Data-Labor-Technology

The ad tech industry is a fast-moving and innovative environment. It’s also very competitive and full of gimmicks and buzzwords in place of technology and real solutions. Santa’s a little preoccupied this time of year, so I thought I’d give him a hand with a “naughty or nice” list—the best (and worst) trends in ad tech and digital media—to help marketers break through the hype and kick off the New Year with confidence. See which ones are meaningful – and which ones lack substance.

THE NICE LIST

Ad quality    

After P&G’s chief brand officer Marc Pritchard challenged brands to “stop giving digital media companies a pass,” we saw growing demand for better brand safety, ad fraud and viewability standards. Digital media companies are beginning to respond with improvements in fraud prevention, transparency and accountability. The greatest impact comes from all three of these areas working together in concert, which is becoming the new standard. There’s still work to be done, but it’s encouraging to see continued progress as poor ad quality can negatively impact advertising performance and cause long-term damage for brands.

People-based media

Even though the industry has been talking about people-based media for some time now, this year we saw more and more brands demonstrate their commitment to reaching consumers with tailored messaging. The key is to ensure you’re talking to real people across all their devices and digital touchpoints, and not just cookies. While not everyone is truly delivering on the promise of one-to-one marketing at scale, brands are moving in the right direction. I encourage all companies to work towards delivering only relevant, meaningful messages to individuals on the right device and at exactly the right moment.   

Measurement

Measurement may not be the most exciting aspect of marketing, but it’s among the most important. Brands want more accurate measurement of their advertising performance, and digital media companies are responding by (finally) abandoning last-click attribution for more advanced and effective measurement methods and metrics – like incremental return on ad spend.

THE NAUGHTY LIST

Non-validated metrics

Let’s face it: the trust is gone. Marketers have been “burned” too many times by digital media companies’ miscalculated metrics related to how consumers are interacting with content on their platforms. Attribution or measurement that isn’t validated by a third-party partner has always been questionable, but this year it was increasingly troubling to some advertisers that rely on such platforms for content distribution and monetization. Digital media companies must strive for transparency and accuracy to ensure they are truly driving results or they will continue to face more backlash.

DIY solutions

Some things you can do yourself, while others you should leave to the pros. Too often, I have seen marketers take the DIY approach and try to piece together multiple technologies to activate their CRM data for digital marketing. The result is an underperforming, money-wasting ecosystem. It takes an investment of time, talent and capital to build robust platforms that can bring that data to life, accurately reach consumers at scale and build personal connections. Marketers who take the DIY path typically spend more time refining and fixing, and ultimately lose sight of the true cost of ownership. Their time and resources would be better spent on driving their business rather than learning martech skills.

Trends that overpromise and under-deliver

AI, VR and blockchain are the future, or so they say. These buzzwords have been getting a lot of attention lately, but are they actually a sound business investment? While there’s value in staying on top of emerging tech and it’s fun to think about how they’ll shape our world in the future, they represent just one facet of a product or deliverable and are not a strategy on their own. Marketers need to do their due diligence and understand what’s underpinning these tools so they can ensure they’re good for their business in the long run and not just a short-lived (and expensive) gimmick. Read the fine print before buying into the hype.

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With the continuing fall out of Brexit and how it impacts on consumer confidence, a knock-on effect will be how that influences brand budgets, and as a consequence, a push for real focus on ROI as a metric for customer success, according to Bing UK head of strategic sales, Aaron McGrath.

McGrath says there are two areas that should be questioned. How does the industry really drive ROI and efficiency? And how does it continue to build trust with consumers?

He expresses that ROI has always been a metric for success, but in 2018, what the industry will see is brands thinking about how much they are spending, how they are going to spend and how effectively they will do that.

Also, publishers, brands and agencies should be keeping an eye on artificial intelligence (AI) and machine learning. How will these concepts be used as a crucial success to 2018?

We’re talking to machines a lot more than we used to, and machines, like Alexa and Cortana, are listening to us more than they used to. The same goes for image or video recognition, allowing machines to watch us a lot more than before. With the power of machine learning, machines are collecting all this data in a much more powerful way, explains McGrath.

The opportunity for brands, agencies and publishers then is how to turn that into an emotional connection/intelligence. Thinking about how they can be intentional about it and how to understand the emotion of the user/consumer in a way that seems natural to them, by overlaying AI with what is found to be the most intelligent and sending that message at the right time, to the right person.

However, there is always a danger when pushing out words like listening, talking, watching and collating, when it comes to machine. Consumers don’t want to be thinking that Big Brother is watching them at every moment. But the only way you can break down that resistance, according to Bing, is by being transparent about how the technology is being used.

As an industry, GDPR is an interesting reflecting point. McGrath asks whether everybody should follow the rules and regulations of governments and legislators or focus on how to really build trust as publishers, agencies and brands with the industry.

He believes this should push thoughts on how the industry can go beyond concepts like GDPR and how to talk in an open and transparent way. For instance, talking to consumers and users about how KPI‘s are connecting, how information is being used and how privacy is being respected within that environment.

The opportunities, explains McGrath, are unlimited, but as an industry, search needs to start with transparency otherwise the challenges faced in 2017 will continue beyond 2018

This discussion arose from The Drum Search Awards breakfast panel, in association with Bing on Monday December 3. The Search Awards are now open to entries for 2018, which will close Friday February 2, 2018. Click here for more information.

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Lotame Ignite APAC Conference 2017: The Current State of Data in Video Advertising Across Asia, brought to you by Lotame and SpotX.

Like other media companies, The New York Times is recognizing that its survival depends on growth in a lot of areas, not just display advertising or subscriptions.

