social media

A One-stop Guide On All You Ever Need To Know About AdTech In 2020

AdTech or Advertising Technology did around $800 Billion Worth Of Business In the US alone in 2019, making it one of the fastest-growing industries in the world.

Are you trying to understand ad tech? Just as advertising is the business of making advertisements, ad tech is the business of using technology to make advertisements faster, quicker, and efficient. The business is driven by powerful algorithms and data points. While it is not rocket science, but for the uninitiated, it can be challenging to understand what is ad tech and how its product and services work.

The ad tech industry fuels the global economy with big investments, employment, and ad spend. Digital advertising has reached new heights of complexity, with the rise of programmatic advertising, AI, and automated interactions between computer systems reducing human intervention. Today’s omnichannel ad campaigns reaching to different platforms all at once from publishers’ websites, mobile apps, social media to search engines. Campaigns using tailor-made and highly targeted ads to reach audiences. This process involves many participants- advertisers, publishers to third-party vendors. The technology used in advertising to store, manage, and deploy data is far more sophisticated. 

This guide will give you a sneak-peek into the world of technological advertising and understand the growing ad tech industry. As you read further, you will understand the ever-changing ad tech ecosystem.

What is Ad Tech?

Ad Tech also is known as Advertising Technology covers a range of tools and software that can be helpful for brands and agencies to plan, strategize, and manage all digital advertising activities.

The AdTech ecosystem consists of two major entities – the advertiser (Demand-side) and the publisher(Supply-side).

On one hand, advertisers want to run effective campaigns and optimize their budgets to reach the target audience, gain customer insights, and measure ROI.

Whereas, on the other hand, publishers cater to the need of advertisers and generate revenue through ads by displaying ads on their publications like websites, apps, etc, increase ad impressions,  bids for ad slots and visitor insights. These are significant factors that publishers need to consider to maintain the platform User Interface (UI).

Adtech helps advertisers and publishers achieve their goals in harmony by providing solutions that meet the demands of both parties. A few examples of AdTech platforms include Pubmatic, Adroll, MediaMath, SmartyAds, and many more.

Image Credit: MarTech Advisor

Programmatic Advertising Explained

After a brief understanding of ad tech, let’s step into the world of programmatic. You will come across concepts like programmatic advertising, Real-time bidding, and programmatic direct. Let’s discuss it:

Image Credit: Martech Advisor

• Programmatic Advertising Definition:

It is projected to be the game-changer for digital advertising.  Programmatic automates the process of buying and selling online advertising space with the help of technology and data. This means, with the introduction of programmatic publishers, advertisers or agencies don’t have to sit across to discuss ad size, rates, et. Ad buying is done through algorithms and data insights.

• Programmatic Direct:

This a type of Programmatic digital advertising, where a publisher bypasses auction and reserves a portion or entire ad inventory for a particular buyer or advertiser at a fixed cost per mile. (CPM). Put simple, here the buyer and seller are known to each other and the ad placement is done programmatically.

• Real-Time Bidding (RTB):

Another type of programmatic digital advertising and also known as an open auction. RTB is when inventory prices are decided through an auction in real-time and open to both advertisers and publishers. This is the most feasible and preferable method of programmatic ad-buying because of scalability and flexibility.

The AdTech EcoSystem

Image Credit: Martech Advisor

The process of digital media buying is similar to the traditional media value chain except AdTech has multiple components in the ecosystem to keep the management of advertising campaigns easy for demand and supply-side platforms. Here are the key components of the AdTech supply chain:

1.Media agency: Responsible to allocate the advertiser’s expenditure budget across the channel. It is not involved in the creative aspect of ad campaigns.

2.Agency Trading Desk (ATD): Plans, buys, and manages ads across different platforms and is a set of services provided by the media agency.

3.Demand-side Platform (DSP):  An essential platform for advertisers to buy, search, display video mobile ads. It enables advertisers to buy ad placements in real-time on the publisher websites made available by ad exchange and networks.  Some of the DSP players are Simplifi, Smarty Ads, App Nexus, Double Click, and more.

4.Data Management Platform (DMP): DMP’s collect data from sources like websites, apps, social networks, campaigns, CRM’s, and more. Using AI and big data analytics to gather first and third-party data, advertisers, and marketers rely on them. DMP players are Lotame, Oracle Blue Kai, SAS data management and more

5.Ad Networks: The unsold inventory will be bought by ad networks from publishers and try to sell to advertisers using their technology. The popular programmatic advertising platforms for the ad networks are Taboola, Google Double Click Ad Exchange, Rocket Fuel, and more.

