YouTube’s Ad Boycott Becomes Google’s Biggest Headache

YouTube’s inability to keep big-brand ads off unsavory videos is threatening to transform a rising star in Google’s digital family into a problem child.

It’s not yet clear whether a recent ad boycott of YouTube will be short-lived or the start of a long-term shift away from the video service — one that could undercut Google’s growth and that of its corporate parent,Alphabet Inc.

Alphabet’s first-quarter results, released Thursday, provided few clues. Major advertisers didn’t start pulling their money from YouTube until the three-month period was nearly over.

The company’s earnings rose 29 percent to $5.4 billion while revenue climbed 22 percent to $24.8 billion. Shares surged nearly 5 percent, to $933, in Thursday’s extended trading.

But the fallout from the YouTube boycott is likely to be felt through the rest of this year. Skittish advertisers have curtailed their spending until they are convinced Google can prevent their brands from appearing next to extremist clips promoting hate and violence.

“There is no entity in the world that is more risk averse than a senior marketing person,” says Larry Chiagouris, a marketing professor at Pace University in New York. “They don’t want to go with a media choice that presents problems for a brand, and they don’t have to because they have many other choices.”

Google CEO Sundar Pichai told analysts during a Thursday review of the first quarter that the company has had “thousands and thousands” of conversations with advertisers as YouTube takes steps to protect their brands. “We are evolving overall to a better place,” Pichai said.

At another point, he assured analysts that YouTube is still experiencing “extraordinary” growth without providing specifics.

Even if YouTube continues to lose advertisers, it won’t leave a huge dent in Alphabet’s earnings. That’s because marketers are expected to keep feeding the company’s golden goose — Google’s dominant search engine. Ads appearing alongside the billions of search results Google churns out each day still generate most of Alphabet’s revenue even as it expands into other fields.

But ad spending has been accelerating at a rapid pace on YouTube over the past two years as brands sought to connect with its audience of more than 1 billion people. Now it looks like things might taper off.

Before the boycott began, YouTube’s ad revenue after subtracting commissions was expected to rise 26 percent this year to $7 billion, based on estimates from the research firm eMarketer. Alphabet doesn’t disclose YouTube’s finances.

Advertisers began to flee YouTube last month, after The Times in London and other media outlets turned up evidence that their brands were appearing alongside clips promoting terrorism and racism.

The findings alerted advertisers that YouTube didn’t have adequate technology or staffing to shield brands from some of the appalling material that gets posted on a site that receives 400 hours of video per minute.

“This is an ostrich situation where the ostrich just pulled its head out of the sand,” says Harry Kargman, CEO of Kargo, which helps manage ad campaigns on mobile devices.

At one point, about 250 advertisers were boycotting YouTube. (Some also stepped back from a related system that Google operates to place commercials next to videos on outside websites.) The list included big-spending marketers such as PepsiCo, Wal-Mart Stores, Starbucks, AT&T, Verizon, Johnson & Johnson, and Volkswagen.

It’s unclear how many, if any, of those have returned to YouTube since Google promised to hire more human reviewers and upgrade its technology to keep ads away from repugnant videos.

Both Verizon and AT&T, two companies that are trying to expand their own digital ad networks to compete with Google, told The Associated Press that they are still boycotting YouTube. FX Networks confirmed that it isn’t advertising on YouTube either. Several other boycotting marketers contacted by AP didn’t respond.

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Podcast: Inside Bloomberg’s Nine-Figure Ad Business

As global CRO at Bloomberg Media, Keith Grossman oversees a “business within a business” that reaches 62 million users and brings in nine figures of revenue annually.

In the latest episode of AdExchanger Talks, Grossman describes his sales strategy for that business-focused audience, and where programmatic fits in.

“Ultimately, every dollar we have that’s digitized will be bought and sold by computer,” Grossman says. “What programmatic provides is an ease of transaction, should that be the method in which somebody wants to partner with us.”

And, he adds, “It opens us up to thinking about how we price ourselves differently not annually, or monthly or weekly or even daily, but ultimately down to the millisecond. My dream is to be in a world where we don’t have a static rate card, but rather to have a fully dynamic one.”

