Andrew Frank
Research VP
5 years at Gartner
30 years IT industry
Andrew Frank covers marketing and advertising technology trends as a research vice president with Gartner Research's media team. His research has focused on new opportunities in search engine marketing, viral marketing and social media, online video and consumer…Read Full Bio
by Andrew Frank | November 11, 2011 | Comments Off
Based on current trends, it’s common to figure that Google owns the future of performance advertising and Facebook owns the future of branding, with a little contention at the borderline. Now come two coincident announcements seeking a different future. Each alone might invite skepticism, but taken together portend something interesting.
The Yahoo-Microsoft-AOL announcement (press release, Yahoo! News coverage), in the words of Yahoo’s Ross Levinsohn, will deliver “a more efficient, effective and more effortless way to access true premium inventory.” Parsing this statement in the context of market trends is instructive: ad exchanges and real-time-bidding (RTB) are gaining traction and putting pressure on “premium” inventory, which is often used synonymously with advertising sold directly to buyers by publishers and portals rather than through a network or exchange. The prices for this “premium” inventory tend to be 10-20x what one might expect to pay on an ad exchange, such as Google’s AdX, which is a major pain point for this trio. So, by attempting to create a category of “premium” non-reserved RTB inventory, can the Yahoo-Microsoft-AOL alliance (YMAA) effectively shore up ad bid prices – and their collective fortunes – with a promise of quality and efficiency? Or, to put it another way, what would it take to move the needle on non-reserved pricing and get brands to consider it “premium?”
Cut to Adobe’s financial analyst meeting in NYC on 11/9. The company drew a great deal of attention to this event by announcing a restructuring that included layoffs and sunsetting of certain product lines, most notably Flash player for mobile devices. Most in the press naturally interpreted this as a victory for Apple, but my view is that, to the extent that Apple’s actions led Adobe to abandon its Flash browser plug-in strategy, they probably did the company a favor, and perhaps even undermined Apple’s own long-term positioning. The reason, in a word, is HTML5. As a consequence of giving up on the ubiquity of Flash in the post-PC browser world, Adobe has embraced HTML5 and will now apply its substantial development and market power to do all it can to accelerate its adoption as a universal multi-screen, platform-neutral standard. And it will allow developers versed in Adobe’s Flash Developer tools to continue to work in the environment they’ve mastered and export their creations directly to HTML5. That will be a huge relief to a great many creative developers in the digital marketing world. Moreover, it doesn’t appear that Adobe has a great deal of strong competition in the HTML5 tools category. And now that they are offering tools through Creative Cloud, they’re likely to become even more ubiquitous. So perhaps the plug-in was a costly crutch they no longer needed.
What does this have to do with YMAA? The answer lies in the connection Adobe is making between its Creative Cloud and its Marketing Cloud. Its digital marketing platform is focused on optimizing advertising – not just on the media side, but also creatively – through a combination of data services (Omniture, Demdex) and experience management (Day Software) – in particular, leveraging data from the creative suite to make marketing experiences adaptive and personal.
My favorite part of the Adobe FA meeting was David Nuescheler’s demo of how Adobe’s marketing cloud connects with its creative cloud to incorporate various types of data directly into the design of context-aware user experience. (David is Adobe’s VP of Enterprise Technology and the former CTO of Day Software – the demo is available here at 0:30:00 into the clip.) David demonstrated how marketers, using Adobe’s CQ5, could apply context information to vary user experience dynamically by demographic, social, and geographic factors, device characteristics and more, and simulate, test and measure the results. The demo showed clearly the complexity of managing and optimizing dynamic context-aware experiences on one’s own web site.
Another key point that was came up during the “fireside chat” section with high-tech investor Roger McNamee was that, with the rise of HTML5, it will become increasingly common and feasible for ads to function as apps, unleashing the rich capabilities of video, web sites, e-commerce and mobile apps within a display unit. This could at last unlock the long-predicted-but-still-unrealized Big Shift in ad spending toward digital media. As Brian Morrissey recently observed in a Digiday story, “What If Brands Never Love Web Banners?,” “it could be that it’s not that brands don’t love the Web, it’s that they don’t love the Web’s standard display advertising.”
