Thanks to our sponsor Google, we got the full first day of last week’s CM Summit, featuring Fred Wilson fresh from the Tumblr deal, Pinterest CEO Ben Silbermann, and about 20 speakers in between for your viewing pleasure. Enjoy!
The world is atwitter about Tumblr’s big exit to Yahoo!, and from what I can tell it seems this one is going to really happen (ATD is covering it well). There are plenty of smart and appropriate takes on why this move makes sense (see GigaOm) but I think a lot of it boils down to the trends driving Yahoo’s massive display business.
If there’s one thing we all know, it’s that a new form of native advertising is spreading throughout the Internet. It started with Google and AdWords, it spread to Twitter and its Promoted Tweets, and Facebook quickly followed with Sponsored Stories. At FMP, we have sponsored posts and our Native Conversationalist suite, which we are scaling now across the “rest of the web” – the smaller but super influential independent sites that we believe are major suppliers of ”the oxygen of the Internet” – the content that drives true engagement. Other companies are adopting similar strategies – Buzzfeed is building a content marketing network, and Sharethrough has moved past its “wrap a YouTube ad in a player and call it native” phase and into more truly native units as well.
The reason native works is because the advertising is treated as a unit of content on the platform where it lives. That may seem obvious, but it’s an important observation. When a brands’s content competes on equal footing alongside a publisher’s content, everyone wins. Those search ads – they win if they are contextually relevant and add value to the consumer’s search results. Those promoted tweets only get promoted if people respond to them – a signal of relevance and value. The same is true for all truly “native” ad products. If the native ad content is good, it will get engagement. The industry is evolving toward rewarding advertising that doesn’t interrupt and is relevant and value additive. That’s a good thing.
Left out of this evolution, until now, has been Yahoo!. When you break it down, Yahoo! is a Very Large Display Advertising business, with a hefty side of search and a bit of this and that on top. And that display advertising business is going through a wrenching shift, as buyers move to more efficient programmatic channels (for a visualization, see my last post). CPMs (cost per thousand, the unit of value for display advertising) are rapidly declining for “standard display” units – the boxes and rectangles that built Yahoo! and much of the rest of the web.
It will take a couple of years for those ads to A/evolve into new forms that are standardized and B/be driven by data and real-time programmatic rules in ways that brands can really trust (it’s already working for direct response, but that’s not the end game). Display will always be around, but as I said, it’s in a significant evolutionary phase, and the short to mid term reality is this: CPMs are dropping, and Yahoo! has a massive display business.
At the same time, we’re all shifting our attention to mobile devices, and we’ve adopted the “stream” as our preferred method of content discovery and consumption. That stream doesn’t work so well with standard display. But it’s great for native units.
Yahoo! is already shifting its home page and other content sections to a stream like interface. Tumblr offers only native ad units (founder David Karp lifted his strategy pretty much wholesale from Twitter’s “the ad is the tweet” philosophy). And Tumblr was built from the ground up as an activity stream.
I’ll write another time about how I believe that display and native will eventually merge – via the programmatic exchange. For now, Yahoo’s move gives it an asset that its branded display sales force can sell as sexy: native, content-driven advertising at scale. A good move.
I’m very proud to announce “Behind the Banner“, a visualization I’ve been producing with Jer Thorp and his team from The Office for Creative Research, underwritten by Adobe as part of the upcoming CM Summit next week. You can read more about it in this release, but the real story of this project starts with my own quest to understand the world of programmatic trading of advertising inventory – a world that at times feels rather like a hot mess, and at other times, like the future of not only all media, but all data-driven experiences we’ll have as a society, period.
I’m a fan of Terry Kawaja and his Lumascapes – Terry was an advisory to us as we iterated this project. But I’ve always been a bit mystified by those diagrams – you have to be pretty well steeped in the world of adtech to grok how all those companies work together. My goal with Behind the Banner was to demystify the 200 or so milliseconds driving each ad impression – to break down the steps, identify the players, make it a living thing. I think this first crack goes a long way toward doing that – like every producer, I’m not entirely satisfied with it, but damn, it’s the best thing I’ve seen out there so far.
I am deeply grateful to all the folks who helped us make this happen, in particular Jared Cook at Adobe, and a legion of leaders in the industry who reviewed early versions, including Walter Knapp, Bill Demas, Ned Brody, Brian O’Kelley, Ann Lewnes, and dozens more who helped me research and imagine what this might end up looking like.
