Redefining a market

Do consumers really see all video, online and offline, as one as we say in the industry? I suspect not. On the contrary, I think they draw a clear distinction - For e.g., " I don't watch TV anymore, I have Netflix!" and so on...

However,the convergence from the business point of view is very clear. In a nutshell, TV is moving towards the data-driven targeting and automation aspects of digital and digital video is trying to be, well, TV-like on several things from content type to positioning in the advertisers' / ad buyers' mind.

Trying to be 'TV-Like' seems to be the more dominant pattern of the two right now.

Consider some of the recent news from the US : Google's OTT play on Cable & Satellite TV with You Tube TV (and thereby on to the Addressable TV space through distributor ad slots) and re-entry into Programmatic TV for linear inventory via DBM; Plans from Facebook, Twitter,Snap, Amazon et al to get into TV-type shows and the focus on premium content in general ; the related conversation about the living room TV set as a screen for digital video; the very existence of something like the NewFronts that, unlike the TV Upfronts ,is a marketing rather than a transactional exercise. Etc.

Why should this be when the market is clearly going in favour of digital ? For example, digital ad spend is expected to equal and, according to some sources, even exceed TV this year in the US.

And therein lies the flaw (in this video-value context ) in comparing those two.

Unlike TV, 'digital' isn't one entity. Specifically, Search is a separate format for a separate objective and a different market that exists pretty much independently.It has very little significant influence on most (read non-Google) of the digital market. Stripping it out reflects the real battleground on which all of those players find themselves, i.e. the market is smaller and TV's share larger. (Ref. chart below)

Arguably there are only two ad markets : branding and search/performance. TV dominates the first , Google the second. Media and channels may and do have elements of both - e.g. Social - but the fundamental drivers remain those two. This is a redefining of the market that the players themselves , either consciously or otherwise, have already worked out but something that the rest of us tend to miss out on from the headlines.

Now add to the above the TV subscription market and you have a big value bucket to draw from (as the likes of You Tube TV, Sling, Hulu, Netflix and the like are already) - but that is a separate story on which more later.

Thanks for reading. Cheers

" ... Search, Banner, Video, 'MOBILE',.." - Er, Why ?

The latest IAB's US digital ad revenue report for 2016 has just been released. Although US-specific,it good bellwether stuff. Key takeouts (not many surprises albeit) :

1. Total digital ad = US$ 72.5 Bn., FY15 +22 %, 5Yr CAGR + 16 % p.a. 2. Growth driven by video FY + 53% overall + 146% on mobile, + 15% desktop, although overall share of total is low at 12% 3. Search @ 48% share, moving to Mobile (FY + 91% vs -13% on desktop) 4. Mobile now leads at 50.52 % of total, F15 + 77 %, 5yC + 87 % p.a. 5. Desktop fell FY -8 %, | 5yC +4 % p.a., video the only growth format 6. Top 10 players stable at 73% share (Ten year : low = 69%, high = 75%) 7. Sectoral contributions stable, Led by Retail (21%), Finance (13%), Auto (13%), Telecom (9%) and Travel (8%), No change in CPGs at 6% of total

You can read and download the report here.

Oh, and why do we overlap format and channel and say " Search, Display,Video, Mobile, Social,.." ? Context-specific is easy to understand - for e.g., to parse out Mobile-only buys, etc - and IMHO is how it should be too ; but as generic classification ? I haven't figured it out yet. Any thoughts ?

Thanks for reading. Cheers :)

Rock.Hard place.Music industry.

My friend’s little home studio where I recently recorded some music of my own. 
What a time to be alive ! 

The much embattled music industry complains about You Tube not paying them a fair share of the ad revenue that it makes from music videos. (Read here). As a lifelong music fanatic and a big You Tube lover - among other things, You Tube has put several lifetimes worth of music within easy access, after all ! - this puts me in a quandary. It's a tough one.

On the one hand, according to industry body the IFPI, the revenue per user going to the music industry from You Tube and other free services is a staggering 20-30x lower than from paid streaming services ($0.6 vs $18 in the chart below). On the other, You Tube et al deliver 5x the audience. Wouldn't the biggest distributor hold and exercise similar bargaining power anywhere ? And from the POV of music itself, You Tube are one of those at the frontlines of democratizing and leveling the field for whoever wants to give it a shot - an often unacknowledged cultural-good role that it plays. Could that be a worthwhile 'externality' (in economics-speak) ?

Commercially, one way of looking at it is to ask the opportunity cost of not being on You Tube. Who can tell for sure but one suspects it would be significant - going by what we see all around us across music or video or gaming , surely most of those being monetized by YT would not otherwise opt for a paid service ?!

All of which is not to say that artistes and/or creators should not get paid their due. On the contrary ! Certainly the reported 30x 'Value Gap' (read and download the IFPI Global Music Report 2017 here) seems excessive and should ideally be reduced. The point,though is that it's, well, complicated. The ground under 'due' itself has shifted dramatically thanks (or no thanks, if you prefer) to the massive tech-disruption that this particular market has been confronted with. 

There are just no easy answers.

