Category: Ads

Shorter May Be Better. The Micro-Ad Works On Smartphones

Posted on by Mike Vorhaus

Advertisers are always battling against the seemingly innate feeling of people that “they just don’t like ads.” Advertisers are often looking for new angles, new twists, and new ad “products” that will grab the consumers’ attention and allow their brand, product or service to stand out among the population. Some advertisers have tried to make their ads look like “newscasts” or “content specials”, others regularly use known celebrities, as well as various “gags” to get consumers’ attention.

Sometimes I feel like the advertisers are focusing on just trying to “trick” people into watching an ad, rather than asking themselves a more fundamental question, “how can we make advertising more appealing to consumers?” One of biggest complaints consumers have about advertising, be it on TV or on digital platforms, is that ads interrupt, they get in the way, of content I want to watch, or listen to, or read.

Why then haven’t advertisers tried shorter ads? If an ad is 15 seconds and not 30 seconds on TV, then it is half as intrusive. Likewise, in digital video advertising, consumers might see 30 second and 15 second ads as “long”, but they will tolerate a 6-second ad (like many of the ads on YouTube.) We can’t force advertising our consumers, we have to make it at least somewhat inviting, and hopefully (and more advanced targeting will allow this) directly relevant.

So then what evidence do we have that shorter ads are better ads? I know many years ago I heard from a large media company that they had tested promo ads for their own TV shows and that they had tested 30 second ads against 15 second ads and found that the shorter ads drove better recall for the promos.

More recently, MAGNA, a well-respected business intelligence and consulting company, in collaboration with the IPG Media Lab, and one of the top companies in social media, Snap, conducted a study comparing 15 second ads against 6 second ads in the mobile video space. Even though the 6 second ads are MORE than 50% shorter that the standard 15 second ads, they still had the same impact (actually slight more) than the longer ads, as measured by key metrics.

Furthermore, this study found that both 6 second and 15 second ads were equally successful on mobile devices in driving the same level of aided recall for the product or brand, but the 15 second ads were considered more intrusive by the viewers.

Brands, products, service and all advertisers should seek to explain concisely and directly, particularly when advertising in the digital environment, what the value proposition of the item being advertised is and why it is relevant. The traditional TV ad world should look at trying much shorter ads on the TV platforms, and perhaps even less ads per show. Some advertisers might then pay a premium for shorter, better ads, that are not hidden away among the clutter of ads on TV and on digital platforms.

Wouldn’t it be great if the major advertisers followed the mantra by customer advocates to, “surprise and delight the consumer” by offering up shorter, more compelling ads.

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Traditional TV Advertising Is Growing – Unlike Newspapers

Posted on by Mike Vorhaus

A mistake is often made by the Silicon Valley “insiders” when they lump all traditional media into one big (failing) bucket. Newspaper advertising in print has been decimated, but TV advertising has actually held up quite well, even during the pandemic. While we are all watching a lot of Netflix NFLX +0.3%, advertisers know that millions of consumers are watching traditional broadcast and cable TV every hour of every day.

According to a recent report from MoffettNathanson, the firm named in part for Michael Nathanson, a long-time, well-regarded media analyst, reported a 3% increase in U.S. TV advertising revenue in the third quarter of this year. The firm compared that to national advertising spending that fell 3.5 percent. For this final quarter of 2020, Nathanson envisions an increase of 2% in TV advertising revenue.

The report is titled “That Was Unexpected!” and Michael Nathanson spoke to why TV advertising revenue was remarkably up this past quarter, “First, the third quarter has a once-in-a-lifetime wave of every major sport returning to the market. Second, the intense 2020 election cycle attracted huge local, regional, and national ad spending – which we estimate to be up roughly 75 percent over 2016 – in key presidential swing states and in the fight for the Senate.”

Nathanson forecast strong future revenue for the TV industry, saying, “The TV ad market will post strong results in the coming three quarters as sports events, including the Olympics, return to their natural cadence.”