With all this in mind, imagine if YMAA and friends could bring their data and inventory to Adobe’s Marketing Cloud in a secure way so that marketers could design and simulate context-aware ad/app experiences on participating third-party sites, using those sites’ own anonymous user data in context? Marketers could then use these experience designs to drive RTB bidding strategies for context-aware, personalized ads that really could deliver better results and support much higher prices based on value. Meanwhile, many of today’s challenges – lack of transparency, clutter, accountability, privacy (eliminating third party cookies), targeting limitations of mobile platforms, creative limitations of banner formats – might all be addressed with such an approach.
Then maybe non-reserved inventory might look and sell like “premium” after all, and the future may look a little richer for brands, portals and publishers.
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by Andrew Frank | October 6, 2011 | Comments Off
Science fiction has often treated the notion of machines developing a human-like understanding of the world as a precursor to Armageddon. Steve Jobs set humanity and its machines on a course toward a happier outcome. He humanized computing. In a way that directly challenged the popular notion that machines are by nature embodiments of rigid, martial values, he showed how computers are capable of playing defining roles in the worlds of art, music, and basic human creativity. He made their power not just accessible but intuitive to everyone. He made machines sensitive to human touch.
Among the things he said in the now-obligatory 2005 Stanford University commencement address was that you can only connect the dots looking backward. I’m certain this is true of Jobs’ impact on history. As much as he’s eulogized in the coming days and weeks, his real influence will only be understood when we look back on the changes that occurred during his lifetime, and the role he played in leading so much of what redefined the relationship between human and machine. The details are unimportant.
A few months ago I attended a seminar at the 4A’s that examined the emerging role called “creative developer” in marketing agencies. I was overcome with déjà vu and nostalgia – I had this discussion – albeit with fewer people – in the eighties, as a game developer, and again in the nineties, as an interactive designer, about how “coders” could also be “artists” – and how this combination was going to be really important once the world catches up with the vision of computing and media fully converged. I now realize that Steve Jobs was the father of creative developers, and everyone who ventures to pick up that mantle can trace their roots to him.
The technology world will want to claim Jobs’ legacy. Technology has always valued its visionaries, its Bells and Edisons (even if some of them, like Tesla, never got their due). But Jobs changed the media world even more than the technology world. He revolutionized music, film, games, even print with his inventions. He changed our culture. He made computers important to people, and vice versa.
The world’s in a new phase now. Big shoes are empty.
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by Andrew Frank | September 12, 2011 | 2 Comments
“Employers Say Jobs Plan Won’t Lead to Hiring” announces the NY Times and we all know why: businesses won’t start hiring until people start buying. We need a stimulus that stimulates demand. In the past, that’s usually meant spending on programs that put cash directly in consumers’ pockets in the form of tax rebates or stimulus grants. Given the current political spotlight on debt, however, this doesn’t seem to be in the cards.
Some might assume it’s impossible to do much to stimulate demand while unemployment is high and wages are stagnant. But consider the words of Federal Reserve Chairman Ben Bernanke: “Even taking into account the many financial pressures that they face, households seem exceptionally cautious.” Bernanke’s assessment is reportedly based on analysis of economic models that look at historical patterns, and that research is saying that lack of demand isn’t just a consequence of high unemployment, stagnant wages, or housing woes…there are also psychological factors holding back consumer spending, inhibiting demand, and trapping us in a downward spiral. Apparently, even the 5 percent of Americans with the highest incomes – which currently account for 37 percent of all consumer purchases according to Moody’s Analytics – are spending less than they could to rekindle growth, spooked by things like wild swings in the stock market and bellicose political dialog in the U.S. and Europe.
Fortunately, there’s a proven method of generating consumer demand by addressing psychological factors. I speak of advertising, which businesses have used for decades (centuries really) to persuade reluctant consumers to spend, even unwisely, on goods and services. Of course, like consumers, businesses don’t like to spend on discretionary items like advertising if they lack confidence in the results because of the economy. They need some stimulus to help convince them. Hence my proposal: a tax break on advertising – media buying to be specific. Make all media spending by businesses fully tax deductible for six months. This will allow business to increase advertising output without increasing budgets, generating jobs almost immediately in the media and related sectors. More importantly, it will persuade those consumers who could afford to spend more to do so – on cars, travel, real-estate, clothing, luxury goods – putting their sinking dollars to good use while bootstrapping the virtuous cycle of hiring and spending.