So take a look and tell me what you think. It’s far too complex to embed here, so we have it running over on the CM Summit site. If nothing else, it should get folks talking, and I hope you’ll help us make it better by leaving a comment here, or sending me mail with your thoughts.
Oh, and while you are at the site, check out the conference lineup. We are almost sold out of tickets, and it’s going to be one heckuva conversation, so please join us!
In case you have any interest, here’s a short clip of me opining on Google Glass and the upcoming OpenCoNYC, which is going to be HOT. More on that soon.
I’ve been a bit slow to update this site lately, as my return to Federated Media, and preparation for the CM Summit and OpenCo NYC, have pretty much eaten up all my time lately. But I did want to repost a few things I have written elsewhere, starting with this article in Ad Age, written two weeks ago.
Titled Publishers, Ad-Tech Firms, Marketers Need to Connect, Build Trust (no, I didn’t write that headline, if I was in charge, it might have been “Hold Hands or Die Apart” – pageviews, ya know?), the article argues that our industry is not yet prepared for what the market is going to demand – solutions that integration adtech and brand marketing. Here’s a sampling:
Something troubling has jumped out at me. There’s an extraordinary asymmetry of information among these three important players in our industry, and a disturbing sense of distrust. Brand marketers don’t believe that ad-tech companies view brands as true partners. Ad-tech companies think brand marketers are paying attention to the wrong things. And publishers, with a few important exceptions, feel taken advantage of by everyone.
Here’s a representative sample of things I’ve heard:
“If I had it to do over again, I am not sure I’d be in publishing. You can’t win over the machines.”
“Brand marketers are wasting their money. If they’d just get smarter about data, they’d realize content doesn’t matter — what matters is leveraging what you know about a customer. They’ll never get it. “
“The Lumascape has devolved into a pay-per-click machine. Tech companies are too full of themselves. I don’t trust them. It’s a “black box.’ “
“Agencies and technology companies are leveraging their data advantage to arbitrage publishers’ inventory — and even their marketing clients’ spend — so as to pad their bottom lines.”
“I won’t put any of my inventories on exchanges — the last time I did, CPMs were so low it was embarrassing.”
This isn’t a pretty picture. But even as I hear statements like these, I also hear story after story about how data-driven marketing practices are working. Publishers like Forbes, Ziff Davis and Weather.com have seen revenue from “programmatic premium” rise to as much as 20% of total top line, up from 5% or so just a year ago. (Programmatic premium is the practice of running premium inventory through programmatic channels in ways that “protect” that inventory, such as building private marketplaces or adding publisher first-party data.)
Smart marketers are leveraging ad tech to drive real brand lift, conversion and sales. And a platoon of top ad-tech companies are preparing to go public in the next 12 months, hardly a sign that they have business models built on shady business practices. (We’d do well to recall that Google went public one year after “click fraud” was considered pervasive in the search marketplace.)
What we have here is a failure of communication and shared values. The brand marketers I speak with acknowledge that they don’t understand how to map their brand-building skills to the offerings of ad-tech companies. The ad-tech companies confide that they don’t understand the motivations of brand marketers (nor do they believe it would be profitable to try).
For more, head to Ad Age.
(image) Back in 2005 I whipped off a post with a title that has recently become relevant again – “Traffic of Good Intent.” That post keyed off a major issue in the burgeoning search industry – click fraud. In the early days of search, click fraud was a huge problem (that link is from 2002!). Pundits (like me) claimed that because everyone was getting paid from fraud, it was “something of a whistling-past-the-graveyard issue for the entire (industry).” Cnet ran a story in 2004 identifying bad actors who created fake content, then ran robots over AdSense links on those pages. It blamed the open nature of the Web as fueling the fraudsters, and it noted that Google could not comment, because it was in its quiet period before an IPO.
But once public, Google did respond, suing bad actors and posting extensive explanations of its anti-fraud practices. Conversely, a major fraud-based class action lawsuit was filed against all of the major search engines. Subsequent research suggested that as much as 30% of commercial clicks were fraudulent - remember, this was after Google had gone public, and after the issue had been well-documented and endlessly discussed in the business and industry press. The major players in search finally banded together to fight the problem – understanding full well that without a united front and open communication, trust would never be established.
