Category Archives: digital media

Tolls

As you might have guessed from the name of my company (Keith Ritter Media), I’ve spent a great deal of time in the media business, both as a marketer and as a publisher. The business model used to be pretty simple. Create something about which people care, make them aware that you’re offering it, get them to read, listen, or watch it, and aggregate those people into a saleable audience. You hired salespeople to meet with the representatives of your real customer – the advertiser. Usually, these representatives were media buyers from an ad agency. You with me so far?

In TV, we’d offer a unit of time at a “gross” price and asked the agency to remit a “net” price, which was usually the gross minus 15%. That commission was the toll we paid to get the revenue. Obviously, how much of that the agency kept was between them and their client but it wasn’t really our concern. We did our budgeting on the expected net revenues we’d get which was pretty much a straight line derivative of the gross monies sold. Other media had similar models but in every case, the dollars received by the publisher were directly and clearly tied to the size and desirability (to marketers) of their audience.

That statement in no longer true for digital publishing and the fact that it isn’t has serious negative implications for other media as they shift to a more programmatic sales model. I have no idea how digital publishers are able to do financial plans since they can’t project revenue from audience size. That’s because they’ve allowed themselves to generate billions of dollars in ad revenue while only capturing somewhere around a third of what is spent. The 15% that used to be paid in tolls is now more like 67% although some estimates are even higher. More importantly, it’s usually impossible to predict the net revenues received from the gross revenues sold. Digital audiences are growing while publisher revenue is declining.

Where is the money going? A sponsor pays $1 for an ad impression. The agency still takes their commission, but added to the toll-takers are trading desks, DSP providers, data providers, supply side platforms, ad serving platforms, verification services (viewability, etc.) and who knows who else. In some cases, it’s the agency double-dipping, but most of the time these are third parties. Most of these ad services have no interest in either the publisher’s or the marketing client’s success. They aren’t about a quality ad environment. They facilitate a transaction. In some cases, a platform that connects both buyers and sellers charges each side a separate fee without disclosing that they’re doing so. In short, publishers, agencies, and marketers have created a system that works for no one but the VC’s that fund these ad tech companies. What happens when programmatic spreads to other media such as TV?

Publishers have many other challenges. Facebook, for example, makes more money off of some publishers’ content than do the publishers themselves without paying the publishers a dime. But the real threat to a healthy media environment is the toll-takers. When you create great content and grow your audiences, you should be the entity that benefits and not some opaque service provider. More eyeballs used to mean more money to the bottom line. Can we make that equation true again?

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Filed under digital media, Huh?

Death By 1,000 Cuts

When I was in the TV business, the most sought-after demographic was always young adults. While they often weren’t the key to the heaviest volume of product sales, it’s when we’re young that we build consumption habits and establish brand loyalty. Let’s keep that in mind as we look at some recent trends in media.

You’re probably not surprised to hear that cord-cutting – consumers ditching their cable or satellite TV subscription in favor of streaming and.or over the air services – has continued to accelerate. As the Techdirt blog reported:

MoffettNathanson analyst Craig Moffett has noted that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. SNL Kagan agrees, noting that traditional pay-TV providers lost around 1.9 million traditional cable subscribers. That was notably worse than the 1.1 million net subscriber loss seen last year.

They also noted that those numbers don’t tell the entire – and much worse – story. Those numbers report those who canceled an existing subscription. When you take into account the youngsters moving out of their parents’ houses or graduating from college and forming their own household for the first time, there are around another million “cord nevers” who are missed sales by the traditional cable and satellite providers. It really doesn’t matter what business you’re in. When you stop attracting younger consumers, you have a problem.

Why is this happening and how can we learn from it in any business? Techcrunch, reporting on a TiVo study, said that:

The majority of consumers in the U.S. and Canada are no longer interested in hefty pay TV packages filled with channels they don’t watch. According to a new study from TiVo out this morning, 77.3 percent now want “a la carte” TV service – meaning, they want to only pay for the channels they actually watch. And they’re not willing to pay too much for this so-called “skinny bundle,” TiVo found. The average price a U.S. consumer will pay for access to the top 20 channels is $28.31 – a figure that’s dropped by 14 percent over the past two quarters.

