The Guardian is Suing Rubicon Project

The Guardian is to sue Rubicon Project, a sell-side ad technology company, for failing to disclose fees they charged advertisers. The disputed figure is believed to be in the single digital millions according to Business Insider, but Rubicon Project insist that it made not attempt to conceal the charges. In a statement provided to VAN the company said, “We charge buyer fees for certain services we provide and have disclosed that fact publicly, including in our SEC filings, and in client contracts, including a contract we signed with Guardian over a year ago. We split our fees between sellers and buyers, reflecting the value we provide to both.”

The statement continued, “Our marketplace fees on transactions support the considerable and compounding costs of performing an open auction – including our extensive brand protection and inventory quality screening, and malware protection. As we add new buyers and sellers onto the platform, the resulting impact is compounding infrastructure costs. Without buyer fees we would need to charge sellers more, and we think our approach is fair.

“Rubicon Project connects more than 500,000 advertisers, hundreds of DSPs, more than 1 million websites and 20,000 mobile applications. We believe that the aggregate fees we charge represent the value for our services and are in line with industry practice. The Guardian’s claims amount to a contract dispute, which we will vigorously contest in court.”

As Mediatel reported last year, The Guardian discovered that on some occasions it was only receiving 30 pence out of every pound spent on media as various intermediaries took a slice of the spend.

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Telstra Joins YouTube Advertising Boycott

Australia’s largest telecommunications company Telstra have joined ranks with companies across the world by dropping advertising on YouTube in response to an investigation by The Times last week, which found that ads from the BBC, the UK government and UK retailer Argos were appearing alongside extremist and offensive content.

The telecommunications giant says it is working with Google to ensure its strict advertising guidelines were upheld, but in the meantime has suspended its ads from the video platform.

“We have made the decision to pause our advertising on YouTube until we are satisfied there is an appropriate level of protection for our brand,” a Telstra spokesman told the Sydney Morning Herald.

Bunnings, Foxtel and Caltex have also suspended their ads.

It’s been estimated by analysts that the global backlash could cost Google $750 million in ad-spend.

Google’s Chief Business Officer Philipp Schindler said in a blog post last week that the company would make changes to improve ad placement.

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US pay-TV penetration set for slide

The US and Canadian pay-TV markets are set for serious headwinds as the industry is hit by subscribers dropping services and a significant rise in on-pay homes, says Digital TV Research.

In its North America Pay-TV Forecasts report, the analyst forecasts that the number of pay-TV subs in North America will fall by ten million from 112 million in the peak year of 2012 to 102 million in 2022, a 9% decline. Though it says that this is evidence of a massive cord-cutting problem in itself, there will also be a steep rise in the number of non-pay homes during this period. These are expected to hit 41.56 million by 2022, nearly double the amount over the same research period. The total number of TV households will increase by 11 million meaning that pay-TV penetration will drop from the peak of 87.4% in 2013 to 75.2% by 2022.

The research company adds that the number of pay-TV subscribers declined by two million in both 2015 and in 2016, and that the 2022 total will be five million lower than the end-2016 total. However, it noted that the rate of decline is actually slowing.

“Where are the lost subscribers in the decade to 2022 going?” asked Simon Murray, principal analyst at Digital TV Research. “Some analogue cable subscribers will give up paying for TV services rather than convert to an often more expensive digital platform. Cord-cutting is also a factor. It has been somewhat exacerbated by the traditional pay-TV operators starting their own OTT platforms: satellite TV platform Dish provides Sling TV and DirecTV Now has recently started. Other distractions include Hulu, HBO Now and, of course, Netflix and Amazon Prime Video.”

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Challenge: Monetizing Facebook Live

Just over a year ago, Facebook introduced its video streaming service Facebook Live and invited one and all to give it a try. Many broadcasters have accepted the invitation and are using it effectively for breaking news and interactive shows. It brings new dimensions to local TV news, but so far no meaningful additional revenue.

By Harry A. Jessell

On Feb. 24, my wife and I came home from dinner and noticed two helicopters droning above our home in Chatham, N.J., outside New York. Since there were no searchlights, I guessed they were news choppers and something must have happened nearby, a big accident on Rt. 24 perhaps. We went to our smartphones to see what was up.

Rosemary found it first, on WCBS’s Facebook page. From its chopper, the CBS flagship was streaming live pictures of a four-seat helicopter that had crash-landed in an apartment building complex a quarter of a mile from us. It wasn’t bad. The downed chopper was mostly intact and the pilot and the sole passenger had walked away, but WCBS stuck with the story for a good while as the few details dibbled in.

As news, it was no big deal. But it impressed on me just how important Facebook has suddenly become in local TV news. I was aware of the phenomenon from stories we have been aggregating and from our own reporting, particularly in promoting news and news talent.

But nothing makes a trend more real than when you are being personally touched by it — in this case, what accident investigators would call an “off-airport landing” blocks from my home.

