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The Shrinking Value of Organic Reach

Instagram proudly highlights how limited organic reach has become

When announcing a new product, it make sense to include testimonials from customers who rave about how it’s exactly what they need in these new and exciting times. What make less sense, however, is to simultaneously highlight a quote from one of those same customers belittling your core offering.

But hey, Facebook-owned Instagram has always been a trendsetter that loves to go its own way. It once again reminded us of this fact with a June 4 blog post trumpeting the ability for brands to promote influencers’ sponsored posts that just so happened to include some perhaps unintentional shade.

The damaging quote, presented in bold and oversized font, comes from the vice president of brand communications at Old Navy and emphasizes the fact that organic reach on the platform — i.e. the ability for people to see your posts without you having to first pay to promote said posts — is mostly a thing of the past.

“We’ve long seen that customers want to discover fashion through trusted sources who have credibility,” explains Liat Weingarten in what is clearly meant to be pitch for Instagram’s latest offering, “but organic reach on that content has become increasingly limited.”

They really don't want you to miss it.

They really don’t want you to miss it.


Weingarten continues that Old Navy is “consistently looking for more sophisticated ways like Branded Content ads to serve partner content to the right shoppers, instead of just throwing it into the social ether.”

Yup, you read that correctly. Likely due — at least in part — to Instagram’s widely despised algorithm, non-paid Old Navy posts relying on organic reach are akin to chucking some ad copy into the ether.

This isn’t surprising. What is surprising, however, is that Instagram would choose to proudly highlight such an assertion on its own blog. 

Buy hey, self-awareness has never exactly been the calling card of anything helmed by Mark Zuckerberg.

Source: Mashable


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Project Feels: How USA Today, ESPN and The New York Times are targeting ads to mood – Digiday

Media companies, including The New York Times, ESPN and USA Today, have rolled out ad products that they say can match ads to people in certain moods.

Lately, media companies, including The New York Times, ESPN and USA Today, have rolled out ad products that they say can match ads to people in certain moods.

USA Today Network in 2016 started categorizing its content by topic and tone, and scoring it based on the emotions it’s believed to most evoke. Last year, it started to sell advertising based on that knowledge with a product called Lens Targeting. Kelly Andresen, svp and head of Get Creative, USA Today Network’s content studio, said the publisher is trying to show a link between the emotions a story is likely to evoke and ad performance. An ad campaign for a nonprofit that was targeted to people reading inspirational stories resulted in a 25 percent higher donation rate than ads that weren’t targeted, she said.

“We’ve seen a gradual increase in RFPs, advertisers aren’t asking for audience by demographic but psychographic,” Andresen said. “This is one step to find those psychographics instead of numbers you can get from outside parties.”

The New York Times rolled out a tool earlier this year called Project Feels that lets advertisers target ads to content based on emotional responses the content is predicted to have. ESPN has been pitching a tool to target sports fans on its digital properties based on their changing emotional state during a game. Now it’s trying to apply all that know-how to the rest of Disney’s properties. The tool is called LiveConnect and takes the sports preferences that its logged-in users provide and overlays that with data about how people feel based on how their team is doing and line that up with advertisers’ goals. That could mean showing ads for travel or other celebratory experiences to people whose team is on a winning streak — or not advertising to them at all if their team is losing.

“We were trying to find any scalable way to deliver the right message at the right time,” said Vikram Somaya, svp, global data officer and ad platforms at ESPN. “Sports, there’s a lot of potential messages around it. The fact is, we’re in the emotion-generating business. We have a lot of first-party data we can use with a lot of transactions with the consumer; why wouldn’t we do it?”

“It’s something a lot of media planners have been trying to do for years,” Chris Wexler, svp and executive director of media and analytics at Cramer‑Krasselt. “It just depends on how rich the data set is. It’s an exciting frontier because we’re looking for people who are open to our message, and emotional state is a key part of it. Demographics based targeting is better than no targeting. Behavior-based is better than demographics. If you put it in order of importance, mood is above behavioral.”