It's heartening to read that the music industry has turned a bit of a corner recently and reversed years of decline to post a + 6% revenue growth driven by streaming (+60%). One hopes this continues and that all parties come together to find a mutually beneficial solution. Like most human endeavors, music (and art in general) relies on commerce to thrive ; but like only those few special endeavors, I believe it goes beyond commerce !

I for one will be watching this space. Or 'listening' to it ! :) Thanks for reading. Cheers !

Removing the Measurement Cap !

Measurement hasn't perhaps got the attention across the wider marketing ecosystem that it deserves. While the challenges of digital measurement - Person vs Cookie, Third Party vs Walled Garden, Cross-device/platform measurement and attribution, etc.- are out there in the conversation , it tends to be mostly among specialists.

The cost from the lack of measurability should be assessed more rigorously and appreciated for what it is - a cost. And this is where a ground-level micro perspective may play a part.

For example, in the simple - though not simplistic! - case of skippable online video (OLV) advertising when average viewing frequency per cookie is known , the duplication rate makes a significant difference to the actual 'person'-reach and therefore frequency and cost.

Imagine a hypothetical OLV campaign of 500,000 paid views with a specific creative copy with an average VTR of 20% targeted at a demographic base of 1 million individuals with an average cookie view frequency of 1.5. As the chart at the bottom shows, depending on what the duplication is in reality, reach can be anything from 33% all the way to 5% and below. Cost per reach obviously increases accordingly.

But it goes beyond just  cost per reach.

Assume that the actual 'person'-reach is close to unique cookie viewers, i.e. an actual 'person'-frequency of around 1.5-2.0 ish (meaning the user wouldn't watch the same spot more than a couple of times or three - a reasonable enough assumption on anecdotal evidence in the absence of anything else ), what happens when another 500K views are bought , say, in the following month ?

Now, at 20% VTR, around 2.5 million impressions would have been already served first time around to generate those 500K views. These impressions would have covered most if not all of the addressable 1.0 M TA base already. So in terms of incremental audience in Month 2 , what are the chances that users opting to skip or drop out the previous month would choose to view the same spot now ? Or that those who viewed it last month would view it again this month ? Neither case is impossible or even improbable but ,well,it doesn't sound very probable either ! The math just does not stack up. Now this becomes not only a question of X% additional cost per reach but also the very tenability of the campaign, i.e. the possibility of a 100% additional cost

This example is obviously illustrative - and,yes, extreme ! In reality, a buyer would take audience size and related info into account before deciding on the buying volume. Equally important, copy would be refreshed regularly. And this is only a case of purely demographic-targeted buys which in reality is a relatively small number of buys.

(Measuring outcomes differently - say, through engagements, etc - doesn't affect this argument. Firstly, they are not mutually exclusive - one doesn't preclude the other. Second, this goes for those measures too, e.g., substitute 'click' for 'view' and the same Person vs Cookie discrepancy holds. Third, 'engagements',for example, tend to be low and stable in this format and , moreover, still a function of scale)

The point here though was to illustrate costs that may fall in the cracks of micro campaign management away from headlights and headlines.Should they - and numerous other more complex cases across channels and formats - be thought about, quantified and aggregated, it could provide the urgency and push which would expedite the move towards better measureability sooner.

Almost the entire illustration here is conjecture built on assumptions. Only the facts and figures could really tell. And for that to happen requires an understanding from the ground-up and cooperation among both marketers / buyers and platforms / sellers. Most questions are not easily answerable and require advanced measurement , including (especially ?) Third Party but some 'clues' could also be provided by platforms - for example, viewing distribution even if at cookie level. The buyer needs to think about that and ask , the seller needs to appreciate the market growing potential of such moves and provide ! The onus is on both because the benefits go to both.

As a post script : talking about frequency and such leads me to a sign off on Frequency Capping. It's a no brainer that Frequency Capping is a huge boon in today's digital era.

But how meaningful is it in the context of served impressions for skippable videoads with completed (or at least paid) views as KPI ? In the above hypothetical example of 20% VTR and an average View frequency of 1.5-2.0, how meaningful is a Frequency Cap of , say, 5 (or 4 or 6 or 10) here ?

When it is highly unlikely that a person will watch your ad three or four times , the cap becomes redundant at best. And at worst, you are limiting the chances of future exposures by not serving it again.

Also,as an aside, when a viewer has actively opted to watch an ad multiple times, is that still a waste ? One to ponder

Two Elephants in the Ad Measurement Room

The first elephant is the difference between digital consumption and digital advertisingconsumption. All the usual issues of viewability, bot fraud and, well, plain unnoticeabilty - and I'm looking squarely at you here, little banner ads ! - is why the percentage of ad exposures will remain relatively stable even as online consumption grows exponentially.(Though,obviously, the absolutes of ad exposures will grow with it)

The good thing with online video advertising where the difference is clearly quantified as the difference between ad impressions and ad views is that the elephant is easily sighted, understood and can be responded to.

The second elephant in the room is the less obvious one : TV ad avoidance.