There is also the matter of convenience and personalization. Netflix, Amazon, and other streaming services do a great job in making recommendations and offering you programming based on your viewing habits. Has your cable operator done that for you lately?

We can learn from this. Cable operators who focus on broadband and “throw in” the TV offerings aren’t doing much better than those who don’t, since the overall out of pocket is sullied by broadband caps and other, often hidden, price increases that help the bottom line but only prolong the inevitable. It also just makes it easier for a lower-priced competitor to enter the market. I know enough about how the TV business works to recognize the issues with skinny bundles (it’s hard to offer channels on an ala carte basis due to contractual restrictions). We’re seeing more and more offerings that bundle channels outside of the traditional providers and that’s going to exacerbate the aforementioned trends as well.

What’s needed is a rethinking of the business model. Getting local governments to preclude more broadband competition isn’t a long-term solution (look at the wireless business!) nor it is the “free and open market” to which most businesspeople pay homage. Listen to your consumers and give them what they want, especially the young ones. Cord cutting isn’t some far off fantasy that naysayers have dreamt up. It’s here, and it’s killing you by 1,000 cuts. The rest of us can learn from this and, hopefully, not make some of the same mistakes. You agree?

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Filed under digital media, Reality checks

It’s A Scam

A couple of decades ago, as I began spending more and more of my professional time in the world of digital, I worked for a guy who wasn’t a believer in all of the hype. He thought that the prognostications of the coming demise of mass media (we worked in TV) and the rapid disruption of business models was BS. Actually, one of his favorite things to do was to pop his head into my office and say “You know this Internet thing is a scam, right?”

I used to laugh it off but 20 years later I’m thinking he might have been right. He certainly was when Web 1.0 blew up, washing away billions of investment. No serious person involved in digital business makes those same mistakes but there is a whole lot of grifting going on nevertheless. Let me explain.

First, there is the whole bots thing in programmatic advertising. If you dig paying real money to put ads in front of fake people, be my guest. The fact that the continuing race to the bottom with respect to pricing results in many legitimate publishers’ sites looking like an Arabian bazaar or a NASCAR vehicle should tell you there’s a problem. The fees taken at every step of the way by vendors who add little to nothing to the process and won’t disclose how their systems function nor the actual ways they’re blocking fake traffic is another scam. Obviously, putting profits before people (servicing your pocketbook before servicing your reader!) is a scam of sorts, too. You’re promising great content but you’re forcing your readers into suffering through a horrible; experience to get to it. Any wonder that Google is adding an ad-blocker to Chrome or that a third of US web users employ some sort of an ad blocker?

Then there are the “influencers.” As one executive who works in influencer marketing stated: 

It’s basically the biggest scam started by the countless influencer marketing platforms that popped up over the past two or three years, who find it a lot easier to recruit and work with super small influencers who will do anything for a $100 gift card. Everyone talks about how these “micro-influencers” have such high engagement, but who cares about a 20 percent engagement rate on a post when only 10 people liked it?

It goes beyond the little guys. The FTC had to once again send out more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationship to brands when promoting or endorsing products through social media. In failing to do so, these folks, many of whom are big-name celebrities, are scamming their fans by failing to tell them that they’re paid to say nice things about a product they may or may not even use.

I’m not meaning to fault the tools here. I’m just pointing out that one effect the democratization of media has had has been to facilitate many more scams. Easy access means for easy for everyone, including those with less than sterling intent. Back in the day, they would never have got past the Standards people every network had or the accountants than every media outlet had. Today, anyone with an ad and a credit card can get involved. It’s like anything else though. At some point, you have to figure out if you’re about lining your pockets at the expense of your customer in a dishonorable way or if you want to solve the customer’s problems in a way that rewards you for having done so. Your call!

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Filed under digital media, Huh?

Is There Anybody Out There?

Over the years, I’ve been privy to a lot of data. My own business analytics (my website, blog posts, social presences, etc.), as well as those of my clients, kick off a lot of information. Combine that with the ongoing streams of data from the various marketing campaigns – both search Engine ads and social media ads – I’ve administered over the years and I’ve seen a lot of information about how readers are captured and interact.