The Times’ push to double digital revenue to $800 million by 2020 is built off a varied business model of agency work, subscriptions, ads and more.

“There is no one single strategy for growing advertising,” said Sebastian Tomich, who was just elevated to the Times’ head of advertising from svp of advertising & innovation.

Next year, the Times will push into a few areas outside its core but mature business selling display ads on NYTimes.com and less and less so in the print newspaper. Growth is expected to come from elaborate partnerships, like the Samsung-sponsored 360-degree videos that the Times publishes daily or a kid-aimed version of its popular news podcast, “The Daily,” that the Times created for voice-activated device Google Home.

The upside is big programs like these can command many millions of dollars. The downside is it can take up to nine months to sell them, and there are only so many companies in the market for them. Tomich has identified around 25 advertisers that are candidates for these and aims to sell five to 10 deals in the year ahead.

Longer term, Tomich also sees growth coming from agency-like products and services via T Brand Marketing Solutions (formerly T Brand Studio), which could include running campaigns that run outside of Times properties.

As its growth strategy evolves, so is the kind of talent the Times is looking for. The Times will always have salespeople, but it’s de-emphasized that role as technology has made that function more efficient and clients are increasingly asking for creative expertise. As part of that shift, the Times let go several ad sales directors last week, the New York Post reported. Now, there are fully 160 people in creative services, plus five to 10 business development leads that focus on the agency businesses. To sell those big partnerships, there’s a new partnerships team led by Andy Wright that’s set to have 18 people once fully staffed. Meanwhile, T Brand, now led by Amber Guild, a vet of The Martin Agency, is hiring creative and strategy people with agency backgrounds.

“Where the industry is heading, it’s valuing creative people,” Tomich said. “To compete as an agency, you’ve got to have the people to do it.”

Closer collaboration with the newsroom will be another hallmark of 2018. To better systematize that effort, the Times named Allison Murphy to lead a new Ad Innovation team of about 30 people, separate from T Brand. Murphy is charged with developing new ad formats and leveraging Times journalism for advertisers.

That isn’t supposed to mean Murphy will sit in on story meetings or that advertising will dictate news coverage; it’s more she’ll work with the Times’ Reader Experience team on the product side (known familiarly as “T Rex”), led by svp Ben French, to identify editorial content that has an advertising opportunity. One such missed opportunity was a video the Times did on Justin Bieber in 2015 that was hugely popular but didn’t have any special ad support.

Three years ago, the Times’ scathing internal innovation report on itself revealed a deep-set divide between news and advertising that was holding back growth. Today, under the threat of extinction, there’s been far more willingness from news to cooperate with the business side, but the two still have their sensibility differences.

“The newsroom is still an untapped resource for advertising,” Tomich said. “I don’t think there’s resistance; it’s just foreign. There’s not a lot of planning. There’s a lot of serendipity.”

The push into new buckets of marketing dollars comes at a point when the Times is getting more growth from subscriptions than advertising, to the point that it now talks about itself as a “consumer brand.” The Times said it had 3.5 million paid subscriptions as of the third quarter. Print advertising revenue decreased 20 percent, while digital ad revenue increased 11 percent. The pursuit of subscription dollars has led the Times to do things like lower its paywall meter count to five articles a month from 10 and start charging for Cooking’s recipe content because the Times figures it can make more money from getting readers to pay directly than by selling advertising against that audience.

Those moves can have a short-term cost to a publisher’s ad business, though. Publishers’ ad problem has gotten bigger, with Google and Facebook gobbling up the majority of digital advertising and advertisers talking brand safety but continuing to allocate more of their budgets to the tech platform. That leaves publishers with little choice but to fight each other even harder for the scraps. For the Times, that means being more forceful about touting its quality, as defined not just by Pulitzers but its readers’ willingness to pay.

“We want to beat our chest more in the media market,” Tomich said. “Going into next year, we’re going to be much less modest. I want to be more vocal about how all inventory is not the same.”

So Stitch Fix is giving it to them.

Online personal styling service Stitch Fix stepped up its advertising spending by 84 percent in the first quarter of its 2018 fiscal year, with TV campaigns playing a big role in trying to attract new customers.

But the new customers attracted by the mass-market commercials had one common piece of feedback: Stitch Fix needs to offer a bigger selection of less-expensive clothing. CEO Katrina Lake told Recode in an interview following today’s release of Q1 results — its first earnings report as a public company — that these consumers want more options in the $20 to $50 price range.

So Stitch Fix plans to give these new customers more of what they want.

“In the last year, lower price point product has grown to represent a double-digit percentage of our total unit sales,” the company said in a letter to shareholders announcing the financial results. “Given the success of this offering, we plan to increase lower price point sales as a percentage of overall sales over the course of this fiscal year.”

In its first few years of existence, Stitch Fix’s selection of clothing items skewed mid-tier — higher than the range mentioned above, but lower than those of premium brands. But in the past year, the company has started to sell name-brands at premium price points, in addition to beefing up the selection in the $20 to $50 range.

On the company’s earnings call with analysts, Lake was asked what the lower-price push would mean for profit margins. She did not offer specifics on the profitability makeup of the different price points, but said Stitch Fix “can serve very profitably” these value shoppers.

Average order values, on the other hand, would be lower for these customers, but would be largely offset by new sales of high-price premium brands, she said.

For the quarter, Stitch Fix reported revenue earnings and profits that were generally in line with analyst estimates. First-quarter revenue grew 25 percent to $296 million year over year, while the company netted $13.5 million in net income.

But Stitch Fix’s stock was trading down as much as 12 percent in the after-hours market, perhaps over concerns that the company did not provide a forecast for net income.

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