Think about that little history lesson – a massive, emerging new industry, one that was upending the entire marketing ecosystem, was operating under a constant cloud of “fraud” which may have been poisoning nearly a third of the revenues in the space. Yet billions in revenue and hundreds of billions in market value was still created. And after several years of lawsuits, negative press, and lord-knows-how-much-fraud, the clickfraud story has pretty much been forgotten.
It should. Because the same movie is once again playing, but this time the problem has migrated to the open ecosystem of programmatic display. As anyone who’s studied the LUMAscape knows, we now have a VC-fueled industry worth billions, with many players primed to go public in the coming year or so. And the original search players – Google in particular, but also Microsoft and Yahoo! – are also major actors in this new industry.
My post from January of this year - It’s Time To Call Out Fraud In The Adtech Ecosystem - summarized the new breed of fraud in our industry, and recently, many publications have intensified their coverage of the topic. In late February, I invited a handful of adtech CEOs to a lunch where we discussed the issue, and everyone at the table – from AppNexus to Google, OpenX to MediaOcean – agreed that it was time to address the problem head on.
And that’s how we got to the news this past week that the IAB is standing up a task force on “Traffic of Good Intent.” I’m proud to be a co-chair of the group (and yes, the name does come from that 2005 post in these pages). This time around, there are many more players, a much larger industry, and a far more complicated ecosystem. But it’s worth remembering that bad actors always take advantage of open systems. It’s up to us to unite and drive them back. We should all be trading in traffic of good intent – real human beings, engaged with real content and services across the Internet. Our customers, partners, investors, and our good company names depend on it.
I look forward to the work.
(image) I know that when I do write here, I tend to go on, and on – and those of you who read me seem to be OK with that. But sometimes the best posts are short and clear.
That was my thought when I read Journalists Need Advertising 101 by Brian Morrissey, writing in Digiday last week. In fewer than 500 words, Morrissey issues a wake up call to those in journalism who believe in the old school notion of a Chinese wall between editorial and advertising:
What’s crazy is journalists seems almost proudly ignorant of the business of advertising. …it’s time journalists take a real interest in how advertising works. I’d go even further. It’s time they get involved in making it. Hope is not a strategy, as they say, and it’s better to deal with the world you live in rather than the world you wish you lived in.
Morrissey goes on to state that the banner ad – the staple of content-based business models for the past 20 years – is “going to zero,” and that the future of the business is in native, integrated content marketing. Journalists, he reasons, need to understand this and get with the program – which means helping to create the content for advertising.
Now, if you’re read me closely, you probably can imagine me nodding my head enthusiastically (though I think display is here to stay, in a renewed model). After all, I’m the one who wrote On Thneeds and the “Death of Display” and The Evolution of Display: Change Is Here, For Good last year. I’ve been on about “native” for more than six years. The company I started in 2005 has been executing native programs since 2005. FMP has a “CM” practice that works with nearly half of the Fortune 100 doing content marketing and native advertising placements. Scores of our top publishers regularly make content for brands. And now that I think about it, it was a decade ago that I taught courses on the business of journalism to graduate students at Berkeley – because I believed that ignorance of business models spells doom for the fourth estate.
So I generally agree with Morrissey’s points – but with one possible caveat. I fully believe that great creators of content should be, well, creating great content on behalf of brands. The best filmmakers are also the best creators of 30-second spots, after all. But I wonder whether journalists – if defined as reporters who cover beats on a full time basis – should be making branded content if it conflicts with what they cover. A reporter’s contract with their audience is this: I will give you straight information about my beat, and I will not be unduly influenced by those I cover. It’s very hard make that promise if you are also being paid to make content for the brands you cover. Of course the truth is that anyone being covered by a reporter will try to influence them in any number of ways. But money complicates everything. The conflicts are deep – and it puts your audience’s trust at risk.
So should a reporter who covers, say, the auto industry full time, be creating marketing content for auto industry brands? I think we can debate this question. We used to live in a world of hard and fast, hierarchical rules. Now, we live in a world of communities who can and do attempt to understand each other. This is a good thing – a reporter can make his or her own decisions, explain them to an audience, and if the community accepts the result, all is well.
Whether or not you think it’s OK for reporters to create branded content about the industry they cover, I absolutely believe that reporters (and their editors, if they have them) certainly should be reviewing content created for that industry, and providing input on whether the content will resonate with the audiences and markets those reporters know best. And any media company that employs reporters should certainly have a content marketing function (if you don’t, why, give me a ring). Without input from publishers, branded content can fall flat, and fail to truly connect with an audience.
