Digital Advertising

Advertising’s COVID Consolidation

Phillip Nones Advertising, Business, Marketing Communications, Media, Social Media , , , , , ,

The triumvirate of Amazon, Facebook and Google surge to even bigger dominance in the field.

Fueled by their ability to target audiences by attitudinal and intentional factors in addition to demographic characteristics, the “Big Three” platforms of Facebook, Amazon and Google were already heavy hitters in the advertising realm well-before COVID-19 burst on the scene.

To wit, they accounted for nearly 50% of all advertising expenditures in the United States in 2019.

Then the coronavirus pandemic hit, resulting in changes overnight in how people work and live.  Thanks to lockdowns — and with more people than ever glued to digital platforms for everything from business communications to entertainment and online shopping — advertisers found the audience-targeting capabilities of the Big Three platform too irresistible.

So in 2020, even as every other kind of ad spending shrank – including double-digit drops seen in newspaper, TV and billboard advertising – online advertising continued to grow.  Even more significantly, the biggest gains in online advertising accrued to the Big Three tech giants rather than to digital media sites and publishers that sell online ads.

When the dust settled, 2020 turned out to be the first year the Big Three swept up more than half of all ad dollars spent in the United States, according to an analysis by ad agency GroupM. 

… And in online advertising specifically, the Big Three’s share jumped from an already dominant ~80% in 2019 to nearly 90% in 2020. Ad industry veteran Tim Armstrong (formerly in executive positions at AOL and Google), puts it succinctly:

“[The] companies that are data science-driven get stronger and faster with a tailwind of usage — and COVID was a hurricane.”

The coronavirus environment proved to be fertile ground for the Big Three even in areas previously inhospitable to them — including such categories as store promotions, catalogues and couponing.

As the nation emerges from the COVID environment in the coming months, one wonders if the newly dominant position of the Big Three will retrench in any meaningful way.  Speaking personally, I wouldn’t bet money on it.  But what are your thoughts?

When P&G cut way back on digital advertising … and nothing changed.

Phillip Nones Advertising, Media, Media Consumption , , , , , , ,

If you suspect that digital advertising might well include a big dose of “blue smoke and mirrors,” you aren’t the only one who thinks this way.

In fact, Marc Pritchard, chief brand officer of Procter & Gamble, felt much the same thing. Back in early 2017, Pritchard complained to the industry about what appeared to him to be an unacceptable degree of waste in the digital advertising supply chain.

Among his concerns was the lack of transparency between advertisers and digital agencies, as well as the myriad ad-tech vendors that seemed to be adding more complexity that was disconnected to any defined value.

Pritchard was also concerned about the prevalence of bot traffic and the dangers to brand safety posed by risky content.

Holding the purse strings of one of the largest digital advertising budgets on the planet, Pritchard was in a uniquely strong position to exert changes in how digital advertising campaigns are handled.

And yet, even with this threat, the response from the industry didn’t go much beyond mild alarm and a bit of lip-service.

So, P&G‘s CBO put some juice behind his warning, cutting more than $100 million in the company’s digital ad spend between April and July of 2017. Pritchard noted at the time that this reduction in ad spending was designed to reduce waste.

After cutting the $100 million in ad dollars – representing a 20% reduction in P&G’s digital ad spend – what changed was … exactly nothing.

That is correct: no negative impact on ROI at all.

In fact, P&G actually experienced a ~10% increase in the overall reach of its remaining advertising campaigns.

How to explain this counterintuitive result?  Spending less but reaching more consumers occurred because extra efficiencies were harnessed by carefully pruning ineffective inventory and reallocating the remaining budget to higher-quality placements.

Imitation being the sincerest form of flattery, another major consumer packaged goods company – Unilever – soon followed suit, reducing its own digital advertising spend by a whopping 50%.

Its move garnered the same result: no discernible ill effects on ROI resulted from the dramatic cuts.

