Advertising – Page 4 – Tech Narratives

The Wall Street Journal has a nice bit of reporting here on several websites which are reducing the number and toning down the nature of ads, and seeing positive results in terms of ad revenue as a result. Reading the article, it’s hard to avoid asking “You mean you dramatically improved the user experience and more people spent more time on your site?” The changes being described here seem so obvious that it’s easy to forget that the received wisdom in online advertising (as in TV advertising, arguably) has been that the best way to generate more ad revenue is to show more ads and make them harder to ignore, at the expense of the user experience. The backlash against advertising online (manifested in both use of ad blockers and refusing to visit sites with obnoxious ads) and on TV (manifested through ad-skipping DVRs and the rise of ad-free properties like Netflix, Hulu, and HBO) is now finally forcing a reckoning among those that have swallowed that line of thinking. And the results should surprise no-one: prioritizing anything over the user experience is always going to worsen the experience and therefore usage, while prioritizing the user experience will improve it and usage, and in the process may well improve revenues too. This isn’t a panacea for online display ads, many of which will be blocked anyway even if not obnoxious, and whose value compared to native and search ads continues to erode, but it’s better than continuing down the road most online publishers have been on. The solution for TV advertising, on the other hand, isn’t nearly so simple, given the broader declines in viewership.

via WSJ

Industry

Advertising Sustainability

Facebook Begins Rolling Out Ads in Messenger Globally (Jul 11, 2017)

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Advertising

Advertising Sustainability

Study Shows Programmatic Ad Buyers Drop, Native Ads Grow Fast in Q1 2017 (Jul 11, 2017)

A study from MediaRadar, reported here by Adweek, suggests that the number of advertisers buying programmatic ads dropped by 12% year on year, while the number spending on native ads rose 74% year on year. The latter is very much in line with a longer-term trend towards native advertising, which looks more like the content in or between which it is embedded, but the former is more newsworthy. The most likely reason appears to be the worries over automatically-placed ads showing up next to undesirable content on YouTube and through Google’s AdSense earlier this year. I said at the time the YouTube boycott began that, although the backlash was publicly aimed at Google’s properties, it was likely to affect programmatic buying generally as brands became more concerned about a lack of control over which content their ads would show up next to, and this is a bit of evidence that confirms that hunch. The two formats discussed here – native and programmatic – needn’t, of course, be mutually exclusive, and as an example Google’s recently introduced mobile ad formats could potentially be bought programmatically while being designed to appear as native ads on various sites. But programmatic buying itself, while Google has explicitly called out as one of a small number of major factors driving its ad performance in recent quarters, looks to be heading for a bit of a setback as at least some brands re-evaluate whether to use it.

via Adweek

Industry

Advertising Sustainability

Major Newspapers Seek Legal Cover for Collective Bargaining with Facebook and Google (Jul 10, 2017)

The News Media Alliance, an industry group representing major newspapers, is beginning a push, launched with an op-ed in the Wall Street Journal from its president, to get permission from Congress to act collectively in negotiating with Facebook and Google. I’m linking here to a piece in the New York Times on the topic, but it’s from the media columnist and therefore almost as much opinion as reporting, something I’ve found with most of the stories on this, which feels a little ironic. But the thrust of both the op-ed and the opinion side of the New York Times piece is that the news industry is being lorded over by the digital giants, and that single publications or even media groups are powerless to negotiate better relationships without being able to bargain collectively. That, in turn, would be a violation of antitrust rules unless Congress were to pass legislation providing legal cover, something it seems rather unlikely to do, especially in the current political climate. The op-ed is disingenuous to say the least – this is the money quote, in my opinion: “But the two digital giants don’t employ reporters: They don’t dig through public records to uncover corruption, send correspondents into war zones, or attend last night’s game to get the highlights. They expect an economically squeezed news industry to do that costly work for them.” That feels like a distortion of the true relationship here, which is that Google and Facebook both point people to the content those people find interesting, including content from major newspapers. If those newspapers decide to make that content available for free either on their sites or through Instant Articles or AMP, that’s their decision. But that’s not nearly the same as those companies doing that work “for” Google or Facebook. While the idea that the newspapers face an imbalance of power in negotiating individually with Facebook and Google has more merit, it’s also disingenuous to argue that these two companies are somehow singlehandedly responsible for the inequitable distribution of advertising revenue between them, given their respective audience sizes and all else that ails newspapers and their business models. At the same time, it’s worth noting that Facebook is pushing ahead with its plans for subscriptions and other improvements to how it works with publishers, but publications including the New York Times continue to be skeptical of those changes, which makes one wonder just what these papers would kind of relationship with these companies the papers would find acceptable. All of this merely reinforces my sense that the companies don’t really have any solutions to propose, but in fact are angling for some kind of punitive regulatory action against these companies on the basis of their size and influence.