The Bloomberg Media audience, if not the revenue, is far larger and more diverse than the core terminal business, which reaches 327,000 mostly Wall Street investors.

Much of Media’s audience is outside the financial sector, in areas like B2B, consulting and marketing. It reaches those professionals across every platform (print, digital, television, radio and live events). And the company has been proactive on social, snatching up a myriad of Twitter handles, including @business and @brexit.

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Netflix’s Use Of Big Data: Lessons For Brand Marketers

by Jonathan Cohen, principal brand analyst at Amobee.

Last Friday, Netflix founder Reed Hastings celebrated Netflix getting its 100 millionth subscriber, a major milestone for a company that has spent the past 20 years thriving on science and analytics.

Netflix has arguably been the biggest disruptor of the decade to the TV and film industries, and it’s impossible to describe its success story without recognizing the central role big data has played every step of the way.

Its business model depends on using analytics to understand its audience better than its competitors. For brand marketers, for whom understanding audience behavior is equally essential, Netflix is a great case study on how to leverage big data correctly.

I see three ways in which Netflix has successfully used actionable analytics that can be relevant for brands.

Outreach Needs To Be Personalized

Even before Netflix was a video streaming service, its recommendation engine played a critical role on its website. Back when its existed solely as a DVD rental-by-mail-business, Netflix didn’t have enough inventory to ship the biggest new releases to all its customers overnight, so it created an algorithm that suggested movies its customer would be interested in, based on their previous picks, and didn’t emphasize new releases.

The strategy worked, and in 2006 new releases represented [PDF] less than 30% of Netflix’s total rentals, compared to new releases making up 70% of total rentals at standard video stores.

Since it made the shift to online streaming, a more sophisticated recommendation engine has been successfully surfacing content that’s personally relevant and engages users to the point that they spend on average 17.8 minutes browsing before selecting a program to watch, compared to 9.1 minutes of browsing for cable users. That keeps Netflix’s monthly churn rate in the low single digits, extending the lifetime value of customers and saving an estimated $1 billion-plus per year in retention efforts.

Minimizing Data Loss Is A Strategic Advantage

“Big data helps us gauge potential audience size better than others,” explained Ted Sarandos, Netflix’s chief content officer, in a 2016 interview.

That’s true, but it’s also important to recognize why it’s able to take advantage of analytics to an extent that traditional broadcast and cable networks can’t. Netflix has exact data at the individual user level as a content platform and creator in a walled-off ecosystem.

Netflix paid $100 million in advance for 26 episodes of “House of Cards” because it knew people who watched the British version also loved Kevin Spacey and David Fincher movies, an insight that’s only possible in a walled-off ecosystem, not from estimated ratings.

Additionally, when it came time to promote “House of Cards,” Netflix had enough audience data to serve different variations of its ad to different audience personas. For instance, “Thelma & Louise” fans saw a version focusing on the female characters, while people who viewed Kevin Spacey movies would see him as the focus.

Relating that to brand marketers, the more unified their digital spend (while minimizing the challenges of working with multiple vendors and metrics), the less data loss there will be, allowing for more educated and effective campaign optimization efforts.

Adapt The 13-Millisecond Rule

Netflix understood it needed to capture a member’s attention within 90 seconds or they’d leave the site. And acknowledging recent research that found the human brain can process an image in as quickly as 13 milliseconds, Netflix began A/B testing the box art thumbnail image for select films, allowing users to pick between six options. Video viewing increased by 20%-30% for the winning images, with photos showing facial expressions that reflected the tone of the film or TV show tending to do well.

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Facebook Aims To Nose In On Google’s Territory With Dynamic Ads For Flights

Facebook is lusting after lucrative online travel ad dollars.

And on Thursday, Facebook launched its next assault on the travel industry – encroaching further on Google’s turf – with the global rollout of Dynamic Ads for flights.

The release will allow airlines and flight advertisers to retarget users across Facebook, Instagram and Audience Network with ads tied to browsing behavior on and off the platform.

Advertisers are able to bring their own data to the table, including activity on their mobile site, app and website.