Except I don’t believe much of it anymore. Let me explain why and what it means to you.

A few weeks ago, there was a report that Facebook was breaking up an “extensive fake account scam” targeting publisher pages with false “likes.” The idea was to obtain more “friends” for the scammers they could later spam. USA Today was the biggest page hit, losing nearly 6 million “likes.“ because they were fake accounts. Facebook also came under fire for giving publishers and advertisers faulty metrics to evaluate audience reach. Even in the last day, Facebook found an error in how its video carousel ads were reporting and is having to give back cash to advertisers. I don’t think it’s news to anyone that a huge percentage of Twitter accounts are bots, and impressions generated against those bots are a complete waste.

If you read web analytics, you’ve probably encountered “referrer spam.” This has the effect of goosing your visitor numbers up while providing no value. It skyrockets bounce rates and kills conversion rates among other things, but the worst part of it is the added time it takes to address, either through filtering or other means.

Programmatic advertising, which is now nearly all of display and other ads on the web, is rife with fraud. The industry is struggling to verify if ads are seen by humans or even if they’re visible at all. Middleman after middleman “clips the ticket” as money moves from advertiser to publisher, and with over 2/3 of those dollars going to just two entities (Google and Facebook), it’s slim pickings in the publishing world. That means the pressure is on the generate big numbers and bigger results. Of course, if you can’t believe the numbers, how can you evaluate anything anymore?

Here’s how. I know I’m old school and what I’m about to say isn’t as efficient as a trading desk’s programmatic solution, but it actually works. First, take the time to look at the only results that matter. It may be revenue, it may be downloads or app installs, it may be the phone ringing, it may be physical store traffic. I used to worry about conversion rates but since we don’t really know who’s a human out there, the conversion itself is what’s key. Make friends with the sales reps from key publications. Have face to face meetings. You don’t want your sales rep to be a bot either. Pay premiums for premium content and premium results. Programmatic is a race to the bottom, even after you cut through the fraud and waste.

We need to rely on people and only upon the data that can’t be subverted or corrupted. Yes, there are people out there. Let’s go find them.

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Filed under Consulting, digital media

Legalized Discrimination

I work with a number of startup companies, as I’ve mentioned before. There are a whole host of issues that these newbies face but one they don’t, if they’re digital, is the same sort of access to their potential audiences as is enjoyed by their much larger, entrenched competition. The reason for this is an underlying principle of the Internet which is that all traffic – those little packets of information that carry data, pictures, sound, etc. – is handled equally, both by the “backbone” companies responsible for transport and by your Internet Service Provider. You know – the folks (or folks, if you have a cable provider that provides internet access and a wireless company) to whom you send a check each month in return for the ability to send cat videos to your friends.

The reason for this post is to call your attention to the increasingly loud noises out of DC about giving those ISPs the ability to discriminate. Three years ago, John Oliver did a fantastic job of explaining why this issue is important and last Friday night, he did so again. Why did he need to? Because rules that were put in place to protect everyone are being changed.

Suppose you watch those cat videos on three different video platforms: YouTube, Vimeo, and a startup called CatVideosRule. You notice that the first two are crystal clear and in full high-def, while the last takes forever to load, buffers a lot, and isn’t very clear. It’s likely that the reason for that isn’t that the startup is using bad technology but that your ISP is prioritizing traffic. Maybe they are getting fees from YouTube and Vimeo. Maybe they don’t like cat videos and are slowing down the startup. The reason doesn’t matter. What does is that it’s discrimination and it’s going to be legal. In my mind, once ISPs get to pick and choose, it’s not a big step for them to begin censoring the content as well. You know: if you want to be on our network at full speed you will not criticize us, etc.

The new head of the FCC is suggesting that we just ask the ISPs to promise they’ll play nice. These are the same ISPs that promised you 50MB speed and deliver 30MB with no fee adjustment or apology. We are already seeing some services become “zero-rated”, which means that using them doesn’t count against any data plan you may have. It’s bad enough that the ISPs are boosting their own services at the expense of others. Legalizing another form of discrimination could be the death knell of one of the things that have fostered the dynamic, disruptive growth of our digital world. Do you agree? Are you following this story?

