Data-Labor-Technology

For the past couple years, several media companies have snatched up many of YouTube’s most popular personalities to create content for their own linear and/or digital properties in an effort to attract their rabid millennial and Generation Z fans to their own platforms. However, only a fraction of those YouTube stars have been able to…

Marketers’ love-hate relationship with Facebook and Google is complicated. While the duopoly’s grip across digital advertising only continues to grow–the two make up 60 percent of 2017 digital spend, per eMarketer–marketers’ concerns about brand safety, data and fake news also continue to grow. Given the platforms’ massive clout and the lack of data that marketers…

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When a company as large as SAP doubles down on digital, the executive org chart must change. For the last six months, the enterprise software company has had two primary CMOs: one who is responsible for brand and media and another who focuses on demand generation, life cycle marketing and bottom-line revenue. But they work… Continue reading »

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A weekly comic strip from AdExchanger that highlights the digital advertising ecosystem…

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Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here. Facebook Changes “Recently we’ve gotten feedback from our community that public content — posts from businesses, brands and media — is crowding out the personal moments that lead us to connect more with each other,” Facebook CEO Mark Zuckerberg wrote in a Facebook post… Continue reading »

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Amazon already is a media giant with a $1 billion ad business. But brands are confused about Amazon’s slew of puzzling acronyms and struggle with navigating the Amazon ecosystem, even with an Amazon rep.

For the latest installment in our Confessions series, in which we exchange anonymity for candor, Digiday spoke with an agency exec who is working with several brands to revamp their Amazon strategies after Amazon persuaded them to purchase expensive media bundles that have not delivered results.

The conversation has been edited for clarity.

What do brands struggle with when it comes to spending on Amazon?
A lot of brands, especially in the [consumer packaged goods] and luxury personal care space, are now saying, “OK, we have to do this Amazon thing, but we’re not really sure what to do.” Most of our brands don’t even know the difference between AMS [Amazon Marketing Services) and AMG [Amazon Media Group]. So for the most part, when they look to their media agencies or Amazon, they are very much encouraged to invest dollars in AMG with expensive bundle packages that have minimum thresholds. But you don’t have to spend a lot of money with Amazon to get great results. At one point, $100,000 was one of the thresholds for an AMG package. But with AMS, you could spend $10,000, and that’s fine. Ultimately, these AMG packages are a bit of an overkill for brands because they may not need that right away. [Brands] are running before walking. Most of the time, when we engage with a brand, they’ve already done AMG, and it’s understanding how they can roll back and get their house in order.

They realize they’re spending too much money and not getting the results they want.
Right. AMG is about driving awareness over a long period of time. It’s mostly display advertising with behavioral data, and ad serving goes outside of Amazon to some of Amazon’s other properties like IMDb. You can also get a homepage takeover or a seasonal banner. In some cases, if a brand spends enough, they get a representative, but an AMG rep is not going to help you with a product page or any challenges you have. They are strictly there for media.

How is AMS more efficient?
AMS is focused on direct sales and ROI. AMS is the self-service platform that allows sellers to target, via keywords and sponsored ads, and drive traffic to their brand stores. Many of the AMS services are pay-per-click and very efficient. With AMS and a keyword strategy, you can capture category folks who weren’t looking for your brand. Plus, you don’t have any other media in a brand store and viewers are not being served competitor or third-party products, so it’s a little more controlled. Lastly, the brand store is also free for now, so it’s almost like, why wouldn’t you want to do that? We’ve had the most efficient results with AMS. For some clients, it’s between 300 to 500 percent return on ad spend. A good example of a potential inefficient use of budget is a brand spending $100,000 on a homepage takeover before investing $10,000 in an SEM campaign. We generally recommend our clients spend about 1 percent of their projected sales against media on Amazon.

How does Amazon reach out to brands about AMG bundles?
Because clients aren’t exactly clear on what they need to do, they go to their media agency or Amazon and end up buying a huge media package from AMG, and they’re spending a lot of money. A lot of the time, media agencies will recommend these bundles because they look very similar to what media bundles look like outside of Amazon, or Amazon reaches out to brands directly about these bundles.

Why would Amazon push brands into AMG relationships versus focus on showing them what they can do with AMS?
AMG is a separate entity and is a direct competitor of any other media, publishing property. So it’s a place to make money. It’s opportunistic, and that’s just how Amazon is. We try to help brands be educated before they make those investments.

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Jesper Doub, CEO of publisher Spiegel Online, believes the time is right to create a subscriptions model. In a recent conversation, Doub discussed Spiegel’s reader-revenue strategy, the ePrivacy Regulation and the duopoly’s power. Our conversation has been edited and condensed.

What’s your view on publishers turning to reader-revenue models?
We’re seeing a dramatic shift in revenue streams. The traditional display ad business is stalling, and programmatic bidding tends to drive prices down. One option is to reshape our ad business and ensure there are new, attractive ad packages which prioritize brand safety, not just reach. We also see a window of opportunity opening for us to access more reader revenue. We believe in the future of subscription models and are developing a paid content model, called Spiegel+ Reloaded.

Is your paid digital newspaper experiment Spiegel Daily part of that strategy?
It’s a small test in that direction. Spiegel Daily is like a live lab environment for us, but one which we can earn money from. It’s a new product that doesn’t relate to our free-access website, [or to] our print magazine or its digital copy. We wanted to test a paid digital product using Google AMP technology, which wasn’t an app, so that the platforms wouldn’t end up taking a share. The product isn’t quite where it should be yet in terms of numbers, but we’ve had great uptake, learned a lot and had positive surprises in the sales process.

