Media Consumption

The ad blocking phenomenon: It’s all about human nature.

Phillip Nones Advertising, Business, Marketing Communications, Marketing Research, Media, Media Consumption, Social Commentary , , , , , ,

noadThe rapid rise in consumer adoption of ad blocking software is threatening the traditional advertising model for publishers. For some, it seems like a topsy-turvy world where none of the old assumptions or the old rules apply.

But author and MarComm über-thought leader Gord Hotchkiss reminds us that the consumer behaviors we are witnesses are as old as the hills.

In a recent MediaPost column titled “Why Our Brains Are Blocking Ads,” Hotchkiss points out that the environment for online ads is vastly different from the environment where traditional advertising flourished for decades – primarily in magazines, newspapers and television.

Gord Hotchkiss
Gord Hotchkiss

He notes that in the past, the majority of people’s interaction with advertising was done while our brains were in “idling” mode – meaning that they had no specific task at hand. Instead, people were looking for something to capture their attention within a TV program, a newspaper or magazine article.

Hotchkiss contends that in such an environment, the brain is in an “accepting” state and thus is more open to advertising messages:

“We were looking for something interesting, we were primed to be in a positive frame of mind, and our brains could easily handle the contextual switches required to consider an ad and its message.”

Contrast this to the delivery of most digital advertising in today’s world, which is happening when people are in more of a “foraging” mode – involved in a task to find information and answers with our attention focused on that task.

In such an environment, advertising isn’t only a distraction; often, it’s a source of frustration. As Hotchkiss notes:

“The reason we’re blocking [digital] ads is that in the context those ads are being delivered, irrelevant ads are – quite literally – painful. Even relevant ads have a very high threshold to get over.”

Hotchkiss concludes that the rapid rise of ad blocking adoption isn’t about the technology per se.  It has to do with the hardwiring of our brains.  New technologies haven’t caused fundamental changes in human behavior – they’ve simply enabled new behaviors that weren’t an option before.

adbAs is becoming increasingly obvious, the implications for the advertising business are huge:  Ad blocking software is projected to lower digital ad revenues by more than $40 billion in 2016 alone, according to estimates by digital data research firm eMarketer.

Looking back on it, actually it seems like it was all so inevitable.

Ad fraud: It’s worse than you think.

Phillip Nones Advertising, Business, Content Creation and Content Management, Economics, Marketing, Marketing Communications, Media, Media Consumption, Publishing, Security , , , , , , ,

It isn’t so much the size of the problem, but rather its implications.

affaA recently published report by White Ops, a digital advertising security and fraud detection company, reveals that the source of most online ad fraud in the United States isn’t large data centers, but rather millions of infected browsers in devices owned by people like you and me.

This is an important finding, because when bots run in browsers, they appear as “real people” to most advertising analytics and many fraud detection systems.

As a result, they are more difficult to detect and much harder to stop.

These fraudulent bots that look like “people” visit publishers, which serve ads to them and collect revenues.

faaf

Of course, once detected, the value of these “bot-bound” ads plummets in the bidding markets.  But is it really a self-correcting problem?   Hardly.

The challenge is that even as those browsers are being detected and rejected as the source of fraudulent traffic, new browsers are being infected and attracting top-dollar ad revenue just as quickly.

It may be that only 3% of all browsers account for well over half of the entire fraud activity by dollar volume … but that 3% is changing all the time.

Even worse, White Ops reports that access to these infected browsers is happening on a “black market” of sorts, where one can buy the right to direct a browser-resident bot to visit a website and generate fraudulent revenues.

… to the tune of billions of dollars every year.  According to ad traffic platform developer eZanga, advertisers are wasting more than $6 billion every year in fraudulent advertising spending.  For some advertisers involved in programmatic buying, fake impressions and clicks represent a majority of their revenue outlay — even as much as 70%.

The solution to this mess in online advertising is hard to see. It isn’t something as “simple and elegant” as blacklisting fake sites, because the fraudsters are dynamically building websites from stolen content, creating (and deleting) hundreds of them every minute.

They’ve taken the very attributes of the worldwide web which make it so easy and useful … and have thrown them back in our faces.