Hitting people with a message when they’re likely to be receptive is as old as advertising, but using artificial intelligence to target people based on their mood is another level of manipulation. Publishers and agencies say they draw the line at using personally identifiable data or data without saying what it’s being collected for. “This is really about focusing on finding better-qualified audiences, but this is not at a point where we can manipulate mood through content,” Andresen said. ESPN’s Somaya said it won’t use information it thinks people don’t feel should be publicly revealed, keeping in mind its family-focused Disney audience, which means everything from health to political preferences to sexual orientation. That data isn’t as commercially valuable as information they willingly provide (like sports interests) anyway, he added.

The biggest challenge is proving mood-based targeting works and at scale. It’s still just an “occasional” part of the ad sell at publishers. It takes a client that’s willing and able to work closely with the publisher on figuring out what the ROI should be, measuring it, and spending the premium that’s often charged.

Agencies also want more information about the methodology. It’s an easier sell with music because it’s easier to believe as companies like Spotify might say that people who listen to break-up music are sad.

Josh Baines, who works on publisher strategy at Oracle, whose Grapeshot product powers mood-based targeting, said the topic is getting more visibility because it provides a deeper level of targeting and chance to qualify people’s mindsets. Showing it drives real business outcomes and not just fluffy metrics will be key to growing its adoption, though, he said.

Other categories outside of music are a harder sell. Some advertisers shy away from being around news because they think it will create a negative association with their brands with readers. For news publishers, one hope of A.I. is to change advertisers’ associations to news. Andresen said USA Today Network found that people are equally drawn to “positive” versus “negative” stories when they come to the site, a finding it uses in pitches to advertisers. “It’s helpful for us to explain that to advertisers: You don’t have to walk away from the whole news category.”

Wexler isn’t so sure. “In music, they can claim to know when you’re sad. We’d be particularly skeptical about news content — are we going to guess that because someone’s in Alabama they’re angry about something versus someone in New York?” he said.

Source: Project Feels: How USA Today, ESPN and The New York Times are targeting ads to mood – Digiday

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IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike)

In a media landscape that continues to be transformed by the confluence of technological innovations and consumer behavior shifts, one thing is clear, the general notion of a video consumer is in the midst of a rewrite. Based on a recent IAB study, the “big screen” video experience is changing rapidly as 56% of consumers’ TVs are now IP-connected and as 54% of those viewers are now spending more time watching non-linear content, including digital video.  And on the small screen, as the “march towards mobile” continues, there’s exciting growth and advertiser demand (145% YoY increase in mobile video ad spend). It’s no wonder then that publishers and advertisers of all stripes are pivoting towards the use of sight, sound, and motion as powerful means of connecting consumers with brands across platforms. However, with all this growth comes both challenges and opportunities.

Given our vantage point, serving as members of the IAB Digital Video Center of Excellence Committees and Board, we see a wide range of perspectives on how best to navigate this frontier of internet-delivered, on-demand disruption that we call “TV Convergence.”  With a goal of providing best practices and advice on “all things video,” the Video Center and its members have developed a Guide to Digital Video Advertising that offers tools, tips, and guidance for publishers, marketers, and brands to understand video in its multiple current and emerging forms. Available as both website and companion PDF document, the guide addresses key topics and themes as outlined below and, given the speed of change in this space, will be updated on a semi-annual basis.

View the Guide to Digital Video AdvertisingOverview (PDF)

Digital Video Advertising Opportunities

IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike)

Recognizing that the video advertising industry is perceived through various overlapping frameworks, the guide maps the various content sources and delivery mechanisms in terms of market and audience size and offers insights on which formats are seeing the most growth, what works today, and what’s trending for the future, such as vertical video, 360-degree video, VR (Virtual Reality), and AR (Augmented Reality).

IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike) 1

The Video Ad Tech Overview chapter examines and explains in layman’s terms the different technologies and standards– such as VAST (Digital Video Ad Serving Template) and VPAID (Digital Video Player Ad Interface Definition) –used to serve ads. It also offers links to practical checklists for executing and launching campaigns, including how to migrate from outdated Flash formats to standard browser-based HTML5 video.


In The New TV chapter, the key message for “big screen” video advertisers is that you need to be in OTT (Over-The-Top Video) if you’re going to stay visible and relevant with on-demand, cord cutting/cord shaving consumers (see stats below on OTT device penetration and ad delivery by device).As the chapter on Audience, Data and Measurement points out, back in the “Mad Men” era of advertising, data flowed in a linear and highly front-loaded process that often centered on magnifying a “big idea.”  In today’s world, driven increasingly by automation, real-time decisioning and performance, there is now a much more decentralized flow of data that originates in the media platform and goes to various teams in no particular order.

IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike) 4

The chapter on Mobile Video highlights the fact that while the “year of mobile” finally arrived in 2016 (when mobile advertising spend surpassed that of desktop), the gap between time spent in mobile and ad spend in mobile is still painfully wide. For advertisers, a key obstacle to increased spend is the lack of a quality mobile video user experience (exacerbated by slow load times). At the same time, publishers know that placing multiple viewability tracking pixels required by advertisers, can bog down the mobile app user experience. To help build trust between buyers and sellers and streamline verification, industry players are working together with IAB to establish an open source viewability SDK. By making available a single tracking SDK, buyers and sellers can see the same metrics while consumers experience fewer slow-loading ads.

Challenges in the Digital Video Space (and Efforts Underway to Solve Them).

IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike) 5With an eye towards a more efficient future marketplace, the guide’s closing chapter focuses on what works today and what needs improvement in areas such as measurement, reporting, and workflow.  While video-based media is increasingly being transacted on data and can occur in milliseconds using techniques such as real-time bidding, getting the right creative to serve on the right device is still often a manual process that contradicts the entire premise of technology-driven digital advertising.  The guide points to metadata-related efforts like Universal Ad-ID, which is helping streamline workflow and reporting, as well as centralized, cloud-based asset management (illustrated in the diagram below). In today’s world, there are redundancies because files are housed locally on various publisher and agency systems. Simplified workflows, like the one described below, are helping streamline publisher-agency communications, reducing “missing file” errors while providing all players in the ecosystem access with the original asset source.



IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike) 6By offering a one-stop shop of information on digital video advertising in all its complexity, the Guide to Digital Video Advertising reminds us that the path to a higher-quality user experience starts with education, ensuring everyone in the industry understands the landscape, the processes and roles of both buyers and sellers involved in delivering video advertising and content to the consumer.  As the old saying goes: “If you want to understand someone’s point of view, try walking a mile in their shoes.” As it turns out, going for that walk is a lot easier with a map in hand.

Overview of the IAB Guide to Digital Video Advertising

Full website: IAB Guide to Digital Video Advertising


Source: IAB Digital Video Guide: a compendium of all things video (for novices and ninjas alike)

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RetailMeNot Shifts Its Linear TV Spend To Digital Video | AdExchanger

RetailMeNot Shifts Its Linear TV Spend To Digital Video

After years of investing in brand-building tactics on TV, RetailMeNot, which was acquired for $630 million by payment processor Harland Clarke and went private in April, is moving its working media budget into digital video.

That’s not to say RetailMeNot is entirely abandoning TV, since the broadcast medium drives brand lift during periods when there are more companies competing for share of voice. (For instance, it might make sense to reinvest in an integrated approach including digital, TV and radio, as RetailMeNot did during last holiday season.)

But for now, the shopping deal aggregator is doubling down on digital as it seeks to reach two key demographics in the build-up to back-to-school shopping. First are millennial moms who use their phones to search, and the second are slightly older moms or “household enthusiasts” who use Facebook.

“We’ve put all our eggs in one basket with a heavy focus on digital video in particular,” said Marissa Tarleton, the CMO of RetailMeNot.

RetailMeNot is dedicating about 96% of its working media budget to digital and mobile activations, with the remaining 4% going to channels such as email, according to Tarleton.

RetailMeNot’s digital video strategy intends to engage its two core segments with a series of videos featuring model and actress Brooklyn Decker and the hashtag #DealBrag encouraging consumers to share their shopping deals via social.

“When you have a target that’s that discrete, the digital platform is so much more effective and efficient for you,” Tarleton said.  “Video not only serves as a performance media vehicle for you, but a brand-building medium.”

Although RetailMeNot declined to share specifics, it says its video ad spend is up 400% YoY over Q3 of last year.  In recent tests, the brand has seen video generate three times the number of site visits than static display or banner ads, both on in-feed social video and paid 15- and 30-second video spots on the open web.

And since launching its Facebook Live presence in October, it’s also reached 2.8 million live viewers.

To determine the success of its video activations, RetailMeNot tends to measure standard KPIs like views, but also considers their “shareability” in social, as well as conversions based on the number of site and app visits it drives via videos with a call to action.

