IS LESS BETTER THAN MORE?:  The proliferation of networks placing display ads across thousands of publishers has created digital demons like ad fraud, viewability and objectionable content placement.  Brands are grappling with these problems by focusing on where they shouldn’t advertise, and spend much less time/energy figuring out where they should.  One client who’s thinking about this dilemma the right way is Chase.  In the attached New York Times article Chase’s CMO explains that they’ve started to test an approach of dramatically restricting the sites they want their ads to appear on – from 400,000 websites (woah!) down to just 5,000.  In their initial 30 day test Chase found no degradation of performance metrics after the reduction (not surprising), and they’ve also seen no increase in cost (which is unexpected).  Logic would dictate the more selective you get about the sites you run on the more you’ll need to pay, since the premium sites cost more.  Granted even a list of 5,000 sites is really long – can you even name 500 websites?  I wonder what would happen to Chase’s eCPM if they culled the list down even further to say 100-200 of the cleanest sites.  It’s a fascinating concept to think about.  (Special thanks to Pandora’s Sari Zager for finding this one – worthwhile read!)

ALL STREAMING MEASUREMENT COMPANIES ARE NOT CREATED EQUAL:  As streaming audio heats up every data company and their brother is try to nose in on the measurement game.  The latest contender is a company called Verto, which tries to measure uniques, consumption, and “stickiness” of the various streaming apps.  The basis for Verto’s data requires listeners to download their app in order to track streaming on that specific mobile device.  Then Verto models out listening behavior from this user panel against the entire population.  The results are laughable at best.  According to their inaugural study Apple Music leads the field with 41M monthly uniques, even though Apple recently announced that they only have 20M worldwide listeners.  On the other side of the spectrum Verto pegs Pandora at 33M uniques, which is more than 50M off comScore’s 86M figure.  Yikes!  I’m thinking Verto might need to go back to the drawing board on its methodology.

COULD ROYALTIES FINALLY BE COMING TO TERRESTRIAL RADIO?:  Broadcast Radio has enjoyed an almost century-old exemption from paying content royalties to artists, songwriters, and labels because of their claimed “indispensable role of breaking new artists and selling records”.  Obviously this loophole has gnawed at the recording industry for years – why should radio get a free ride on music royalties when everyone else has to pay?!?  Because this every so many years you’ll see the RIAA attempt to go through Congress to get the exemption over turned.  Those efforts have always been stone-walled because the broadcasters have been able to paint the royalties as a new tax, and members of Congress rarely want to be on record as voting for a new tax  But it feels like the winds are shifting on this issue per the attached Inside Radio article.  Broadcasters seem willing, for the first time ever, to engage in negotiations over music royalties.  Maybe they sense that the “specialness of radio” argument is eroding beneath their feet.  Maybe they see paying royalties on music played terrestrially is a way to negotiate down the royalties they already pay on streaming music.  Regardless of the reasoning this has the potential to fundamentally change the relationship between the radio industry and the music creators.

Have a great Friday (and weekend) guys!

USERS WEIGH IN ON CONTROVERSIAL CONTENT:  The Google/YouTube advertiser boycott has officially hit forest fire level, with dozens of global brands pulling of the platforms to avoid having their ads run next to objectionable content.  So far most of the feedback has come front clients and their agencies.  For another perspective on the issue AdWeek has conducted a survey to gain an understanding of what YT users are being exposed to and how they’re interpreting it.  In one sense the data doesn’t look terrible – most users don’t remember seeing inappropriate content and don’t remember seeing ads in those moments.  But then you get to question #6.  Even 36% of users thinking that a brand is somehow endorsing or sponsoring objectionable content is a horrifying thought.  No wonder advertisers are making a mad dash for the door!

IS A TWITTER SUBSCRIPTION IN YOUR FUTURE?:  I’ll have to admit that I’m not the biggest Twitter user in the world.  Yes, it’s a powerful social media tool with an impressive user interface and substantial scale.  But I find myself wading through so many useless postings that I quickly lose interest and log out.  So the attached Music Alley story about Twitter mulling over a potential paid subscription tier is a little surprising to me.  Is there enough value in premium features to justify a paywall?  What would those be?  And wouldn’t the vast majority of content still come from non-paying Twitter users, so what’s the difference if you log in as a free user or a subscriber?  If Twitter can get a paid tier off the ground more power to them.  Seems like a long shot though.

