Brands Look Far and Wide for a Niche in Virtual Reality


From my story in The New York Times:

Even in virtual reality, it seems, there will be no escape from advertising.

The Oculus Rift, which is owned by Facebook, won’t be available until early next year, but many of the two billion consumers worldwide who own smartphones can already try out virtual reality on the cheap with Cardboard, a device from Google that folds into a viewer with a slot for a smartphone. As more devices come to market with the aim of making virtual reality more commonplace, advertisers and agencies hope virtual reality will be the next great medium for persuading consumers to buy stuff.

For now, marketers are producing mostly eye candy in their own apps and on YouTube’s #360Video channel. But with virtual reality movies, shows and stories coming soon, the question is what kind of ads, if any, will work on the platform.

Companies including Coca-Cola, Volvo and HBO are struggling to figure that out. So are publishers like Facebook, which introduced 360-degree ads on Thursday, including video ads from AT&T, Nestlé and other brands. …

Read the rest of the story.

This Number In Facebook’s Q3 Earnings Should Scare TV Networks


From my Forbes blog:

Eight billion.

That’s how many videos people watch on Facebook every day, according to company comments after it reported third-quarter earnings today–and it’s double the number just seven months ago. More than anything–Facebook’s 45% ad revenue growth notwithstanding–that’s why companies that make their money on television advertising should be worried.

Granted, it’s easy to put too much stock into even a figure as eye-popping as 8 billion a day. Facebook counts any videos watched for as little as three seconds. And nearly all those videos are nothing like television shows or movies. Instead, they’re short videos of your child’s first steps along with trailers for actual shows and movies. So this is not yet prime time advertising as brand marketers think of it.

But what the 8 billion daily video views shows is that Facebook has arrived as a place where people are happy to watch videos of almost any kind–some 500 million people daily, in fact. Not only that, they’re doing so on the mobile devices where advertisers know they need to reach people–especially the younger people with disposable income–who have begun drifting away from linear television. …

What that means is that people on Facebook will now view video ads, the most lucrative kind of ad online or off, as a natural if not universally loved complement to the videos they’re already watching. At some point, ad spending on television–still the largest single place for marketers’ budgets–seems bound to shift at least in part to video ads. …

It’s clear that Facebook is now a force to be reckoned with in video advertising, something that seemed unthinkable just a couple of years ago.

Read the complete analysis.

The One Killer Feature Apple TV Needs Is Still Missing


From my Forbes blog:

As the new Apple TV video streamer debuts today, it is still missing the one key feature it needs to become a must-have device: TV programs and movies all its own.

The new version of Apple’s not-quite-a-hobby-anymore looks to be a major improvement over the existing hockey puck. It has a new remote control with a touchpad that will make Apple TV good for gaming, as well as voice control using Siri and an app store so other developers of games, video apps, and more can offer additional reasons to buy the device.

But most important, according to various reports, one most recently in Variety, Apple is currently exploring anew how it might boost Apple TV’s prospects by entering the growing fray in original video programming. Earlier, there were persistent reports that Apple would offer a Internet-based bundle of existing TV programming. But it’s believed that rights issues and a reluctance by programmers and networks to endanger their cash cows have stalled that service. “Original programming is the only solution to Apple’s biggest problem in the video world–that is, that nobody wants to sell Apple content rights,” says Forrester analyst James McQuivey.

Either way, it’s clear that Apple has designs on its own bundle of programming, especially programming no one else has, to drive more interest in all its devices. And now Apple TV may loom more important in that effort than it has so far. A stronger Apple move into television and online video is long overdue, but instead of the television set many people had expected for years, it appears that for now Apple TV is the horse the company plans to continue riding.

The challenge for Apple is that its rivals have galloped ahead of Apple TV, which hasn’t changed much in three years. … Given Apple TV’s solid but unspectacular base, original programming would offer the last piece that help recharge it into the home hub that Apple appears to want it to become. …

Read the complete post.

The One-Second Rule: New Viewability Metric Exposes How Low Online Advertising Standards Still Are

From my Forbes blog:

Who could argue with the notion that advertisers shouldn’t be charged for an ad unless someone actually views it?