“We’ve found the need to get a lot more creative [with messaging] to ensure we’re not just hitting reach, but proper frequency, not to use outdated media terms,” Tarleton said. “And digital video will be a huge part of that strategy.”

Like Gilt Groupe and Groupon, which both tried to evolve beyond flash sales and deep discounting to emphasize discovery, RetailMeNot has attempted to shift from just generating traffic and leads for merchant partners to “something more omnichannel,” as Tarleton put it.

RetailMeNot’s ambitious goal is to link digital exposures to in-store purchases, which gives the company’s services more value higher up in the funnel.

With that shift, it hopes to not only drive lower-funnel discounts and promotional offers, but also aid merchants in brand-building through video content and an expansion into new categories beyond coupons.

“With our app, we started to solve a problem most retailers have, which is not just capturing online traffic, but capturing the mobile user and driving them in-store,” she said. “I think retailers are thinking more strategically about personalization and location in mobile.”

Source: RetailMeNot Shifts Its Linear TV Spend To Digital Video | AdExchanger

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Apple adds ad tracker blocker to desktop Safari

There’s arguably a pretty big distinction between Apple dynamically shuttering the ability of websites that users of its browser aren’t actively using to deploy cross-site trackers which silently harvest those same consumers’ browsing habits in the background — a practice web users have long voiced loud discomfort about (i.e. when people complain about random ads stalking them around the internet), versus advertising company Google’s recent intent to add “quality filters” to its Chrome browser and actively block ads that do not meet its own quality bar, thereby controlling the marketing content Chrome users are able to see.

No one likes being stalked around the internet by ads for something they once looked at or have previously bought. And Apple has noticed this — so it’s adding an ad tracker blocker for its Safari web browser as part of a series of updates of its desktop OS.

Apple’s SVP of software engineering, Craig Federighi, unveiled the incoming Safari feature — which it’s calling “intelligent tracking prevention” — onstage at its developer conference, WWDC, drawing applause and a handful of appreciative “woos” from the crowd.

The feature will use machine learning technology to power tracker blocking in a bid to outwit the digital stalkers, according to Federighi.

“Safari uses machine learning to identify trackers, segregate the cross-site scripting data, put it away so now your privacy — your browsing history — is your own,” he explained.

“It’s not about blocking ads, the web behaves as it always did, but your privacy is protected,” he added.

There are plenty of questions here — such as how effective the tech will prove versus ad industry ingenuity; whether it will be enabled by default; and how much configuration consumers will be offered. Not to mention whether Apple will be extending the blocker to the mobile version of Safari. But it’s a positive step for privacy.

The explosive proliferation of online trackers in recent years — which not only intrude on web users’ privacy but can add serious lag to page load times too — has led to the rise of browser extensions for tracker blocking.

One of these standalones, Ghostery, was recently acquired by a pro-privacy browser called Cliqz, for example.

Apple has clearly spotted what it feels is growing appetite for web users to have more control over their browsing privacy.

Update: A little more detail on how the tracker blocker will function can be found on Apple’s Webkit blog, where it notes that it’s building on long-standing Webkit features aimed at reducing tracking (such as default blocking third-party cookies) with the new machine learning-powered tracker blocker, and that in its testing process it found popular websites with more than 70 cross-site tracking/third-party cookie trackers — “all silently collecting data on users.”

“Intelligent Tracking Prevention [ITP] is a new WebKit feature that reduces cross-site tracking by further limiting cookies and other website data,” writes Apple’s John Wilander in the blog. “Intelligent Tracking Prevention collects statistics on resource loads as well as user interactions such as taps, clicks, and text entries. The statistics are put into buckets per top privately-controlled domain or TLD+1.”

Apple then applies a machine learning model to classify which top privately controlled domains have the ability to track the user cross-site, based on the collected statistics. It notes that all data collection and classification happens on-device.

The ITP system analyzes the frequency of a user’s interaction with the websites they visit, automatically purging a site’s cookies entirely after 30 days if the person does not visit the site and ensuring its cookies cannot add new data so long as they don’t use the site.

However, if they do visit again, the tracker blocker temporarily adjusts how it responds — by, for example, allowing cookies in a third-party context for a one-day window before shutting that off if the person does not visit the site after 24 hours. In this scenario the cookies are partitioned, which means users can stay logged in to sites they only visit occasionally but those sites’ cookies are restricted for cross-site tracking purposes.