Branded content has to match its audience, and it must add value to the conversation. And most importantly, sponsor relationships must be clearly communicated. So how to do it? Branded content needs an understanding of the market, the talent to create content in that market and the ability to place its content in front of the market. If you want to be in a fast moving conversation, it’s damn hard to do all that without editors and reporters. As Morrissey points out, the flat-footed Scientology mess shows what happens when the Chinese wall between advertisers and publishers is overly imposed.
But let’s address the elephant in the room: should brands be asking reporters to make content for brands they directly cover? It’s debatable, but I’d argue it’s probably not a good idea.
Of course, this may be a question of degree. Is it OK for a reporter to write branded content if it’s not about the brand, but merely underwritten by the brand? That happens a lot already, to the point where it seems almost uncontroversial (although many “traditional” journalists decry the practice). What if the reporter writes content for a brand they don’t cover directly, but is in the industry they cover? Can auto industry reporters, for example, create content for other areas not on their specific beat, like say, for an auto insurance brand? Is it only OK if they write whatever they wish to, editorially, but not alright if they are told what topics to cover? I could go on for quite a while…
I’ve given a ton of thought to these issues, but it strikes me our industry hasn’t really codified a clear set of principles on the matter. And for content marketing to really thrive, we certainly should.
Perhaps a start to this conversation is the distinction between a reporter who covers a beat full time with a promise to an audience of unbiased point of view, and a strong voice in the industry who lives or dies based on their individual point of view, but isn’t a full time reporter working for someone else. This has been a long standing point of contention since the rise of bloggers – what is a journalist, anyway? Is a blogger who regularly expresses a strong point of view on a particular industry a journalist?
Lord knows tons of folks have weighed in on this topic, but here’s my shorthand: I think everyone and anyone can be a journalist, especially bloggers. But not all journalists are reporters. There’s an important distinction here, and it’s one worth maintaining. I write a journal – this site. It has my opinion, my point of view, my voice and analysis, and every so often, a piece of reporting. But I am not a full time reporter. I believe readers are smart: They understand when someone (like me) is a voice in a particular industry. They also understand that someone with a passion who writes a site on food, or style, or entertainment, isn’t a beat reporter covering those issues full time, but rather a smart voice saying whatever they care to say, whenever they care to say it. If that person decides to take on sponsored work, that’s fine. If the content they create is disclosed, of high quality, adds value to their community, and puts food on the table, everyone wins.
This is naunced stuff, and worth airing out. As content marketing becomes a standard in our industry, we need to open up this dialog and be willing to learn from each other. I look forward to the ongoing conversation.
Over on the brand spanking new CM Summit website, we’ve announced our initial speaker lineup and progam theme for the 2013 event – Parting the Clouds: Bridging Data and Humanity.
This is the seventh annual CM Summit, the fifth as an anchor conference for New York’s Internet Week. It’s a direct result of nearly a year of work on my book, and inspired by research into the programmatic, data-driven world of advertising technology as well as some very deep roots in brand building and digital media.
The speakers are an extraordinary bunch – and this is just the first group. There are many more to come. For any of you who have been to previous events I’ve curated, you know we really sweat the details – in particular the intellectual framework of the program itself.
More on the theme:
In a scant few years, data has become a critical driver of business decisions – and increasingly, a fundamental currency of all human endeavor. But to marketers and consumers alike, “data” is often a poorly defined term that can elicit confusion, anxiety, and even fear.
Our society has embarked on a historic conversation around the role of data in business, government, and our personal lives. In the seventh annual CM Summit, we’ll seek to define just what data really is, and how we might bridge the concept of data to not only marketing, but to a deeper understanding of culture and humanity.
We will create more than 3.6 zettabytes of data in 2013 – roughly 565 gigabytes per person on earth. And that rate is doubling every two years as we adopt ever faster and more innovative devices – in particular, mobile devices untethered to one “desktop” or even one “phone.” Ten years ago, the very idea that someone might map their “social graph,” tweet their “status,” or “check in” at a location was unthinkable. Now it’s commonplace. What might be common ten years from now, as we begin to monitor our health in real time, and place sensors in our homes, automobiles, clothes and wallets?
