Marketers, Get Ready: ‘All Advertising Soon Will Be Digital’

From my Forbes.com blog The New Persuaders:

The constant battle between TV viewers who want to watch their favorite shows when and where they want broadcast and cable networks that want to maintain their lucrative linear-TV business model is just the tip of a digital media iceberg. Fact is, people want to view all kinds of content, whether it’s TV shows, movies, games, or blogs and magazine stories, wherever they want. Inconveniently, that’s not necessarily on media companies’ own websites, where they make most of their money from advertising.

As a result, marketers and publishers alike are gradually realizing they need to reach people through their advertising on whatever site, app, or device they’re using, not just where they’d like them to be. At a recent event held by Google’s DoubleClick display-ad business, a couple of prominent online media executives said they’re well on the way to doing just that.

On the stage at the Google event were moderator Terry Kawaja, CEO of boutique investment bank Luma Partners; Neal Mohan, Google’s vice president of display advertising; Weather Channel (and former adman) CEO David Kenny; and Disney Interactive Media Group Co-President Jimmy Pitaro. Here’s what they had to say about how they’re dealing with the challenge.

Q: Is a $200 billion display ad prediction [made by Mohan last year] just wishful thinking?

Kenny: It’s not wishful thinking at all. The mistake is in assuming it’s in advertising units that exist today. The $200 billion could be $300 billion or $400 billion if it’s more of service to the consumer.

Q: It feels like the digital channel is still an adolescent. Isn’t a lack of new formats the problem? …

Read the rest of the post at The New Persuaders.

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Google: Let’s Make Display Ads As Compelling As TV

From my Forbes.com blog The New Persuaders:

Google made a renewed bid last week to control much of the online advertising business it doesn’t already own with a revamped display ad buying system. At a semi-private event (livestreamed here) held by its DoubleClick display-ad unit, Neal Mohan, VP of display advertising products for Google, debuted the system to advertisers, agencies, and publishers.

Mohan also provided his perspective on what’s needed next to make display advertising easier to create and buy. His comments, which I ran out of time to post after the announcement, remain especially relevant today given Facebook’s announcement on June 13 that it would soon launch its own Facebook Exchange to allow marketers to reach audiences on Facebook for the first time using data they’ve collected about their browsing habits. That puts Facebook in more direct competition with Google for marketers looking to reach audiences online.

Here are the highlights of Mohan’s keynote:

Some 60% of the ads on YouTube are TrueView ads, for which advertisers are charged only if they’re viewed. That’s a sign of where display is going, toward measuring actual impact rather than theoretical impressions.

He says engaging ads such as larger display ads and those that are larger than the standard units are getting up to twice as much engagement. He thinks engagement rates, or the time people spend looking at an ad, should rise 50% in coming years.

To do that, he says, we need better integration across these tools and better measurement.

The first principle is that digital marketing should be as easy as “press and play.”

None of these tools has worked together very well. It’s like a stereo system used to be, with lots of separate components connected by a mess of wires. All of that has been replaced today by smartphones. In short, he says, that’s what Google wants to do with digital marketing. …

Read the complete post at The New Persuaders.

Here’s One Thing Google and Facebook Can Agree On: Fighting Scam Ads

From my Forbes.com blog The New Persuaders:

Google recently has stepped up a drive to stop ads that hawk counterfeit goods or send people to sites that try to scam them or install malicious software on their computers. But up to now, Google and other companies from AOL to Facebook have attacked the problem individually, leaving holes in their defenses.

On June 14, the nonprofit group StopBadware, backed by Google, PayPal, Mozilla, and others, will launch the Ads Integrity Alliance to present a more united front to scammers and also educate policymakers on potential legal or legislative remedies.

StopBadware was formed in early 2006 as an experimental anti-malware project at Harvard Law School’s Berkman Center for Internet and Society and since spun out into a nonprofit group. Executive Director Maxim Weinstein says bad ads are a natural extension of the mission, partly because malware often is distributed via online ads. “It’s a similar threat in that it undermines trust in the Web,” he said in an interview. “Those ads are what pay for all the services on the Web.”