Consider the benefits. First, as a stimulus, it’s targeted directly at the demand problem, putting it into the hands of domestic private-sector professionals in the advertising business to solve. Second, it’s relatively cheap. Media spending in the U.S. was about $131 billion in 2010 according to Kantar Media, so foregoing tax receipts on six months’ worth would probably cost the government less than $50 billion, in contrast with the $447 billion the President has proposed to spend mainly on payroll tax cuts. Third, it would generate returns almost immediately, in contrast to programs such as infrastructure and education. And fourth, there are federally sanctioned measurement regimes in place, certified by the Congressionally authorized Media Ratings Council (MRC) which accredits independent methodologies that can be used to control fraud. (In fact, Nielsen just received MRC accreditation for its new Online Campaign Ratings for digital advertising campaigns which should also make advertisers more comfortable investing in online media while helping America build on its lead in digital innovation.)
I know what you’re thinking. The upcoming election year is the first presidential race since the Supreme Court overturned spending limitations and opened the floodgates on political advertising in its landmark Citizens United decision of 2010, so our media universe will already be saturated with as many ads as the public could possibly endure – most of them likely to reinforce themes contrary to economic optimism. That could be a problem. On the other hand, perhaps it will make us more receptive to positive messages from brands, which may seem like a breath of fresh air in contrast to the high-decibel debate that’s bringing us down and keeping us from shopping. In any case, even with the political advertising windfall, our media business could still use the help. How about it, Washington?
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by Andrew Frank | August 28, 2011 | 4 Comments
Earthquakes and hurricanes may damage lives and property, but they sure don’t hurt the broadcast news business. The serial crises of the summer of 2011 are generating ratings spikes among news channels, with the earthquake driving a 246% jump among Washington DC stations and the Weather Channel seeing a 288% lift from hurricane Irene.
Beyond the short-term, these events are also adding fuel to a long-standing debate about spectrum use. Seeking to head off what the telecom industry has predicted could be a catastrophic shortage of bandwidth for mobile broadband services facing skyrocketing demand, the FCC has asked Congress for the authority to reclaim up to 120MHz of spectrum currently licensed to television broadcasters. Broadcasters are concerned about this, to put it mildly, and have been lobbying intensely to protect broadcasters’ control over spectrum. One of the broadcast industry’s key initiatives in this regard is the Open Mobile Video Coalition which seeks to convince the FCC to mandate the inclusion of TV receiver chips (based on the ATSC-M/H mobile television standard) in all mobile phones sold in the U.S.
On August 25, the OMVC issued an open letter to the FCC citing the earthquake as evidence of “the crucial importance of Mobile Digital TV during emergencies:”
“Wireless networks simply are not now, and never will be, in a position to deliver the sort of ubiquitous, bandwidth intensive information during a time of crisis that broadcast television and Mobile DTV stations delivered on Tuesday. Merely allocating additional spectrum to wireless networks will not enable them to do so. Cellular economics do not allow for the massive buildout of network infrastructure that would be necessary to support the large call and data volume that invariably is triggered by mass events of this nature.”
This declaration echoes conclusions from an earlier study sponsored by the OMVC which said,
“…the cost of providing video broadcasts over the cell networks — even 3G and 4G networks — is prohibitive because the unicast nature of these networks was not designed to serve broadcast-sized audiences simultaneously …”
Did you spot the rub? It’s “unicast.” And here’s where the engineers run away with the argument. IP multicast is the internet’s general answer to more efficient live streaming, but applying it in mobile circumstances is problematic. For those interested, the difficulties are outlined in an Internet Research Task Force paper, but they boil down to problems with handovers between cells and related issues. Among the paper’s telling recommendations, however, is this:
“Integrate multicast listener support into unicast mobility management schemes and architectural entities to define a consistent mobility service architecture, providing equal support for unicast and multicast communication.”
In other words, merge broadcast capabilities into Mobile IPv6 so that service providers can operate and optimize a single integrated transmission channel.