Virus protection software? To these fraudsters, it’s a joke.  Most anti-virus resources cannot even hope to keep pace.  Indeed, some of them have been hacked themselves – their code stolen and made available on the so-called “deep web.”  Is it any wonder that so many Internet-connected devices – from smartphones to home automation systems – contain weaknesses that make them subject to attack?

The problems would go away almost overnight if all infected devices were cut off from the Internet. But we all know that this is an impossibility; no one is going to throw the baby out with the bathwater.

It might help if more people in the ad industry would be willing to admit that there is a big problem, as well as to be more amenable to involve federal law enforcement in attacking it.  But I’m not sure even that would make all that much difference.

There’s no doubt we’ve built a Frankenstein-like monster.  But it’s one we love as well as hate.  Good luck squaring that circle!

Twitter is looking more and more like the old, hidebound player in social platforms.

Phillip Nones Business, Media, Media Consumption, Social Media , , , , ,

tWe’ve been hearing for a while now that Twitter’s go-go-days might be in the rear-view mirror.

But even so, the latest growth forecast for the company still seems pretty shocking for a “new media” participant.

In its most recent forecast of Twitter usage in the United States, eMarketer has lowered its projections of Twitter growth in usage to essentially “treading water” status.

More specifically, digital data research company eMarketer forecasts that by the end of the year, ~52 million U.S. consumers will be accessing their Twitter accounts at least once per month.

That will represent just a 2% increase for the year.

Long-term growth prospects for Twitter don’t look any better. At one point, eMarketer was forecasting growth estimates of nearly 14 million new Twitter users by 2020.  But today, that forecast has been downgraded significantly to only about 3.5 million new users.

In the world of social media platforms, such paltry growth expectations mean that Twitter’s share of domestic social network users will continue to decline. (It’s at around 28% now, which is already a bit of a drop from last year.)

What’s making Twitter seem like such a “passé player” in the go-go world of social media? Oscar Orozco, an analyst at eMarketer, sums up its challenges succinctly:

“Twitter continues to struggle with growing its user base because new users often find the product unwieldy and difficult to navigate, which makes it challenging to find long-term value in being an active user. Also, [Twitter’s] new product initiatives have had little impact in attracting new users.”

Who’s eating into Twitter’s market presence? How about Snapchat and Instagram, for starters.  A host of other messaging apps are also hurting Twitter’s growth prospects.

It hasn’t helped that Twitter has been struggling mightily to monetize its service offering. While it has made valiant efforts to do so, Facebook and LinkedIn have done a more effective job of leveraging their massive user data into attracting advertising dollars.

Facebook is a cash machine … LinkedIn does a respectable job … while Twitter seems almost hopeless by comparison.

After flying high for so long – even to the degree that many companies still speak about social media as one mashup term “Facebook-Twitter-LinkedIn,” Twitter’s decline is all the more surprising.  Poignant, even.

Digital display advertising: (Still) looking like the weakest online promo tactic.

Phillip Nones Advertising, Creative and Production, Marketing, Marketing Communications, Media, Media Consumption, Publishing , , , , , , ,

untitledI’ve blogged before about the lack of engagement with online banner advertising, and as time goes on … the picture doesn’t change much at all.

When you break it down, online banner advertising is a bust on several levels:

 

  • As of the most recent stats, clickthrough rates on online banner advertising are running about 0.08%. That translates to fewer than one click for every 1,000 times the ad is served.

 

  • Based on current pricing for online banner ads, that one click might be costing anywhere from $5 to $10 (and it might have even been an accidental click).

 

Despite these “inconvenient truths,” nearly two-thirds of digital ad spending continues to go to online banner advertising based on a “cost per impression” pricing model. Why?

One answer is that it’s an easy way to advertise a product or service. Simply supply ad creative to the publisher and let it be served online.

Another may be that advertisers consider banner advertising to be a basic component of any promotional campaign: prepare a mix of direct marketing, some search engine marketing, some print advertising and some digital display advertising, and you’re off to the races.

A third reason — related to the one above and I suspect one big reason why so much digital display advertising persists in the B-to-B realm in particular — is that publishers who offer a suite of promo tactics as part of a specially priced integrated program always throw in digital display advertising as part of the mix. It becomes the default option for advertisers as they approve bundled programs and the discount rates that come along with them.