The experiences of these two companies have poked several gigantic holes in a number of “truisms” about digital advertising.  Here’s what we’ve learned:

  • Ad spending doesn’t drive value when it isn’t tied to quality metrics like viewable inventory.
  • “Quality” is something that can be controlled by taking steps like moving platforms.
  • Measuring the quantity of impressions isn’t as important as the quality of those impressions.
  • “Scale” isn’t king. Advertisers don’t need to have super-large budgets in order to drive meaningful results in the digital sphere.

Indeed, P&G and Unilever have proven that a media strategy that focuses on context and quality rather than brute force can get a lot done for significantly less outlay.

The escalating “arms race” in the adblocking arena.

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

Have you noticed how, despite installing adblocking software on your computer or mobile device, a lot of online advertising is still making it through to you?

That isn’t just your imagination. It’s happening – and it’s getting worse.

According to a recent report based on findings prepared by researchers at the University of Iowa, Syracuse University and the University of California – Riverside, the extent of “end runs” being successfully made around adblockers is quite high – and it’s growing.

According to the research, more than 30% of the Top 10,000 Alexa-ranked websites are thwarting adblockers in order that millions of visitors will continue to see online advertisements despite running adblocking software.

As the universities’ report states:

“Online publishers consider adblockers a major threat to the ad-powered ‘free’ web. They have started to retaliate against adblockers by employing anti-adblockers, which can detect and stop adblock users.   

To counter this retaliation, adblockers in turn try to detect and filter anti-adblocking scripts.”

Some of the more “forthright” publishers are being at least a little transparent about the process – first asking visitors to stop blocking ads. If those appeals go unheeded, the next step is to notify visitors that if they fail to whitelist the site, they will no longer be able to access any of its content.

The problem with this scenario is that many visitors simply go elsewhere for content when faced with such a choice. Still, it’s nice that some online publishers are giving people the choice to opt in … in an environment where the publisher’s content can be monetized to some degree.

Other sites aren’t so courteous; instead, they’re overriding the adblock software and serving up the advertising anyway. That certainly isn’t the way to “make friends and influence people.”

But “violating consumer intent” is kind of where we are in this arena at the moment, unfortunately.

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.

Twitter’s Continuing Monetization Challenge

Phillip Nones Advertising, Content Creation and Content Management, Marketing, Marketing Communications, Marketing Research, Media, Social Media , , , , ,

Press reports have been pretty consistent over the past year or so about the underwhelming financial performance of Twitter.  Here’s the trend line for Twitter shares of stock since the beginning of 2014:

 

Twitter share price trend

 

… And beyond the financial performance, I’ve been writing about Twitter’s fundamental business challenges off and on for well over five years now.

While Twitter undoubtedly has its place in the social realm — its place in “breaking news” is a biggie — it remains a frustrating platform for advertisers, which is one reason Twitter’s business model has turned out to be less effective than Facebook’s.

Recent stats from eMarketer reveal that over 50 million Internet users in the United States are accessing their Twitter accounts via any device at least monthly.

That equates to about fifth of U.S. Internet users — and nearly three in ten people active on social networks.

So … this means that many people are seeing ads on Twitter. And that’s confirmed through an evaluation conducted by Cowen & Company which finds that well over half of U.S. adult Twitter users are e encountering ads on their Twitter feed at least every 10 or 20 tweets.

Predictably, most of the advertising pertains to retail, app installations and travel. Those are pretty relevant as broad advertising categories.

It’s just … many Twitter users aren’t finding the ads effective.  Here’s what Cowen’s findings show in terms of user feelings about Twitter advertising:

  • Ads on Twitter are relevant and/or insightful: ~3%
  • Ads are OK: ~26%
  • Ads are not really relevant: ~45%
  • Ads are usually a poor fit: ~14%

These results suggest that advertisers need to improve their targeting capabilities significantly if they wish to reach the right audience segments with relevant messages.

More fundamentally, current attitudes about Twitter advertising pose continuing challenges for Twitter as it attempts to further-monetize its platform. The tepid performance of Twitter shares since the beginning of 2014 underscores how the company continues to cast about for answers to that fundamental challenge.  I wonder when (or if) the company will ever figure it all out.

