanent existential crisis that can’t be resolved with new thinking, innovation, better strategy and better execution. I’m hopeful these issues can be overcome. You’re seeing tons of interesting opportunities for significant growth despite the challenges.
Does the duopoly get blamed too much?
You’ve got to deal with the environment you’re in. The duopoly’s increasing share of digital ad spend is a total reality and one everyone needs to reckon with. Where the fears are overstated are in two dimensions. One, if you look at Google and Facebook’s aggregate ad revenue totals, I would say the vast majority of that is direct-response advertising that’s transitioned to digital. The brand piece of it is still in traditional media. The battle over that has begun, but it’s not been decisively won by Google and Facebook. What’s also overstated is the assumption Google and Facebook are going to dominate forever. It’s a fluid situation — fluid in terms of consumer behavior, advertiser behavior and the regulatory environment. There are many potential cracks in the facade of these companies. They may be invisible to many now, but in all likelihood, these businesses don’t last forever. Fifteen years ago, we had another duopoly: Yahoo and AOL.
How does that point of view translate to strategy?
What we say to our teams is, let’s not let the platforms solely enjoy the spoils of this incredible moment of change. Let’s find the areas where we can also benefit tremendously and not assume a defensive position and begin attacking parts of the ecosystem ourselves.
Is media too defensive?
Yes. When people think about managing a media business in this environment, media operators tend to think about revenue diversification. Jonah mentioned it in his memo. We think about revenue diversification also in product diversification. Another way to diversify is create new products that are related to your core business but are new things. Not enough media owners are thinking that way. They’re transitioning revenue from bucket one to buckets two, three and four.
So TicToc is a product diversification.
It’s an example of that. We have been thrilled with our digital growth. We’re looking at 25 percent digital advertising growth and potentially up to 30 percent this year. The opportunity we see in TicToc is product diversification. We began streaming video on Twitter and came to understand Twitter had a large and engaged audience for news. That led us to think of Twitter differently from how many do. We think of it as potentially the largest news media company in the world. We saw a news-hungry audience living on Twitter. We thought of how can we marry the assets of Bloomberg with this audience to create a new product that can live on Twitter, and in effect, provides the best of what a journalism company can do merged with the best of what a social media network can do.
But why not Facebook? It has much more scale.
The Twitter audience is the most scaled for breaking news. I don’t think anyone goes to Facebook for breaking news. News there is more of a passive general-interest experience rather than breaking news. Twitter was the natural partner from that perspective. One of the things I said in March [at the Digiday Publishing Summit] was be picky about your platform relationships. We’re truly collaborated with Twitter on this. They’re providing access to insights and data; we’re sharing with them our different ways of creating content and video. And the economics are far more equitable than anything I’ve seen with the duopoly. An idealistic view is Bloomberg is taking its 3,000 journalists to improve the quality of breaking news information for the world. That’s a big idea.
When we spoke in March, you said paywalls have mostly failed. But there are signs of success there.
At the very premium end of the market with established and premium brands, you’ve seen a handful of success stories. The truth is, across the much broader swath of the market, paid content has not worked at all. The numbers are pretty decisive. But it’s not a permanent situation. I believe consumer behavior is shifting. The user experience has become more frictionless. Up until now, it’s been only a few companies that have succeeded. On the niche business-to-business side, that’s clearly a place where subscriptions have been solid and growing. Businessweek would fall into that business category, particularly when professionals can put it on their corporate card.
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Publishers are bending to the will of advertisers to make their ads more viewable, but some publishers are finding the payoff isn’t as great as they anticipated.
Over the past year and a half, advertisers have continually pounded their fists, demanding that they’ll only buy ads that are guaranteed to be seen by a user. The push for viewability gave the impression that advertisers would spend branding campaign dollars with publishers that had highly viewable ads, said Erik Requidan, vp of programmatic strategy at Intermarkets, which helps publishers including Drudge Report and The Political Insider market their ad inventory to buyers.
Instead, the sites Requidan works with continue to be relegated to getting performance-based ads, he said. Those sites might see a few dollars increase in their CPMs if they boost their viewability, but big-brand dollars haven’t materialized.