“This means users only have long-term persistent cookies and website data from the sites they actually interact with and tracking data is removed proactively as they browse the web,” adds Wilander.

Source: Apple adds ad tracker blocker to desktop Safari

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P&G’s Marc Pritchard: Clout Finally Speaking Some Sense


Let Triton help fortify your henhouses, by eliminating high probability media and maximizing effective partnerships. 
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Zenith: Mobile Growth Will Cause Desktop Ad Spend To Decline Faster Than Print

Zenith: Mobile Growth Will Cause Desktop Ad Spend To Decline Faster Than Print

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Facebook’s David Jakubowski: Audience Network ‘Basically Fraud-Free’ (For Now)

Facebook’s head of ad tech, David Jakubowski, will participate in a panel discussion on sell-side impressions at the May 24 CLEAN ADS I/O conference in New York.

As Facebook expands its Audience Network, it faces a number of challenges.

Keeping out fraud. Achieving high viewability. Ensuring off-site placements still drive performance.

By directly integrating with publishers versus buying inventory through the open exchange, Facebook has given itself back some measure of control.

But it operates a $1 billion business that takes place off its owned-and-operated sites and in environments where it wields less control. And it added video advertising to Audience Network on Monday, an area known for high levels of fraud.

Ensuring Facebook Audience Network meets the same standards as its news feed is one of the jobs of David Jakubowski, Facebook’s ad tech head who oversees Atlas, LiveRail and Audience Network.

AdExchanger talked to Jakubowski about how Facebook is monitoring its publisher relationships, including on Audience Network.

AdExchanger: Atlas played a part in detecting fraud on LiveRail, right?

JAKUBOWSKI: We used our measurement tools, and Atlas is a measurement platform. LiveRail is one exchange. But there are lots of exchanges where we did our testing in programmatic buying. What we found is that very little of the inventory out there has any value at all.

On the low side, you have people saying it’s 17% to 20% bots. On the high side, 30%. That’s known bot fraud. And you have all this gray stuff in the middle, where there are techniques like ad stacking or changing the ads in tabs on top of the browser. We are able to clearly identify who the real people are, on the white end of the spectrum.

So Facebook killed its buying platform because there’s no point of having a buying tool if you can’t buy quality inventory on it?

 That is the reason. It’s not that we didn’t want to do buying. But the open inventory in the ecosystem has very little value. We didn’t want to build a product and sell it to marketers knowing that there was no value on it. We have these unique measurement tools to determine those things. We couldn’t in good conscience move that forward. Now, because we know about it, we feel like we have a responsibility to tell marketers what to do next.

So where should marketers buy if not on the open exchange?

 What I would say to them is make sure you are accurately measuring real people and if they saw an ad. Start there, and here is the crazy concept: Did they buy something? Did they do something that has actual value? One-third of marketers don’t measure squat. Start there.

Now, evaluate each of the places that you buy. Our research suggests that the people who are plugging into the publishers directly are having the higher-quality audiences first. And that makes sense. If you’re a publisher, you’re going to send the things to the exchange that you don’t want to sell to anything else. And that’s why we shifted the strategy on Audience Network as well. It’s curated, publisher-direct only.

What else are you doing to keep Audience Network clean?

The ads go to the white-hat end of the spectrum. Audience Network runs exclusively to the known people side. We started in-app because it is easier to control viewability and it’s a better, safer environment. We’ve now taken those learnings and expanded to mobile web, and on Monday expanded our video offerings. We know we have a base where we can identify those audiences when they are viewable. And we are curating it by going publisher-direct.

Facebook kicked out many of its LiveRail partners because of fraud issues. Why be so public about this?

We’ve been very transparent about how low-quality the inventory is, and it’s because we look at it through a value-based lens. We’ve also been public about the pieces of the business we aren’t going to continue to support because of it. And we shut down a lot of inventory. We pulled back on our buying initiative that was designed for open exchange buying. The biggest marketers in the world don’t want low-quality inventory. The minute you shift to value, the things that are white and black become much easier to see.

Google has acquired companies like Spider.IO and employs thousands of people all to root out fraud and police its network. Will you have to deploy resources like that for Audience Network?