In contrast, the newspaper companies continue to lose advertising revenue, and in most cases, subscription revenue too. The national newspapers, particularly The Wall Street Journal and The New York Times NYT +0.9% have avoided this value-destruction by successfully driving paid-subscriptions online.

The Pew Research Center recently issued a report that documented, to no one’s surprise, that advertising revenue from the major local newspaper chains, already suffering from plummeting print advertising revenue, have been slammed even harder during the pandemic and the resultant economic recession.

Pew reported, that among the six publicly owned newspaper chains — Gannett GCI.I 0.0%, New York Times, Tribune, McClatchy, Lee and Belo AHC 0.0% — who own and operate more than 300 daily newspapers, advertising revenue fell by 42% over year last year.

 

Trump And Biden Double Down On Facebook Advertising

Posted on by Mike Vorhaus

Trump and Biden both advertised extensively on Facebook, along with other digital advertising.

This past election was, as evidenced by the highest popular vote ever, very important to many people. Of course, no one cared more about the election results than President Trump and former Vice President Biden. Though the average voter also seemed very motivated this year to learn about the candidates as proven by the high ratings achieved for the Presidential Debates.

One of the many ways that Trump and Biden sought to communicate to their supporters, and to win over the undecided, was through social media, particularly Facebook. I am not talking about all the free attention that Trump, and to a lesser extent, Biden, got from their own posts on Twitter, but rather the hundreds of millions of dollars spent on paid social media advertising reaching out to all ages, gender and races in the U.S. through the social media giant, Facebook. In fact, each candidate hit all time highs in Facebook advertising expenditures.

Over the last 22 months, ABC 7 Los Angeles’ Eyewitness News, has reported that both Trump and Biden in this election, spent more INDIVIDUALLYon Facebook advertising than both Trump and former Secretary of State Hillary Clinton spent combined during the 2016 election. Reportedly, Biden spent over $94 million on Facebook ads in this election, and Trump spent even more – reporting $107 million spent on Facebook ads.

Not only was the 2020 election very good to Facebook, but Facebook overall has rebounded stronglyfrom the lower advertising revenue driven in the early months of the pandemic. There can be no doubt that social media and overall digital advertising expenditures are now rivalling TV advertising in importance.

The Wesleyan Media Project, an enterprise run out of Wesleyan University (full disclosure, I am an alumnus), has gathered and analyzed extensive data on the advertising expenditures of Presidential, Senatorial and Congressional candidates.

In the case of the Presidential race, they estimated that Trump spent over $426 million in advertising for his candidacy, and Biden spent $564 million. Despite Trump having less to spend on advertising, he over-spent Biden considerably in terms of digital spend, directing over $201 million to digital advertising, vs. Biden’s digital expenditure of $166 million. The same pattern existed in terms of TV advertising with Trump’s spend on TV being $222 million vs. $376 million was spent on TV advertising for Biden.

This year has been, obviously, a very hard time for most people economically, socially and psychologically. But thanks to Presidential espousals, at least the TV advertising and digital advertising businesses got big boosts (political stimulus you might say) from the 2020 elections.

IAB Names David Cohen As New CEO To Lead Digital Advertising Association.

Posted on by Mike Vorhaus

The Interactive Advertising Bureau (IAB), the well-regarded national trade association for the digital media and marketing industries, has announced David Cohen, its current President, has been promoted to Chief Executive Officer (CEO), succeeding Randall Rothenberg. Rothenberg had served as the IAB CEO since 2007, except for six months when he was at Time, Inc. Rothenberg will remain at IAB as Executive Chair through 2022.

The IAB sets standards, develops best practices, provides continuing education and training, provides advice and assistance, as well as research and data to the many advertisers and advertising companies that work with IAB. IAB has been instrumental in the growth of digital revenue since its founding in 1996 – the very wild west of the Internet.

Cohen takes on the leadership of the IAB at a time when traditional advertising is faltering, which has been catalyzed by the Covid pandemic, while digital advertising is projected to grow, albeit, no doubt at a lower rate than in the past.