“If something is 90 percent viewable, shouldn’t that unlock a whole lot more money or a bigger price point?” he asked.
When listicle publisher Ranker tweaked its site layout last year, page-load time went down 60 percent and average viewability rates doubled from 35 percent to 70 percent. Those factors helped Ranker increase its average CPMs by about 75 percent, but the prices of its least and most viewable ads don’t differ much.
Ranker’s ad viewability ranges from 62 to 82 percent. But there’s only a 13 percent difference in the CPMs for these ad units, said Ranker CEO Clark Benson. Given how much advertisers and their tech vendors emphasize that campaigns perform better when ads are 80 percent viewable, Benson expected Ranker’s most viewable ad units to command a higher price.
“So far, the promise of viewability quickly filtering out bad actors and improving yields for the good ones seems to be only a half-kept one,” he said.
It’s a similar story elsewhere. Stephanie Layser, vp of ad tech and operations at News Corp, said there’s no significant difference in price between the publisher’s least and most viewable ads. Remedy Health Media, the publisher of health sites like HealthCentral and TheBody.com, has seen little lift in its ad rates since increasing its viewability, said Aryeh Lebeau, evp of client operations there.
Some publishers said they’re satisfied with the pricing lift they’re getting for highly viewable ads, which is a function of their expectations of their advertisers.
Lebeau wasn’t bothered by the lack of lift in ad rates because advertisers never promised Remedy higher rates in exchange for higher viewability.
A programmatic specialist at a comScore 200 entertainment publisher, requesting anonymity because he wasn’t authorized to share financial details, said a 30 percentage-point lift in viewability at his company’s websites tends to increase CPMs by about 20 percent. This person emphasized that it’s difficult to isolate viewability’s impact on ad rates, so these figures are rough estimates. The source still felt his company was being compensated fairly for its highly viewable ad placements.
Another source, Danny Khatib, CEO of 100 percent programmatic publisher Granite Media, said high viewability rates can boost Granite’s CPMs by a few dollars, which he saw as significant.
“We never expected new branding budgets to come online solely because of viewability improvements,” he said. “That seems like wishful thinking.”
In an Integral Ad Science survey of more than 1,000 advertisers, 68 percent of respondents said they transact on viewability and another 25 percent said they wanted to do so. Although buyers are regularly transacting on viewable metrics, viewability is less likely to influence ad rates if it isn’t a primary KPI.
The reason rates haven’t risen right along with viewability has to do with how programmatic buying works. David Lee, programmatic lead at media-buying agency The Richards Group, said that even in a private marketplace setup, most buyers don’t place bids on individual publishers but place bids across hundreds, if not thousands, of sites at a time.
So if viewability is being used as a secondary KPI, then buyers’ bids will be restricted to the publishers that meet a certain viewability threshold. But since buyers aren’t bidding on individual publishers, they’re not intentionally setting out to pay specific publishers more based on their viewability gains. And since viewability rates are rising across the industry, publisher improvements in viewability are less likely to increase publishers’ CPMs than they were a year ago.
Another issue with rising viewability is that in an effort to appease advertisers, many publishers are doing whatever they can to make sure their ads are viewed just long enough to be counted as viewable. Most viewable ads are in view for just one second, according to IAS data. That amount of time happens to be the standard the Media Rating Council uses to define viewability.
As publishers increased their volume of viewable ads by refreshing pages, sticking ads in photo galleries and using interstitials, users got turned off and buyers caught on. IAS found that the average time that a desktop display impression was in view declined from 9.8 seconds in May 2016 to 7.7 seconds in May 2017.
“We’ve seen some publishers game the system in using ad placements that provide a less than optimal consumer experience but have higher rates of viewability,” said Stephani Estes, svp of media strategy at ad agency Cramer-Krasselt. “In those instances, we’re not willing to pay more for higher viewability.”
It’s understandable that publishers get miffed by low returns on highly viewable ads. But in programmatic environments, the highest CPMs come from programmatic direct deals, not the open exchange. And to entice ad buyers to set these deals up, publishers need to have viewability rates above 65 percent, according to three publisher sources.