Although Google and no doubt others spend millions of dollars a year to fight bad ads, scammers continually exploit automated and human safeguards and loopholes in site policies. “The more companies can learn, the better,” says Weinstein. “Once you get to a consistent set of principles, the bad guys find it harder to squeeze through.”

At least that’s the hope. …

Read the full post at The New Persuaders.

Facebook to Debut Ad Exchange in Bid to Boost Revenues

From my Forbes.com blog The New Persuaders:

Facebook will debut an advertising exchange in the next few weeks that will help advertisers target audiences on the social network in the same way they’ve been able to do elsewhere on the Web. That may help Facebook boost its revenues to counter worries by investors, who have knocked its stock down nearly 30% from its initial public offering last month.

The exchange will allow a select group of ad tech companies called Demand-Side Platforms, or DSPs, which gather pools of target audiences that advertisers can reach instantly through automated buying systems, to get access to such audiences on Facebook, according to spokesperson Annie Ta. They haven’t been able to do that before because Facebook only allowed them to target ads using its own data on posts or brands that users Liked or shared, or on information about themselves that the revealed in their Facebook profiles.

Using what’s known as real-time bidding on the Facebook Exchange, a travel site, for instance, could target an ad on Facebook for a discounted air ticket to Hawaii to people who searched for a Hawaii flight but didn’t buy a ticket, or an ad for a Honolulu hotel room to someone who did buy a ticket.

The main advantage for advertisers is simply being able to reach people when they are on Facebook the same way they reach them when they are surfing the rest of the Web. That’s potentially huge, because Facebook boasts nearly a billion active monthly users, who spend hours a month on the site. No longer will those hours be lost to advertisers. What’s more, recent browsing data may be more of an indication of intent to purchase a product or service than stated interests or Likes–or at least advertisers may think so–so the ads may be more successful than some of the targeting currently available on Facebook.

For Facebook, the move is likely to raise the amount it can charge for its nearly limitless ad space, which is widely believed to command relatively low rates. It’s not clear how much this will boost its revenues, but if the resulting targeted ads prove more relevant to users, prices should rise as advertisers will be willing to bid more for the space.

As AllThingD’s Peter Kafka points out, this is not the ad network that Facebook has long been rumored to be considering. That would run Facebook ads on other websites, like Google does with its lucrative AdSense network. But Facebook has steadfastly said it has no near-term plans for an ad network.

Of course, the more relevant those ads are, the more they could raise more privacy concerns for Facebook: Too relevant, and people might get creeped out. They can opt out of this targeting, but not through Facebook–only through the DSPs, which can be difficult to do. However, these ads also will sport the little “X” that lets you get rid of an ad, and clicking on it will send you to information that directs you to the DSP’s website to opt out.  Facebook itself won’t be building user profiles based on the exchange.

Read the complete post on The New Persuaders.

What Madison Avenue Needs to Know About Mobile Advertising

Cross-posted from my Forbes.com blog The New Persuaders:

Still struggling to figure out how to participate in Facebook and the rest of the social Web, marketers now face a brand-new set of challenges and opportunities to their established way of doing business: mobile advertising. As more people abandon their personal computers to do everything on their iPhones and iPads, advertisers need to figure out how they can continue to reach them on a tiny screen, often in the social context of Facebook and other social networks people use on their mobile devices.

A group of mobile and advertising startups took a crack today at educating the marketers and agencies they want to sell to during a panel at AlwaysOn’s OnMobile conference in Redwood City, Calif. On the panel are host Bill Cleary, founder of Cleary & Partners; Ragnar Kruse, CEO of Smaato, which represents 50,000 mobile publishers on ad networks; Lucy Jacobs, COO of Facebook ad firm Spruce Media; Are Traasdahl, founder and CEO of Tapad, which offers cross-platform ads; and Lon Otremba, CEO of mobile social gaming platform Tylted. Here’s what they had to tell Madison Avenue folks about how they can tap into the emerging mobile opportunities:

Q: How do you deal with the cynicism of Madison Avenue about Facebook and mobile?