Cohen has been President of the IAB for the last year and was responsible for a big increase in their media marketplaces and the number of industry executives involved in IAB’s leadership councils. Rothenberg said about Cohen, “He is a true leader with the steadiness, strategic insights, and experience necessary to take IAB and the digital marketing and media industries through the economic recovery and ultimately to the next level of growth. The Board and I felt strongly that there was no reason to wait. He should be our CEO now.”

“As the industry continues to face some of its biggest challenges, we rely on IAB to bring us together, tackle the tough questions, and develop real, actionable solutions,” said Rik Van der Kooi, Corporate Vice President at Microsoft MSFT 0.0% Advertising and Interim Chair of IAB Board of Directors. “In this next chapter, we’ll still be able to rely on Randall’s wisdom and counsel, and we’ll have all the benefits and tremendous strengths David brings to the table. Everybody wins — especially IAB members.”

In his new role Cohen will report to the IAB Board of Directors, chaired by Rik Van der Kooi, Corporate Vice President at Microsoft MSFT 0.0% Advertising. The IAB Vice Chair, is Gina Garrubbo, President and CEO of National Public Media. A long-standing member of the IAB Board, Peter Naylor, VP of Sales, Snap Inc. SNAP -4.7%said, “The bottom line in business is results, and David delivers. His buy-side experience and perspective, most recently as President of Magna, is invaluable. He has built organizations responsible for purchasing billions of dollars of digital media inventory annually.”

Cohen expressed enthusiasm for leading the IAB and serving their clients and partners in the digital media eco-system. He said, “what makes the IAB leadership position so meaningful is that the team here is not just helping individual companies – we’re helping to reshape and grow an entire sector of the economy.”

Cohen continued, “We are boosting our focus on dramatically increasing our brand, agency, and publisher presence across all IAB activities. My buy-side experience has shown me that connecting all those dots is critical for industry collaboration, agenda-setting, and leadership.”

As Executive Chair, Rothenberg will report to Cohen, and advise the IAB on economic, public policy, compliance, and consumer brand and retail issues.

“I speak for all of us at IAB when I say we can’t thank Randall enough for his leadership, his friendship, his sage counsel, and for everything he has done for the industry he has served so faithfully for the past 14 years,” said Cohen. “What we are able to build in the years ahead would not have been possible without him.”

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Advertising Revenues Projected To Decline In 2020 Worldwide

Posted on by Mike Vorhaus

The deeper and deeper we get into the economic and societal impacts of the Covid-19 pandemic, the more clear it is that the advertising industry, and the many different types of companies that advertise, are being hit hard.

Zenith, a respected media planning firm, released a new report today regarding the future of advertising expenditures worldwide. They project that total global advertising expenditures will decline just over 9% for all of 2020. In the U.S. they see the 2020 decline as being down 7%. In comparison they reported that the U.S. “great recession” impact on U.S. advertising was a negative 9.5% in 2009.

Zenith is forecasting a 5.8% gain in global advertising spend in 2021 partly because of the Summer Olympics in Tokyo which have been moved to 2021.

Earlier in the pandemic I wrote about the future for advertising expenditures, including coverage of a study of U.S. advertising executives. As I quoted Rob Norman, long-time digital advertising executive, using a long-standing sailors’ analogy, “It’s an ill wind that blows no one any good.”

Digital advertising continues to be a somewhat, though dim, bright spot, in the advertising eco-system currently. The growth of digital advertising is being affected by the pandemic, but overall digital advertising continues its march forward. Zenith said in their release of the report “that digital advertising will account for 51.0% of global ad spend this year.”

This is the first time that digital ad spend has been a majority of total ad spend worldwide. And it is going to continue to grow. “The coronavirus forced brands to embrace digital advertising even faster than expected and made digital transformation of businesses more urgent than ever,” said Jonathan Barnard, Zenith’s head of forecasting.