THE SWAN SONG FOR THIRD PARTY EXCHANGES:  If you work in digital media you know the once vibrant ad exchange/network business is in serious trouble.  There a so many business challenges and an equal number of neigh sayers out there, that it’s hard to make sense of what’s actually happening to the exchange business model.  The attached guest author article from AdExchanger concisely breaks the ad exchange problem down into four simple issues:  1) Header Bidding, 2) Fraud, 3) Quality and 4) Data.  Any of these factors could derail a third party ad exchange.  And the fact that the industry is facing all four issues at once means exchanges like Rubicon, OpenX and AppNexus could quickly become dinosaurs lumbering off into digital extinction.

Have a great Thursday guys!

Today I want to go off format and show you two different forecasts of Ad Revenue spending by channel over the next few years.  The first is a Global view and the second is Local.  Hope you enjoy!

GLOBAL AD REVENUE FORECAST:  Zenith is out with its annual forecast of global ad spending trends over the next several years.  The big headline in this year’s report is the surge in mobile (what else?), and the expectation that ad spending on mobile will surpass desktop this year.  It’s also shocking to think that by 2019 mobile will be closing in on TV as the top platform for ad revenue.  Of course, much of this shift is fueled by traditional TV dollars moving into digital via OLV.  Radio’s share of the pie will continue to dwindle to under 6% by 2016, as spot revenue erosion accelerates.  Keep in mind the revenue from pureplay streamers, who compete with radio broadcasters for audio dollars, is listed under desktop and mobile ad revenue.  So the audio revenue is still alive and well, but it’s also flowing to digital.

LOCAL AD REVENUE FORECAST:  On the other side of the ad revenue spectrum check out this BIA/Kelsey forecast of Local ad revenue for 2017.  Local is just a small fraction of the overall marketing ecosystem, so it’s not a comprehensive number.  But it does shed light on how spending from bread-and-butter local advertisers is shifting.  At this level the story of much different.  Radio continues to hold steady at around 10% and mobile has yet to make serious inroads.  What’s notable is the decline of newspaper revenue at the local level.  10 years ago NP would have garnered 40-50% of local dollars, but it’s now barely over 10%.  I wonder what this will look like a decade from now, once mobile penetrates Main Street marketing the same way it has globally.

BRAD’S WIFE JUST BROKE THE INTERNET:  And to leave you with a little bit of levity today, here’s a great example of the power (and ridiculousness) of social media.  This story started with Brad Byrd, the husband of a terminated Cracker Barrel employee in southern Indiana, asking Cracker Barrel why his wife was fired on the company’s Facebook page.  Doesn’t sound like much of a story, right?  Well it became one when his comment went viral and snowballed into a full-scale #justiceforbradswife movement.  I’ll give the social-sphere credit for creativity – there are some pretty funny memes here.   But when I think about the time and energy put into this I start to cringe.  As for Cracker Barrel, I hope they subscribe to the theory that “any PR is good PR”, because Brad and his wife have pulled them into this kerfuffle whether they like it or not.

Have a great Wednesday guys!

STREAMING LIVE SPORTS IS ABOUT TO BECOME BIG BUSINESS:  There’s a fascinating set of developments occurring with live streaming of play-by-play sports.  In 2016 Twitter was the first publisher to cut a streaming-only rights deal with the NFL.  The endeavor was generally deemed successful, with Twitter claiming an average of 3.5M unique viewers per game against licensing costs of $1M/game.  (Guessing they didn’t turn a profit on this deal, but it was more of a year one experiment than anything.)  Now other publishers like Facebook, Amazon, and YouTube are showing interest in the NFL, as well as just about every other play-by-play property they can get their hands on.  The reason for the demand is simple – sports is exclusive content publishers can use to draw new uniques to their platform with the hope of recycling them into regular users.  For the leagues/teams streaming represents incremental revenue.  Although you have to wonder if streaming games will eventually cannibalize broadcast viewership and negatively impact their mother ship TV deals, which are priced in the billions instead of millions.  This Recode article explains the marketplace dynamics and breaks down the pros/cons of the four main competitors for the NFL’s 2017 streaming rights.

