13 Questions For 2013 In The World Of Online Advertising

questionsCross-posted at my Forbes.com blog The New Persuaders:

For the past few years, I’ve offered predictions here and on The New Persuaders for what’s likely to come in the next year. I viewed them more as an agenda for what to watch for in the next 12 months than as firm predictions.

But it was too easy sometimes to state the obvious so they’d end up right by year-end. So this year, I’m going to shake it up and throw out a few questions instead. I think I know the answers to some of them, but if many won’t be answered definitively by year-end, they remain top of mind for me and probably for many others in online media and advertising.

So in this, the first full week of the new year, here are some questions to which I hope to start finding answers (and if you’ve got ‘em, sound off in the comments below!):

* Will image advertising finally take off online? I have to believe that as people spend more and more time online instead of reading print publications and watching TV, brand marketers will want and need to reach them there with ads that are aimed at creating consideration for later purchases, not just eliciting an immediate sale like Google’s search ads and too many banner ads. We’re already starting to see signs of such advertising with the early success of Facebook’s Sponsored StoriesTwitter’s Promoted Tweets, and YouTube’s TrueView ads–not to mention the explosion of tablets, which provide a lean-back experience more compatible with image advertising. This won’t be a sudden change, since brand marketers and agencies don’t move quickly, but you can’t tell me there aren’t going to be increasingly compelling ways for brands to influence people online.

* Will native ads reach broad scale? Well, perhaps they will on platforms such as Facebook and–well, Facebook–that already reach hundreds of millions of people. Sponsored Stories clearly have gotten some traction, even on mobile devices. But marketers and agencies won’t create multiple versions of campaigns to serve every new ad format that publishers claim work better than banner ads. Which brings up a related question:

* Will any standards emerge around the social gestures that most of these native ads embody? That’s really the only thing that will ensure that marketers can reach scale across many sites. That wouldn’t be in the interest of big companies such as Facebook and Google, which benefit from proprietary ad formats that can reach their huge audiences. But standards, whether it’s banners of a particular size or ad networks, create a more liquid market that helps hundreds of publishers survive as they provide marketers scalable opportunities to reach big audiences. So are there atomic units of social gestures that could carry brand messages across multiple native ad formats without destroying the appeal of native formats? Maybe there’s a technological fix for this, but it’s clear that a lot more needs to be done.

* Will the long-predicted shakeout in ad tech companies finally happen? It didn’t really occur last year despite a few middling-big acquisitions by Oracle, Salesforce.com, and Google. This year, perhaps new Yahoo CEO Marissa Mayer will corral a few to try to recharge the company’s ad business. Google, Adobe, and IBM have built out “stacks” of ad tech, but no doubt they can each fill out their offerings. Then there’s Facebook, whose ad exchange is likely to need fleshing out. But even if they each write checks for a few three-letter acronym startups apiece, don’t call it a shakeout. Given the rapid evolution of advertising technologies, and the reality that using data to refine advertising is still in its infancy, it’s a good bet that more companies will still be created than disappear. That should keep the Lumascape as crowded as ever.

* Can advertisers and publishers make ads more personal without scaring people? That’s the $64 billion question, and it likely won’t get answered in full this year. It’s easy for headline-hungry politicians to make a big deal out of Facebook’s latest privacy gaffe or the Wall Street Journal’s or the New York Times’ latest scare story about an ad that followed somebody all over the Web. That’s especially so since Facebook really does push the privacy envelope too far at times, and too many advertisers idiotically chase one more sales conversion at the cost of scaring off hundreds of others or inviting onerous legislation. But making ads more useful to each individual person is not only crucial to online commerce, it’s potentially better for most consumers as well–seriously, I don’t need to see another ad for a fitness center or a new credit card, but that ad for Camper van Beethoven’s new CD had me in a split-second. The answer lies in these two words, everyone: transparency and choice.

* Will mobile advertising work? Well, some of it already does, to hear Google and Facebook tell it. And while those already devalued digital dimes so far turn to pennies when it comes to ads on smartphones and tablets, this still feels more like growing pains than a crisis in online advertising. Sure, the screens are small and people don’t like to be interrupted in their mobile cocoons. So a different kind of advertising is probably needed–clearly, banners don’t cut it on a four-inch screen. But the value to advertisers of knowing your location and maybe the apps you’re using, coupled with knowledge of what your friends like–all with permission, of course–is huge. That permission may be really tough to earn. But if advertisers can offer tangible value, perhaps in the form of useful services related to what you’re doing or looking for or shopping for–and isn’t that the ultimate native ad?–people may loosen their hold on that information.