Zenith pointed out that the traditional media outlets like TV and radio have suffered less than other traditional advertising platforms like print and magazine advertising, both of which are predicted to be down 20% or more this year.

“In past downturns, ad revenue is quick to fall and slow to recover relative to GDP. And since in this case, the economy follows the uncertain trajectory of the pandemic, no one has good visibility into the timing and depth of this recession. What is clear from the past is that brands that maintain or increase their share of voice during the tough times earn lasting market share gains in the recovery – gains that often persist for 5 years or more beyond the crisis,” said Scott McDonald, President and CEO of the Advertising Research Foundation based in New York, and a well-known research expert who has worked at a number of prominent media companies over the years.

Another well-known advertising expert and long-time advertising technology executive, Dave Morgan, CEO of Simulmedia, looked into his crystal ball and saw a continued decline in traditional U.S. television advertising in the years ahead, with growth coming from the Connected TV space, “I think that U.S. TV ad spend this year will be down in the 15% range from last year. I think that 2021 will be down just slightly to 2019, and then decline 5% per year over the subsequent couple of years. Advanced TV ad spend – data driven linear, addressable and CTV – will grow 30% this year and 30-50% per year after that for the next five years,” Morgan concluded.

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Expect Podcast Ad Revenue To Be Up In 2020: Study

Posted on by Mike Vorhaus

Podcasts have been another source of fun, information, and something to do during our extensive time at home due to the Covid-19 pandemic. Recent data from a national online survey I conducted in June reported that 20% of American adults were listening to podcasts at least once a week or more, including those who listened every day (7%).

The Interactive Advertising Bureau (IAB), the leading organization for promoting digital advertising, and Price Waterhouse Coopers (PwC), the international consulting firm, recently released their annual study, U.S. Podcast Advertising Revenue Study, for 2020. The study predicts that podcast advertising revenue will increase by almost 15%, “nearing $1 billion in 2020,” according to the IAB and PwC.

In many cases advertising has been hard hit by the economic impacts of the pandemic and stay-at-home orders. For many industries—such as travel, hospitality, retail and others—the result of the current economic upheaval has been huge. The recent study on podcast advertising revenue documents an example of where advertising has been more robust. In general, digital advertising is being less negatively impacted than other forms of advertising during the pandemic.

The same partners in this study issued a similar study in 2019 and past years. In 2019 they estimated that podcast-related advertising revenue was $708 million and that in 2018 it was $479 million. The rates of increase are coming down as the total advertising revenue scales up. Nonetheless, it is clear that podcasts have become an important platform for advertising.

It is often said in the media world that advertising revenue follows eyeballs. In this case it is more that the advertising dollars are following the ears of consumers.

Some of the advertising categories that were strong on podcasting, according to the PwC and IAB report, include consumer brands, financial services, health, wellness, and home appliances. The top type of content on podcasts was news at 22%, comedy at 17%, and society/culture at 13%. It is interesting to note the breadth of podcast content on the top grossing podcasts, such as sports content and commentary from The Joe Rogan Experience or the Bill Simmons Podcast, to true crime podcasts like My Favorite Murder.

There are also other revenue streams growing in the podcasting world, including content licensing and consumer payments. Hernan Lopez, founder and CEO of Wondery, a major podcast company, said looking at the future, “Podcast ad revenues will grow faster than pretty much any other form of media in 2020; and ad revenue is only part of the story. For Wondery, licensing and consumer revenue will represent well over 20% of the total this year.”

In fact, 72% of podcast consumers over the age of 55+ believe in the mixed-business model of paid podcasts and free podcasts supported by advertising. Only 56% of podcast consumers in the 18-to-34 range believed in the mixed model, and 34% of the younger age group felt all podcasts should be free.

The podcast world is growing with major acquisitions, expanded marketing efforts, more distribution outlets, and a number of venture backed companies competing alongside huge companies like Apple and Spotify. For a thoughtful analysis of the larger ecosystem around podcasting I recommendthis article from fellow Forbes.com contributor Jay Kapoor. And if you are trying to find something new in the podcasting realm to listen to, Spotify has launched a series of charts in various countries showing the most popular podcasts, as well as the rising, up-and-coming podcasts.