Here’s a suggestion for advertisers going forward: Push back a bit and ask publishers to come up with alternative program options that don’t include digital display advertising.  The revised program might not look as promising at first blush, but then remember the stats above and you may well see the attributes of the alternative program in a more positive light.

Tech meets traditional: Digital marketing drives more phone calls by far.

Phillip Nones Advertising, Business, Direct Marketing, Marketing, Marketing Communications, Marketing Research, Media, Media Consumption , , , , ,

CCIn a classic case of marrying tech with traditional marketing, digital channels are driving more calls to businesses than ever before.

What’s more, digital channels are now responsible for nine out of ten phone calls made to companies as a result of promotional efforts using the ten most popular marketing channels.

These findings come from the 2016 Call Intelligence Index published by Invoca, a phone call tracking and analytics firm that evaluates phone call activity across 40 industry segments.

Invoca’s 2016 evaluation covers more than 58 million phone calls generated from ten marketing channels — six of them digital and four of them “traditional offline” channels.

According to Invoca’s analysis, the biggest single source of phone queries is mobile search — representing nearly half of all phone call volume. But the next five channels that follow in line are all digital as well, as can be seen in this list:

  • INMobile search: Drives 48% of phone calls to businesses from marketing channels
  • Desktop search: 17%
  • Desktop display advertising: 11%
  • Content / review websites: 9%
  • Mobile display advertising: 3%
  • E-mail marketing: 3%
  • Total digital channels: 91%

 

  • Radio advertising: 3%
  • TV advertising/infomercials: 2%
  • Newspaper advertising: 2%
  • Directory advertising: 2%
  • Total non-digital channels: 9%

Comparing the 2016 results against a similar analysis conducted by Invoca in 2014, digital marketing channels have continued to rise in prominence — from representing 84% of the total phone call activity to 91% today.

The Invoca research also finds that phone calls are supplementing digital interactions, which is the result of consumers shifting between various different digital channels as they go about their research — often employing several different ones during the same mission task.

One of the biggest jumps in digital channel usage is in the automotive segment, where it’s clear that a big shift is underway from offline to digital channels — particularly mobile. The automotive industry experienced nearly a 120% increase in digital sources driving phone calls in the current Invoca research compared to the previous one.

So there’s no question that digital now “rules” when it comes to marketing channels. But far from causing the demise of a traditional channel like a phone call — as some people predicted not so long ago — digital channels have simply changed where the consumer might be just prior to heading for the (smart)phone.

Journalism’s Slow Fade

Phillip Nones Business, Demographics, Economics, Employment, Media, Media Consumption, Social Commentary, Social Media , , , , , , , , , ,

jjLate last month, the 2016 Lecture Series at the Panetta Institute for Public Policy in Carmel, CA hosted a panel discussion focusing on the topic “Changing Society, Technology and Media.”

The panelists included Ted Koppel, former anchor of ABC News’ Nightline, Howard Kurtz, host of FAX News’ Media Buzz, and Judy Woodruff, co-anchor and managing editor of the PBS NewsHour show.

During the discussion, Ted Koppel expressed his dismay over the decline of journalism as a professional discipline, noting that the rise of social media and blogging have created an environment where news and information are no longer “vetted” by professional news-gatherers.

One can agree or disagree with Koppel about whether the “democratization” of media represents regression rather than progress, but one thing that cannot be denied is that the rise of “mobile media” has sparked a decline in the overall number of professional media jobs.

Data from the Bureau of Labor Statistics can quantify the trend pretty convincingly. As summarized in a report published in the American Consumers Newsletter, until the introduction of smartphones in 2007, the effect of the Internet on jobs in traditional media, newspapers, magazines and book had been, on balance, rather slight.

To wit, between 1993 and 2007, U.S. employment changes in the following segments looked like this:

  • Book Industry: Net increase of ~700 jobs
  • Magazines: Net decline of ~300 jobs
  • Newspapers: Net decline of ~79,000 jobs

True, the newspaper industry had been hard hit, but other segments not nearly so much, and indeed there had been net increases charted also in radio, film and TV.

But with the advent of the smartphone, Internet and media access underwent a transformation into something personal and portable. Look how that has impacted on jobs in the same media categories when comparing 2007 to 2016 employment:

  • Book Industry: Net loss of ~20,700 jobs
  • Magazines: Net loss of ~48,400 jobs
  • Newspapers: Net loss of ~168,200 jobs

Of course, new types of media jobs have sprung up during this period, particularly in Internet publishing and broadcasting. But those haven’t begun to make up for the losses noted in the segments above.