* Can Larry Page keep Google relevant in the social media age? So far, the no-longer-new CEO has at least kept Google’s mainstream ad business humming. Page has outlasted a year or so of missteps, missed opportunities, antitrust investigations, and bum vocal chords, and arguably emerged with a company that’s leaner, more focused, and more potent than ever. Not only does the recent antitrust victory appear to leave it free to compete unimpeded, but Android is doing better than ever even vs. a very strong Apple ecosystem and Google is about to emerge as a powerhouse in the other half of online advertising: display ads, whether on the desktop or on mobile devices. Page’s big challenge looms as big as ever, though: Can Google play in the social Web vs. Facebook/Instagram, Twitter, Pinterest, and more? I don’t know, but this may be the year Page has to provide a more definitive answer.

* Will TV and Web video ads finally come together on Connected TVs, tablets, or other devices? Sure, at some point. Video is video no matter where it runs, and while personal computer users bristle at pre-roll video ads, I’m betting viewers are more amenable to various kinds of ads when they view video on Internet-connected TVs or tablets. And even on PCs, YouTube’s TrueView ads, which you can skip after a few seconds, have proven successful to the tune of several billion dollars last year. Traditional TV advertising will continue to thrive thanks to unassailable economics of the cable-content cabal. But given extensive work by Nielsen, comScore, and others to provide metrics that can extend across TV and the Web, the latter may finally get some serious coin from brand marketers–if not this year, pretty soon thereafter. Especially if Apple works its magic on the television.

* Will Facebook really tick us off with a new feature or privacy “improvement”? Is Mark Zuckerberg CEO of Facebook? Nonetheless, Facebook’s well-worn playbook of pushing beyond social comfort levels, then pulling back just a bit, means we’ll probably see privacy norms get stretched once again.

* Will Apple ever make a real splash in advertising? Don’t bet your iPad on it. I think even the post-Steve Jobs Apple still views ads the way a lot of Silicon Valley still does (mostly in error): ineffective, inelegant, and crass. Apple itself can make great ads, but selling them is an entirely different matter.

* Will Amazon make a real splash in advertising? Oh yeah. All the pieces are in place, from a huge shopping-focused audience to a nearly bulletproof technology infrastructure. Again, it won’t set the world on fire this year, but we’re likely to see the smoke.

* Will Marissa Mayer turn around Yahoo? Not this year. Still, I wouldn’t be surprised to see signs of a real turn for the first time in about five CEOs. But the real turnaround will take years–if Yahoo’s board has the patience. That’s still an iffy bet worth about as much as a share of Yahoo stock.

* Will I ever figure out the appeal of Reddit and BuzzFeed? Gosh, I hope so. I get that these guys attract massive traffic, but neither site does much for me. Reddit, in particular, seems so random that I guess it must be the channel-surfing of today’s generation, only with somewhat more worthwhile nuggets. But for pete’s sake, there’s so much noise for the signal you get, and even the most popular noise can be many hours, days, or even months old. Go ahead, call me a geezer who doesn’t get it. You wouldn’t be the first, and maybe you’re right. So I will continue to click over to them until I see the light, my brain explodes, or the next phenom looks more worth wasting my remaining years on.

I have a lot more questions, but I’ve got to stop before too much of 2013 is gone.

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Peering Over Fiscal Cliff, Marketers Cut Global Ad Spending

adrevsFrom my Forbes.com blog The New Persuaders:

Global ad spending is slowing down, prompting a prominent market researcher to cut its estimate of growth this year. eMarketer says ad revenues worldwide will rise 5.4% this year, to $519 billion, down from its 6.8% growth estimate seven months ago.

The culprit, not surprisingly: worries about the economy. No doubt the last couple of months of concern over the U.S. going over the fiscal cliff, thereby potentially triggering a recession, has marketers spooked about committing too much when it looks like consumer spending could follow national finances off the cliff.

That 5.4% increase is still a big improvement over 2011’s 3.6% growth, though partly thanks to the Olympics and the election. And eMarketer, whose forecasts are based on analysis of economic conditions and other researchers’ estimates, reckons growth will be fairly steady at about 5% through 2016.

What’s more, online ad spending, not specifically addressed in this report, is expected to grow much faster. In particular, mobile ad spending, while still relatively small, will grow like crazy–nearly tripling this year, to $4 billion in the U.S. thanks to surging “native” ads from Facebook and Twitter.