Viewability isn’t necessarily a way to lift rates, said Mort Greenberg, svp of ad sales at Sightline Media Group, which owns government-focused sites like Federal Times and Military Times. “However,” he added, “high viewability will keep you on a plan.”
Amazon has a growing ad business, but its ad infrastructure doesn’t seem to be as developed as Google’s or Facebook’s. For instance, ad buyers think Amazon Marketing Services — a self-serve paid search marketing tool that is supposed to help advertisers efficiently run search campaigns on Amazon — requires lots of manual work, and its reporting is inefficient.
For now, AMS offers three ad formats: sponsored products that appear below search results on Amazon, headline search ads that show up above search results and product display ads that are located on corresponding product detail pages. Four media buyers interviewed for this story think that while AMS is critical to advertising on Amazon, the self-serve search marketing tool is not as handy as they expected.
“AMS is a growing business that is extending to both first-party sellers and third-party sellers, and AMS is becoming a competitive search engine to Google,” said Nich Weinheimer, marketing director for Amazon consultancy Buy Box Experts. “But Amazon doesn’t have the DNA of Google, whose business is built upon search ads. Amazon’s core business is still e-commerce, so it is playing catch-up in advertising to become an equal player to Google and Facebook.”
Google and Facebook have a big head start on Amazon when it comes to building easy-to-use ad systems. That make a difference.
“Setting up AMS campaigns is laborious, and budget control remains manual,” said Todd Silverstein, U.S. head of performance marketing for Edelman. “The auto-pausing of ads for out-of-stock products has its pros and its cons.”
A New York-based ad buyer, who prefers anonymity, echoes Silverstein’s sentiment. This person said “speed is the biggest limitation” with AMS because compared to Google AdWords, it takes longer to set up and manage campaigns, as well as get campaign results.
“AMS is a manual tool. It didn’t come with automation until now because AMS is built as it is used,” said the New York-based executive. “Automation of AMS is Amazon’s priority. I believe most third-party tools that were initially designed for Google AdWords will adapt to AMS in the first half of 2018.”
AMS doesn’t allow advertisers schedule and download campaign reporting in a granular and efficient manner, forcing ad buyers to manually click into each campaign in the AMS dashboard to get performance data, according to Weinheimer. This is cumbersome for advertisers, especially those with a large range of products, because one AMS campaign is typically geared toward one product. (The only AMS ad unit that lets companies group multiple products into one campaign is headline search ads). As a company’s catalog grows, its AMS campaign list lengthens, making it laborious to pull performance data per campaign and update campaigns on a daily basis, said Weinheimer.
In addition to inefficient campaign reporting, Weinheimer believes the creation of product display ads and headline search ads is clunky. This is because AMS doesn’t function the same way as Google AdWords — AMS goes beyond keyword targeting. For instance, with product display ads, advertisers must manually set up their targeting with shopper interests (fashion or microfiber towels, for instance) or target a list of Amazon standard identification numbers (an identification number that Amazon gives to each product).
“Headline search ads is a keyword-based ad unit, but you need to create a headline and decide which landing page the ad should direct shoppers to,” Weinheimer added.
Meanwhile, agency executives said although advertisers can see if their keywords in an ad campaign are low-, medium- or high-volume keywords on AMS, they can’t see their actual share of that volume, which could lead to wasted ad spend on Amazon search marketing. On Google, however, advertisers can research the volume number of a given keyword and compare that to the clicks the advertiser gets to determine how much market share they can go after, said Weinheimer.
At the same time, agency executives think it’s unfair to compare AMS to Google AdWords because they have different algorithms: Google AdWords is more focused on page information and relevancy of keywords, while Amazon ranks search ads based on product sales, product reviews on the platform and then keywords, according to media buyers. Both Google AdWords and AMS run second-price auctions.
Amazon is aware of advertisers’ struggles and working to improve its advertising tools so they can support high-volume campaign management and execution. “It’s definitely still early days,” said an Amazon spokesperson. “Agencies and advertisers have shared a lot of valuable feedback with us as we work to increase the efficiency of our tools. It’s an area on which we’ve been very focused, and that will continue to be the case.”