6.Ad Exchange:  A dynamic platform to buy and sell ad impressions between advertisers and publishers without any intermediaries.  Open X, App Nexus, Rubicon Project Exchange are examples of programmatic advertising platforms.

7.Supply Side Platform (SSP): The platform allows publishers to sell display, mobile ad impressions to potential buyers in real-time. Some of the key SSP players are MoPub, AerServ, App Nexus Publisher SSP, and more.

8.Ad Server: This platform is used by advertisers, publishers, ad networks, and ad agencies to run their campaigns. It determines which ad will be displayed on a website and also collect ad performances data such as clicks and impressions  Double click for publishers, OPen X Ad server, Ad butler, and more are the examples.

Learn more: Programmatic Advertising Platforms in 2020: A Complete Guide

Is Programmatic advertising worth it?

The programmatic advertising statistics say it all. According to Zenith’s Programmatic Marketing Forecasts 2019, 69% of digital media will be programmatic in 2020.

• The total amount spent programmatically will exceed US$100bn for the first time in 2019, reaching US$106bn by the end of the year, and will rise to US$127bn in 2020 and US$147bn in 2021.
• 72% of digital media will be programmatic in 2021
• Ad spends growth is slowing down to 22% in 2019 due to industry challenges of privacy and supply-chain.
• Brands need to develop new targeting techniques using first-party data and customer data platforms in response to the ongoing death of the cookie.

Programmatic Display Advertising fastest-growing segment.

• The ascent of programmatic display advertising has been rapid. In 2012, only 10.4 % of global digital display spend was programmatic. However, it ballooned to 65.3% in 2019 and it is estimated that the share of programmatic display advertising will grow 69.2 5 and 72% in 2020 and 2021 respectively.
• How does it translate in dollars? In 2012, total digital ad spend was $37.8 billion and the programmatic display market was $3.9 million. Fast forward to today, digital display ad spend is $162.3 billion, out of which $106 billion is invested in programmatic display advertising. In 2021, global digital display ad spend is estimated to reach $204 billion, with $147.1 billion going to be programmatic share.

Image Credit: Marketing Charts

Programmatic marketing by country

One of the benefits of programmatic technology is it shows real-time data that helps companies take swift actions to adjust their strategy as per customer requirements. Digital marketers are considering buying programmatic media in-house due to its transparency. Programmatic has undergone massive growth in the following 6 countries out of which the UK and the US are the most advanced programmatic markets in the share of digital media.

Image Credit: Marketing Profs

As per eMarketer forecast, Programmatic ad spending will reach $59.45 billion in 2019, accounting for 84.9% of the US digital display ad market. It is estimated that 87.5%, or $81 billion, of all US digital display advertisements, will be bought via automated channels in 2021.

Image Credit: eMarketer

The above programmatic advertising statistics prove that the investment has increased Y-o-Y and marketers prefer programmatic advertising to buy digital display ads. Marketers are increasingly allocating their advertising budgets to digital advertising channels as it provides precise data that helps to reach customers effectively. 

Learn more: 5 Programmatic Advertising Case Studies That Yielded Exponential Results

Artificial Intelligence can be leveraged in AdTech Industry

Artificial Intelligence(AI) and Machine Learning (ML) are two buzzwords in recent times. And why not, as it brings efficiency in whatever we do. 

However, AdTech is a messy market now. Ironically, the good and bad part of AdTech is the abundance of data. True, we certainly have all the information to better understand the customers but most marketers aren’t aware of how to leverage the data and use it forward.

The way you advertise-is going to change extremely right before your eyes- thanks to Artificial Intelligence. Not all in the AdTech world have the analytical skills to evaluate the big data as not many are trained to use it and are misinterpreting them.

Adtech partnering with AI can help lower CPC prices, higher click-through rates (CTR), conversions, and better ROI. Let’s check out how AI can help the Adtech industry find better solutions in the following areas.

• AI in Ads Positioning

Developers don’t need to sit and determine which ad position will drive maximum revenue for the website. With the help of AI, employing machine learning algorithms study historical data to find relevant ads for the targeted user group.

Adtech has not used heatmaps previously but AI algorithms use them to learn where the visitors on the website are going and present them with the relevant ads. AI will help marketers to find the best ad positions by studying the maps in detail.