The addition of the flight vertical rounds out Facebook’s Dynamic Ads for travel offering, which Facebook developed last year to help hotels and destinations generate bookings.

Travel marketers spent almost $6 billion on digital advertising in 2016 in the US alone, according to eMarketer, while digital travel sales are expected to hit $755.9 billion by 2019.

Google Flights, Google’s search engine for travel, already generated at least $12.2 billion from travel advertisers last year, but Facebook’s play is that it’s a place where people go to converse with their friends and family about travel plans.

Now, Dynamic Ads for travel and flights allows Facebook to edge in when consumers are ready to book – which is increasingly happening on mobile. A research study conducted by GfK for Facebook last September found that 85% of travel is planned on a mobile device.

“People come to us every day to discover and talk about what matters to them,” said Christine Warner, Facebook’s US industry head for the travel sector. “And then Dynamic Ads for travel capture people when they express interest in your brand with clear intent about where they want to go.”

FacebookCathayCathay Pacific, an early beta tester of dynamic flight ads, has seen a sixteenfold increase in booking volumes and a 15% reduction in its cost per acquisition. Delta is also using the product.

For now, the only creative formats available are static images and carousels, although video is something Facebook would consider down the line, Warner said.

Tackling flights in a dynamic ad format is a complex endeavor. The ads need to take origin and destination into account, as well as the continually fluctuating price of flights.

Airlines can either share specific flight prices pegged to time windows or enable Facebook to target individuals based on the pixel fire that happens before serving an ad that’s dynamically aligned with that person’s last search.

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TV ads just went digital, and this could have far reaching impact on the industry

The internet has changed the way we consume multimedia content. The shift to smaller screens is very much evident, especially in a ‘mobile-first’ market like India. Availability of faster connectivity options such as 4G and Wi-Fi hotspots have only accelerated this trajectory. Current media such as TV broadcasters are obviously bleeding. Fortunately, a lot of them are evolving and embracing the digital age as we know it. Though sporadic in nature, the evolution of the traditional media has begun.

Smaller screens, of course, make a lot of sense in the digital age. You can catch up with any news, videos and even communicate with your friends on-the-go. With mobile displays peaking to 2K resolution, the user experience has only gotten better. Last year a Vuclip study revealed that while TVs were the preferred medium to consume content, people were increasingly getting acquaintance with streaming and downloading on their smartphones. ALSO READ: Online video consumption habits of Indians reveal the challenges for Netflix and other streaming services

In the West, the shift is happening at a much faster pace. According to an Accenture study, laptops and desktops have surpassed TVs as the preferred devices for watching TV shows. Also, the people who prefer watching shows on TV dropped to 23 percent from 55 percent in the previous year.

That being said, TVs are still around in our living rooms, and I don’t think they are going to be redundant anytime soon. What TV manufacturers and even broadcasters are doing to stay abreast with the shift in paradigm is embracing the internet.

Already a slew of smart TVs that let you surf the internet and access your favorite streaming apps have launched in the market. In India, these smart TVs are still niche, but growing popularity of Apple TV and Chromecast, and now Amazon Fire Stick, suggests people are wanting to get more out of their TV sets, rather just watch the routine channels.

As far as the televisions go, brands like VU have already some efforts in this direction. Last year, it introduced Netflix as preloaded feature on its TV along with a slew of entertainment focused apps. “Video-on-demand is big. We have partnered with Hotstar, Eros Now and bunch of other apps on the Opera store to offer video content on television,” VU Technologies chief Devita Saraf is quoted as saying. Though LeEco is currently in hot soup, it did make an attempt to bring its content ecosystem preloaded on its TVs. Xiaomi, on the other hand, has done the same in China.

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Contextual Brand Safety: Now What?

On Feb. 9, The Times, one of oldest and most venerable newspapers in the world, ran a story titled “Big brands fund terror.” It dedicated an additional four-page spread to the subject of brands’ advertising funding inappropriate and illegal activities on YouTube. Brands were named.

Did clients overreact to the situation by pausing advertising on YouTube? When your brand, the cornerstone of your offering and most precious asset, is in danger of being called out in the mainstream press, it seems more than sensible to pause advertising on YouTube until you understand the risk. So, no, clients were right to be cautious. The risks of reputational damage far outweigh the risk of underdelivering on a campaign for most brands.

