Advertising Week Briefing: ‘There’s a lot of failing upwards’

Advertisers are waking up to OTT, but challenges remain
A common complaint in any honest conversation about the world of ad-supported, streaming video is that advertising has not caught up with consumer adoption.

Make no mistake: advertising is growing in over-the-top environments. Hulu topped $1 billion in ad revenue for the first time last year. And Roku, with the largest market share of OTT devices in the U.S., expects its ad revenue to surpass the money the company makes in selling streaming dongles and boxes.

But one issue is that for many marketers, “OTT” is not its own line-item in the marketing and advertising budgets. One top entertainment marketing exec told Digiday that Hulu, for instance, sits in a premium content category alongside ABC, HBO, Netflix and other major TV networks. This is separate from the budget this marketer devotes to digital publishers and video creators such as BuzzFeed and Group Nine Media. One is not necessarily better than the other, he said, but it shows how this marketer thinks about these different companies.

The marketer admitted that it expects to do more with streaming video companies going forward both from ad sales and content marketing perspectives.

But even with all of the consumption that is happening on connected TV screens, there are still only a handful of apps that enough people care about for marketers to care. Beyond Netflix, Hulu and Amazon, networks such as CBS, Showtime and HBO have been able to snag several millions of subscribers. As one prominent TV ad sales exec said, “OTT is TV. It’s just a different way of delivering the same shows and movies and sports that people have always watched.” This makes it difficult to separate out OTT in a marketer’s budget.

Hulu’s director of ad sales research, Asaf Davidov, said that Hulu is beginning to see more interest from direct-to-consumer advertisers such as Blue Apron, Peloton and Dollar Shave Club. The challenge here is that these marketers need greater amounts of real-time attribution in an environment where measurement remains an overall challenge.

“Connected TV is not ‘cookie-able’ like PCs and it doesn’t have a mobile ID like tablets,” Davidov said. “Being able to solve for that will be important.”

Solving for measurement shouldn’t come from the big measurement firms alone, Davidov argued. Instead of a “one-size-fits-all” approach to measurement in OTT environments, Davidov said it’s on every OTT publisher to work with Nielsen, comScore and other measurement firms in a way that makes sense for what their business model is. For instance, Hulu is both a branding medium like traditional TV but also provides real-time data for marketers that’s more akin to digital media.

“Ultimately, it starts with advertisers and agencies who understand the value of OTT and are now realizing that we need to be even more precise in how we measure this,” Davidov said.

— Sahil Patel

Overheard
“Even if a client wanted attribution, we couldn’t afford it.”

“Is this the right way out? It smells like urine.” — Attendee, taking the panel exit route to the street

“Data, data, data. Really? You’re using data to get a better understanding of who your customers are? That’s incredible.” — Research exec at agency

“There’s a lot of failing upwards.” — Marketing exec

Quality control
Digital was supposed to bring us ads that were measurable and precisely targeted, but the reality has been a lot more complicated. Data, privacy and quality ads were hot topics Tuesday, but the gripes were familiar. Brands are starting to pay more attention to where their ads appear, but many still move slowly and still want large reach at cheap CPMs, leading to bad or embarrassing ad experiences. “Probably a lot of cord cutters in the rooms. Sometimes I’m seeing the same house ad over and over — we can frequency cap, people, we can target!” said an exasperated Jed Dederick, vp of business development for The Trade Desk. There are rating systems and quality badges for ads — perhaps too many. It’s unclear who if anyone should regulate fraudulent sites and if a government overlord needs to step in to fix the problem. For all the complaining and finger-pointing, Facebook and Google weren’t being blamed for everything, though.

— Lucia Moses

GDPReality
It’s four months into Europe’s General Data Protection Regulation taking effect, and other privacy regulations being adopted in the U.S. and elsewhere, and the digital ad market has managed to keep operating. But the ad ecosystem is still processing the industry impact. Agencies are scrambling to show clients they’re ready while quality publishers whose relationship with audiences are wondering what happened to the advantage they were supposed to have in a consent-driven world.

After years of giving away their content for free, publishers haven’t done a good job of explaining why people are being shown targeted ads. “Publishers have backed themselves into a corner by not educating consumers on the value of their products,” said Glen Ames, chief product officer at Captify. “People don’t understand the value of advertising. It’s an industry problem that’s got to be solved. Content has always cost money.”

At the same time, there’s a sense that in the new era of privacy, dealing with customers’ data has never been more delicate than ever. “It’s a make or break moment — if we misuse that data, we are all screwed,” said Megan Clarken, president of Nielsen’s Watch.

— Lucia Moses

[Your problem here]
Personalization is held up as a panacea for all kinds of digital business problems. But to marketers focused on ecommerce, it still looks mostly like a minefield.

Go too far with personalization, and you risk being perceived as creepy by consumers. Act too hands-off, and you miss your chance to build loyalty. Marketers still lack the information they need to do personalization well. The most valuable information is data that most consumers don’t want to part with.

And no matter how much you personalize your product, be prepared to screw up a lot. “Most of the algorithms you’re going to test for personalization are going to be wrong,” said Sam Crosby, a product manager at eBay responsible for integrating programmatic advertising into its product.

— Max Willens

Coming Up
9:00 a.m.: “The Evolution of the Ad-Supported Business Model” with Spotify, Refinery29 and The Washington Post.
9:30 a.m.: “Trust and Transparency in Influencer Marketing” with ANA and Unilever
10:15 a.m.: Stan Chudnovsky, the head of Facebook Messenger, takes the stage to talk successful messaging strategies
1 p.m.: Digiday’s Kerry Flynn joins Fullscreen to talk about the modern gamer
2:30 p.m.: “Breaking Through the Permission Barrier” with Accenture Interactive’s CEO
4 p.m.: Digiday’s Kerry Flynn is at it again talking about how to use data to drive sales growth with Brooks Brothers and American Eagle
5 p.m.: Kerry Flynn is hosting an AI game show with Xaxis
5 p.m.: Digiday’s In & Out game show, with GE, Giphy and Equinox, where Digiday’s Shareen Pathak will discuss the most tired and wired concepts in advertising.