• AI in Ad Network Selection

There are many Ad Networks that provide different kinds of ads to websites owners and required to sort ads according to the websites. This is called Ad mediation and apt to earn high revenue for the websites.

By employing AI for ad optimization it reduces human effort by using a data-oriented approach that includes data, facts, and intelligence to make sure only relevant ads reach the end-user. Data will be user or website’s past history and facts will be website content, geo, and timing. Machine learning algorithms are employed to enhance the best ad-user match.

• Analytics

In the Adtech world, data analytics is not ‘taken seriously’ and publishers.are not happy about it. The AI-based approach will drive reporting and analytics to new levels. 

Analytics will help publishers understand the content that drives the audience, placement of the CTA button to turn one time users into loyal users, and increase traffic. It will be a win-win situation for AdTech and parties- publishers, platforms, and users.

AI is the Future of Advertising

Today, digital advertising cannot exist without AI.  Behind most online ads are the sophisticated delivery systems in place powered by AI. These systems place the ads before users, the coordination process happens in real-time and generally is automatic. It’s called programmatic advertising.’

According to eMarketer,  86.2% of all digital display ads will be bought via automated channels and nearly $19 billion in additional spending will enter programmatic display platforms between 2018-2020.

Also, 90% of mobile display ads are bought programmatically. On the other hand, AI also powers advertising products offered by Facebook and Google. In 2017, 90% of the new advertising business was captured by these firms.

In recent times, brands are under more pressure to deliver relevant, personalized, and contextual ads to individual customer preferences.

How AI makes Programmatic Advertising better

More companies are turning to AI for creating advertising relevance at scale.

For instance, if you want to advertise on Facebook,-an AI-powered algorithm determines the relevance of the score of your ad. This means that the score impacts the ad delivery directly and influenced by the experience of the ad delivery to Facebook users. Expect a low score if the ad is not liked or is irrelevant.

This decision is made by machine and is beyond your brand’s control independent of strategic or creative decisions 

A marketing company like Phrasee launched an AI tool that writes Facebook and Instagram ads. The AI tool assesses a brand’s voice and copy, then the machine writes the ad that performs better than human-written ads. Recently, it helped reduce one client’s cost per lead by 31%. Another AI-powered tool is Albert that helps automate media buying, testing, and optimization. It enhances ad performance and delivers relevant ads to the right person. This shows that relevance at scale is possible in advertising.

Emerging  Programmatic AdTech Trends 2020

Image Credit: MarketingToolbox

1. AI in Programmatic Advertising: 

Technologies such as artificial intelligence(AI) and machine learning (ML)have involved programmatic ad buying or bid optimization. Programmatic campaigns are used by companies for more targeted net across platforms. By 2020, it is expected that there will be a shift towards automating technologies like AI and ML to get the most from data.

2. First Part Data Move Made Important by GDPR:

After the announcement of the General Data Protection Regulation (GDPR) in Europe, last year on cookie crumble or removal of third party cookies is gradually turning out to be beneficial. The regulations protecting the privacy of user data initially looked limiting to ad tech experts but is resulting in cleaner and more reliable data over time.

Learn more: Digital Advertising Industry Plans To Replace Cookies With First-Party Data

3. Digital Out Of Home (DOOH) and Mobile Location:

Digital DOOH combined with mobile location data has the potential to help marketers to drive conversions in the offline world. Integrated ‘home-to-out-of-home’ programmatic advertising approach provides a smooth experience to the customers. 

4. Voice-activated Ads:

The adoption of voice-based to in-home smart devices has grown rapidly. Gartner predicted by 2020, 30% of web browsing sessions will be done through voice-first browsing. Amazon sold over 100 million Alexa-enabled devices in 2018 compared to 2017. A recent survey by VoiceBot.AI revealed 25% of respondents orders everyday household items through voice assistants followed by apparel and games and entertainment.

Programmatic advertising helps marketers to optimize these ad spaces across in-home smart devices, to on-app audio ad opportunities, and connect to consumers through in-store ads, ads in elevators and taxis, and more. 

5. Wearables will enhance programmatic advertising:

Wearables collect data on location, lifestyle, health metrics, and more. The market penetration of smartwatches has grown multifold over the years and programmatic advertising is already making its way into this medium. For instance, it helps advertisers run banner promos to customers on their Samsung or Sony smartwatches. The wearable ecosystem has a huge potential to grow and programmatic adtech can bring greater opportunities.