That’s the logic behind today’s announcement of the blessing by an ad industry group of a new standard for viewable ad impressions. The Media Rating Council, which had been studying how to ensure consistent measurement of viewable impressions, today lifted a moratorium it had placed on the metric way back in November 2012 while it examined how to ensure the many ratings firms out there could come up with similar metrics using their various methods of calculating viewability.

The move does make sense, especially for the brand advertisers that have been keeping most of their budgets in television to date. It’s now widely known that at least a third and maybe more than half of online ads are never seen for a variety of reasons, from the ad appearing off the visible part of a screen to outright fraud, such as embedding an ad behind a pixel so it can’t be viewed but gets counted as an “impression.”

That couldn’t last, though it sure lasted many years longer than it should have. The new standard suggests that online ads can be credibly included on the same ad buyer spreadsheet as TV ads. “Practically speaking, it means that—as of today—for brand advertising, agencies can and will expect guarantees on viewable display impressions, with video to come soon after,” Sherrill Mane, senior VP of research, analytics and measurement at the online ad industry trade group IAB, said in a blog post. “This means that one of the major obstacles to being included in brand allocations has finally been removed.”

What’s still absurd about the situation is the appallingly low standard for viewability. …

Read the rest of the post.

Google’s Next Big Battle: A Conversation With Ad Chief Susan Wojcicki

From my Forbes blog:

Straightforward and unflashy, Susan Wojcicki doesn’t come off like the most powerful woman in advertising that Forbes and others have labeled her. When we meet outside her office at the Googleplex in Mountain View, she’s dressed in jeans and a simple maroon top and speaks with an almost self-deprecating lilt.

But as the search giant’s senior vice president of advertising and commerce, she is indeed the exec leading the development of some of the most disruptive ad technologies of the past half-century. I interviewed Wojcicki (pronounced wo-JIT-ski) for my article in the current issue of Forbes on how Google is gunning for brand advertising, the image advertising still dominated by television and the dwindling pages of slick magazines.

After picking up “detox” lemonades at a juice bar, we walked past a T. Rex skeleton sculpture festooned with plastic pink flamingos to a set of tables to talk about how the company aims to wrest away brand advertising budgets, which still constitute the majority of ad spending worldwide thanks to the persistent popularity of television among advertisers. Over the slap of spikes and serves from a nearby volleyball court and the occasional caw of a crow resting in the nearby trees, she explained her vision of Google’s next big step beyond search and plain-vanilla display ads. This is an edited version of our conversation.

Google senior VP Susan Wojcicki

Google senior VP Susan Wojcicki

Q: Lots of brand marketers and agencies say they can get truly large audiences more easily on TV than on YouTube or elsewhere online. Why haven’t online ads been able to provide similar branding opportunities as TV and other traditional media?

A: Most advertising is a portfolio of different types of advertising. TV definitely is effective for lots of advertisers. If we want to talk about the long-term future, the question is: Where is TV going? Will all TVs be Internet-enabled? And if they are Internet-enabled, what does your TV look like then? Is your TV then basically a screen attached to your computer in your living room? There could be all different types of things your TV looks like in the future.

Q: You still hear the argument that TV is a lean-back medium and people in that kind of environment are always going to be more receptive to brand messaging. Are people ever going to be as receptive online?

A: Even in TV advertising, they try to target specific types of users. That’s why they’ll say, “We want users who watch sports,” because that means a certain type of demographic. Users are opting into seeing specific shows on TV, and I think it’s similar with digital. They are choosing specific shows to see.

I’m not really sure that lean-back vs. interactive necessarily means that the user is more or less receptive. It’s counterintuitive that something where you’re engaging, you’re less receptive. If users are engaging with something, they’re choosing to see something. That’s the whole concept of what we’re doing with TrueView [YouTube ads that viewers can skip and that advertisers pay for only if they’re viewed], where users are choosing to see something, so they’re engaging with it. …

Read the rest of the interview.

Look Out, Television: Google Goes For The Biggest Advertising Prize Of All

Google's BrandLab at YouTube headquarters

Google’s BrandLab at YouTube headquarters

From my Forbes magazine feature story:

IT’S MID-SEPTEMBER, and Volkswagen of America has a problem: It won’t have any new models coming out until the spring. Keeping VW front and center in consumers’ minds has drawn a group of marketing folks from the automaker and two of its ad agencies to Google’s BrandLab at its YouTube headquarters south of San Francisco. Dedicated to “evangelizing the art and science of brand-building,” the richly appointed meeting space is basically a man cave for ad creatives, complete with overstuffed couches, booze and the mother of all big screens, an assemblage of 32 flat-panel displays massed into 300 square feet of video overload.