NIELSEN’S EAR BUD PROBLEM:  Lately I’ve been on a rant about Nielsen’s mounting challenges with its PPM measurement platform.  While most of their problems have to do with sample size which causes ratings instability, there’s another lurking issue which is a much more fundamental problem.  PPM can’t detect listening through ear buds unless the listener sets up the maze of wired connections shown in the image below.  (I’m not kidding, that’s a real picture of what a listener would have to plug into and wear.)  Inside Radio’s article explains the problem for broadcasters.  In a nut shell the vast majority of stream listening occurs through ear buds, so as streaming grows PPMs will miss a larger and larger chunk of listening.  Nielsen’s response is that only 2.6% of current broadcasters’ listening occurs via stream (which is a whole different problem), so not measuring stream listening is statistically insignificant in the short term.  In the long term Nielsen’s plan is not to use PPMs to measure stream listening at all, and instead use broadcaster-installed SDKs to measure server-based data – which is how the pureplay streamers are already measured through Triton.  No wonder broadcasters are starting to talk about bringing back paper diaries and getting rid of the PPM dumpster fire all together.

HEADER BIDDING IS HEATING UP:  Finally today, there’s a battling brewing for the future of display revenue in the form of Header Bidding.  Google is the reigning king in display because they run most of the exchanges (ad networks) which fulfill programmatic bid requests from publishers.  But recently companies like Amazon have developed header bidding technologies which effectively bypass the Google-only exchanges by allowing multiple networks to directly bid for inventory from participating publishers, thus driving up the price for premium display inventory and simultaneously cutting out the middle man named Google.  (If you really want to geek out on the header bidding process, or just need a good sleep aid, see the diagram below.)  Facebook is the latest publisher to get into the scrum with their announcement to begin header bidding with their Facebook Audience Network (FAN) properties.  I know this topic is a little dense, but it’s important to understand as it has the potential to revolutionize how display inventory is bought/sold.  The Motley Fool is featuring a good summary article explaining the nuances of Facebook’s move as well as what’s at stake.

Have a great Tuesday guys!

BRAND SAFETY . . . AT A COST:  As the Google/YouTube boycott over ads placed next to objectionable content continues to heat up, Business Insider is shining a light on the cost for brands to be clean.  Specifically, if clients want their videos to run in a brand-safe environment what premium will they have to pay?  The chart below illustrates the stack order of video purchasing options. As expected, site-served ads sold by the publishers/broadcasters themselves, either directly or through a PMP, is the safest but also the most expensive option.  It’s interesting to the see the cascade of ways to buy and the relative price comparisons.  The term “you get what you pay for” has never been more appropriate.

DEMAND FOR PANDORA PREMIUM:  As Pandora begins rolling out its on-demand Pandora Premium tier, the million dollar question is what % of current users will pay for the service.  On Friday the first estimates came in from the investment firm Piper Jaffray  Their research concludes 15% of current free Pandora users show an intent to subscribe to Premium, and that much of the interest is shifting from the mid-tier Plus option to the full Premium plan.  This number comports with industry estimates that paid subscription audio streaming in the US will ceiling out at 20%, while 80% will never pay and continue to get their music free via ad-supported streaming.  Prior to their on-demand launch Pandora’s Plus subscription % has held steady at around 5%.  So a 15% adoption of Premium seems like a realistic mid-point between the current 5% and the 20% ceiling.

DIGITAL MARKETING STATS:  Finally, AdWeek is out with another summary of the past week’s top digital marketing stats.  This edition is almost exclusively around Social, so it’s a little myopic.  But the one non-social point (#6) they did include, about iHeart Media’s 100M registered users, absolutely drives me crazy since it’s a headline only with no connection to usage.  For more on that topic see my posting from last Thursday posting from last Friday.  With that off my chest, enjoy the rest of the list.  J

Have a great Monday guys!