6. 5G in programmatic advertising:

The high speed and no buffering will encourage the rise of more users to spend time on videos on mobile devices. It will enhance other technologies such as AR-enabled ad displays, VR without headsets, and innovative new digital outdoor mediums. 

This will give programmatic advertising new opportunities to run more interactive ads without any lags across mediums. By 2024, the use of 5G in AdTech is predicted to grow to 1.4 billion.

7. Evolution of Personalization: 

With Gen Z and Millennials- the biggest demographics -personalization is a priority as they like all things customized. Personalization in advertising is going to be inevitable as the choices of the new generation are different. Therefore, programmatic customization by advertisers is increasing offering personalized, relevant messaging to their target group.

8. Blockchains and Ads.xt:

Ad frauds are increasing over the past few years. A cybersecurity firm Cheq reports that ad fraud damages will touch $26 billion in 2020, $29 billion by 2021, and $32 billion the year after that.

The only way to handle the frauds is by bringing transparency in programmatic advertising. Blockchain and Ads.txt (an Interactive Advertising Bureau initiative – Authorized Digital Sellers) can help to remove unrequired middleman, domain spoofing, and verification of publishers and allow transactions using cryptocurrencies.

Learn More: Advertisers Look For Greater Transparency In Programmatic Ad Buying

9. Programmatic TV, podcasts and audio Ads set to grow:

The content on TV has changed drastically. There is a paradigm shift in TV viewing from cable TV to over-the-top(OTT) like Amazon Prime or Netflix via an internet connection.

Programmatic advertising has a larger role to play to ensure marketers get the best of both worlds. Programmatic TV is also going to get more important with its data-driven approach for buying and delivering ads.

Programmatic in podcasts and audio advertising is also growing. Apps like Spotify and Soundcloud are seeing more user acceptance and a new advertising landscape is being created for companies to monetize on.

10. Omnichannel Programmatic:

Forrester defines omnichannel marketing as ‘the practice of digitally sequencing advertising across channels, which is connected, relevant, and consistent with the customer’s stage in their life cycle.’ This is how programmatic advertising is going to be in 2020 and beyond.

A single marketing resource or an ad can be customized programmatically suiting various platforms through programmatic AdTech.

11. Agencies to work on outcome-based pay:

Discussions are making rounds to switch to an outcome-based remuneration model. With increasing ad frauds and agencies promise programmatic tech, advertisers fear how their budgets were used and where their ads placed. There was a lot of wastage in the space. Media buying companies started giving outcome-based remuneration more prominence. Gradually, advertisers would like to see the full cost chain of their programmatic buys, pushing agencies to outcome-based pay.

12. In House programmatic advertising v/s agency.

An IAB report suggests that nearly 40% executing programmatic trading via in house and 50% publishers also have an in-house model. This means advertisers are looking for more transparency, control of their ad strategies, and outcome.

It makes more sense to have an in-house team for strategizing programmatic ads and an agency partner for implementing parts of it instead of having a full-stack programmatic AdTech in house. 

Wrapping up

Yes, Adtech is complicated but the best part is that it allows integrating the whole toolset into a single system. According to Zenith Media, the ad spends on digital media will reach $329 billion in 2021. However, there are major concerns and challenges -Ad Fraud, transparency, and privacy issues need immediate action.

There have been big changes and improvements over what advertisers and publishers used to have earlier but it still needs more work and their expertise to handle the challenges and resolve for good.

Facebook’s “Shop” Feature Breaks The Wall Between Social Media And Ecommerce

Facebook has recently launched an option of “Shops” on its social networking platform. This Will allow its 2.6 billion users an opportunity to shop while browsing through their favorite social networking website.

As the demand for the e-commerce market rises, Facebook sees this as an opportunity and is ready to cash more money. Facebook “Shops” will provide room to merchants, SMB, and product companies to build a virtual store on Facebook. Facebook is calling it “Social commerce”.

“We want to give people a place to experience the joy of shopping versus the chore of buying. And we want to help small businesses adapt and make it easier for people to discover and shop for things they love,” Facebook said in a press release.

To make things easy and secure, the products that will appear on Facebook and Instagram as the ad will not be linked to any third-party website or server. Instead, it will be linked to a zippy on the Facebook portal which will take the user to a catalogue from where the user can choose or purchase the product. It will also show the saved card details if the user has ever purchased from Facebook or any of its applications.