But slower-than-expected ad spending could have ripple effects on a wide swath of companies depending on a strong advertising market, from Google and Facebook to hundreds of startups.

And it gets even worse for the many companies chiefly dependent on ad spending in North America, the world’s biggest market. Here, eMarketer expects growth of 4.9% this year, dropping precipitously to 3.5% next year and bumping up and down around that rate for several more years.

Propping up growth are surging ad markets in China, India, Indonesia, South America, and even Russia.

Going Native: Disqus Says Promoted Discovery Ads Getting Traction

disqusadFrom my Forbes.com blog The New Persuaders:

Any blogger or media site knows there can be a lot of garbage in the comments on their posts and stories. Now, there’s a little gold in them, too.

A couple of months after quietly rolling out an ad system to select advertisers and publishers, commenting service Disqus is revealing a bit about the initial results. The ads build upon an article discovery feature Disqus introduced over the summer, a box below the comments that provides links to related articles either on the site or elsewhere on the Web. Disqus, which claims 75% market share among independent commenting systems such as those from Facebook and Livefyre, says 900 million unique visitors a month view 6 billion pages monthly on 2 million websites.

Promoted Discovery units are a way for publishers and advertisers (which also may be other publishers) to buy links that will send traffic their way. They barely look like ads, but that’s the point of so-called native monetization, also employed in Facebook’s Sponsored Stories and Twitter’s Promoted Tweets: They seek to avoid disrupting the flow of what people are doing, especially in a social setting–or, if you’re a cynic, they seek to conceal the fact that they’re ads. Either way, though, they often get more clicks and other engagement. …

Read the complete post at The New Persuaders.

 

Instagram Backs Off New Photo Policy–But Here’s How It Might Really Make Money

Image representing Kevin Systrom as depicted i...

Instagram cofounder Kevin Systrom (Image: CrunchBase)

From my Forbes.com blog The New Persuaders:

Not surprisingly, the Facebook-owned mobile photo-posting service Instagram has backed off the language in its new privacy and terms of service policies that set off a firestorm online. The worry was that people’s Instagram photos could be sold without users getting compensated (never really true) or could be used in ads (which did certainly look likely).

Apparently, neither will be the case, at least for now. Instagram cofounder Kevin Systrom just posted on the company’s blog under the title “Thank you, and we’re listening”:

I’m writing this today to let you know we’re listening and to commit to you that we will be doing more to answer your questions, fix any mistakes, and eliminate the confusion. As we review your feedback and stories in the press, we’re going to modify specific parts of the terms to make it more clear what will happen with your photos.

Legal documents are easy to misinterpret. So I’d like to address specific concerns we’ve heard from everyone:

Advertising on Instagram From the start, Instagram was created to become a business. Advertising is one of many ways that Instagram can become a self-sustaining business, but not the only one. Our intention in updating the terms was to communicate that we’d like to experiment with innovative advertising that feels appropriate on Instagram. Instead it was interpreted by many that we were going to sell your photos to others without any compensation. This is not true and it is our mistake that this language is confusing. To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear.

Systrom then provides clues to how Instagram might really make money from advertising on the site:

To provide context, we envision a future where both users and brands alike may promote their photos & accounts to increase engagement and to build a more meaningful following. Let’s say a business wanted to promote their account to gain more followers and Instagram was able to feature them in some way. In order to help make a more relevant and useful promotion, it would be helpful to see which of the people you follow also follow this business. In this way, some of the data you produce — like the actions you take (eg, following the account) and your profile photo — might show up if you are following this business.

The language we proposed also raised question about whether your photos can be part of an advertisement. We do not have plans for anything like this and because of that we’re going to remove the language that raised the question. Our main goal is to avoid things likes advertising banners you see in other apps that would hurt the Instagram user experience. Instead, we want to create meaningful ways to help you discover new and interesting accounts and content while building a self-sustaining business at the same time.

So it seems that whatever advertising Instagram does, it will be quite a bit like Facebook’s Sponsored Stories, or even precisely like them. Although that won’t comfort people who don’t like the possibility that their actions can become an ad, they’re already subject to those terms if they use Facebook.

I wouldn’t be surprised to see Instagram follow Facebook’s well-worn playbook, which calls for the company to push the envelope, then back off a bit, rinse, repeat. But for now, pending future changes, your cute cat photos are safe from becoming ads for your local pet salon.