The carriers, for their part, are generally unenthusiastic about putting ATSC DTV receiver chips in mobile devices: not only do they raise device costs (which are still largely subsidized by service providers) but they presumably encourage a mode of free usage that doesn’t boost ARPU or reduce churn. (Some have made the counterargument that such usage could relieve data network congestion and even provide a gateway to paid mobile video services like Verizon’s V-Cast by stimulating mobile video viewing in general.) Still, they also want that spectrum.
Consumer demand for mobile TV has been, shall we say, cool as evidenced by the failure of Qualcomm’s FLO TV service which sold its FCC spectrum licenses to AT&T and suspended service earlier this year. Although the broadcast lobby is strong, it’s probably not strong enough to win any public subsidy for mobile TV in the current economic climate. And the FCC’s visionary National Broadband Plan which includes plans for spectrum reallocation is currently as paralyzed and embroiled in partisan politics as most matters of public policy in the U.S. today, with House Minority Leader John Boehner describing it as “a government takeover of the Internet.”
So what can we conclude from all this? First, it’s going to take a long time for the FCC, Congress, and the competing factions to sort out the mandates for mobile broadcasting (IP-based or otherwise). Perhaps this is for the best as it will take some time for innovations like cognitive radio to make their way to marketplace, and massive changes in spectrum allocation are not to be taken lightly.
Second, until we can get this sorted out, I’m keeping my battery-powered AM/FM radio handy for the next emergency.
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by Andrew Frank | July 14, 2011 | Comments Off
AdAge reports that Canoe Ventures’ CEO, David Verklin, is leaving the company. Verklin, a charismatic ad industry veteran who ran Aegis Group’s Carat agency for a decade, has been the public face of the company almost since its inception, and his departure signals a likely change of direction for an organization that has struggled with a difficult charter.
For those unfamiliar with Canoe, it’s a start-up spun out of CableLabs in 2008 by the six largest U.S. cable operators with $150 million in funding and a mission to develop a national platform for next-generation advertising technology to be shared by its cable operator owners. This has proven to be a tall order for a number reasons – diverse (and often anemic) legacy technology, internal competition among owners, skepticism on the part of both agency buyers and content providers, privacy issues and general industry recalcitrance to name a few – but the biggest challenge in my view is that the cable TV industry has a bad case of the innovator’s dilemma, and Canoe has apparently positioned itself on the wrong side of the coming gulf of disruption.
You’ll recall that Clayton Christensen in 1997 described a pattern in which successful companies continue to invest in “sustaining technologies” that offer incremental improvements to their product lines – and steadily rising prices – until, often suddenly, an inferior, much lower cost disruptive technology would appear that was just good enough to take over the market and kill the superior high-priced incumbent. A key observation was that this would often happen not because management was blind, foolish, in denial or just didn’t get it. Instead, it happened because, in most corporations, especially public ones that must report quarterly earnings, it’s really sales bringing in revenue that calls the shots and it’s almost impossible for even the most prescient and powerful strategic leaders to kill a profitable product line based on a suspicion that it’s about to be disrupted. Until it’s too late.
Back to interactive advertising on cable TV. The cable industry clearly sees what’s coming: IP-based video delivery is bound eventually to disrupt the fixed multichannel tiered packages cable (and satellite and telcos) sell today, at which point a new interactive or addressable TV advertising edifice built on 10-year-old legacy set-top box technology and cable-specific standards will face instant obsolescence. But disruption of cable service packages is not really the cable operators’ biggest problem – it’s much more of a problem for cable networks and their media company owners accustomed to getting paid by the operators for channels that few people watch, because they’ve been bundled with the channels people do watch. This has been a bone of contention in the industry for a while, and at least a few major cable operators, who also happen to also operate the broadband ISP services poised to disrupt their TV business, might be perfectly happy to simply raise consumer broadband pricing for cable cutters and leave the acrimonious licensing negotiations to the likes of Apple, Hulu, and Netflix. Except for one thing: none of them wants to be a “dumb pipe.” Programming gives cable services differentiation, and keeps them from being a commoditized utility, competing with telcos on little more than the price of a fast connection. They need a way to differentiate.