How do we get our arms around such abundance and complexity? And how can businesses position themselves to compete in such an environment? 2013 will mark the CM Summit’s most ambitious and far reaching program. Rooted in the firmament of digital marketing, the event will reach out to explore the human implications of data, algorithms, mobility, and technological progress. In the past ten years, the marketing industry has built one of the most intricate ecosystems imaginable, with real-time bidded exchanges and powerful layers of algorithmic logic, all driven by massive storehouses of data. And while this ecosystem began with the desktop web, it’s spread to encompass mobile, video, and even search. At the Summit, you’ll meet the people behind this world, as well as the agencies, marketers and brands who power it.
We’ll continue our tradition of rigorous, in depth interviews, practical case studies, and eye-opening “high order bits” that will challenge traditional thinking and provide context for doing business in a data-driven world.
We work hard to earn your time and money, and I hope you’ll consider supporting this, the only executive conference I’m doing this year. It’d mean the world to me. Register here. I hope to see you in New York!
As part of research I’m doing both for the book and for my upcoming conference (the CM Summit, more on that soon), I’ve been in pretty extensive conversations lately with dozens of key players in the advertising technology industry. I find the ecosystem that has developed to be fascinating, complex, and ripe with opportunity (and deeply important to the future of our society, not just marketing). I’ll be writing about it quite a bit in coming months. But before I do, I wanted to call out a growing issue that our industry will have to tackle sooner rather than later.
Just as in the early, wild west days of search (1999-2004), the programmatic advertising business – a multi-billion dollar marketplace growing faster than search, video, or anything else for that matter – is riddled with fraud.
That’s what many very reputable sources have told me in great length over the past few months. It’s something of an open secret, and more and more people are speaking out against it. Here’s Federated Media’s Walter Knapp on the problem, back in March of last year:
The great thing about the Internet is that it is built on the foundation of openness — from the way the domain system works to the way content and publishing are increasingly democratic. The core technologies embrace openness, sharing, linking and the ability to consume content across devices and across wired or wireless connections. Unfortunately, the openness we depend on in the digital media business is also available to people who can (and will) take advantage of this openness and exploit it for their own selfish wants.
Knapp notes two forms of fraud – ad injectors, fraudulent browser plugins that take over ad calls; and the practice of inserting an entire site into a 1×1 pixel hidden on high traffic but low quality sites featuring porn or music lyrics. Both are examples I’ve heard about over and over in my reporting. A third involves “stacking” ads one behind the other, all playing video to completion, often playing in inactive tabs. A fourth features refreshing ad calls on accelerated schedules or in inactive tabs. Yet another involves running as many ads as possible out of view, simply to gain “view through attribution” on a closed loop success metric.
More people are starting to call these practices out. AppNexus CEO Brian O’Kelly prominently featured the issue of fraud in his blog post celebrating his company’s recent $75 million funding, and what he intends to use it for:
Quality We will continue to invest in cleaning up the advertising marketplace. We’re proud of our anti-piracy stance, and our 5x volume growth this year indicates that you don’t need to serve on BitTorrent sites to be an ad platform company. We are investing heavily in fighting fraud, porn, malvertising, and malicious toolbars, and we are actively working on viewability tools.
Programmatic industry watcher AdExchanger puts it this way:
AppNexus’s pledge to invest money in ad quality issues is worth calling out. The issue is becoming more pervasive as companies emerge to exploit the vulnerabilities of real-time traded inventory to data and impression fraud, malvertising, and other nefarious practices. Fraudulent activities aside, the emergence of robust ad verification and viewability tools means display ad marketplaces and buying platforms must keep a clean nose.
It’s true that many folks are working on addressing the issue, including the IAB. But the bad actors are currently far ahead of the good guys, and worse, many in our industry are turning a blind eye, hoping the problem goes away in time, without too much publicity. Why? Well, nearly everyone gets paid from fraud – the publishers, the exchanges, the data providers, and the agencies. Even the marketers,who are footing the bill, feel like they are getting value – because the success metrics they’ve set up are being met.
But fraud hurts the ecosystem in a massive way. It means that low quality, invisible, or purely fraudulent inventory is holding down the average value of the entire marketplace – hurting high quality, engaged publishers in the process, stunting investment in quality content.
Over and over, I hear that the reason CPMs (the amount of money a marketer is willing to pay for one thousand advertising impresssions) are so low is because “there’s infinite inventory.”
Hogwash. There’s only so much time in the day, and only so many pages where actual human beings are really paying attention, and the web (including mobile) is growing at a finite pace. There are even fewer places where marketers can be assured of quality, engagement, and appropriate context. It’s time we focus on identifying them, and ridding ourselves of the true source of “infinite inventory” – fraud.