Otremba: It’s the same scenario we saw when the Web came around. There’s as much fear as anything. They know their clients are going to beat the hell out of them if they don’t figure it out soon.

Read the rest of the post at The New Persuaders.

How Facebook–and Its Advertisers–Can Make Money From Mobile

Cross-posted from my Forbes.com blog The New Persuaders:

If there’s one thing that gave investors pause about Facebook’s underwhelming initial public offering last month–besides Nasdaq’s royal screwup–it was that the social network has been AWOL from the hottest trend in tech today: mobile. Facebook admitted shortly before its IPO that it wasn’t making any money on mobile advertising even as its users increasingly access the service from their smartphones and tablets.

But it’s also quite early in the opportunities associated with skyrocketing use of mobile devices, whether it’s games or advertising or payments. Lucy Jacobs, COO at Spruce Media, a company that helps brands do performance advertising on Facebook, offered a brief perspective on what Facebook and brands hoping to use it for marketing can do to make money from all the people ditching their PCs for iPhones, iPads, and Android devices. Here’s what she had to say during a talk at AlwaysOn’s OnMobile conference in Redwood City, Calif.:

Only about 32% of the world has a mobile phone so far, she says, and most of them aren’t smartphones, so there’s plenty of opportunity. We’re currently monetizing only 1% of all ad impressions even though 10% of time is spent on mobile devices. Result: Ad rates are five times lower on mobile devices vs. desktops.

Facebook is well-positioned to monetize mobile, Jacobs says. Why? Very rapid user growth, large number of innovative developers, broad base of advertisers, highly engaged consumers, and apps that are essential utilities.

Facebook now has four formats, or locations, for mobile ads–in the news feed on the home page, in the news feed in mobile, on the right-hand side, and on the log-out page. And last week, it announced the ability to run just mobile ads instead of having to do desktop and mobile ads simultaneously.

The mobile newsfeed ads have really high engagement and good results, Jacobs says. Click-through rates are 1% to 5%, or 10 times higher than on standard Facebook ads. That suggests that mobile has a huge upside for Facebook, since clicks on its other ads are way lower than the average display ad.

However, conversion rates, or the rate at which people buy something, fill out a form, or the like, are one-third lower. She doesn’t say why. Other marketers and agencies have suggested that it’s likely people using their devices on the go, such as in or near stores, simply buy the product in the store, but that purchase doesn’t get attributed to the Facebook ad.

Jacobs offers several tips and tricks for brands using mobile ads on Facebook:

Read the complete post at The New Persuaders.

What’s the Next Breakout Mobile Startup? Here’s What VCs Think

Cross-posted from my Forbes.com blog The New Persuaders.

Mobile computing is arguably the most disruptive force in tech right now. Just look at what it did to Zynga’s stock today. Or what it has already done to Facebook’s and Google’s shares.

Today, a group of venture capitalists laid out what they think is coming for mobile investment this year–in other words, who’s going to disrupt whom next. On a panel at the AlwaysOn OnMobile conference in Redwood City (Calif.) were host Mihir Jobalia, managing Director at KPMG; Rob Coneybeer, cofounder and managing director at Shasta Ventures; Paul Santinelli, a partner at North Bridge Venture Partners; Sling cofounder Jason Krikorian, now general partner at DCM and the Android Investment Fund; Navin Chaddha, managing director at Mayfield Fund; and Aydin Senkut, founder and president of Felicis Ventures.

Here’s what they had to say:

Q: What are the opportunities and challenges in Apple’s iOS vs. Google’s Android?

Chaddha: With Android, even though it’s open, not having control is a big issue. If developers have an app, they go to iOS first, then they look at Android, but there are so many choices, phones. It’s just hard. In the iOS, iPad and iPhone are all the same–life is easy.

Senkut: iOS’s big advantage is monetization. If you want growth and high numbers, it’s difficult without Android.

Coneybeer: It’s a stable duopoly. You need to do both. But nobody’s talking about any other platform now. For developers, you’re looking at a five-year-plus duopoly.