According to BLS statistics, Internet media employment grew by ~125,300 between 2007 and 2016 — but that’s less than half the losses charted elsewhere.

All told, factoring in the impact of TV, radio and film, there has been a net loss of nearly 160,000 U.S. media jobs since 2007.

employment-trends-in-newspaper-publishing-and-other-media-1990-2016

You’d be hard-pressed to find any other industry in the United States that has sustained such steep net losses over the past decade or so.

Much to the chagrin of old-school journalists, newspaper readership has plummeted in recent years — and with it newspaper advertising revenues (both classified and display).

The change in behavior is across the board, but it’s particularly age-based. These usage figures tell it all:

  • In 2007, ~33% of Americans age 18 to 34 read a daily newspaper … today it’s just 16%.
  • Even among Americans age 45 to 64, more than 50% read a daily newspaper in 2007 … today’s it’s around one third.
  • And among seniors age 65 and up, whereas two-thirds read a daily paper in 2007, today it’s just 50%.

With trends like that, the bigger question is how traditional media have been able to hang in there as long as they have. Because if it were simply dollars and cents being considered, the job losses would have been even steeper.

Perhaps we should take people like Jeff Bezos — who purchased the Washington Post newspaper not so long ago — at their word:  Maybe they do wish to see traditional journalism maintain its relevance even as the world around it is changing rapidly.

Online ad blocking grows ever-more popular.

Phillip Nones Advertising, Business, Marketing, Marketing Communications, Marketing Research, Media, Media Consumption, Publishing , , , ,

abThe ad blocking phenomenon on the Internet shows no signs of abating.

Underscoring this, marketing research and forecasting firm eMarketer has just published its most recent ad blocking stats and forecasts for the United States. It projects that ad blocking adoption will continue to rise by a double digit rate in 2016 to reach nearly 70 million users.

If those projections turn out to be accurate, it will mean that ad blocking will now be used by more than 26% of all Internet users in the United States, up from ~20% just a year earlier.

And for 2017? Those forecasts are looking a whole lot like this year, too; eMarketer forecasts that ad blocker adoption will grow to more than 86 million users by the end of 2017.

[For the record, eMarketer defines a user as an Internet user of any age who accesses the ‘net at least once per month via a desktop or laptop computer, tablet, smartphone or other mobile device that has an ad blocker enabled.]

eab

According to the eMarketer analysis, the incidence of ad blocking is substantially more common on desktops and laptops; ~63 million people will use an ad blocker on these types of devices this year compared to ~21 million who will do so on a smartphone.

One reason for this is that ad blockers typically don’t work on apps, which is where mobile users spend much of their time. Moreover, some of the most irritating aspects of desktop/laptops advertising, such as ads with video and sound, are the kinds of advertising less likely to be served on mobile devices.

eMarketer expects many more people to begin installing ad blockers on their smartphones, however — to the tune of an increase of over 60% this year.

These projections must be alarming to publishers and advertisers. Paul Verna, a senior analyst at eMarketer, notes this:

“They’re seeing immediate revenue losses and [they] would be remiss to downplay what amounts to a large-scale rejection of their main monetization model.”

Separately, an analysis by Juniper Research sees more than $27 billion in advertising revenues lost over the next five years as a result of ad blockers.

Of course, that’s a far cry from the estimated ~$160 billion that digital advertising represents today.  But significant nonetheless.

As if on cue, The New York Times has just announced that it will introduce an ad-free subscription option. Reportedly, the publication will begin to offer subscriptions that cost more than a regular digital subscription, along with giving subscribers the option of opting out of seeing advertising if they wish to do so.

At present, NYT subscribers who use ad blockers are technically violating the publisher’s Terms of Use agreement — although I seriously doubt many people have had their knuckles rapped for doing so.

For now, all the Times does is kindly request that users “white-list” the NYT site so that the ads will appear even though an ad blocker has been installed.  According to news reports, about 40% of the people notified have actually done so.

Presumably, the new subscription option is targeted at people who really do wish to avoid seeing online advertising — and are willing to pay a premium for the benefit.