Seen in this light, Canoe Ventures might yet be a source of competitive advantage for the industry. There’s a myriad of ways a service provider might offer more value to both consumers and advertisers across digital channels, once one gives up on legacy set-top hardware, embraces the Internet innovators, and looks toward the longer-term future. <Insert research plug here.>
Unfortunately, that’s not the way David Verklin seemed to see things, at least in some of his more memorable public pitches. I recall his address at a NewTeeVee conference in 2008 in which he emphatically declared,
“…don’t count out the traditional television business. […] Believe me, we get it. We’re not sitting idly by. We’re not Neanderthals and we’re not Luddites. We intend to turn the television set into a platform called ‘television.’ And we intend to give display advertising on the Internet, for one, a run for its money. Or maybe it’s a run for our money.”
Well, many heard these as fighting words. The problem wasn’t that TV wanted to compete for digital advertising revenue. To that, most say “bring it on.” The problem was that “the TV set” (as Verklin personified it) wanted to isolate its ecosystem from the Internet. And this wasn’t just talk – it was etched in a system of non-Internet standards that would compete with online video and other Internet standards for mindshare among advertisers and developers.
Verklin liked to emphasize the scale of Canoe’s vision, citing that Canoe’s owners represented 60 million American cable TV households. Of course, the global Internet doesn’t consider that a very big number. 750 million Facebook users, 1 billion monthly visitors to Google, those are big numbers. 100 million media tablets and 600 million smartphones are also big numbers. So big, in fact, that the cable industry has put some real wood behind its TV Everywhere efforts to make sure that its customers can use its services to access their paid-for programming on any connected device, anywhere (almost).
TV Everywhere is a sound response to the innovator’s dilemma: it builds a path beyond legacy infrastructure and gives the industry a great deal of flexibility to deal with over-the-top alternatives to conventional cable TV packages that will accommodate new devices and usage patterns. Unfortunately for Canoe 1.0, CableLabs standards for “advanced advertising,” designed to accommodate twenty-year-old disjointed headends and weak STB hardware, are unlikely to find much support on all these shiny new connected screens – even the ones that call themselves “connected TVs” – and will most likely wind up collateral damage. Canoe 2.0 should plan accordingly.
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by Andrew Frank | May 23, 2011 | Comments Off
The 4A’s inaugural CreateTech event on Friday was an eclectic look at the emerging “creative technologist” role, and the many ways technology is changing the ad agency business. An overarching theme was this: advertising is a relatively small part of what creative technologists do, and perhaps even a shrinking part of what many ad agencies do. As McKinney’s Group Creative Director, Glen Fellman, put it: “We don’t just make ads anymore, we make marketing platforms.”
Examples of non-advertising projects were abundant: McKinney showed an online RPG game designed to help people empathize with the homeless. Scott Roen of American Express showed how its OPEN platform fostered job creation by supporting small business. Gary Koelling of Best Buy talked about the significance of opening APIs. Kati London of Zynga (formerly Areacode) showed a variety of games with social and safety themes. At one point I asked Andy Hood, Executive Creative Development Director at AKQA who was describing the relationship among agency functions with creative technology in the middle, about the role of media planning, which appeared nowhere in the mix. His response was telling: he looked slightly perplexed and then said, “you mean, for advertising projects?” These were clearly not central to the business, and the related issue of close integration with the analytics department was still on the roadmap.
Andy Hood’s team structure presentation was also relevant in the light it shed on the relationship between “creative technology” (or “Creative Research & Development” – CRD – as AKQA calls it) and the traditional enterprise technology function, still known in some parts as “IT”. Creative technology at AKQA, as, I believe, at most ad agencies (pure-play digital shops notwithstanding), started in the creative department, and only more recently has begun interacting with the “technology” department.
I found a surprising number of IT people in the audience. I spoke with several of them – most were employed by large ad agency holding companies to support specific offices or account teams – and confirmed a theme I’ve been observing for a while: they are struggling with this transformation. Creative teams often look for ways “around” internal IT – and, yet, making “marketing platforms” often translates into unfunded mandates for IT. Issues of IP ownership and codebase continuity, maintenance, service levels, multiplatform QA, resource provisioning and so forth – areas usually more familiar to IT than creative – are difficult to fund as overhead in a fee-for-services advertising model, which is still how things still tend to get structured, even at digital agencies building marketing platforms.