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Filed under digital media, Huh?

New Isn’t Synonymous With Good

A decade or more ago (2003, actually), there was an early attempt at a VR world called “Second Life.” It’s still in existence although in my mind it reached its PR peak way back when. Many sports and entertainment properties rushed to set up virtual home bases in the virtual world. If memory serves, MLB built a stadium and the NBA built an arena.

I was running the NHL’s digital stuff at the time and as you might expect, the Second Life folks came to us to participate. You should also know that sports leagues keep an eye on one another (duh) and so the fact that the other leagues were there had some folks internally asking why we weren’t. I had a pretty simple answer for them: we weren’t because it made absolutely no business sense. Back then, Second Life’s business was almost a real estate play. We would have had to have bought “land” on which to construct our presence as well as to build and maintain whatever we build. The audience numbers weren’t all that great when compared with other options. When we put all the numbers together the cost was well into six figures and the potential return was pretty nebulous at best. I explained all this to my management and said that if they wanted to be involved from a marketing perspective (and pay for it out of that budget) we’d proceed but if they were asking if it was a smart business deal the answer was no.

The Second Life folks were way ahead of their time (VR is just starting to take off) but the lesson from that is just as relevant today. Look at the rush of sponsors to new platforms, whether they’re the latest hot app or a new type of programmatic buying. There is no vetting. Many of these things lack any form of third-party verification or transparency. Frankly, my guess is that many of the folks involved don’t even know what questions to ask since ad tech has become incredibly complex. Add in the controversy about rebates driving placements and investment in much of this new stuff might make a visible splash but bellyflop as a business decision.

Good strategy is timeless. Yes, we need to push forward with respect to how we display our messages and engage with our consumers. No, we don’t need to rush off a technological cliff as we try to do that in the name of being cutting edge. Newness for newness’ sake is not synonymous with good. You agree?

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Filed under digital media, Helpful Hints

How To Cure A Headache

My introduction to the business side of media came when I was a teenager. My dad was a television rep who sold time to ad agencies. Broadcasting Magazine showed up every week and once in a while, he’d have a Nielsen book in his briefcase for me to peruse. From my perspective, the business seemed pretty simple. The seller and buyer agreed on a price based on how many people they thought might be watching and how narrowly defined the parameters were with respect to when the ad could run. In other words, they negotiated and measured based on ratings, rate, and rotation.

Drawing "THE CLUSTER HEADACHE" Subti...

(Photo credit: Wikipedia)

When I actually followed my father into the media business, not much had changed. Sure, the numbers were more demographically-based instead of on household counts, but the business was pretty much the 3 R’s. Not anymore. In fact, a recent study by ID Comms found that most advertisers see media as a complex headache. It is pretty overwhelming now, both from the perspective of available media options as well as the addition of digital channels such as social media. The fact that a huge percentage of media is now bought programmatically through systems that are often rife with fraud and lacking in transparency adds to the headache.

I don’t think it’s the complexity of the media world that’s causing the headache. I think it’s a misplaced emphasis on buying efficiency at the expense of both strategic thinking and measuring results on things other than easily-manipulated metrics such as CPM. If a campaign makes the cash register ring, it’s effective. If it doesn’t, what good is it to have delivered something useless in a highly-efficient manner?

I’ve spoken with friends on both the sales and buying side of the equation. There seems to be universal frustration but not much in the way of solutions. It really needs to come from the people who control the purses – the clients. They need to stop thinking about CPM’s as a measure of efficiency (at least when it comes to digital, anyway) and place a lot more emphasis on strategy. Is the register ringing? Is the phone? Are there more interactions on social even if the number of “likes” isn’t rising? Is there a buzz about your brand? Those are the modern metrics that are relevant in the long-term and that kind of thinking can cure a media headache many folks are now experiencing. You agree?

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Filed under Consulting, digital media, Thinking Aloud