One wonders how much of a dollar premium subscribers will be asked to shell out for the privilege of keeping their screens from being inundated with advertising. (At present, annual NYT digital subscriptions range from ~$140 to ~$200.)  Will users balk at the higher rates?

Clearly, we’re in the middle of this movie … and it’ll be some time before we see how things shake out in the online media advertising game.  What are your thoughts about spending more for an ad-free subscription … and do you even have any online pay subscriptions at all?  (Many of my friends and business colleagues don’t.)

What’s behind Microsoft’s $26 billion purchase of LinkedIn?

Phillip Nones Business, Economics, Employment, Human Resources, Marketing, Marketing Communications, Marketing Research, Media Consumption, Publishing , , , , , , , , , , ,

LI MCAt first blush, it appears almost ludicrous that Microsoft Corporation is offering an eye-popping $26 billion+ to acquire LinkedIn Corporation.

The dollar figure far eclipses any previous Microsoft acquisition — including the $9 billion+ it paid for Nokia Corporation in 2014, not to mention what the company paid for Yammer and Skype.

What’s also acknowledged is that none of those earlier acquisitions did all that much to further Microsoft’s digital and social credentials — and in the case of Nokia, the financial write-downs Microsoft has recorded have actually exceeded Nokia’s purchase price.

So what’s different about LinkedIn — and why does Microsoft feel that the synergies will work to its advantage better this time?

In a recent Wall Street Journal column, technology journalist Christopher Mims noted that such synergies do exist — and in a much bigger way.

That includes Microsoft Office, the productivity suite that’s now delivered almost exclusively online. And then there’s LinkedIn’s database of over 400 million subscriber professionals.

Put those two elements together with a strong strategic vision, and you have the potential for some pretty amazing synergies.

When you think about it, LinkedIn’s users are essentially Microsoft’s core demographic. And it isn’t something that’s replicated anywhere else in Cyberspace.  Here’s Microsoft’s CEO Satya Nadella talking:  “It’s really the coming together of the professional cloud and the professional network.”

Acting on its own, LinkedIn hasn’t been all that successful in leveraging what is arguably the most comprehensive and powerful database of business professionals ever compiled in the history of mankind.

While it consists of self-contributed information that hasn’t been “vetted” by outside parties, it’s still the single most comprehensive and valuable repository of information about business professionals — anywhere in the world.

I view the dynamics of LinkedIn as something like the Wikipedia. Wikipedia has become so pervasive, it has driven traditional encyclopedias from the scene.  And while we all know that there can be misstatements of fact — or omissions of facts — from Wikipedia entries, it’s also become the quickest and easiest place to go for information that’s “accurate enough and complete enough” for most any type of informational query.

In similar fashion, LinkedIn is making personnel databases like Dun & Bradstreet that are less robust and accessible only by subscription increasingly obsolete.

And yet … with all of this powerful data at its fingertips, up to now LinkedIn hasn’t been all that effective in leveraging its vast trove of data in way that goes much beyond using it as a personnel recruitment tool.

Try as LinkedIn might to create “stickiness” by offering communities of users based on job function, shared industry involvement and the like, to this day only about one-fourth of LinkedIn’s ~400 million users come to the site on a monthly basis.

The reality is that the vast majority of people continue to access LinkedIn only when they’re in the job market — either as a seeker of talent or seeking a new position for themselves.

In the wake of the pending Microsoft acquisition, those dynamics could change quickly — and in a big way.

One way is in how LinkedIn could begin to provide a big boost to Microsoft’s CRM services. Many companies use such products to identify and track sales leads; in fact, having such a tool is almost a prerequisite for any successful business of any size at all.

As of today, Microsoft languishes behind three other CRM software providers (Salesforce.com, SAP and Oracle). LinkedIn’s own product (LinkedIn Sales Navigator) is essentially an also-ran in the category.

But bringing together LinkedIn’s extensive personnel database with Microsoft’s CRM capabilities looks to deliver data and reach that would be the envy of anyone in the market.

So … it is certainly possible to understand why Microsoft might see LinkedIn as its strategic “ticket to ride” in the coming decades. But two questions remain:

  • Does the acquisition business potential match with the $26 billion+ Microsoft is paying for the buying LinkedIn?
  •  Will Microsoft do a better job of integrating LinkedIn with its other products and services when compared to the disappointing results resulting from its other acquisitions?