This disconnect is reflected in background economic trends as well. Most analysts agree that, although marketing budgets are on a long-term upward trend, advertising’s share of the marketing budget is shrinking – although it’s still large – while direct marketing, PR, and sales promotion’s shares are growing. Digital, to the extent it’s considered a separate budget category, is certainly growing the fastest – and, on the agency side, where it is broken out, digital is now a major contributor to revenue, even at traditional agencies (at CreateTech Trevor O’Brien, Creative Technology Director at McKinney, noted that digital now accounts for 40% of that creative agency’s revenue). But where is this digital spending coming from? The lines are blurry.
In a few years I believe it will be a rare ad campaign that doesn’t include some sort of direct response mechanism (mostly enabled by mobile devices) as well as a social element to attempt to generate earned-media buzz, virality, and support for low-friction embedded transactions, ultimately connecting through metrics and data to CRM systems and dashboards for enterprise marketers. Agencies that can provide these “marketing platforms-as-a-service” will see increasing demand and funding from outside traditional advertising budgets, but will need to solve the problem of how to integrate IT into the “creative technology” culture as a full partner. And that will not be easy.
Of course, these issues aren’t new. But the stakes are rising quickly. At one point at CreateTech, Fellman wryly noted one benefit of putting [IT] technologists on the creative team: “you can bill them to clients on a fee basis.” Unfortunately, that’s no way to fund a marketing platform.
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by Andrew Frank | May 13, 2011 | 1 Comment
The topic of Google’s brand value emerged recently when Millward Brown’s Brandz, which publishes an annual ranking of the “top 100″ global brands by value (according to their formulation), announced that Apple had surpassed Google to claim the #1 spot, ending the search giant’s four-year reign as the world’s most valuable brand (sample coverage here and here). According to the report, Apple’s brand is now worth $153 billion to Google’s $111 billion.
The report also noted that a new brand had entered the top 100: Facebook, which debuted at the 35th spot with a brand value of $19.1 billion. Perhaps more significant, the reported year-over-year growth rate of Facebook’s brand value was #1, at 246%. Compare with Apple, up 84%, and Google, down 2%.
Of course, the significance of these ratings is debatable, but one thing is clear: Google’s competitors have put its brand in the cross-hairs, especially Facebook, which acknowledges hiring PR firm Burson-Marsteller to run a negative PR campaign against Google by persuading top news outlets and bloggers to stir up controversy against Google’s privacy practices by highlighting a Gmail feature called Social Circle, which allows Gmail users to make social connections across other Google products. (USA Today broke the story here, without naming Facebook, and CNet filled in some details.)
Google, for its part, has hardly been neglecting its brand. In fact, it recently launched what advertising folks would call a “pure brand” campaign – a TV ad that aligns Google with a highly charged emotional cause: the It Gets Better project, a gay social support movement started by Dan Savage. The Google ad, which features the tagline, “the web is what you make of it,” positions Chrome as the platform for social change. Watch it here.
This campaign initiative strikes me as significant on many levels. First, we should acknowledge that it shows a suprising degree of courage on Google’s part to choose such an emotional topic to associate with its brand. Then, it’s interesting that the spotlight is on Chrome rather than Google itself. Other Google products and brands (notably YouTube) play supporting roles, but Chrome is out front. It’s also interesting that Chrome is being symbolically associated with the idealism of the web itself as an open place where people are empowered to start movements – and watch them spread across the globe. It’s a youth-oriented message of liberation, timed to coincide with Google’s announcement of the Chromebook, coming in June.
The promotion of Chrome as an emotional centerpiece of the Google brand must be considered a risky strategy. Not only does it depart from the idea that Google itself should be the main subject of any “pure branding” efforts, but the status of Chrome (and Chrome OS in particular) within Google is conflicted by Google’s association with Android, as was evident at Google I/O. Here’s a take on this, via Moconews: “Google’s Mixed Message On The Future of Mobile Computing:”
> “In short, the entire mobile app versus mobile Web debate is playing out within one company.”
Good branding is, first and foremost, about creating clarity. This is hard to do when internal strategy is murky. Given the aggressiveness of Google’s competitors, brand clarity is even more essential, and more important to insulate from product issues.
As industry analysts focus on Google’s technology and business moves, we must remember that Google above all requires trust to succeed, and its brand is its most valuable and vulnerable asset. Both Apple and Facebook are, in their own ways, positioned as alternatives to the open web. The open web itself has branding issues related to privacy controversies, child safety, and so forth. Will Google bet its brand on the web? Should it?