Despite the challenges with AMS, retailers are spending more on AMS before the holidays, and performance marketers think automation will come to AMS next year. “Amazon is already working with companies like Kenshoo on automation, and I believe more data API [application programming interface] integrations [with AMS] will go live in 2018,” said Weinheimer. “We should give Amazon credit — the company is putting amazing effort in agency support and ad product development.”
Correction: An earlier version of this story mistakenly said that AMS ran a first-price auction. It has been corrected to say AMS employs a second-price auction model. Digiday regrets the error.
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Proving the effectiveness of branded content has been an industry fixation in 2017, BBC StoryWorks, the branded-content arm of the broadcaster’s commercial division BBC Global News, is offering clients facial-coding and eye-tracking tools to show its branded content works, the fruits of two years of research.
Chinese phone maker Huawei is the first client to use these tools for its four-part video campaign “The Explorers.” One of the two-minute videos features an interview with former NASA astronaut Ron Garan. The content is viewed by a sample of the BBC’s global panel of 12,000 members — for Huawei, the sample was 400 — with facial-recognition and eye-tracking software activated through their desktop webcams. Facial movements are recorded on a second-by-second basis and then divided into six possible emotions: sadness, puzzlement, happiness, fear, rejection and surprise. Eye-tracking software indicates which part of the content, which could also be text-based, triggers the emotion.
After the campaign, StoryWorks offers analysis on how the content delivered against brand metrics. Compared to a control group, those who saw the Huawei campaign recorded a 216 percent increase in brand awareness, a 23 percent uptick in brand association and a 19 percent increase in purchase intent, according to the BBC insights team, which couldn’t share exact numbers.
“We want to use science to ascertain the emotional impact of content,” said Richard Pattinson, svp of BBC StoryWorks. “We see a clear correlation between audience engagement and brand impact; we want to use this when we commission with our partners. My focus in 2018 is to understand engagement better. We’re long past engagement [for content] being dwell times and pageviews.”
BBC Global News’ insights team has been researching how emotion relates to brand metrics for the last two years. Its “Science of Engagement” study, in partnership with facial-coding company CrowdEmotion, has won awards.
“We see a strong correlation between serious emotions like fear and positive uplifts in brand awareness,” said Pattinson. “Eliciting more challenging emotions is legitimate. It demonstrates empathy and understanding as a brand.”
Understanding which part of content elicits an emotional response can play into a brand’s distribution strategy. For instance, audiences might feel puzzled during a certain section of a two-minute video, which could then be cut and distributed on social media with the idea that more people will share it.
As with most data-related decisions, these tools are more likely to reinforce hunches rather than break new ground. Pattinson notes that they are not used to create ideas but achieve better cut-through in a crowded content market. “This is the science that helps the art show its full potential,” he said. “It demonstrates why it has been effective for the brand.”
Pattinson also said the tools could help brands understand what content relates to which part of the purchase funnel, which could inform distribution cycles, depending on the campaign objectives. For Huawei, the campaign objectives were more about driving awareness than driving purchase. Four other brands are using StoryWorks’ tools to help demonstrate brand outcomes as a result of emotional engagement, although StoryWorks couldn’t disclose their names. With this added research, the hope is clients are more likely to renew contracts with StoryWorks. Media companies like Vice and The Telegraph are increasingly beefing up the information they can give to clients to prove the effectiveness of their ads.
Since April, StoryWorks has closed over a hundred branded-content deals globally. In early 2016, Pattinson said revenue from branded content was roughly 30 percent of overall ad sales; now, he said it’s closer to 45 percent. StoryWorks has offices in London, New York, Singapore and Sydney with roughly 36 employees, including strategists, project managers, writers, developers and social media managers, among others.
As StoryWorks offers the tools to more clients as planned, it will need to hire more staffers, particularly because post-campaign analysis is bespoke, depending on campaign objectives. “This can only be valuable with the right degree of attention,” said Pattinson, “but bits of it are very scalable.”
Image courtesy of BBC StoryWorks
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