The answer is no. But it raises an interesting question, which is why is our bar higher than others? What aren’t they seeing that we are, when we are not willing to put our name on certain pieces of inventory? And how does a marketer decide how much low-quality inventory they are willing to tolerate? Because if you are buying in those open exchanges, and you are price optimizing and not value optimizing, you are by definition playing in some garbage inventory. If you move to measurement goals like sales, you are more likely to see where the high-quality inventory sits.

I’ve spoken to one buyer that didn’t use Audience Network because it didn’t perform. Another said it used to have performance issues but that’s no longer the case. But that’s anecdotal. What do you see as the gap in value between the news feed and Audience Network, and what does fraud and viewability have to do with it?

The fraud problem with Audience Network is solved for the time being. It’s basically fraud-free. The pricing mechanics are such that Audience Network is benchmarked against the feed, and it shouldn’t deviate too far from performance in-feed. We have a thing called the advertiser outcome score, which was not available at the Audience Network launch, but we added because of this issue. The system calibrates according to whatever you give it – in-app conversions, for example – and predicts the value that an advertiser is going to get from going off Facebook. It then compares it to what you would be getting on feed, and adjusts the price to reflect higher or lower value in news feed. 

How many publishers have you had to kick out of Audience Network? 

We have a self-service tool to apply and a human-curated team that goes through and approves them. It starts upfront. From there, the tech takes every single ad request and looks at it and says, “Is this a quality user?” If it’s not or we don’t know, we send it back to the publisher.

This sounds like a pre-bid solution.

That’s a term for the open programmatic exchange world. We are plugging in our SDK directly to that publisher so we don’t have to do any of those gimmicky, complicated things. We simply return their request to their inventory management system.

So if there is a publisher with lots of bad inventory, they just get 10% fill rates?

At that rate, you’d get a phone call. If 90% of what you are sending us is crap, either something is mechanically wrong or something is wrong with you as a publisher.



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Marketers Growing In-House Media Buying Capabilities Amid Transparency Concerns

More marketers are growing their in-house ad-buying capabilities as a result of heightened concern around fraud and transparency, according to the latest survey from the Association of National Advertisers and Forrester.

The survey was conducted in February 2016 and included responses from 128 ANA members.

Of the respondents, 70% cited higher bot fraud in programmatic buys as a concern, and 64% said a lack of transparency in the costs associated with the programmatic supply chain posed a challenge, according to the findings.

Also, some respondents cited a lack of inventory and data transparency, as well as a dearth of information about whether an agency reaps financial gains from the media seller by using the client’s funds.

“While programmatic buying indeed offers benefits, it suffers from a complex and non-transparent supply chain,” said Bob Liodice, president-CEO of the ANA. “And that is wasteful. The industry — and marketers in particular — would greatly benefit from a rethink of the entire digital supply chain.”

That concern is likely associated with a growing number of marketers buying media programmatically. The ANA found that 79% of total respondents have made programmatic buys in the past year. That’s a 35% boost compared to the last survey the ANA conducted in 2014.

At the same time, 31% of respondents said they’ve expanded their in-house capabilities to manage and oversee programmatic ad buying. They’ve also taken a number of steps to address their concerns: 62% of respondents said they’re requesting detailed campaign guidelines and reporting from their agencies; 51% said they’re aggressively updating so-called “black lists,” which are lists of websites they avoid when planning buys, often due to high levels of fraud; 42% said they’re purchasing inventory through media owners’ private marketplaces; and 40% are adding language in insertion orders to increase transparency.

The survey, being presented at the ANA’s Media Leadership Conference in Hollywood, Fla., comes a year after the advertiser trade organization intensified its focus on the topic of media transparency. Interest was sparked by former media agency boss Jon Mandel, who at last year’s ANA Leadership Conference said media agency rebates and kickbacks, long thought to be something that happened overseas, are actually more widespread.

Since then, the ANA has hired two firms — K2 and Ebiquity — to investigate the issue.



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Advertising Isn’t Dead, But Market Is Changing

All advertising isn’t dead. Just bad advertising.

That was the conclusion from Brad Jakeman, president of PepsiCo’s global beverage group, speaking at The Wall Street Journal panel during the annual Cannes Lions advertising festival in the South of France.

