Display Ads Don’t Work Anymore: NOW WHAT


I attended several meetings last week in the Bay Area and met with several companies including Google and Pandora.  I’m always energized after spending time with businesses whose sole focus is on the pursuit of digital and the monetization of those efforts.

During the meetings we spent a lot of time talking about the ever changing consumer behavior as it relates to interacting with advertising.  As we all know, display ads are still a major component of most online efforts but with each passing day the advertisers that pay for those ads are asking for more clarity on the success rate.  Jason Del Rey of AdAge wrote a good article on the subject that talked about click throughs becoming irrelevant as a way to measure the success of digital display ads.  Advertisers are starting to talk more about the interaction with the ad which includes hovering over the ad, listening to audio, playing a game integrated in the ad, or other activities.

I am seeing more and more advertisers asking to have their message put into the context of content on the page.  Check out how SAP ad is relevant to content. Advertisers are also asking how social aspects of the content can be integrated into advertising.  Think Facebook.  In other words, the old way of thinking about display ads as relatively static messaging has to change if we want to continue selling to advertisers.

Buzzfeed’s Jonah Peretti  wrote a good article that talked about the importance of moving beyond display ads.  I particularly took note of this quote:

“Peretti sees display ads as artifacts of an earlier Internet era when people went to portals to find content. That era — and its skyscraper and banner ads — has long passed as readers instead turned to search and, more recently, to social networks to find stories.”

I believe the issue of display ads not working as well as they once did is becoming even more critical when you consider the impact of mobile and tablets. Most publishers are seeing desktop page views flattening out and most growth is coming from smart phones and tablets.  Now think about display ads on a smart phone.  It’s a small screen and many advertiser websites are not optimized for smart phones, creating a bad experience.  The answer?  We often create mobile landing pages for our advertisers.

On the tablet, display takes on a whole new meaning.  Using a tablet is an engaging process; consumers are much more interactive using the device. They spend more time, look at more pages, and click on more ads. They are more likely to click on an ad if it takes advantage of the device’s technology, with interactive and social elements. Most advertisers can’t create interactive ads. They need an agency or the publisher to do that for them. Therefore we create tablet landing pages and build interactive and social elements into ads for our advertisers.

So, what’s a publisher to do? Here are some recommendations:

  1. Create mobile and tablet landing pages for your advertisers
  2. Integrate interactive and social elements into ads
  3. Offer advertisers an immersive experience, giving them a role in the content on the page

There are no easy solutions. For anyone. And after sitting with the Pandora execs, one thing I know is no one has it all figured out.  Pandora is doing a great job in getting an audio advertisement to your music station every 20 minutes.  The ad includes a leave-behind display ad.  However unless you have the phone in your hand or you’re sitting at your desktop you won’t see a display ad unless you need to access the screen itself.

And Pandora’s ads are typical display ads that fill the screen on a smart phone, similar to a static display ad. Pandora has a compelling message and audience reach story.  As they evolve in the space my bet is they come up with even more compelling interactive ads for mobile devices.

Everyone has a chance to be successful in the mobile and tablet space as long as they don’t treat it like desktop.  Pandora is making sure they don’t, and my guess is they will be a big winner in selling digital ads for their service.

Google is also really pushing the envelope in thinking about mobile and tablet, but their real knockout punch is still Search.  They are constantly evolving with more progressive advertising on mobile formats and no longer thinking about it as a display ad.

It is going to take a combination of social, display, integrated messaging and interactive elements to win this battle.  My message here is that even the big guys haven’t figured out the secret sauce as display ages and new formats evolve and progress for all our mobile devices.  Keep trying new things and don’t get caught trying to repurpose old formats.

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Jumping on the Proverbial Band Wagon

I have been reading a lot lately about newspaper businesses implementing pay walls at what seems like a rapid rate compared to just 12 months ago.  So, what has changed?  The number one driver of this new enthusiasm is because the New York Times was able to implement a “pay fence” to its primary website with an acceptably low decline in traffic, along with more than 450,000 paid subscribers.  The increase in subscription revenue has more than offset any decline in ad revenues from the drop in page views.