Image credit- Facebook.

Live shopping experience:

Facebook will also provide live shopping features on its platform. According to Facebook, People have always been showcasing their products in live videos. Now, they can link these products with their store. The products will appear on the bottom of their live feed. By tapping on the product on their screen users can get all the details of the product. Live shopping feature will be available worldwide to its users!

Image credit – Facebook.

Image Credit – Facebook

“Shops” will be an integral part of the Facebook family. Users can save products in their cart on Facebook, and complete the checkout process on Instagram, or vice-versa. Facebook aims to target small vendors for his aspirations, and nearly 1 million users have registered to be a part of this experiment.

The other principal dissimilarity from past commerce enterprise is that Facebook “required the small businesses to go all-in on our tools,” Zuckerberg said.

The platform is free for everyone and Facebook is partnering with other tech giants to provide services at the back-end.

Image credit – Facebook.

Zuckerberg further stated, “Rather than charge for Shops, we know if it’s valuable they’ll want to bid more for ads.”

One of the key partnership deals is made with “Shopify”, According to Facebook, in just a few clicks you can operate a Facebook shops account from Shopify.

Shopify founder and CEO Tobi Lutke said, “It’s an incredible new reality in the retail space to have these tools natively in the Facebook platform,” he further mentioned, for small businesses it’s very crucial to find new customers.

CEO Tobi Lutke added, “Communications is incredibly important, for so long that’s been monopolized by large CPG brands on television.”

According to him instead of going to different levels of media and advertisement, sellers will be able to reach directly to the customer. “The DTC industry, as some people call it, really happened on top of Facebook and Shopify.”

With Facebook focusing more on small scale businesses adding Shopify having the strength of entrepreneurs, the model looks like a rival of Etsy and doesn’t seem to target retail chains like Target.

Image credit – Facebook.

According to the Zukerberg and Lutke analysis, this model will help to empower small-scale businesses. Helping those sellers who are genuine, and want to provide efficient services to their customers. The model will help small businesses to highlight their product in the market without expensive advertising. As most of the small scale businesses can’t afford the luxury of advertisement.

Image credit -Facebook

The users will also be able to earn rewards for their purchase. Rewards will be known as loyalty points. Facebook will motivate the sellers to provide these points to the customer on their purchase. This will help them to lure more customers. Users will be able to easily keep track of their loyalty points.

TikTok Appoints Former Disney Chairman As New CEO To Capture New Markets.

• Disney veteran Kevin Mayers who oversaw the launches of Disney+ and ESPN+ is leaving the company after 27 years to become the new CEO of TikTok.
• Mayer will take the lead on ByteDance’s music, gaming, and emerging business along with heading TikTok.

• Mayer will start on June 1 and report directly to Bytedance CEO Yiming Zhang.

• TikTok had an immense impact on the music industry and grabbing eyeballs of gaming and esports companies.

TikTok appoints Kevin Mayer as the new CEO after being poached from Disney. Kevin Mayer who was passed over for the Disney CEO role is taking a jump from the entertainment industry’s most esteemed names to one of its most dynamic new arrival.

TikTok’s new CEO plans to explore business opportunities in music and gaming as the company looks to capitalize on a recent increase in app downloads. Mayer, head of The Walt Disney Company’s direct-to-consumer and international business said in a statement,

“I’m thrilled to have the opportunity to join the amazing team at ByteDance. Like everyone else, I’ve been impressed watching the company build something incredibly rare in TikTok – a creative, positive online global community – and I’m excited to help lead the next phase of ByteDance’s journey as the company continues to expand its breadth of products across every region of the world.”

Advertisers and brands taking advantage of music trends

TikTok is a significant player in the music industry for discovering new artists and making songs to hit status. The platform contributed to the grand success of Lil Nas X’s record-breaking “Old Town Road” and more recently with chart-toppers like Doja Cat’s “Say So” and Megan thee Stallion’s “Savage,” which are all featured in the TikTok videos.

Advertisers have found new ways to use TikTok music and dance trends to their advantage in order to drive brand awareness among the Gen Z audience. Brands like e.l.f. Cosmetics and Warner Bros. have used original music and dance challenges to attract the audience and generate billions of views and user engagement on the app. As quoted by Business Insider, Evan Horowitz, CEO of the creative agency Movers+Shakers said,

“I think the nature of TikTok as a platform is that it’s one. It’s only natural that brands that create really good music.that the community on TikTok really resonate with, that music can start to trend and be successful outside of the platform.”