This week, our Michael Depp reinforced for me just how important Facebook Live has become in broadcasting with an article on how the Scripps stations have made Facebook its go-to digital platform for breaking news.

At Scripps at least, websites have become an afterthought and Twitter a runner-up. “The audience for Facebook is much larger and more representative of the local news demographic, broadly speaking, where Twitter is more niche,” says Scripps’ News VP Sean McLaughlin. “If you have some sort of video-intensive breaking news situation, Facebook Live is simply a better platform than Twitter.”

Just over a year ago, Facebook introduced its video streaming service dubbed Facebook Live and invited one and all to give it a try. After some initial resistance, many broadcasters have accepted the invitation and quickly incorporated it into their news mix in one fashion or another.

For the biggest stories, the stations will preempt regularly scheduled broadcasts as they did here in the New York area last week when we were hit with a fluke snow storm. But for everything less than “the biggest,” they will turn to Facebook.

Facebook Live brings new dimensions to local TV news. It gives viewers (users?) a behind-the-scene look at the news as it is happening, which lends authenticity to it, a quality that many believe is lacking in the over-produced newscasts. With Facebook, newsgathering becomes reality TV that’s actually real.

And Facebook allows reporters and producers to interact with viewers in a way that they have never done before. Facebook users are accustomed to commenting and are not shy about it.

I should point out that stations are using it for more than breaking news. Weathercasters have created regularly scheduled shows and built communities of weather watchers around themselves. Some newsrooms have hosted panels to comment on — and solicit comments on — the news of the day.

The website may have turned stations into round-the-clock news operations, but Facebook is turning them into round-the-clock live TV news operations. That’s good for journalism and good for the public.

But I suspect that it doesn’t come without cost.

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A.N.A. Asks Digital Players for Advertising Safeguards

The Association of National Advertisers called on Google’s YouTube and other digital platforms to create stronger safeguards to protect brands from having their advertising run with questionable content.

The move comes as an increasing number of advertisers have pulled ad dollars from YouTube after revelations that ads for some major brands are running adjacent to content from hate groups online.

“We join the ecosystem in calling upon all digital advertising platforms to take the necessary steps to guarantee the safety and reputations of our brands. Brands choose those platforms to work hard for them to achieve all of their business and brand building objectives. But the most important of those priorities is ‘to do no harm,’” said Bob Liodice, CEO of the ANA.

“We view brand safety issues as an unfortunate example of the many challenges that exist throughout the digital media supply chain. The current crisis is representative of the issues that ANA—and others—have raised with respect to fraud and risk, reduced transparency, suboptimum measurement and nebulous productivity,” Liodice said.

Digital advertising has also been bedeviled by measurement issues that have eroded advertiser trust in the audiences they’re getting when the buy ads online.

It was unclear how much this situation would help TV advertising. Analyst Michael Nathanson said that TV networks could get a modest boost from advertisers fleeing digital for the relative safety of national TV.

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Brands pull ads from Youtube

A growing number of brands have suspended their spend with Google, following The Times’ investigation into ads appearing alongside extremist content on YouTube and Google’s display ad network

More than 250 brands have reportedly frozen all their campaigns with Google aside from search, after the issue – which first seemed isolated to the UK – spread globally as major US advertisers began to boycott the online ad giant too. According to The Times the spend pulled amounted to hundreds of millions of dollars.

The tech company has responded with an announcement of tougher ad policies, increased control for marketers, and said it would grow its capacity to review offensive content with a hiring spree.

Here’s a list of some of the biggest advertisers who have stopped their spend with Google and YouTube in the UK:

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US now a “binge watching, streaming, multitasking nation”

Nearly three-quarters (73%) of US consumers and nearly 90% of millennials have watched binged video content, according to the findings of Deloitte’s 11th Digital Democracy Study.

Furthermore, almost 40% of millennial and Gen Z binge watchers do so weekly and they watch an average of six hours, or five hours of content, in a single sitting.

The study found that the device of choice for key demographics remains split: Gen Z and millennials spend about half their time watching television shows and movies on devices other than a TV. Additionally, Gen X favours the TV by over 60% and Baby Boomers watch over 80% of programming on the TV. Also, nearly all (99%) of millennials and Gen Z are multitasking while watching TV, averaging four additional activities, such as texting, browsing the web, using social networks, reading email and online shopping.

Almost half (49%) of US consumers and nearly 60% of Gen Z, millennials and Gen X subscribe to at least one paid streaming video service. However, the survey notes that despite the growth of paid streaming services, US consumers spend more time streaming video via free services (40%) than paid streaming subscriptions (35%).

In terms of advertising, 67% of consumers, and over 70% of Gen Z and millennials, find mobile ads on their phone to be irrelevant. However, 37%of consumers find it valuable to receive location-based ads on their smartphone and use them regularly.