Even though no other newspaper is anything like the NY Times, with its national footprint and millions of readers, others are following in what feels like a frenzied rush to judgment.  The largest newspaper chain holding company, Gannett, announced all 80 of its daily newspapers (with exception of USA Today) would be behind a pay wall within 12 months.  Lee Enterprises, owner of the St. Louis Post Dispatch as well as many small community newspapers, announced all of its dailies would be going behind a pay wall.  Many others are heading in the same direction.  So a little success in a big national newspaper is giving everyone confidence to move in this direction, forget the fact that the audience for digital content has been conditioned for “free” content (with ads of course).

Could there be something else driving this change in attitude?  Maybe, there’s a lack of new ideas on how to grow digital faster.  Could it be that mobile isn’t moving fast enough and current indications are that it could be at a lower CPM than desktop web?  Is it that the sales organization is now smaller and has to focus on what still drives 85% of the revenues for these companies (print)?   Maybe it’s because it’s a last ditch effort to stop the slide in revenues since the economy is coming back but hasn’t really helped the newspaper industry.  Or, could it be all of these things.

Here are some things to think about if you are working in a media business, regardless of where you think the future will be.

  • Are you selling advertising as if you are part of an agency?  Do you offer much more than just display ads?  Do you help an advertiser spend their precious $1,000 a month budget and not place 85% of it in print unless it really creates 85% of the interest?
  • Do you offer your advertisers help in creating digital ads for web and mobile?
  • What are you doing to help advertisers deal with social media?
  • How are you helping advertisers be successful in search?
  • Are you creating post campaign reports that your reps actually understand, and are able to review with advertisers to demonstrate the value of their advertising efforts?
  • Are you selling the newest opportunity in digital (mobile) with the same sales organization that sells print, and who just recently started understanding how to sell digital ads for desktop? If so, why?
  • What about tablets?  They are sold differently than mobile.  Do you know why?
  • Are you creating content specific to the device, or is your content team putting the same content that is on the web onto mobile and tablet?
  • What have you done to move beyond display ads for smart phones?
  • Does your sales organization understand how to sell “share of voice?”  This is the way selling advertising on tablets will be done.

If you can answer positively to these questions I wonder if a pay wall is really needed?

Spend some time thinking this through.  We don’t want the newspaper business to be compared to Kodak.

Selling Mobile & Tablet Advertising is Different

Over the past several months I’ve been invited to speak about mobile and tablet pursuits from both content and monetization perspectives.  I’ve also spent countless hours with sales people discussing issues they run into when selling mobile advertising.   Let me lay out the crux of the issue in a nutshell; mobile and tablet page views are growing exponentially, yet ad dollars are lagging far behind.  Why is the rift so dramatic?

I feel the lag  occurs primarily due to the lack of knowledge on the interactive aspect of mobile and tablet advertising and  the ‘newness’ factor of mobile and tablet advertising in general (it’s hard to sell it if you don’t fully understand the worth and growth potential).

Take a look at the following graph. It is clear to see that within mobile media the amount of dollars spent on advertising versus the time users spend with content is dramatically unbalanced compared to  other forms of media.  However, newspapers and magazines have the opposite situation; users spend less time with the content, but the advertising dollars are still there!  It’s obvious to see that traditional media must figure out mobile as well as tablet advertising, and the sooner the better!

Today, the primary advertising sold on mobile is display advertising (banner ads).   Many clicks of display/banner ads are inadvertent due to the small size of the screen and therefore cause the analytics to be rather inaccurate.

The solution to the issue is to create interactive landing pages – user experiences that take advantage of the features of the mobile device.

Take a look at the example below (Kohls landing page built for an iPad app).  Rather than displaying a simple banner ad that runs across a small portion of the screen, we’ve created an interactive full scale landing page with maps, store locator, social media links and deal specifics.  This particular ad received 11x more engagement than a banner ad that carried the same promotion.  The key was building an experience for the end user, something that didn’t act or feel like a static ad.  This landing page ad can still be sold using a CPM basis, but at a higher rate due to customization of the ad.