Gaming and esports companies jumping onto the bandwagon

Video games companies and esports brands have shown keen interest in the TikTok app as it continues to be popular among Gen Z users of the app. 

Many esports brands like FaZe Clan, Team SoloMid (TSM), and 100 Thieves have officially created verified accounts whereas video game content is slowly taking up TikTok’s content recommendation landing page (ForYou). It’s too early for gaming creators on the platform even though esports companies are slowly and carefully exploring TikTok in recent months. Jason Wilhelm, CEO of TalentX Gaming told Business Insider, 

“For TikTok, they haven’t really found what is the best way forward for gaming yet. You need a lot of requirements in order to stream video games. TikTok obviously is not set up for that right now, but that is something that we’re going to be figuring out.”

TikTok has seen a significant surge in users since the pandemic hit U.S – 315 million downloads across the iOS and android app stores in 2020 Q1, that’s the most download for one app in a single quarter as per mobile data analysis group Sensor Tower.

Also read: YouTube Shorts: Will it be Able to Capture Tik Tok’s Audience?

Financial Report Card Of The Global Giants And Industries In COVID-19

Media companies are facing distress owing to the pandemic crisis,  particularly those relying on advertising revenue. The current situation is precarious that compelled companies to roll out furloughs, pay cuts, or layoffs.

Even though publishers are recording high traffic, there is a mismatch in demand and supply in the ad market. Subscriptions are a silver lining for publishers but again sustainability is in question. Many businesses are impacted due to cancelled live events like sports that would bring a vast sum of revenue. Newsstands sales have also witnessed a fall.

Keeping the above factors in mind, below is the analysis of leading media companies’ financial and quarterly reports and their progress in this crisis.

CONGLOMERATES

Bertelsmann: Ad funded businesses were affected while music, services, and education business performed well.

The German media conglomerate Bertelsmann’s revenue declined by 2.7%. The advertising-funded business Q 1 was “highly affected” by the pandemic. Within the digital business RTL Group specifically, the revenue was down 3.4 % owing to the cancellation of ad bookings at the start of March or postponement of productions. 

Music business BMG, its Arvato services business and its education business performed well. Subscription to the online streaming services was up 34% Y-o-Y.

Comcast/NBCUniversal: Broadband business upticks whereas rolling out Peacock streaming service.

Comcast is a large company with its broadband business marks an uptick with signups. and revenues up by8.8%. On the other hand, its theme park, TV and film production business is on hold.

NBCUniversal and newly acquired Sky TV cannot broadcast live sports. The company expects the advertising business to be down significantly in Q2 

NBCUniversal Q1 revenue was down 7%  and it rolled out ad-supported Peacock streaming service to Comcast customers in April.

Disney: Theme Parks and Sports Broadcast Shut, Disney+ subscribers up.

The crisis led to shutting down of theme parks, and productions and theatre movie releases were put to hold. Ad revenue at its TV business was affected as ESPN couldn’t air any live sports.

However, it stepped up the launch of ad-free streaming service in European countries. Disney+ had 33.5 million subscribers by the end of Q1 and an average of $5.63 in monthly revenue per paid user. Disneyland Shanghai did reopen, at 30% capacity on May 11.

WarnerMedia (owned by AT&T): Q1 Revenues severely hit.

Recently, folded its Xandr advanced advertising unit into a bigger WarnerMedia business. 

Q1 revenues of WarnerMedia was down 12% on the year-ago quarter to $7.4 billion due to lower ad revenues in March on sports cancellations. Movie productions are also on hold.

PUBLISHERS

News Corp: Circulation and Subscription revenue grows, Ad revenue takes a hit.

Rupert Murdoch’s News Corp includes various leading and established brands like The Wall Street Journal, The Sun, and many more in U.S, U.K, and Australia.

Overall revenue declined 7.8% to $2.27 billion in Q1 due to weak ad business, low ad revenues, and negative currency movements. April ad revenue for Dow Jones declined 20% from the prior year whereas for News Corp Australia and News UK fell by more than 45% which includes negative currency impact.

The Wall Street Journal reported circulation and subscription revenue growth by 1% reaching a record subscriber base of 3 million overall, of which 2.2 million are digital-only.

The New York Times: Focus on Subscription Revenue to thrive in the post coronavirus world.