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by Andrew Frank | November 8, 2010 | 1 Comment
Given the world’s pre-occupation with America’s midterm election results and QE2 financial news last week, Nielsen picked a relatively good day to reveal that it had been systematically underreporting Internet traffic due to a technical error involving long URLs. As a result, some who were impacted may have missed it.
As reported by AdAge’s Michael Learmonth:
"What it does is it erodes confidence in one of the primary tools for planning," said Sherrill Mane, senior VP of products for the Interactive Advertising Bureau. "Those who are making plans and allocating dollars were using a fundamentally reduced number of users of audience to do their plans. That does ultimately translate to lost money for publishers and websites."
Nielsen says methodology flaws appear to account for a 22% drop in reported time-spent year-over-year online. This revelation has implications beyond the tarnish it puts on Nielsen’s reputation.
First, in the long-standing debate between advocates of panel-based versus census-based (i.e., derived from server data) metrics, panel advocates have now been dealt a serious setback. Beyond long URLs (which are typical of the methods used by social media sites like Facebook to encode session data), other issues have come to light, such as excluding users of Google’s Chrome browser due to its use of long URLs for secure purchases and crashing “people meter” software (which panelists install on their computers which monitors Internet use). These are now being piled on to standard criticisms of panel data which charge that these panels are hardly “random samples” to begin with, and thus all of their data should be regarded suspiciously. Both Nielsen and its main competitor, ComScore, have been moving to “hybrid” methods that combine panel data with census data, and this incident only underscores the urgency of this transition.
Second, the incident also highlights the fact that neither Nielsen nor ComScore has received accreditation from the Media Rating Council (MRC), the group charged by the U.S. Congress with overseeing media ratings systems, although audits have been in progress for several years. Given the billions of dollars now being spent on online media advertising, the use of uncertified currency is clearly unsustainable, and may be costing online publishers millions. This, too, must be urgently addressed.
It’s hard to overstate the significance of Nielsen’s role as currency provider to the media industry (and hence, indirectly, in all industries that depend on media for marketing). Nielsen has borne the brunt of much criticism through its history, and many of its recent studies, such as its Three Screen Report and its Video Consumer Mapping Study, have generated some predictable skepticism, as is to be expected whenever a study billed as “independent” lends support for the core business case of its sponsors (in these cases, the conclusion being that Internet video consumption is yet utterly dwarfed by television consumption in the U.S.).
It’s ultimately a positive sign for online publishers and advertisers that ComScore has mounted a significant competitive challenge to Nielsen, and has plans to take that challenge to Nielsen’s home turf of television. It’s clearly in the interest of these publishers and advertisers, through associations such as IAB, OPA, and 4As, to turn up the heat on MRC and the measurement companies to raise standards of transparency in methodologies and the MRC audit and accreditation process.
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by Andrew Frank | October 22, 2010 | 3 Comments
A week after the launch of Google TV, the vanguard of TV-Internet convergence is delivering on the drama. As is being widely reported, ABC, CBS, and NBC (with some exceptions) are now blocking their web-based TV content from displaying on the Google TV browser (see WSJ coverage here, a more detailed account from search engine land here, and techmeme coverage here). This comes on the heals of Fox – the one major broadcast network not blocking Google TV – endeavoring, as part of its ongoing dispute with Cablevision, to block Cablevision subscribers from viewing its TV content on Hulu (assuming they use the provider for both cable TV and Internet service). Hulu is also being blocked from Google TV.
As many who have been watching these industries have long predicted, what we have here is not convergence so much as collision and conflict being played out with messages like
The operating system or Web browser you’re using is not currently supported. For a list of recommended operating systems and browsers, please see the help section.
As media giants enlist Internet engineers to implement browser sniffers in an effort to gain negotiating leverage, we are at last witnessing the inevitable confrontation between two incompatible models for broadcast content: cable TV and the Internet.
The situation is complex, but suggests the possibility of game theory analysis using the “prisoner’s dilemma” framework. In a simplified model, broadcasters and cable companies are cast as the “prisoners.” In principle, as long as they cooperate to keep unlicensed Internet-delivered TV programming off connected-TV sets (or at least inconvenient enough that it remains on the viewer fringe), they both win: broadcast gets its hefty retransmission fees and cable gets to sell differentiated premium service at a profit.