Here’s A New Way You’ll Soon Get Targeted For Ads: Your Hashtags

Screen shot 2012-12-11 at 8.17.52 PMFrom my Forbes.com blog The New Persuaders:

Facebook has Sponsored Stories. Twitter has Promoted Tweets. Buzzfeed has Promoted Posts. They’re all based on social gestures and activities, each targeted to people, whether friends or birds of a feather, who might share similar interests. Now, a company has come up with a new way of targeting people using one of the most common social gestures of our time: the hashtag.

If you’re bothering to read this, you probably already know hashtags are those short subject labels, starting with a # or hash sign, that describe the topic a tweet or other shared item is about. They didn’t start with Twitter, but they became popular thanks to their common use in tweets. That use has spread to other social networks, from Pinterest to Instagram (though not very often on Facebook, for some reason).

Today, social ad firm RadiumOne announced it’s making hashtag targeting available to advertisers so they can reach like-minded consumers in real-time across the Web based on the hashtags they’re using. So, for example, says RadiumOne founder and CEO Gurbaksh Chahal, Nike can reach consumers who use the hashtag #nike, or #olympics, or #fitness with ads for running shoes. Or McDonald’s could target people who tag their tweet or Instagram photo #burgers or even #hungry. …

Read the complete post at The New Persuaders.

 

Uh-Oh–Survey Says Most People Find Facebook And Twitter Ads Misleading

From my Forbes.com blog The New Persuaders:

To hear Silicon Valley and nouveau ad-tech types tell it, traditional advertising sucks. The best way to attract people’s attention and engage them more fully is to create ad formats that more closely resemble the activities people are already doing on a site–in other words, to make ads look less like ads.

That’s the idea behind so-called “native” ads such as Facebook’s Sponsored Stories and Twitter’s Promoted Tweets. Although various studies seem to indicate these ads are indeed more effective than standard banner ads–a low bar, it must be said–a new survey released today indicates that a lot of consumers don’t trust native ads. According to the survey by app advertising firm MediaBrix and Harris Interactive:

* 45% found Twitter promoted tweets misleading.

* 57%  found Facebook sponsored stories misleading.

* 86% found sponsored video ads that appear to be content misleading.

The survey also found that a large majority of people who have seen Twitter Promoted Tweets in the past 12 months said they hurt or had no impact on their perception of the brand advertised. Some 72% said the same thing about Facebook’s Sponsored Stories. And 85% found sponsored video ads didn’t leave them with warm feelings. “While anyone pushing the native ad agenda or otherwise would agree that we need to provide user experiences that are not jarring or disruptive, we also need to ensure that we are direct and honest with our consumers about when they are being marketed to,” MediaBrix CEO Ari Brandt said. “Some formats achieve this better than others.”

Mind some caveats about this research. For one, it doesn’t compare native ads to banner ads, so there’s no telling whether trust in banner ads is any better than these native ads. Also, what people say they feel about ads and brands may have little to do with the ads’ effectiveness. And MediaBrix has a dog in this hunt, since it offers its own kinds of ad formats for social and mobile apps.

Still, it’s a splash of cold water on a trend that some very high-profile companies are counting on to become the next Google. And it’s a lesson that marketers apparently constantly need to be reminded about: Don’t try to fool your customers, because it can destroy trust in your brand.

7 Great Places Online To Track Hurricane Sandy

Google Crisis Map of Hurricane SandyFrom my Forbes.com blog The New Persuaders:

Assuming you’ve got power or even a cell phone signal by now, media and tech companies and tweeters galore are providing instant insight into where Hurricane Sandy is heading. Here are a few that go well beyond the reporter-in-the-rain TV coverage:

* Weather Channel livestream: The cable channel that no doubt will be seeing ratings skyrocket is running a livestream on YouTube of the latest news and frequent warnings about what to do (stay home!).

* New York Times live updates: The newspaper is posting live updates mostly on official news, along with an interactive map of evacuation zones.

* Wall Street Journal liveblog: The paper’s continuously updated blog has a wealth of information, including on-the-scene reporting of how folks are coping with the storm.

* Twitter: The hashtag #sandy brings up a (forgive me) flood of tweets related to the storm. Oddly enough, it’s not a trending topic, though “East Coast” and “FEMA” are. And not surprisingly, some people are finding ways to make a joke out of potential tragedy. A tweeter named @HurricaneSandy tweeted: YOU THINK I’M BAD? SEE WHAT HAPPENS IF MITT ROMNEY GETS ELECTED. Still, as in many crises, Twitter remains the place to get the latest, on-the-scene, unvarnished news. …

Read the complete post at The New Persuaders.

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