While most clients are carefully considering dipping their toe back into the water using enhanced tools to keep their brands safer, some clients will simply reason that even the smallest risk is not worth taking, and they will seek audience reach in safer places.

Google’s Response

Any response would rarely be deemed good enough when reacting to a crisis like this. Given that Google had to absorb the situation, respond at a global level and revert with tangible solutions, I think that it did a pretty good job.

However, the industry must keep up the pressure on solutions – this problem is far from over.

Did Google go far enough? Not by a long chalk. However one may rationalize the difficulty in managing the stupefying levels of uploads that Google processes every minute, it is still Google’s responsibility to keep advertisers safe on its platform. The industry expects Google to use its massive resources and technical acumen to tackle this problem. We may intellectualize that there is no such thing as 100% assurance on an uncurated social platform like YouTube, but brands expect a zero-tolerance approach to contextual brand safety.

Google and the other social media platforms should now let third-party measurement accompany ads onto their platforms to allow marketers to block ads from appearing with inappropriate content. Third-party technologies may not be perfect, particularly when it comes to video, but social media partners must realize that the industry will only be truly satisfied that we are doing what we can to detect and avoid inappropriate content if brand safety measurement is driven by objective, external verification companies. Surely if we open-source the challenge and work on a solution together, we will devise a better solution, faster – and with industry buy-in.

Other Uncurated Social Networks

The risk around contextual brand safety is not confined to GDN or YouTube. Any social network that allows users to upload uncurated social content has limited control of what appears on its platform. Some, like YouTube, may be deemed riskier because advertising can share the same screen as the inappropriate content, while others may be considered less harmful because the ads appear on the screen preceding or immediately following.

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The Wall Street Journal reports that Google is readying its own ad-blocker as part of its Chrome browser. Chrome is the undisputed most used browser in the world with a market share north of 41%.

The ad blocker would be added to both mobile and desktop versions, per the report, and target what the company deems as bad user experiences. As banner ads have become less effective, more intrusive ads have popped up – literally. Pop-up ads, long the bane of internet users since the early days of the web, are still around. Other targets may be auto-play video with audio enabled, ads that take over your screen, or cause you to take an action before getting the page you’re trying to see.

Google hasn’t commented on the specifics, but said in a released statement:

“We’ve been working closely with the Coalition for Better Ads and industry trades to explore a multitude of ways Google and other members of the Coalition could support the Better Ads Standards.” – Google via statement
Users may applaud the move. As any as a quarter of internet users have ad blockers already on their desktop computers and 10% have ad blockers on their phones (SOURCE: Interactive Advertising Bureau). That’s indicative of a desire to better control the experience on-line when it comes to advertising.

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The Guardian pulls out of Facebook’s Instant Articles and Apple News

Publishers aren’t happy with the deal platforms are cutting them. Now, the Guardian has dropped both Facebook’s fast-loading Instant Article format and will no longer publish content on Apple News.

The publisher had gone all-in on Instant Articles, running every single Guardian article via the format for the last year. It was one of first U.K. media owners to adopt the Facebook format, alongside BBC News in the spring of 2015. The Guardian was also among the first publishers to join the Apple News app when it launched in the U.K. in October 2015. It ran all its articles in the app.

A Guardian News and Media spokesperson confirmed the removal, and issued the following statement to Digiday: “We have run extensive trials on Facebook Instant Articles and Apple News to assess how they fit with our editorial and commercial objectives. Having evaluated these trials, we have decided to stop publishing in those formats on both platforms. Our primary objective is to bring audiences to the trusted environment of the Guardian to support building deeper relationships with our readers, and growing membership and contributions to fund our world-class journalism.”

The publisher ceased running content through both Apple News and Instant Articles today. The move is a clear sign of displeasure in how these platform-publishing initiatives have treated the business needs of the Guardian. Many publishers have complained the money they make off visits to IA pages, for example, do not measure up to what they get on their own sites.