BIG HEADLINE, NOT SO BIG AUDIENCE:  iHeart Radio’s streaming platform has crossed a milestone of 100M registered users over the lifetime of its service.  While that looks like an impressive stat it’s important to separate the total number of listeners who have ever registered from the actual number of people who use the service. According to Triton in January iHeart had an average of 741,000 listeners, Mon-Sun 6a-12md.  So less than 1% of registered are users are listening at any given moment – which seems like it would be the more important stat for advertisers.  By comparison industry leader Pandora has had over 300M registered users over the lifetime of the service, and an average 2M listeners at any given time.  Given that only actual listening creates scale for advertisers, don’t get caught looking at the birdie with iHeart’s latest headline.

ISPs ARE ABOUT TO GET INTO THE RETARGETING GAME:  Anyone in digital marketing knows the power of retargeting to consumers based on their browsing history.  It’s why when you search for a hotel room on Trivago you’re suddenly bombarded with every travel ad imaginable on the next several websites you visit.  The logic is sound – you’ll only be on Trivago if you’re thinking about taking a trip, so serving travel ads to you makes sense.  But it’s a little known fact that currently only publishers (websites and apps) can retarget consumers without consent, while ISPs (Internet Service Providers) cannot.  So the Telco big boys like Comcast, Verizon, AT&T, etc. aren’t using their data for retargeting . . . yet.  Yesterday the Senate passed legislation which would allow ISPs to retarget consumers based on their internet usage without explicit consent.  It’s expected that the House of Representatives will pass and President Trump will sign the legislation making it legal to retarget without consent.  If/When that happens get ready for a heck of lot more travel ads next time you visit Trivago.

UNINTENDED CONSEQUENCES OF VIEWABILITY:  The next article from Digiday puts forth a provocative theory that today’s push for viewability may inadvertently create more ad blocking.  The reasoning is pretty simple . . . in order to guarantee viewable ads publishers are using more intrusive ad units.  The best example of this is the full page interstitial pop-up – there’s no way to avoid that ad, so it’s definitely viewed.  But if a user is exposed to too many of these units they may get fed up with the intrusions and decide to install an ad blocker.  This happens regularly in Asia where ad blockers are the norm. So what would happen if this trend picks up in the US or Europe?  More ad blocking creates fewer addressable uniques and therefore less overall inventory to serve ads within, which is the opposite of what viewability is trying to achieve the first place.  Hmmm . . . .

SALES 101:  Since I’m feeling generous today here’s one extra article for your weekend reading.  It comes from a fellow media sales blogger and it’s a little old school, but I still like it given its basic truths.  Sales principles are the same, no matter what industry you’re selling in or what generation you come from.  These 10 principles capture what you need to do to be successful in sales, period.  In particular points 1, 3, 5, 6, 7 and 9 are my favorites.  Commit to these ways of doing business and you can sell ketchup popsicles at a white glove convention!

Have a great Friday (and weekend) guys!

ANOTHER MEASUREMENT MISSTEP FOR FACEBOOK:  The image below pretty much tells you what you need to know about client/agency feedback towards Facebook’s new cross-platform measurement strategy.  FB’s plan is to eliminate their segregated measurement solution on the self-owned Atlas platform, and derive all measurement analytics from their main ad server.  This is tantamount to grading your own test, which is why you’re hearing “fox guarding the hen house” analogies about this move.  What’s buried in this story is an important capability around the idea of cross-platform measurement using registered users instead of web-based emails, which are limited to cookie-based tracking solutions.  FB has the right approach to tracking attribution in a mobile environment.  It’s just a shame that they’re going about it in the wrong way.

THE WRONG KIND OF MOMENTUM:  The decision on Friday by Havas to pull its clients’ ads from Google and YouTube UK appears to be picking up traction with others.  Since then advertising giants like Johnson & Johnson and Verizon have pulled ads from YouTube globally (not just in the UK), and others like AT&T are rumored to be close to making the same decision.  The reason for the move is Google’s inability to keep it’s advertisers away from objectionable content, especially next to YouTube videos which contain hate speech and/or terrorism propaganda.  Google is said to be working furiously on a fix, but you can imagine how complicated the problem is.  My guess is you’ll see a growing list of clients who pull their ads (tons of loose money in the ad market?!?), and a focus on other publishers who rely on user uploaded content (like maybe Facebook, Snapchat, Twitter, etc.), who might also start to see brand boycotts.