Santinelli: In a few years, you’ll be able to do all development in HTML5. It will solve a lot of those fragmentation problems.

Q: Where are the most interesting growth opportunities in the next five years?

Read the full post at The New Persuaders.

Is Zynga the Canary in the Social Games Coal Mine?

Infographic courtesy of Tableau Software (click to see interactive version)

Cross-posted from my Forbes.com blog The New Persuaders:

I stopped playing FarmVille several months ago. Why? I got bored. Apparently a lot of other people are getting bored, too–at least with playing FarmVille and other Zynga games on  their personal computers.

According to a research note from Cowen & Co. analyst Doug Creutz today, social games played on Facebook such as Zynga’s are seeing steadily dropping usage–leading to a fearsome 10% drop in its shares today, to $5 or less.

The reason, he says, is likely that more and more people are playing social games on their smartphones and tablets:

We believe that mobile devices may be siphoning off an accelerating number of gamers from Facebook. Facebook itself is increasingly being accessed by mobile devices, however it is not possible to play Facebook-native apps through Facebook on a smartphone. We believe that over the last two months, trends in the casual digital gaming space have swung decisively towards mobile and away from social, at least in Western markets.

No doubt that’s one reason, and an inevitable one as more people use their smartphones and tablets instead of PCs for many tasks (and fun and games). But I also wonder if enough people are realizing that these games are taking a little too much of their lives. …

Read the rest of the post at The New Persuaders.

ComScore: Here’s How Ads and Brand Posts on Facebook Drive Actual Purchases

Cross-posted from my Forbes.com blog The New Persuaders:

You may have read last week about this new research from comScore about the effectiveness of Facebook ads and brand posts. But the details of the study, which is being presented this morning at the Advertising Research Foundation’s Audience Measurement 7.0 conference in New York, are much more interesting than comScore’s teaser blog post.

The white paperThe Power of Like 2: How Social Marketing Works, follows up an initial study last year, this time with control tests on Facebook that isolated the actual impact of Facebook ads on sales, both online and in physical stores. “We found Facebook fans had significantly higher percentages of purchasing,” says Andrew Lipsman, comScore’s VP of industry analysis. “It proves Facebook earned media and advertising are driving purchase behavior.”

Mind the caveats: Facebook is a comScore client and even arranged my phone interview with Lipsman–which I appreciate, but just saying. Also, the white paper looks mostly at so-called earned media, the posts, “likes,” and shares that users and brands create, more than ads. However, some Facebook ads such as Sponsored Stories are in fact actual posts that a brand simply pays to distribute more widely, while others are brand ads with a notice that a friend likes the brand.

ComScore’s research provides the numbers behind its claim that Facebook activity, including advertising, has an impact over time–regardless of whether people click on an ad–all the way through to products leaving store shelves. …

Read the rest of the post at The New Persuaders.

Online Ad Revenue Growth Slowing

Cross-posted from my Forbes.com blog The New Persuaders:

Internet advertising revenues grew 15% in the second quarter from a year ago, according to the latest official tally released today. The Interactive Advertising Bureau said online ad revenues from all sources hit a record $8.4 billion.

But that 15% growth rate, while not bad in these uncertain economic times, is a considerable drop from a year ago, when revenues rose 23%.

IAB didn’t provide a reason for the slowing growth, but ad folks across the spectrum of advertisers, agencies, and publishers have noted caution on the part of marketers as the economy has appeared to stall in recent months. While Google’s search ads, which led to the company’s 24% rise in revenues in the first quarter, continue to be strong, less direct or measurable ads such as display ads may be seeing more of an impact from the economy. Facebook, for instance, one of the big drivers of display growth, saw revenues fall 8% from the fourth to the first quarter, though to be fair, first-quarter revenues jumped 45% from a year ago.

In any case, the flagging growth all the more points up the need for Web publishers to come up with better ways to attract the brand advertisers that still spend 95% of their budgets in traditional media. They don’t yet see a compelling way to reach a whole lot of people with image ads online.

Read the original post at The New Persuaders.

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