via The New York Times

Facebook's Power

Google Debuts New Native AdSense Ads for Third Party Sites (Jul 6, 2017)

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Advertising Sustainability

Apple News Reportedly Readying Ad Platform Integration for Publishers (Jul 5, 2017)

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Subscriptions Drove Nearly 80% of US Streaming Music Listening in H1 (Jul 5, 2017)

BuzzAngle, a company which tracks the North American music industry, has released a first-half 2017 report, with lots of numbers on music consumption patterns in the US over the past six months, and Variety here has a summary of some of the key findings. One of the most striking numbers to me is that subscription streams accounted for nearly 80% of total streaming audio plays in the first half, with ad-based streaming only driving 21% of listens. That was slightly surprising to me, because the number of ad-based streaming music users is much higher than the number of paid subscribers, so I went back and checked some earlier data from BuzzAngle in this year-end 2016 report. It appears that this balance began to shift dramatically starting in the middle of 2015, which is not coincidentally when Apple Music launched. Importantly, BuzzAngle treats streaming video plays of music (e.g. music videos on YouTube) as a separate category, so the split mentioned above only accounts for pure audio streaming such as Spotify’s free and paid tiers and their equivalents. But it’s still striking that the balance has gone from roughly 50/50 between subscription and free audio streaming at the beginning of 2015 to 80/20 in Q2 of this year. And in Q2, subscription audio streaming actually eclipsed combined ad-based audio and video streams for the first time, so it’s now the largest category even when video plays are included. It’s worth remembering that this is US data, and the US has shifted dramatically from being a streaming laggard to being a leader over the last few years, so this certainly isn’t reflective of global behavior. But it is worth noting that subscription music streaming not only provides the vast majority of revenue and profits in the US, but now also a majority of actual plays as well.

via Variety

Industry

Streaming is Saving Music

AMC Networks Confirms $5/Month Ad-Free VoD Service Through Comcast (Jun 29, 2017)

Back in March, there were reports that AMC was looking to provide an ad-free version of its TV network through pay TV operators, though the specifics weren’t then known. Today, AMC and Comcast have announced that the service will run (for now at least) as a partnership between them, providing AMC Premiere as a video on demand service through Comcast’s set top boxes and apps for $5 per month. As I said in March, that’s a hefty price for a network which commands just a fraction of that from pay TV operators each month, and which generates only half its current revenue from advertising. It may have decided that pricing a service below $5 per month devalues it, but the $5 price point clearly overvalues it, especially given that it won’t be a standalone service – in other words, you have to be an Xfinity pay TV subscriber to be able to get the service, so this is an add-on to the standard AMC channel, not an alternative to it. Taking a step back, the move clearly taps into a broad consumer push to get ad-free TV, something which Netflix has always offered and Hulu has made something of a default recently too for VoD. And of course competitors like HBO have never had ads either, but they also have massively more content including lots of big-budget original content to justify a higher price. This feels like a good concept in principle, but both the wrong channel to apply it to and the wrong price point for what AMC actually offers. I’m looking forward to better applications of the same idea from other content owners.

via Recode

Advertising Sustainability

Verizon Seeking Customer Data from Wireless Rivals to Bolster Ad Platform (Jun 27, 2017)

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Advertising Sustainability

★ EU Fines Google €2.4bn ($2.7bn) Over Favoring Google Shopping in Search Results (Jun 27, 2017)

The EU has three open antitrust cases against Google, and has just announced its final decision in one of those cases, which concerns Google Shopping. Very briefly, EU law doesn’t punish dominance in a market per se, but does place limits on certain behavior by dominant companies, specifically those which give their other products and services an unfair advantage. The EU has concluded firstly that Google search is dominant in the EU, and secondly that Google abused that dominance by favoring its Google Shopping feature over other “comparison shopping services”. It has therefore set a €2.4 billion ($2.7bn) fine based on revenue from Google Shopping in 13 countries where it’s available since as long ago as 2008, with a threat to levy an additional 5% of Alphabet’s total revenue going forward if Google doesn’t comply with its directives within 90 days. Other than the fine, the directive says Google has to stop favoring Google Shopping over other comparison shopping services, presumably either by eliminating the Shopping box that appears at the top and merely allowing Google Shopping results to appear with the other blue links below, or by featuring every available comparison shopping service in that box at the top and letting users choose. Predictably, Google has said it feels the decision is wrong and may appeal.