When considering the iPad (or tablets in general) the job of selling and delivering ads is totally different than selling ads on smart phones.  The biggest reason is due to the engagement factor of people using the iPad.  A typical user spends anywhere from 10-20 minutes with most content products.  A highly engaged audience expects to see advertisements, but these advertisements need to be part of the content experience.  Display ads don’t cut it.  Landing page advertising carries highly visual and interactive elements, tied directly to the promotion.  An even more critical component to this process, is the way it the ad is sold to the advertiser.  The Sales person must convey to the advertiser that the iPad/tablet is more like advertising on TV rather than advertising on a website.  CPM selling doesn’t work here.  Similar to television advertising, tablet advertising is a “share of voice” type of sale. It’s more about a percentage of pages viewed or time spent by the user within the content.  This means that if your product is a highly visual and interactive (with a lot of video); users are going to spend 4x as much time on average, as they do with your web product! This is where I highly suggest you learn how to sell share of voice!  If you don’t, you run the risk of selling everything in a bundle format (with print and web), and consequently undervalue inventory on the iPad.

How do we really get to the bottom of this issue and find a solution to the problem of selling mobile and tablet advertising effectively? The suggestion I have may be considered controversial, but here it is: you must build a separate sales group focused on mobile and tablet.

The majority of traditional media businesses are just now figuring out how to sell interactive on a CPM basis.  This being said, a traditional media sales rep’s plate is already full with selling print, web and other third party products. Then “BAMM!” now comes the duty of selling mobile and tablet as well.  Also, it must be understood that selling mobile advertising requires a lot of hand holding to develop the interactive elements and to create something that will work on small screen.  Also, tablet advertising requires a completely new way of selling and creating ads for advertisers.

Newspapers need to prioritize digital advertising sales if they expect to thrive.” Pew Research Center, March 2012*

If you believe as I do that mobile and tablet represent the largest opportunity on both content and monetization/revenue fronts, you’ll want to avoid adding mobile and tablet to your current sales organization. Rather, you’ll build a separate sales group focused on mobile and tablet.  And, of course consider mobile and tablet advertising as a big piece of the revenue growth required to get back to growing revenues.

Publishing Content For A Device Does NOT Equal New Audience

I have been immersed in digital media for over 17 years. And, although the digital world has evolved at rapid speed most recently, my main goal has always stayed the same: deliver content when, where and how people want it. Then, monetize the content via advertisements, subscriptions and ecommerce.

Traditionally, media companies have a large database of content that meets the needs of one mass audience, and it’s no secret that most traditional newspaper organizations have a strong foothold in the 50+ age group.  The newspaper creates a piece of content, and then delivers that content on multiple platforms.  This is driven by a “let the brand do the work” mentality.

Here’s the problem. Building content for one mass audience doesn’t work anymore.  Placing the content on smartphones and tablets that is pulled directly from your print newspaper and website, doesn’t mean you will all of a sudden attract a new and younger audience that’s using these devices.

Younger audiences expect news and information built specifically around their likes and dislikes. More so, they expect it to be structured to meet the different digital platforms.

Let me give you an example from my own company.  When we moved existing web content to smart phones, we found it met the needs of our current print and web audience of 50+, yet we weren’t reaching a new and younger audience. The traditional newspaper subscribers want convenient access on smart phones to the exact same stories as in print and online – just shorter versions of those stories.

With the iPad project, we decided to take a completely different approach. We looked at design and content differently in an effort to reach a younger demographic, that we knew was extremely active on iPads. We weren’t trying to satisfy/grow the current traditional 50+ demographic that made up our print/website brand.

For the iPad app, we started with a design that was very graphical and that categorized information around typical interests of a 35-45 year old. We developed original content and we curated existing content to focus on providing entertaining information as well as news. We were developing content around a specific audience, rather than driving the effort around the specific device.

Early results have been positive.  We continue to build a new audience that is very different than the traditional newspaper reader.  Our iPad app users are more engaged, spending on average approximately 11 minutes for every visit.  They are heavy users in the evening, from 6-10pm.  The majority of users fall in the 25-45 age group.  At least 60% of the iPad app content is still being created by our existing ‘traditional’ content center, but a separate iPad production team is curating it.  Our original content offering, in addition to the curated content, has proven to be very successful at building a new and younger loyal audience.  However, must continue to grow this audience to a size that rivals our other online efforts, in order to call this a true success story.

This being said, we know it’s time to cater to the traditional newspaper audience as well, as they too are purchasing iPads and consuming news on them. We’ll give this audience what they want by providing  a format similar to the structure of a news focused product.  It will still take advantage of the technology but in a fashion that is consistent with expected content for the traditional audience.  Call it an interactive newspaper.