The Guardian isn’t the only publisher that has lately cooled on Instant Articles, with several publishers are running far fewer articles within that format, according to analysis by NewsWhip. BBC News, National Geographic and The Wall Street Journal barely seem to be using Instant Articles either. The New York Times has pulled out altogether.

Plenty of publishers remain on IA, of course, but the loss of marquee publishers like The New York Times and the Guardian is not exactly a great sign of health. Other publishers are likely to take a hard look at where their interests intersect with Facebook’s. The same goes for Apple News, although signs point to many publishers seeing promise there.

The draw of Instant Articles was that they load much faster than the Facebook links that take readers back to most publishers’ own sites. Engagement is also supposedly higher on those articles than regular Facebook links. But Instant Articles keep people within the Facebook app, rather than sending readers through to a publisher’s own sites, where they can monetize them more effectively, and have better control of reader data.

The Guardian, under pressure to cut costs and boost revenue, is pushing forwards with its paying membership scheme, and for it to keep building that successfully it must prioritize driving readers back to its own site, where it can ask them to donate or become a paying member, as well as serve advertising.

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A Chrome Ad-Block Addition? Really?

Rumors that Google is considering adding a built-in ad-blocking feature to its Chrome browser elicited a mix of shouts and shrugs across the digital advertising landscape.
The potential Chrome ad-blocking extension, first reported Wednesday by The Wall Street Journal, would block ad formats deemed unacceptable by the Coalition for Better Ads (CFBA), a cross-industry trade association founded last year to formalize digital standards.

Though the CFBA is uninvolved with the reported Chrome ad blocker, “it’s the logical extension of the goal we’re trying to achieve and in line with what stakeholders said they intended to do when standards were established,” said Stuart Ingis, a partner at the law firm Venable who represents the organization.

With so few details known and the product unconfirmed, companies across the digital media spectrum are holding their peace.

“We do not comment on rumor or speculation,” said a Google spokesperson. “We’ve been working closely with the Coalition for Better Ads and industry trades to explore a multitude of ways Google and other members of the coalition could support the Better Ads Standards.”

Digital Content Next, a trade group for digital media suppliers, “is 100% committed to the Coalition for Better Ads as the forum for addressing consumer concerns around ad experiences,” according to association President Jason Kint.

“We’ll wait to hear publicly from Google on what exactly they’re planning to roll out,” he said

The Wall Street Journal reported that autoplay videos with automatic sound and prestitial ads with countdowns (which are full-page takeovers before entering a site) are among the ad formats being considered for blocking by Chrome.

Some top media brands, including Forbes, carry at least one format that fail to meet those standards, said Ben Barokas, founder and CEO of the publisher technology company Sourcepoint.

“I’d guess it’s on purpose that there are no specifics,” Barokas said, “because on some things they may or may not have the mandate of the industry to decide what’s acceptable and what’s not.”

The addition of ad blocking to Chrome “raises the perception of anticompetitiveness,” but isn’t expected to impact business, according to a CFBA member and Google competitor speaking on background due to nondisclosure agreements. Establishing ad standards “is really what the CFBA was created for.”

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Booming over-the-top video set to overtake TV within five years

Within the next five years, viewership hours of live linear streaming over-the-top (OTT) video will surpass those of traditional broadcast TV, according to the third annual OTT Video Services Study.

Based on responses from almost 500 media industry professionals, the study from Level 3 Communications, Streaming Media and Unisphere Research found that more than a quarter of participants expect OTT year-over-year revenue growth in 2016 to 2017 to increase as much as 25%, and about half of respondents anticipate growth of anywhere between 30-50%. Nearly two-thirds of respondents indicated that OTT-related services will account for more than a quarter of their overall business over the next three years.

The latest study did find some new trends, notably that bandwidth limitation challenges are giving way to concerns around quality of service and quality of experience. In addition, while VR-video garnered notable attention in the previous survey, the 2017 OTT Video Services study found that respondents are focused on both higher frame rates (HFR) and high-dynamic ranges (HDR). Almost half of respondents offering or planning to offer both options, while an additional fifth were focusing only on HFR delivery, such as 1080p60, which is often used to smooth out sports content.

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