More than 80% of consumers will skip an online video ad if allowed, while almost half (46%) pay more attention to an ad they can skip versus an ad they cannot skip.

Almost half (45%) of millennials use ad-blocking software, with 89% of the group saying their primary reason is to avoid all advertising. In fact, 40% of them also noted use of ad-blocking software on their smartphones.

Online recommendations on social media (27%) are more influential than TV ads (18%) for Gen Z in influencing buying decisions.

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Digital transition drives growth in European cable

The cable industry is growing, with total revenues up 4.6% year on year based on IHS statistics released today by the industry’s trade association, Cable Europe, at the annual Cable Congress in Brussels.

Revenue growth remains solid across all cable services: broadband internet (7.5%), TV (3.7%) and telephony (2.1%). Broadband represents an increasing share of revenue at 32.8%, and the number of broadband subscribers rose 5.9%. Television continues to be the largest source of profit for the industry, accounting for 46.5% of the €23.45 billion of revenue.

The digital transition continues to be an important driver for TV services, with revenue growth for TV driven by a strong appetite for digital subscriptions and video on demand (VOD). Digital TV subscribers rose 6.3%, accounting for 66.3% of all TV subscriptions and generating 80% of TV revenue.

More than 2.7 million Revenue Generating Units (RGUs), the industry metric for the total sum of TV, internet and telephony subscriptions, were added in 2016, and the total across Europe is now 118.24 million.

Manuel Kohnstamm, President of Cable Europe, commented: “Overall digital VOD revenue has increased by 14.1% year on year, showing solid growth in the year. Going forward, we still see huge opportunities for sustained digital growth in Europe, as 18.5 million analogue TV subscribers are still to convert.”

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Native display ads to spike by a third in 2017

Native digital display ad spending in the US will grow 36.2% this year to reach $22.09 billion, according to eMarketer’s inaugural forecast.

For the first time this year, native ad spending will make up more than half (52.9%) of all display ad spending in the US, the firm said.

“Growth of native digital display is being driven by publishers’ pursuit of higher-value and more mobile-friendly inventory, as well as by advertisers’ demands for more engaging, less intrusive ads,” said eMarketer principal analyst Lauren Fisher.

An overwhelming portion of US native display ad spending goes to social networks, driven mainly by Facebook. This year, native social network display ad spending will reach $18.59 billion, representing 84.2% of all US native display. Importantly, social’s share of native is falling and will drop to 82.2% next year, as non-social (specifically in-feed and sponsored content) grows faster.

“We’re seeing a huge ramp up in non-social publishers adopting in-feed ads and video,” Fisher said. “This, coupled with continued advancements on the programmatic native front, will accelerate non-social native ad spending.”

Since native advertising is largely purchased on social platforms, it’s also almost entirely mobile. Native mobile display ad spending will reach $19.50 billion this year, representing 88.3% of all native advertising – with that share growing. And native mobile will represent 64.5% of all US mobile display ad spending this year.

“Greater demand for native formats such as in-app rewarded video ads, and greater momentum around redesigning the mobile experience for a more in-feed and mobile-first world will also draw greater ad dollars to native inventory on mobile devices,” said Fisher.

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Three ways Netflix continues to set the pace in SVOD

Netflix dominating the competition in usage

New user data from Netflix suggests the service is watched much more than competitor services. The company reports that on an average day it delivers 125 million hours of video to its approximately 100 million members. That works out to an hour and quarter per day per subscriber. It also says that the busiest day ever occurred on January 8th 2017, when the company streamed 250 million hours. That’s two-and-a-half hours of video per subscriber.

Though Netflix has not broken out this data regionally, there’s reason to believe that usage is much higher in established markets like the U.S., Canada, and the UK. For example, one of the most popular devices to stream Netflix on is a Roku set-top box. In December, Roku said that it’s 14.5M active users watched 1 billion hours of video and music. That’s 2 hours and 24 minutes per day. The company says that the average active user streamed an hour-and-three-quarters a day in 2016.

Combining Netflix and Roku data suggests SVOD leader absorbs the lions’ share of streaming on Roku set-top boxes. It also implies usage of all other streaming services, including Amazon Video and Hulu, doesn’t even come close.

Taking anchor tenant status in consumer entertainment mix

Consumers are migrating video consumption to connected platforms. Over the last three years, the average U.S. consumers has increased connected device viewing from 257 minutes per week to 388. The Roku and Netflix usage data suggests that as people shift their viewing, Netflix is the first service they turn to. Sanford and Bernstein media analyst Todd Juenger agrees. He says that Netflix has become the anchor tenant of consumer online video offerings.

Being anchor tenant is a coveted spot in a consumer’s video portfolio. Consumers will pay for anchor tenant services month-in-and-month-out. Chances are they will only have a few of these. Perhaps one for scripted shows, another for movies, and one more for live sports. All other services likely will be subscribed to as needed, and then dropped at other times.

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