What’s the Latest Forecast on U.S. Ad Spending?

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

ad forecastingMost observers agree that 2015 will be a decent-or-better year for ad spending.  But how will it break down by media segment?

Industry and market forecasting firm Strategy Analytics has just released its latest U.S. advertising spend forecast, which it expects to total almost $190 billion.  That’s about a 3% increase over 2014.

But there are wide variations in the growth expectations depending on the media type.

Digital advertising leads the pack, with an expected growth increase in double digits, while at the other end of the scale, print advertising is forecast to drop by approximately 8%:

  • Digital advertising: 13.0% increase in 2015 U.S. ad spend
  • Outdoor advertising: +4.8%
  • Cinema advertising: +3.4%
  • Radio advertising: +1.8%
  • TV advertising: +1.7%
  • Print advertising: -7.9%

Of course, “digital advertising” is a broad category, and within it Strategy Analytics expects certain sub-categories to grow at a faster clip:  Social media advertising looks to be the star in 2015 (+31%), followed by video advertising (+29%) and mobile advertising (+20%).

Even with these lucrative growth expectations, search advertising (SEM) will continue to represent the lion’s share of digital ad revenues – around 45%.

Also, despite the dramatic growth of digital, the segment isn’t expected to break 30% of all U.S. advertising in 2015.  The more traditional TV ad segment continues to lead all others, although it has fallen below the 50% share of all advertising in recent years.

Here’s what Strategy Analytics is forecasting for ad expenditures by media segment for 2015:

  • TV advertising: ~$79 billion in 2015 U.S. ad spending
  • Digital advertising: ~$53 billion
  • Print advertising: ~$28 billion
  • Radio advertising: ~$18 billion
  • Outdoor advertising: ~$9 billion
  • Cinema advertising: ~$1 billion

Strategy AnalyticsLeika Kawasaki, a digital media analyst and one of the Strategy Analytics Advertising Forecast report’s co-authors, notes that  looking ahead to 2018, TV’s share of advertising revenue is expected to fall further to ~40%, while digital advertising’s share will reach ~35%.

However, it’s not that TV’s volume will be declining — it’s more that digital will be robbing more funds from other segments (particularly radio and print).

Additional details on the 2015 forecast can be viewed here — if you wish to shell out $7,000 for the report, that is.

Many online banner ads are “invisible” — just like all the other kinds of advertising.

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

poor online display ad clickthrough ratesI’ve blogged before about the dismal performance of web banner ads, with their miniscule clickthrough rates resulting from “banner blindness.”

The situation has caused more than a few marketers to shy away from engaging in any sort of banner advertising online — and it’s not hard to understand why.

But as Ben Kunz, a vice president at media buying and planning agency Mediassociates likes to point out, other forms of display advertising have similar challenges.

The fact that omnibus marketing information resource eMarketer has predicted that digital ad spending will increase to ~$132 billion this year is proof that many advertisers continue to see the value in online display advertising.

So what is Kunz’s major argument? Simply this:  Digital ads have the same challenges that television, radio and print advertising have as well.  In Kunz’s view, there’s huge waste in advertising because of advertising’s very nature.

He is correct. The vast majority of ad impressions that are “served” are never really seen or heard — regardless of the ad medium.

Ad visibility online is an issue for sure. Proving the point, internet analytics company comScore evaluated some 290 billion ad impressions on thousands of web sites … and found that ~54% of them weren’t visible.

There was some differentiation the comScore detected between different types of sites. Ads served up on “Ppemium” web publisher sites performed better (only ~39% of theirs weren’t visible).

Ads that aren’t visible occur for a variety of reasons, one of which is fraud (fake web traffic). But more often, it’s because of slow load times on digital devices or because the ads fall outside a viewable browser window or further down that page, necessitating scrolling that many viewers simply don’t do.