There is simply no way of knowing whether people really watched your ads on TV. All that commercial ad break ratings tell us for certain - and this is keeping aside markets such as ours in MENA where these are not even available in the first place ! - is that people didn't switch off the TV and didn't zap channels.

Whether they walked out of the room or switched their mind off or buried their noses in their phones or , indeed, watched the TV commercials with love and adoration during those three or five or ten long minutes we do not know. And have no way of knowing.

So in effect we are penalizing online video for being transparent while not holding up TV to the same level of scrutiny and accountability. So TV ad exposures* all over the world are likely to be overstated simply because of a quantification gap (see figure)

* This post is only from the limited point of view of ad exposure. Engagement, impact, sales outcome et al are a different- though surely correlated !- matter.

While realistically speaking this gap can't be eliminated, can it be reduced ? Perhaps through syndicated sample survey-based research or,say, through more pervasive individual advertiser-level A/B experiments ? Hard to tell - but as viewer consumption boundaries blur and the market battles intensify, more attention will probably need to be paid to this TV elephant to size it up to some reasonable approximation.

(click to enlarge picture)

Data and the problem of plenty

"Won't be nothing, nothing you can measure anymore" - Leonard Cohen : The Future

As I listen in remembrance to one of the greatest pop poet-musicians of all time in the wake of his passing, I am also thinking of the problem of plenty in marketing data today. Namely : the more data there is the less data there is.

That paradox sounds (almost) Cohenesque but it's certainly a lot less than poetic for us practitioners out there !

Marketing data today has immense depth but very little breadth. There is a treasure trove of KPI metrics for each digital 'walled garden'* in your marketing mix but little or nothing by way of the same metrics aggregated for the entire digital mix (let alone the entire overall mix as a combination of online and offline)

(* I borrow the term in this context from an excellent piece by senior and very respected industry leader Gowthaman Ragothaman which you can read here)

Later if not sooner this is likely to place at least some constraint to business growth for these advertising dependent gardens - and which is why I am sure a solution will arrive sooner rather than later ! The recent announcement from Facebook (read here) about the launch of a 'Measurement Council' along with Third Party verification measures is a step in that direction. More will no doubt follow from more players. After all, it is some very important value delivered to their customers (viz. advertisers and agencies) - and as we all know to superior customer value goes the spoils !

Even leaving the whole third party thing to one side , improvement in existing reporting within each single platform is where it can and needs to begin. An obvious if simple example is unduplicated individual person-level reach. Sure, it is complex but something that can be solved given the right commitment and resources. Far more complex problems have been solved after all ! The question is when it will be deemed a necessity rather than an also-good-to-have. I suspect it will be sooner rather than later. One step at a time and the rest follows. This diagram illustrates very roughly how that can unfold. We await that first step !

L'affaire Facebook and the 1-0 Bunnies

The weekend was abuzz with the story of how the reported average time spent on Facebook videos had been inflated for the last two years. The error came from excluding views of less than three seconds from average time spent calculations thereby inflating the average.

Important as the news is, especially to content publishers, it's less so to practitioners from the marketer and agency side. On day to day operations built mostly on raw campaign data on views, pricing,etc, the metric is almost inconsequential. But even on the larger plane of,say, budget allocations on which it has the most bearing, this should matter less than may be presumed.

First, such a metric is only one among other factors that decides allocations. Second , the clear line between platform/channel consumption versus advertising consumption is as evident from daily-life observation as it is from analytics data. Something like a share of time spent doesn't necessarily equate to share of budget. Campaign analytics data provide a good enough input into what that share should be.

So to me the misreporting itself (inadvertent or otherwise) is secondary. Facebook with its 1.7 bn. monthly active user base - and psychographics revealed (almost literally !) for all the world to see is - is obviously one of the largest and richest ever one-stop Target shop in mass marketing history. Any improvement on channel or product - video, in this case- is at worst a tweak or two away. Where's the case against ?

The beef I take out from the story, instead, is the roles both of third party validation AND second party vigilance in using first party data.

Third party validation is the obvious one and doesn't need elaboration. The entire ecosystem , digital giants included, should only welcome something that'd grow the pie by removing doubt and uncertainty.

The Second Party stuff though ? Much overlooked. And very important !

This senior, very experienced and unabashedly old school data specialist who I have learned a lot from once used a phrase to describe a bunch of enthusiasts who were so impressed with a website's new metric that they not only didn't notice its obvious flaws but also immediately began advocating its use. Digital Bunnies, he called them.I thought that both funny and pretty much on the money.

As click-of-the-mouse analytics packages and the like proliferate  with their masses of first party data , it's tempting to leave everything to them. In fairness , when there's so much data placed out there so transparently (give or take !) that's reasonable enough.

Up to a point.

What still remains are the interpretation of those numbers in context - e.g. how big are those views ? How good is that VTR ? - and thinking about the questions which are outside the scope of the data - e.g., how likely is a claim based on it. That's where second party vigilance comes in with its evaluation of the numbers and assessment of the pros and the cons. And that's where we probably could do more.

The good old Think For Yourself is part of the toolkit too - even if the 'too much too fast' digital marketplace can overwhelm one into forgetting that !

That funny bunny could do with some stick !