In one corner of the BrandLab, Google’s Jeff Rozic goes to work running VW’s folks through a rapid-fire succession of video ad campaigns the BrandLab feels have worked. His earnest delivery is well-honed, courtesy of 100-plus similar “private workshops” held for potential advertisers from Coca-Cola to Toyota over the past year. VW has some catching up to do, a point Rozic makes intentionally or not by highlighting 13 travel vignettes produced by a rival, Nissan Mexico. His larger point: Don’t clutter a story with too blatant a call to action. “We shouldn’t apologize for trying to sell cars,” one VW exec protests. “Sure,” Rozic shoots back, “but you have to be careful to distinguish when you’re telling a story and when you’re selling.”

Fair point. Rozic is clearly selling–and it’s a product intended to change Google’s path. The king of the click is now lecturing one of the world’s most accomplished advertisers to forget those clicks and amp up the image ads. CEO Larry Page can go on as much as he wants about self-driving cars, wearable computers or any of the company’s other “moon shots.” But Google fundamentally remains the most disruptive advertising company of the past half-century. As its total advertising-revenue growth rate has halved in the past two years, from 29% to 15% (thanks in part to Facebook and Twitter), it’s now charging full-bore toward the biggest pot of advertising gold it doesn’t own: brand advertising, the image ads you see in glossy magazines and on television.

Most online ads–the banners that litter nearly every commercial website and, most notably, Google’s search ads–have failed to help marketers move the needle on classic advertising measures like brand awareness and intent to purchase. Instead, they mainly drive people to a product page to click the buy button. Direct marketing is lucrative: Search is still upwards of 60% of Google’s ad revenue, helping it earn an estimated 15.8% net margin in 2013–but image ads will come to dominate digital advertising in this decade.

Look at the numbers: Digital brand advertising is an $18 billion market this year, according to eMarketer. Its forecast implies that number will double by 2018, at which point it will have passed search and direct marketing, with plenty of room to grow. Television advertising, comprising almost entirely image ads, is currently a $200 billion global market. And it’s a vulnerable one, as the medium’s iron grip on the bulk of ad spending looks a little less firm as younger people scatter to YouTube and Netflix when they aren’t Snapchatting or Instagramming on iPhones or skipping ads entirely on their DVRs. Some 75% of respondents to an Interactive Advertising Bureau poll of 5,000 ad execs expect to see some spending move from TV to digital video in the next year.

This explains the man cave. YouTube remains one of the greatest acquisitions of the Internet era. Larry and Sergey paid $1.65 billion in 2006 for a business that today would conservatively be worth $20 billion as a stand-alone. So what’s another $400 million or so to build out a brand ad business? …

Read the rest of the story.

Why You Won’t Really Mind Facebook’s Coming Video Ads

From my Forbes blog:

Nobody outside a few advertising partners has even seen Facebook’s coming video ads, but already the sky is falling. Critics are labeling the social network a “super troll” (whatever that means) for its plan to “blast” the “intrusive” ads into news feeds and predicting that the ads will annoy users so much that they’ll be driven away.

That’s doubtful. Here’s why:

* There won’t be all that many of them. Despite complaints about the increasing ad load, you can still scroll through many screens before you encounter more than an ad or two. You can bet that Facebook will be very careful about letting advertisers run too many of these things. Anyway, relatively few advertisers will be allowed to run them or, at $2 million for a day, afford them.

* You’re already seeing video ads on Facebook anyway. Marketers have been creating video posts on their Facebook page and then running those posts as ads. So it’s not as if these new video ads are all that new. The new part is that they will play automatically. “We’d note that we’ve personally been seeing autoplay video in our newsfeed on desktop recently, and been pleasantly surprised that it actually improves the user experience, in our view,” Macquarie Securities analyst Benjamin Schachter said in a note to clients today. “The auto-play feature is relatively unobtrusive and calls our attention to the video without expanding over other content or playing audio. We can see how it could increase video views on Facebook meaningfully.” …

Read the rest of the post.