TECH DIVERSIFICATION IN ACTION:  Finally today, I want to share an important article on the topic of diversification in the tech workforce.  A few years ago the Silicon Valley-Bay Area metroplex was called out by various groups for only hiring within the white/male/tech geek mirrortocrasy.  Since then a few publishers have taken action on this serious social issue.  Forbes highlights the various approaches; from Facebook’s forbidding of the term “Culture Fit” on interview assessments, to Pandora’s introduction of the “Culture Add” concept to encourage diversification, to Atlassian’s focus on “Values Fit”.  Each of these companies are proactively encouraging not only gender and racial diversification within their ranks, but also improving the talent of their workforce because they’re hiring different skills sets and backgrounds instead of a bunch of clones.  Bravo to anyone or any company showing initiative on this!

Have a great Thursday guys!

TWITTER GETS ITS LIVE VIDEO ON:  During Twitter’s Q4’16 Earnings Call they reported some bad news in the form of flat earnings.  While their traditional display business has been eroding, there was one bright spot in the form of live video consumption, which increased to 6.6M hours in Q4 alone.  Video content consumption on Twitter is important because it creates OLV inventory which can be sold at far higher CPMs then display.  Now Twitter is doubling down on that strategy, and following the lead of Facebook, by launching a new Live Video functionality which can be uploaded by individuals without having to go through Twitter-owned Periscope.  The tech side of this is a little complicated, so I’ll leave it to this Business Insider article for the details.  In the meantime know that Twitter is fully committed to chasing the mighty digital video dollar as a way to reignite revenue growth.

THE OTHER SIDE OF THE RETAIL CONUNDRUM:  Yesterday I featured an interview with Walmart’s CEO which focused on the retailer’s challenge of melding a traditional B&M core operation with consumers’ shift towards eCommerce.  Now for the opposite perspective consider Amazon’s challenge of solving the most complicated pillar within retail . . . Grocery.  No doubt the “steaks” (sorry) are high, with annual grocery sales in the US approaching 1 trillion dollars – that’s with a T, not a B!  But the delivery model Amazon has mastered for other products doesn’t work well for grocery because of two reasons – produce and meat.  Consumers want the ability to hand pick the freshest, best looking items.  And even if they do order groceries online, the return rate is so high that it’s hard for eCommerce vendors to make any money.  The attached IBJ article delves into Amazon’s plan to break into the grocery game.  Their strategy is still evolving, but it feels like a hybrid of their current Amazon Fresh grocery delivery, and the new Amazon Go register-less stores their testing in Seattle.  Get ready to watch this one play out.

THE FIRST STREAMING-ONLY RECORD LABEL:  In a sign of the times Warner Music Group is launching the first streaming only specialty label within their portfolio.  They’re positioning it as an emerging artist platform – sort of like the farm team to their regular label.  I think Warner is doing this to appease  current artists under their main label who might feel like they’re stuck on the old platform.  My guess is within 5-10 years there won’t be a streaming-only designation for labels, because all labels will be completely concentrated on streaming and concerts, as physical album sales become a relic of the past.

Have a great Wednesday guys!

HAVAS RATTLES IT’S SABER:  On Friday there was a story in Europe about Havas UK making the decision to pull all business from Google and YouTube over the issue of its clients’ ads being placed next to controversial content, and the inability of Google to police and prevent this from happening.  Seemed like a pretty straightforward move, although a big one given that Havas spends $175M/year in the UK on the two platforms.  But then things got weird.  Shortly after the original announcement Havas Global CEO Yannick Bollore tweeted that he was “completely unaware of the decision”, and then the agency issued a revised statement saying the move was more of a “short pause . . . than an indefinite stop”.  Seems hard to believe Havas’s senior leadership could be so disconnected on an issue like this.  The cynic in me wonders if this was their way of sending a message to Google that they’re fed up with offensive content issues, while looking like the hero to their clients by drawing a line in the sand with the tech juggernaut.