What are the biggest concerns regarding the duopoly in the German media market?
We have a huge debate around the power of the duopoly. Different media companies are taking different approaches to how they want to tackle that and work with the platforms. But there’s a lot of politics involved — if you live in an ecosystem that changes a lot you must adapt, not just cry for others to bring back the good old times. We need to find ways to work with the duopoly.

Why does the proposed ePrivacy Regulation worry German publishers more than the GDPR?
For publishers, GDPR is just a matter of doing your homework, although advertisers and marketers are having more challenges with the GDPR. But the ePrivacy Regulation would mean a major change to the whole ecosystem in Europe. The way the regulation is written now is way too general. In a nutshell, it would force everyone to have a login and [for publishers to have] very detailed user consent for whatever they do on your platform — a very big problem for small and midsize players.

What does it mean for the platforms?
It will drive advertising, money and reach to those with registered users, and above all, that will be the big four [Google, Facebook, Apple and Amazon]. I suspect Google and Facebook are getting ready to offer us their help, to say, “We have registered users: If you use our logins on your website, we can get the user content [on your behalf].” In doing so, we would transfer our users to the platforms.

Should the duopoly be regulated?
The issue is, how can [platforms] identify a credible journalistic source? Who makes that decision? If you look at the U.K., Germany, France, Spain, it’s easier as there’s a common sense of what professional journalism is. But if you look at a country like Turkey where the government has a totally different view on what proper journalism is, how do you handle that as a platform? Do you adhere to what the government view is in that country? It’s a difficult thing to do.

Publishers are starting to more aggressively address ad fraud in the U.K. Is there similar concern in Germany?
The concern is growing. [Ad fraud] has come up a lot over the last month. It’s not as much of a big issue for Spiegel as we are not selling a high share of programmatic ads yet, but that’s not typical of the whole German market.

Does Facebook work for you in terms of monetization?
Few publishers in Europe are satisfied with Facebook monetization. We are on Instant Articles and earn extra money from that. It’s not something like a quarter of our revenue or anything, but it’s additional revenue. We’ve been working closely with the Facebook Journalism Project. If Facebook’s ideas aren’t attractive for us, we will do less with them; if they are, we’ll do more. If you’re a publisher that’s totally reliant on Facebook, you’re in big trouble.

Spiegel launched on Snapchat Discover last May. How’s that going?
So-so. We’re really happy with the product performance. The audience we reach [on Discover] is younger and more female than we would have gotten with our own channels. But monetization-wise, it is not satisfying at all. Snap demands high-quality content, but because the majority of the ads are sold programmatically, there are a lot of crappy ads sold at low prices. It doesn’t work. We’re aligned with a couple of publishers on this and are in open talks with [Snap] to change that.

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Amazon invited an agency executive to learn Alexa’s product road map at the company’s Seattle headquarters last spring. The major themes from multiple meetings with Alexa product managers throughout the day were how Amazon could direct individuals to discover and further use Alexa skills through the conversational interface; and what a paid model for skills promotion should be, according to this agency executive, who prefers anonymity given the business relationship with Amazon.

Three other agency executives agreed that skills discoverability is top of mind for Amazon in 2018, based on their conversations with the company. Two of them said Amazon is also looking to earn revenue from Alexa users through advertising, but the e-commerce giant hasn’t yet figured out how to inject advertising into a voice environment without compromising user experience.

“Amazon has been working on a scoring and paid model for skills on the Alexa app for at least nine months,” said Michael Nicholas, co-founder and partner of artificial intelligence agency Born. “But the problem is how to make paid work. Amazon is rightly very protective of user experience — it won’t introduce any advertising on Echo until it is perfect.”

It’s hard to make paid voice-based search work because unlike a website page that lists many search results, a voice assistant like Alexa only presents one result at a time, said Nicholas. For instance, if an individual asks, “Alexa, how do I cook steak?” If Alexa only surfaces a paid option, it may come across like a hard sell. If Alexa recommends a mix of paid and unpaid yet relevant options concurrently, it would be too cumbersome for users. Either way, it will impair the Alexa user experience, according to Nicholas.

“If the first and only brand position is paid, why do I trust Alexa? Meanwhile, a paid result is not necessarily the most relevant, so you can’t rely on Alexa to make the decision,” he said. “There may be a way to do voice search, but as far as I know, Amazon hasn’t yet found a balance between what brands want to pay for versus what is natural to Alexa.”

Thomas Stelter, vp of emerging solutions for agency Possible, echoed that sentiment. “It’s a house of cards situation for Alexa,” he said. “There’s a strong [ad] demand, while consumers don’t want marketers to interrupt their experience.”

An Amazon spokesperson said that the company is not bringing advertising to Alexa.

It may be too early for Amazon to introduce ad products on Echo, but Amazon has focused on and will put more effort into skills discoverability this year, according to agency executives. There are tens of thousands of Alexa skills, but there’s no way for brands to advertise their skills on Echo or the Alexa app and further direct people to install their skills.

“As far as I know, Amazon is working to find ways to make discovery [of skills] easier, but a paid model is not the solution,” said Gela Fridman, managing director of technology for Huge. “The value proposition of Alexa is not an advertising platform — it is a voice assistant that provides utility on how brands engage with consumers.”

Nicholas, on the other hand, thinks Alexa could promote skills discovery by directing users to the Alexa app, where search advertising occurs. For instance, if an Echo user asks Alexa to order a pizza, Alexa could say, “Should I enable the Domino’s pizza skill, or do you want to order from other restaurants?” If it’s the latter, Alexa would direct the person to select a pizza skill on their mobile phone.

“Based on my conversations with Amazon, ultimately I think a lot of [search advertising] will happen on the phone,” he said. “[The Alexa app] will then be optimized like an app store with organic rankings and paid placements.”

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