“We are here celebrating 0.5% of the work that actually gets made. The other 99.5% of the work is generally crap. And when that happens, consumers don’t want to see it,” Mr. Jakeman said.

Cannes Lions began as a way for the creative ad community to honor the best ads but has more recently shifted into a weeklong rosé-fueled deal-making session. But this year’s gathering comes during a particularly precarious time in the ad industry. More consumers are using tools that block web ads. Marketers are worried about the transparency of how their dollars are spent by ad agencies. And new media pioneers are producing content on behalf of brands, encroaching on the turf of traditional agencies.

The WSJ panel, titled “Advertising is dead; Long live advertising,” also featured WPP PLC CEO Martin Sorrell, Vice Media LLC CEO Shane Smith and Facebook Inc. ’s vice president of Europe, the Middle East and Africa, Nicola Mendelsohn. It was moderated by The Wall Street Journal’s editor in chief, Gerard Baker.

One of the biggest topics at Cannes this week has been how to win consumers’ attention amid a swiftly changing technology landscape and backlash against a perceived overload of advertising.

Mr. Jakeman said that with the rise of digital advertising and the 30-second TV ad feeling more like a relic of a bygone era, brands feel compelled to churn out hundreds of pieces of work. But that is reducing the quality of the marketing and creating a “digital landfill” of “crap content that gets produced quickly and cheaply and doesn’t connect to the brand’s narrative,” he argued.

Mr. Smith’s Vice Media thinks it has the solution. The company has been the poster child of “branded content,” catapulting Vice to an almost $4.5 billion valuation. Vice works with marketers to create custom videos that feel like regular editorial fare, and Mr. Smith said that viewers don’t mind watching sponsored content so long as it is actually compelling.

“The ubiquitous 30-second spot doesn’t work,” he said. If Vice were to come up with a movie about climbing a mountain, it would approach North Face for a branded deal, Mr. Smith said.

Facebook’s Ms. Mendelsohn said consumers respond to advertising that is “targeted” for them, and that the problem is too many ads are irrelevant to the consumers who see them. While Facebook collects a vast amount of consumer data to make its targeting capabilities more robust, “privacy is the No. 1 thing that we think about,” she said.

Mr. Sorrell, who runs the world’s largest ad holding company, took the opportunity to defend traditional media. He said that videos on Facebook, where a “view” is counted after 3 seconds and users mostly watch with the sound off, isn’t equivalent to a TV ad.

“Traditional media, linear TV, [and] newspapers in their old form are more effective from an engagement point of view,” Mr. Sorrell said.

Still, Mr. Sorrell said that 75% of his company “is stuff that Don Draper wouldn’t recognize,” referring to the fictional ad executive from the 1960s-based television show “Mad Men.” Out of the $73 billion that WPP spent for clients last year, about $4 billion went to Google and $1 billion to Facebook, Mr. Sorrell said. This year, WPP will spend about $5 billion to $5.5 billion with Google and $1.7 billion with Facebook.

“Facebook on its current trajectory will be our second-biggest after Google probably next year,” Mr. Sorrell said.

Meanwhile, the dark cloud of “rebates” has hung over sunny Cannes this week. Earlier this month, the Association of National Advertisers released a report detailing pervasive transparency issues across the industry, particularly a practice where media companies return rebates to advertising agencies if they spend a certain amount of client dollars. The clients, in many cases, aren’t aware that their agencies are being incentivized, the report claimed.

“We have to be aware of where the financial transactions are taking place,” Mr. Jakeman said. The advertising industry until now has had an unspoken policy of “don’t ask, don’t tell,” he said.

The panelists also expressed concerns about measurement in the media business. Mr. Jakeman said “billion-dollar decisions” are being made upon things like outmoded surveys, and Mr. Sorrell said the digital world needs to produce agreed-upon metrics made by an independent third party. He highlighted digital measurement specialist comScore, in which WPP has a 16% stake.

“We invested in comScore because we think Nielsen is not a perfect system…and clients believe this, media owners believe this, and agencies believe this,” Mr. Sorrell said, ribbing the company whose industry-standard measurement has long set the currency for ad deals.

As for the future, Mr. Smith predicted a “culling” among media outlets, as brands figure out where to spend their money and media companies scramble for those dollars.

“There’s going to be a consolidation in media,” Mr. Smith said. “Only the strong survive.”



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