The Swedish firm Sticky has investigated banner blindness from another angle — studying the eyeball movements of ~500 subjects. Its research found that of the digital ads that do appear within a viewable window, only ~51% of them are actually “seen” by the viewer.

Mashing it all up, it means that roughly three out of four online ads are “invisible” to viewers. It’s a lot of waste for sure.

But then … what’s the alternative? Do other advertising tactics and channels actually do better?

Nope. According to Kunz, at least three out of four newspaper ads aren’t seen, either.

Ben Kunz
Ben Kunz

Here’s how he arrives at that conclusion. The average U.S. newspaper has ~60 pages, with an average number of ads per page of around 20 (this includes large ads and smaller classifieds).  Around half of the pages are unopened when someone reads the paper, meaning that those ads are “unviewable.”  If half of the remaining ads are ignored as well, the viewability stats are effectively tied.

Kunz also contends that ~30% of radio advertising is “invisible,” citing an Arbitron study that quantified the extent to which listeners switch stations when advertising came on, then flip back later.

The findings were such that Arbitron started recommending that media planners change their measurement from 100 GRPs to 70 GRPs, reflecting the fact that ~30% of radio ads paid for never make it human ears.

TV advertising? It’s the same phenomenon.

Trips to the refrigerator or the bathroom abound during commercial breaks — not to mention channel flipping or TiVo-ing.  Kunz contends that such ad-dodging techniques reduce TV ad viewability by as much as 75%.

The bottom line on all of this: Waste in digital advertising is a significant issue … but it’s a similar issue with other ad vehicles as well.

Add to this the fact that digital advertising offers the best metrics (accountability for every click and conversion action), and it should come as little surprise that digital ad spending continues to grow (and why eMarketer expects it to reach about a quarter of all ad spending this year).

Does Kunz have a point about offline and online advertising sharing similar “blindness” characteristics? What are your thoughts?  Please share your perspectives with other readers.

Digital Advertising Growth Forecasts: Rosy Scenarios on Steroids?

Phillip Nones Uncategorized , , , , , , , , ,

Ad spend forecasts lower than projected.Isn’t it interesting how industry growth forecasts for emerging digital segments always start out looking stupendously stellar? Terms like “swelling demand” … “robust growth” … and “tipping point” often accompany these breathless predictions.

And of course, the business media are highly prone to report the news, as it underscores the fact that highly interesting things are afoot in the marketplace.

What’s done much less often is to go back at a later date and compare the growth forecasts to the actual performance.

But digital media company Digiday has done that, and if you think you remembered industry growth predictions that were a bit high on hyperbole … Digiday’s analysis reveals your memory is right on the money.

One market prognosticator – eMarketer – is often cited for its digital ad market predictions. But how accurate are they? Here’s how it forecast annual mobile ad spending in the United States:

 Prediction by eMarketer published in 2008: $5.2 billion in 2011
 Revised prediction from eMarketer restated in 2011: $1.2 billion
 Percent off-target: ~77%

And here’s how eMarketer forecast U.S. annual video ad spending:

 Prediction by eMarketer published in 2007: $4.3 billion in 2011
 Revised prediction from eMarketer restated in 2011: $2.2 billion
 Percent off target: ~49%

Granted, it is a challenge to forecast growth rates in digital advertising activity early on in the developmental cycle. But being off by such a dramatic degree makes the forecasts essentially worthless – and laughably so.

Another phenomenon may be at work as well. Invariably, the initial growth forecasts are too aggressive rather than too timid.

Why? Rosy forecasts tend to spark more interest from journalists, venture capitalists, publishers and others – and hence have a greater propensity to be published. So there may well be subtle pressure to “err on the plus side” when formulating the forecasts.

Digiday’s Jack Marshall poses that question, too, and then writes: “It’s important to think about where new markets and technologies are headed, but the ad industry often gets preoccupied and overexcited with what are essentially just guesses.”

As for the latest crop of (downwardly revised) growth estimates, Marshall adds: “Let’s reconvene in four years for the inevitable update.”