In the end, when looking at the early successes of our current iPad app product, we’ve learned our challenges go beyond apps and devices when delivering news to reach new audiences.  We can’t build one content database and deliver it on multiple platforms. Whether its iPads, smartphones, online, or print, we must continue in our iPad app curated and original content mindset, by building content for specific audiences and specific platforms.

Audience Acquisition with iPad Product “The Peel” Is it working?

Back in May 2011 we launched our tablet publishing effort (The Peel) seeking to attract a younger demographic utilizing Apple’s iPad.  It has been an exciting, yet daunting task.  Today, I am happy to say we are making great progress.  When we set out on this journey, we laid out milestones that we wanted to reach within a year.  The key milestones were 20,000 loyal users and a primary audience in the 35-45 year old demographic, 50,000 downloads, deep user engagement of at least 8 minutes per session and advertiser acceptance.  I have been receiving calls from industry friends fairly regularly since the launch of The Peel asking how we are doing.  Many of those calls from traditional media businesses still trying to figure out if they should pursue an audience acquisition strategy similar to what we have done.  We believe we are heading in the right direction with this product.  As The Peel continues to show good results, we will be adding another tablet product focused on a traditional newspaper audience in the 50+ age demographic.   I thought everyone might like to see how we have done after 8 months of publishing The Peel, so I included an infographic on the topic.  Our strategy is paying off.

Frictionless sharing – is it right for publishers?

Frictionless sharing. Have you heard these social media buzz words yet? They are becoming quite the discussion point in the publishing world.  So what does it mean?  Facebook launched frictionless sharing a couple of months ago as a way for users to share content with their friends automatically.  Anytime you read news from a social news app or listen to music from a social music app, it will automatically be shared to your Facebook page in the right-side rail and in certain promotional boxes in your timeline.  You can still manually share and Like content, in which case, it will be displayed at the top of your timeline.

Who’s in?

Several publishers are already implementing frictionless sharing. Washington Post and Yahoo both built social apps but they took different approaches.  WaPo created a news app that resides within Facebook and allows an entire body of work to move from user to user, while Yahoo is allowing links to be shared directly from its own Website.  WaPo doesn’t currently monetize the shared articles, while Yahoo protects its digital display ads by sending traffic back to its site.  We have had conversations with both companies and I can appreciate both approaches. On the one hand, WaPo is seeking a new audience and will figure out monetization later. On the other hand, Yahoo wants the audience but not without advertising to pay for it.

What’s in it for Facebook users?

For Facebook users, frictionless sharing allows for greater discovery. Facebook users can now easily see what their friends are reading or listening to.  The potential downside is that your friends will get tired of your abundance of automatic shares.  If so, users can turn off the frictionless sharing feature and just stick to sharing content on a manual basis.  Most likely, users will end up using a combination of automatic and manual sharing.

What’s in it for content producers?

A content producer can gain exposure and potentially reach a new audience.  WaPo tells me that the majority of its Facebook social readers app users are younger – which has cultivated a new audience for its brand and has resulted in millions of page views.  WaPo knows that monetization is a necessary factor, but right now it’s simply basking in the fact that a younger demographic has exposure to the brand.  Also notable – it hasn’t resulted in a negative impact on its current subscriber base.

Yahoo is also benefiting from Facebook’s frictionless sharing, but in this case the end user links back to the Yahoo website which drives up page views and thereby generates more ad impressions.  I completely understand why Yahoo is happy with this model, but at the same time WaPo is learning a lot about an audience it doesn’t typically serve.  Who’s to say that both brands aren’t correct in their pursuits?

A recent article from an exec at Next Issue Media sums up the opportunities that come from frictionless sharing, which I tend to agree with:

“Some have grumbled that ‘frictionless sharing’ is less ideal. First of all, the sender of an article might not want to automatically share that he’s reading about Snookie’s latest shenanigans and his friends might not want to know. For publishers developing news apps, they must make it transparent and easy for users to either enable or disable the ‘frictionless sharing’ function.