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The New Advertising Zeitgeist—Google’s US Ad Revenue To Decline

Posted on by Mike Vorhaus

Originally Posted on Forbes

As the second half of the calendar year begins, many on Wall Street and Madison Avenue are wondering where advertising revenues will net out for the first half of the year and what the second half of 2020 will be like for the advertising market.

EMarketer recently predicted that in 2020 Google’s US advertising revenue will decline by just over 5% by end of the year. This is the first time, according to eMarketer, since 2008, that Google’s US digital ad revenue will decline. EMarketer had estimated that US ad revenues would grow about 13% before the Covid advertising recession hit. Google’s US market share for search advertising is projected to go down from 61.3% to 58.5% in 2020. Google makes up a huge portion of the total revenue of Alphabet, its parent company. Emarketer predicts that total advertising revenue in the US for 2020 will be $134.7 billion – an increase just under 2%.

These Covid-related headwinds for Google come along at the same time as Facebook is dealing with a boycott of Facebook advertising by numerous companies. Nonetheless, eMarketer still forecasts a small increase for Facebook’s advertising revenue in 2020. Amazon, who has been on a tear in selling advertising, is projected to have in 2020, an increase of 23.5% over their US advertising revenue last year, despite the Covid pandemic.

All of these media companies will have to deal with the constant shifting of the sands in the Internet

advertising landscape. Will Snapchat become a bigger player in the advertising arena? Will TikTok’s US advertising revenue grow at scale enough so that they too

become a bigger player in the advertising marketplace? Will the AVOD (Advertiser-supported, free, video on demand) digital video services eat into TV advertising marketing dollars? Who knows what the next “new thing” will be that will attract consumers’ and their eyeballs? Overtime, it is clear that ad dollars follow consumers’ eyeballs. We will know the actual revenue results for Alphabet and Google when Alphabet reports its second quarter earnings on July 23.

As Mike Kelly, former CEO of The Weather Channel and a long-time executive in the advertising and media world, said to me in an interview, “It is almost inevitable, that as competition increases from all comers, that Google will revert back to something closer to their ‘fair share’ of the ad market. After all these years, search is still their dominant product. As consumer intent and discovery (and attention) shifts to other platforms, so will the advertising dollars.” 

On the other hand, another major business model of the Internet – ecommerce – is likely to have a very strong year of growth. Ecommerce is poised to grow 18.0% following a 14.9% gain in 2019 according to eMarketer.

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Ad Revenue To Fall 7% In 2020 Under Pressure From Covid-19

Posted on by Mike Vorhaus

New estimates as to the impact of the Covid-19 pandemic on advertising revenue in 2020 and 2021 have been issued by Magna Global, a unit of IPG Mediabrands that provides media intelligence, such as on-going estimates of worldwide advertising revenue. Magna predicts that total worldwide ad spending will end 2020 down by 7%. In the U.S., if you remove the once every four year advertising tidal wave driven by Presidential and other political campaigns, then Magna estimates that U.S. advertising revenue will be down 6% for 2020.

Other analysts generally agree with Magna’s estimates, such as Raghu Kodige, Co-Founder and Chief Product Officer of Alphonso, a TV measurement and data company based in Silicon Valley, who said, “This is a reasonable, if modest estimate, given that we’ve already logged 25% of the year in a lower-spend environment with major tentpole marketing events, like March Madness, completely shut down.”

The digital ad spend is projected to be flat year-over-year by end of 2020 worldwide and up a bit in the U.S. for 2020 at a 2% projected increase. Magna says: “The most resilient formats will be digital video, as well as social media ads.” Digital spending had a very good Q. 1 this year and there are already signs of the third and fourth quarter bouncing back.

I wrote about the falling advertising revenues caused by the Covid-19 recession last month here at Forbes.com and the new data from Magna shows clearly that traditional advertising is under a lot of pressure (particularly print and TV) and digital spending is showing some strength into the second half of 2020 and the full year of 2021.