If you’re a betting person, you’d best wager on the revised figures being lower.

Where are Newspapers Now?

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Newspaper ad revenues continue in the doldrums.John Barlow of Barlow Research Associates, Inc. reminds me that it’s been awhile since I blogged about the dire straits of America’s newspaper industry. The twin whammies of a major economic recession along with the rapidly changing ways Americans are getting their news have hammered advertising revenues and profits, leading to organizational restructuring, bankruptcies, and more.

But with the recession bottoming out (hopefully?), there was hope that the decline in newspaper ad revenues might be arrested as well.

Well, the latest industry survey doesn’t provide much cause for celebration. A poll of ~2,700 small and mid-size businesses conducted this summer by Portland, OR-based market research firm ITZBelden and the American Press Institute finds that ~23% of these businesses plan to cut back on newspaper advertising this year.

The kicker is that these revenues are being spent, but they’re being put to use in other advertising media.

The ITZBelden survey found that a similar ~23% of companies plan to up their 2010 digital ad spending anywhere from 10% to 30%. This compares to only about 10% planning to increase their print advertising by similar proportions.

Moreover, the survey findings reveal that small and mid-size U.S. businesses have moved into digital marketing in a significant way. Not only do more than 80% of them maintain web sites, they’re active in other areas, including:

 ~45% maintain a Facebook or MySpace page
 ~23% are engaged in online couponing
 ~13% are involved with Craigslist
 ~10% are listed on Yelp! or similar user-review sites

One area which is still just a relative blip on the screen is mobile advertising, in that fewer than 4% of the respondents reported activities in that advertising category.

Where are these advertisers planning to put their promotional funds going forward? While newspapers should continue to represent around one quarter of the expenditures, various digital media expenditures will account for ~13% of the activity, making this more important than direct mail, TV and Yellow Pages advertising.

There was one bright spot for newspapers in the survey, however. Respondents expressed a mixture of confusion and bewilderment about the constantly evolving array of digital marketing communications options opening up … and they’re looking for support from media experts to guide their plans and activities.

And where do they see this expert advice coming from? Newspaper ad reps.

Perhaps the Yellow Book’s “Beyond Yellow” small business advertising campaign – you know, the one that touts not only the Yellow Pages advertising but also web development, online advertising, search marketing and mobile advertising – is onto something.

Signs of the Times

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Divine, aka Harris Glenn MilsteadIt absolutely had to happen.

Reports from Japan are that facial-recognition technology is now being incorporated into mall signage wherein the age and gender of passersby are discerned before displaying “demographic appropriate” advertisements to them as they walk by.

NEC, a multinational electronics firm, is experimenting with biometric technology. the ability to scan faces to detect gender and age within a range of 10 years. Not only is the technology being tested in mall signage, but also in vending machinery where “helpful suggestions” will be made to consumers based on their presumed age and gender.

And of course, Japan today means the U.S. tomorrow. In fact, other companies are already testing “gender-aware” technology for outdoor billboards and mall signage here in the United States. Intel has partnered with Microsoft in such an endeavor to design the Intel Intelligent Digital Signage Concept.

Joe Jensen, a manager at Intel’s Embedded Computing Division, sums it up like this: “As stores seek more competitive advantages over online retailers, digital signage has become a valuable technology for dispersing targeted and interactive content to shoppers.”

If gender-aware technology proves to be effective, does this mean that gin & tonics will be now offered to older consumers? At the end of a long day at the office, that could be a tantalizing option for businesspeople hitting Grand Central Station to catch the Long Island Railway home.

Or consider this picture: Legions of “Divine” impersonators (see above) descending upon malls or food kiosks, just to test how well the signage and vending machines can determine true age and gender!

Kidding aside, it’s really no surprise that digital technology with its ability to serve highly targeted, relevant content would eventually work its way into billboards and signage, historically the most “mass” of mass communications. Marketers crave statistical results, and they’re naturally going to gravitate to anything that provides those metrics – no matter how imprecise they might be.