We’ll need to check back over the coming months to see how things are come together.

The Gawker saga: Are there any good guys in this drama?

Phillip Nones Business, Content Creation and Content Management, Marketing Communications, Media, Media Consumption, Social Commentary , , , , , , ,

gmSome people I’ve spoken to about blog collective Gawker Media’s recent legal and corporate tribulations have expressed concerns about the chilling effect well-funded lawsuits may be having on a free and unfettered press.  But it’s hard to find any angels in the ongoing saga of Gawker Media and its many detractors.

The latest news is that Gawker is filing for Chapter 11 bankruptcy protection even as it entertains an acquisition bid from publishing firm Ziff Davis.

Reportedly, Ziff Davis is offering $90 million to purchase Gawker Media.  This compares to the $140 million judgment against Gawker handed down by the courts in March in the Hulk Hogan defamation lawsuit.

hhLooking at the sordid details, it’s hard to find sympathy for any of the major players.  In the choice words of journalist and writer Bob Garfield:

“[Gawker Media is a] snide, predatory gossip site that built a reputation cutting hypocritical big shots down to size, but soon ran out of big shots and turned its sneering animus on any anonymous medium-shot unfortunate enough to fall into its sights … Gawker.com is in the schadenfreude business.”

Professional wrestler and television personality Hulk Hogan (aka Terry Gene Bollea) isn’t a paradigm of virtue, either – what with his history of obnoxious statements and what we’ll call euphemistically “other activities” that fall pretty low on the class-meter.

ptTech industry billionaire Peter Thiel, who provided the financial backing for Hulk Hogan’s successful lawsuit, was once a victim of Gawker himself – being “outed” as gay by the media site.  But Thiel’s über-libertarian pronouncements appear churlish on the one hand, while his legal takedown of Gawker seems to be at cross-purposes with the “anything goes” free speech premises of libertarianism.

Nick Denton, Gawker founder and CEO, has remained defiant even in the wake of the latest turn of events:  “Even with his billions, Thiel will not silence our writers.  Our sites will thrive – under new ownership,” Denton has been quoted, adding that court appeals will continue.

Clearly, this drama isn’t ending anytime soon. But with no sympathetic characters in this drama — and that’s about the most positive thing one can say about it — who’s ready to take a shower right about now?

Ad blocking goes big-time.

Phillip Nones Advertising, Marketing, Marketing Communications, Media, Media Consumption , , , , , , , ,

Adblock-PlusA new milestone of sorts has been reached in the ad blocking realm. Adblock Plus, the leading ad blocking tool, has just announced that it’s just passed the 100 million marker in active installations.

An earlier milestone – 500 million downloads – was reached at the beginning of this year. That means the active user base has now doubled in less than half a year.

If these figures are accurate – and there’s little reason to think that they aren’t – it’s a pretty big deal. No longer is ad blocking an exotic functionality that’s the exclusive preserve of techies or other geeky subgroups.  It’s gone majorly mainstream.

What’s driving the ad blocking business is the ubiquity of online advertising. For many viewers, it’s nothing short of intolerable:  obtrusive, irritating, and sometimes creepy (hello, retargeting).

So once a well-functioning and reputable tool like Adblock came along, it was only a matter of time before it would take on “snowball-rolling-down-a-mountainside” proportions.

AdBlock Plus promises “annoyance-free web surfing.”  But as with most any innovation, there are one or two hitches. For Adblock Plus, it’s something called “Acceptable Ads.”

untitled“What’s that?” you might ask. It’s a white-list program that allows certain advertisers through Adblock’s screen.  The company receives a cut of publishers’ revenues through that program.

Fundamentally, it’s how Adblock Plus makes money. But it’s also how advertisers can do an end-run around the very service Adblock provides.

AdBlock goes to great pains to “explain” its rationale and why the Acceptable Ads program makes sense for everyone.

But it isn’t difficult to see where this might end up.  Larger advertisers will see fit to exempt themselves from ad blocking by paying for the privilege of their ads being served.

Which gets us right back to where we were with advertising in the first place, doesn’t it? Pay to play.

What’s old is new again, I guess. And meanwhile, the online ads just keep coming …