Jonah Bloom, former Editor-in-Chief of AdAge and currently CMO of Kinship, a start-up dedicated to improving people’s friendships and networking, said there is, “a long-term, ongoing shift, that isn’t going to change regardless of market conditions,” as “brands continue to spend more on customer experience, and (related) technology and content.”

In 2021 Magna expects that advertising spend worldwide, and in the U.S., will rebound based on the GDP growth expected in 2021. Vincent Letang, Executive Vice President and Managing Partner, Global Market Intelligence at Magna, said, based on well-respected estimates of likely GDP growth in 2021, that the GDP is forecast to grow in the U.S. by 3.1% to 4.7%, according to macroeconomic forecasts issued by the Federal Reserve Bank of Philadelphia and the International Monetary Fund, respectively. These GDP estimates are likely to translate into a U.S. growth in 2021 advertising by 4% approximately, Letang estimated.

The unknowns, both in the advertising world, and across our economy, are immense as we go through this once in a lifetime event. As Josh Sternberg, editor and writer of the Media Nut, a daily media business newsletter, and a former journalist at Adweek, NBC News, Washington Post, and Digiday, said “We have no idea how bad it’s going to get.” He expressed worries to me that with the end of the stimulus, continued unemployment and a virus that is not under control yet, “it’s hard to see ad spend bouncing back.”

Though there is a lot of data and experience to back the Magna estimates, which are similar to other predictions about the next few years in the advertising industry, you still wonder if the Chinese Poet from the 6th Century BC, Lao Tzu, was wise when he said, “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”

Snap Is Growing It’s Advertising Business With New Dynamic E-Commerce Ads

Posted on by Mike Vorhaus

Snap, like Facebook FB in its earlier years, is frequently being viewed, in terms of success or failure, from the point of view of monetization. It is relatively easier to acquire a large audience to use a free service like Snapchat, than it is to monetize those consumers and achieve large-scale advertising revenue growth.

In a further step toward enhanced monetization, Snap announced last year a new automated advertising product, Dynamic Product Ads (DPAs) in the U.S. and selected other countries. Snap has just recently extended that product to more countries in Europe, the Middle East, and Australia.

DPAs are appealing to e-commerce advertisers because it allows retailers and brands to more easily sell their services and products to consumers using Snapchat. Google GOOGL and Facebook already offer similar ad products, where an e-commerce catalog is uploaded into a template on a digital platform and then updated in real-time. The benefit to consumers is that they will get up-to-date listings of products and prices. The benefit to advertisers is that they will save time over previous methods of updating e-commerce digital listings.

Rob Seidu, the senior director of media activation in Europe for Adidas said they have seen an increased return on advertising spend during their test of Snap’s DPAs. “The launch of DPAs allows us a route to reach our target Gen Z and Millennial audiences with relevant product creative throughout the consumer journey,” Seidu said.

Long-time digital media observer and experienced revenue executive in the digital world, Michael Hudes, observed, “Snap’s move to launch dynamic ads is a no brainer move for all of the obvious reasons and on the surface, far from innovative. The real question is how does Snap deliver a user experience that performs for a wide swath of brands and not just direct response – D to C – advertisers?”

In the period leading up to Facebook’s IPO many analysts doubted Facebook’s ability to monetize particularly in the mobile environment. But once Facebook demonstrated rising advertising revenue with good margins, the stock took off and has been a darling of Wall Street.

While Snap’s stock price has moved up considerably in the last year, as they increased revenue and demonstrated the value of their many US and European users, they are still trading below their high. Snap has other efforts underway to increase their advertising revenue, including an advertising network across many sites and apps, not limited to Snap properties.

Snap has continued to hire advertising sales people from some of the leading digital companies, like Facebook, Amazon AMZN, and Google. Snap continues to take more and more steps toward demonstrating they can grow their primary revenue stream – digital advertising.