On, then, to what this all means. Firstly, this is just the first in three separate cases, and I’ve previously written in depth about the one that concerns Android here and here. In its decision, the EU explicitly says that this case sets a precedent, which certainly suggests it’s likely to find and act similarly in the other two cases. Secondly, the fine is substantial, but ultimately not the biggest punishment for Google here. Rather, the most significant outcome is restrictions on promoting other Google services in search, which applies for today onto to Shopping but by implication would also affect other linked products that get prominent promotion in search results, whether Maps, News, or potentially other categories too. Put that together with the precedent point, and we’re very likely to see similar restrictions on bundling and promoting other services in Android and possibly other areas too. Thirdly, the decision is notable for a very European approach to defining markets, which I mentioned in one of those earlier pieces on Android: the EU tends to define markets in ways normal people probably wouldn’t, because that allows it to make findings that otherwise couldn’t be made. In this case, it’s defining Google Shopping as a comparison shopping service rather than just a more useful way to present shopping-related search results and/or ads, which is how Google sees them. Once you define Google Shopping in that way, then of course Google is unfairly promoting Google Shopping over other comparison shopping services – can you even name any others? Google’s own algorithm, which benefits only from being as good as possible, rarely ranks any others above the fourth page of organic search results, suggesting their limited relevance. But as long as the EU is determined to take that approach, I see very little Google can do to fight against this decision, because it’s based on a market definition the EU gets to decide on, and which Google is essentially powerless to change. Overall, this feels like something of a watershed moment in Google’s relationship with the EU – I think any appeal is very unlikely to succeed, and at most will push back the implementation of the decision and the forced unbending of Shopping from search. But there’s lots more to come here, and Google is going to end up operating very differently in the EU from the rest of the world as a result. See a recent case in Russia for a small sense of some of the possible implications of the Android case.

One quick note: I’ve used the term “EU” throughout for simplicity’s sake, but it’s worth noting that technically it’s a specific part of the EU organization, the European Commission, which is taking this action.

via Bloomberg (see also the EU announcement and Google’s blog post)

EU vs US Tech

Facebook Video Ad Viewability Numbers Far Lower than Industry Averages (Jun 26, 2017)

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Facebook's Bad Metrics

Gmail Will Stop Scanning Emails to Target Ads Due to Enterprise Confusion (Jun 23, 2017)

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Some YouTube Advertisers Still Staying Away (Jun 21, 2017)

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Advertising Sustainability

Spotify Tests New Sponsored Songs Ad Unit to Place Songs in User Playlists (Jun 19, 2017)

Any service which becomes central enough to its users’ lives eventually has aspects which become essentially intimate to the user: what feel like private places where the user feels extremely comfortable, and where intrusions of content, ads, or other unwanted outside elements feel like a violation. I suspect users’ own playlists on Spotify feel like just such a place to its loyal users, and so the news that Spotify is testing a “Sponsored Song” ad unit in which songs are literally placed into users’ playlists should be concerning. Almost every ad-based business model eventually engages in such violations, either temporarily or permanently, because the drive is always to push the boundaries of ad load and the places where ads can show – the most valuable real estate is also often the most invasive, and each ad platform has to draw its own line between what is and isn’t acceptable in the pursuit of ad dollars. Spotify’s recently leaked full results for 2016 show that its ad-based business is loss-making even on a gross margin basis, while its subscription business is profitable on that same basis, so there’s always going to be a push to squeeze more ad revenue out of each user. I’ve recently finished a piece for Variety which will publish in the next couple of weeks in which I argue that Spotify should in fact ditch its free tier and go subscription-only, because of all the tradeoffs the ad-based business forces, especially in its relationships with labels. But these types of encroachments into what should be sacrosanct aspects of the user experience are another example of the risks of the free tier, especially relative to the small rewards – just 10% of Spotify’s revenue in 2016.

via TechCrunch