Enter Over-the-top TV (Google and Apple) to propose the dilemma. To broadcasters, OTT offers the opportunity to sell programming direct to consumers, at potentially higher margins than through the cable middleman. It also offers more direct control over advanced advertising and interactive capabilities, that cable companies are currently attempting to control themselves. To cable companies, OTT offers the opportunity to gain more leverage in retransmission negotiations by potentially offering content that’s free on the Internet for free to their cable customers as well.
In most well-formed prisoner’s dilemma scenarios, the situation results in the defection of both (or all) rational players (in game-theory terms, defection strictly dominates cooperation). The OTT situation today is not well-formed enough to make this prediction, however, because the benefits of defecting do not yet clearly exceed the benefits of cooperating. Broadcasters are unlikely to get more money from OTT providers than cable companies, and cable companies are unlikely to gain enough leverage to offset the potential loss of subscribers should they lose access to popular programming.
The game is also complicated by the fact that there’s a time factor involved: at some point technology will evolve to the point where the boundary will fall and broadcasters will have to choose between offering programming on the Internet knowing it will be viewable on TV as well, and losing a large share of the growing online audience. Distributors, for their part, will need to choose whether to continue to pay escalating carriage fees to hold-out broadcasters or take their chances with OTT. To head off this stage in the dilemma, distributors are working with broadcasters on the TV Everywhere concept, that would extend subscriber-based conditional access to video on any device. As often happens with large, distributed technology initiatives, progress has been uneven and technical issues abound.
The situation is clearly different for cable networks, especially premium ones like ESPN, which has made significant progress on TV Everywhere, than for over-the-air broadcast networks. It’s also clear that delayed action can be costly in this game. In any case, this game’s more complex than the idealized blackboard version.
To discern the winning strategy requires plugging in some numbers and making some forecasts. This will be occupying a good deal of our time in the coming season. You see, billions of dollars hang on the outcome.
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by Andrew Frank | September 17, 2010 | 2 Comments
September 17 – Microsoft, after a long hiatus in advertising-related announcements, unveiled two new salvos in its bid for a major role in mobile advertising: a Mobile Advertising SDK for Windows Phone 7 and a Microsoft Advertising Exchange, claimed to be the first such platform to support real-time bidding (RTB). (See details on this Microsoft blog.)
On the principle that three data points close together define a trend, here are two more:
- DataXu, a leading demand-side platform (DSP) for RTB announced last week the “industry’s first” DSP advertising solution for mobile, GroupM’s B3 (using DataXu’s decisioning technology);
- Ericsson announced that, on September 22, it will announce AdMarket, a “an open marketplace for targeted mobile advertising through which Ericsson acts as a neutral broker” (in other words, an ad exchange) – see video here.
This is all good news for the mobile advertising market, which still trails online by about $60 billion worldwide. It shows that many of the technologies and concepts innovated for the Internet can help accelerate the mobile market and potentially avoid some of the pitfalls of fragmentation and inefficiency that have at times impeded the development of web advertising (at least on the display side).
The problem, of course, is that for an exchange to work – that is, to attract a critical mass of buyers and sellers and generate enough fees to cover infrastructure and operations – there needs to be sufficient liquidity to start with. This also goes for the highly-touted targeting capabilities of mobile: they’re only valuable if the resulting segments are large enough to interest advertisers, and we still appear to be short of audience.
Part of this is simply a factor of where we are in the growth curve, but there’s another things to consider in assessing the prospects of the mobile ad exchange concept: the problem of smallness. I mean smallness, both in terms of literal size and figurative impact, of the common formats available across platforms, especially as compared with the bigness of proprietary formats like Apple iAds. Proprietary formats may be more attractive than a 300×50 MMA banner, but they fragment the audience in a way that is not conducive to the exchange model. Advanced targeting may someday overcome this, but until then we appear to have a chicken-and-egg problem with mobile ad exchanges, even if they can do RTB.
So, what will it take for mobile ad exchanges to take off? Look for it when Google integrates AdMob mobile inventory into its AdX online display exchange.
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