Second of all and perhaps even more troubling, when friends click to read one of your shares, they are forced to authenticate with the news app (and thus give up personal information) to read the article. This setup creates friction and as a result, less people will end up engaging with news apps. Publishers and Facebook jointly need to work on solutions to allow for true frictionless sharing.

With that said, the opportunity seems to outweigh the limitations. In a world of many enemies eating away at your business, Facebook seems to be on publishers’ side.”

When you weigh the risks of participating in Facebook’s social app world against the upside of obtaining a new audience, my advice is to start experimenting and above all figure out first hand what frictionless sharing means and what it can bring to your brand.

News Readers and Aggregators: Friend or Foe of Traditional Media?

The tablet market has seen several news readers and aggregator apps emerge that elegantly package news, social media and other content from multiple sources into one compelling and personalized reading experience. Apps, such as Flipboard, Zite and the new Livestand by Yahoo!, seem to have found a place in tablet users’ critical hearts. As such, Livestand is currently the number two free app in iTunes.

What part will traditional publishers play in this space? Are these newcomers posing a competitive threat, or do they give us an opportunity?

News readers provide a powerful new way to consume information. This blog excerpt from globalmoxie.com explains some of the benefits:

“Publishers and designers have to start thinking about content at a more atomic level, not in aggregated issues. That’s how we already understand news as consumers, and we have to start thinking that way as publishers, too. This is why Flipboard, Instapaper, and other aggregators are so interesting: they give you one container for the whole universe of content, unbound to any one publisher.”

It doesn’t seem likely that consumers will pay for these products. Instead, since the news readers rely on third party content, their key to success long term has to be in partnering with content providers. In other words, they need us. But do we need them?

Advertising

At present, it doesn’t appear that news readers drive much referral traffic back to publishers. Over time, this could change, but for now, the only way publishers will benefit is to get ads displayed within their content. You are starting to see some examples of ad placement inside content from content partners. In the example below, The Oprah Magazine is advertising for themselves within Flipboard.

Discovery

The real payoff in partnering with news readers is the potential for premium placement. Yes, you are giving users free access to your content, but you also get maximum exposure of your brand. New audiences will discover you and become familiar with your content. Flipboard, for example has 37 selections, which include brands such as TechCrunch, GigaOm and Wired under Tech & Science. It is publishers job to deliver compelling enough content, such that users eventually will be enticed to visit the original source.

DIY

Instead of partnering with these newcomers, why can’t newspapers or magazines just do something similar to Flipboard themselves? Washington Post did with the launch of Trove earlier this year. What about publishers at the local level? The reality is we could, but instead we spend most of our time pursuing legacy revenue streams from legacy websites.

Partnership opportunities

So, friend or foe? They are both. Foe, in the sense they use our content to “steal” audiences. Friend, in the sense they introduce new audiences to our content. I believe publishers need to work with companies like Flipboard more because of discovery rather than a direct revenue source – at least today.

Many news readers are already reaching out to publishers.

  • Yahoo LiveStand has already included publisher partners from their newspaper consortium.
  • Google Propeller will also have partners in place at launch.
  • Pulse just introduced Pulse Connect, which lets publishers submit their site for inclusion in Pulse. After approval, it is then available to users of the newsreader as a content source.
  • Zite has an integrated partner program that enables content to be provided to appropriately targeted audiences, such as people in your publishing area or people who are interested in content from your area.  Zite claims to use proprietary algorithms to deliver users content that matches their unique tastes and interests and is personalized to the type of content they like to read.
  • Flipboard offers a product called Flipboard Pages, which already includes some larger publishers such as Conde Nast, ABC, SF Gate and the Washington Post. It will soon be expanded to interested publishers, who then become visible inside Flipboard. Users can create a section of Flipboard of just your content.

The jury is out how publishers will make money from news readers, but they cannot be ignored as potential partners.

What do you think? Is partnering with newsreaders a good move, or do you think it would diminish the value of our brand?

For more reading, check out this great article from Nieman Labs, which analyzes the battle between aggregators and single-brand apps.  There is a particular comment I am in agreement with from the article.

“We’ll each pick a single news aggregator to complement our top two to three top single brand choices. Those will be the buttons, the apps, on the first page of our iPads — and the second page won’t matter much”.

Also, check out this blog post from cenevoldsen.com, which talks about why aggregators are so compelling from a design standpoint in the first place.