PROGRAMMATIC’S TOP 10:  Yesterday AdExchanger published a solid roundup of the top 10 programmatic advertisers in the industry right now.  If you call on or work at any of these accounts it’s helpful to see the individual strategies laid out.  But even if you don’t cover one of these clients it’s insightful to see the commonalities across these industry leaders in order to catch emerging trends.  One interesting observation is that 6 of the 10 companies on this list have taken programmatic (or the DMP they’re using to buy programmatically) in-house. That 60% ratio is way above the industry average, proving the theory that if you own it you’ll become an expert at it.  Another observation is that many of these clients are using programmatic for targeting and transparency, and not just efficiency.  Being able to deliver the right message to the intended target, and actually knowing the ad is being seen, is the true promise of programmatic.  And it looks like these accounts are executing on this potential.

SOMETIMES A CEO’S DILEMMA AND VISION ARE THE SAME THING:  Finally today, I want to share a fascinating read from the Harvard Business Review.  This HBR article is an extensive interview with Walmart CEO Doug McMillon.  Walmart is going through what’s known as the “innovator’s dilemma” right now.  As the ultimate predator disruptor of Retail during the 1980s, 1990s, and 2000s they now walk the tight rope of maintaining their core B&M business while integrating eCommerce to compete with the likes of Amazon.  In real terms for Walmart it’s become a question of when is opening the next ultra-successful SuperCenter not enough, and when should they divert resources to next generation investments in companies like Jet.com?  Successfully connecting current success and future needs into one executable strategy could create another inflection point for Walmart to build upon.  Failure to do this could make Walmart the next Sears, Woolworth’s, or K-Mart – the very type of retail dinosaur they chewed up during their halcyon years.  Special thanks to Pandora’s Priscilla Valls for finding this one.  It’s a long read, but well worth it!

Have a great Tuesday guys!

LESS MUSIC ON FREE SPOTIFY:  Over the last year or two tension has been increasing between the artists/labels and Spotify over the “freemium” streaming model.  In a nutshell freemium is the free trial (or limited free listening) Spotify offers as a way to get new listeners to try the service with the hopes of turning them into subscribers.  The labels generally dislike this feature since it’s effectively a free ride for listeners and Spotify – no subscription payment = no royalties paid.  Now we’re starting to see the first signs of Spotify blinking at the labels’ pressure by changing the Free offering to limit a portion of music offered to only the paid side.  Presumably the bigger artists (aka the music you really want to hear) will be taken behind the paywall, and effectively diminish the free trial product.  Will the new limits to free music be noticed by listeners?  Is this the first step to dismantling the Free Spotify tier?  I’m sure we’ll find out sooner than later. (link)

ANA NAMES NAMES IN THE TRANSPARENCY FIGHT:  We’ve heard individual clients (most notably P&G) pushing digital publishers, networks and AdTechs to increase transparency in their measurement and ad delivery.  One of the most tangible ways to do this is by going through a rigorous MRC audit.  Facebook and Google have already started the audit process in reaction to the self-measurement snafus of Q4’16.  Now the ANA (Association of National Advertisers) is calling out seven more companies by name to submit to an audit.  Five of the seven already appear to be in motion, or at least seem to be willing to go through an MRC audit.  The two notable no comments to the ANA’s request are Snap and Amazon.  We’ll see how this plays out as pressure mounts on all digital players to prove that they’re running a clean business.  (link)

APPLE MUSIC, BY THE NUMBERS:  Finally today, we’re getting a peek inside Apple’s Services revenue to see the impact Apple Music is making on the bottom line.  Despite the 17M subscribers stat Apple is currently quoting, only 3% of Apple devices have an Apple Music account.  Subsequently, their streaming music service only makes up 10% of its Services revenue, while iTunes downloads still doubles up that total at 22%.  Keep in mind Services is a very small fraction of Apple’s total revenue compared to the Device rev mother ship.  These stats prove once again that Apple is a device company trying to do music, and more of a download sales platform than a pureplay streamer at that.  (link)

Have a great Monday everyone!