The NYT is leading more emphasis on subscription revenues to reduce its dependency on ad revenue to be in a better position and thrive post coronavirus world.

NYT recorded the highest quarterly increase in new digital-only subscriptions-up 587,000 in Q1 -leading to a 5.4% increase in subscription revenue to $285.4 million. Ad revenue fell by 15% and likely to fall further in Q2 somewhere between 50% and 55%.

“Other revenues” segment is estimated to fall around 10% as licensing revenue from Facebook News is expected to be “more than offset”- by lower revenue from its live events and its TV series.

TV AND CABLE

Discovery: Their channels are new sports.

Discovery CEO David Zaslav on the Q1 earnings call said, “Our channels are the new sports — the numbers are huge” around its lifestyle channels like HGTV, Food Network, and DIY. The engagement with the characters and talent is enormous. Discovery is also saving money productions through the pandemic as the film shows from home.

Total revenue declined from 1£ in the first quarter to $2.68 billion and expects advertising revenue to fall significantly in 2020. Many sports events are postponed and 90% of the sports deals have force majeure provisions or provisions to not pay for the content that is not received.

Fox: Fox News gains the largest audience.

Revenue for the three months to March 31 rose 25% supported by the forecast of Super Bowl in February, an increase in political advertising, and growth in affiliate revenue. But in March entered coronavirus crisis leading to the postponement of sports events and suspensions of entertainment shows.

80% who signed up for Fox Nation streaming service from Fox news continued to become paying subscribers and advertisers from sectors like technology and communications looked for the transition from sports buy to news buy. Ad revenue within local TV stations to be down 50% from last year.

ViacomCBS: Streaming revenue continues to grow and more on its way441.2 b

Revenue for Q1 fell 6% to $6.67 billion of which advertising revenue marked a 19% drop though a comparison to last year would be unfair when it aired Super bowl and basketball tournament.

Streaming continues to grow- domestic and digital revenue up by 51% to $471 million and had 13.5 million streaming subscribers. It intends to build “a broad pay streaming product in multiple markets” over the next 12 months. It announced a distribution deal with YouTube TV, which will carry 14 ViacomCBS channels

DIGITAL GIANTS

Alphabet or Google: Faring well in this crisis and a better situation.

Q1 revenue stood at $41.2 billion, up 13% Y-o-Y basis(including Google cloud revenue and the ‘other bets’ segment). 

According to CFO Ruth Porat, Youtube’s March revenue “decelerated to a year-on-year growth rate in the high single digits” and Google Network March revenue declined “in the low double digits.”

Google Cuts Marketing Budgets by 50%, Freezes Hiring, and launched a “Journalism Emergency Relief Fund”.

Baidu: A closer watch on the signs of recovery in the upcoming result.

Chinese advertising giant Baidu was the first to report the coronavirus crisis set to affect media companies and expect a revenue drop of between 5% and 13% due to advertiser pullback. 

In April, it suspended updating content on certain newsfeed channels within its app due to government directives which may impact its marketing services revenue. On May 18, Baidu will give the next quarterly update, and would be worth watching whether there is any recovery in the ad business.

Amazon: The advertising business grew as directly related to eCommerce sales

Amazon’s Q1 revenue soared as consumers quickly shifted to shopping online amidst the coronavirus crisis. Conversely, revenue rose 26%, and profit dropped 29% compared to last year’s quarter. The cost grew to finish the surge in orders 

In the financial statement, the ‘other’ category is advertising business- revenue grew by 40% to $3.9 billion in Q1. The growth is consistent with a little downward pressure in March but no major impact as its directly related to eCommerce sales. ‘

Facebook: Post Strong Earnings, Exceeds Projections

Facebook ad revenue grew by 17% Y-o-Y to  $17.4 billion despite the instability in the digital ad market due to COVID-19.

Facebook saw strength in the advertiser’s vertical- gaming, technology, and e-commerce whereas travel and automotive were the weakest verticals in the first three weeks of March.

Facebook had Pledged $2M Grant Funding To Support Publishers Financially.

Snapchat: Users and Revenue Increases, ad spend declines

Snapchat reported in its Q1 2020 earnings – strong gains in both users and revenues but a dip in advertiser spend despite the growing concerns about the coronavirus pandemic. the company reported a 44 percent (Y-o-Y) increase in its first-quarter revenue to $462 million. Snap benefited as people used animated lenses to keep in touch with loved ones in this lockdown. Snapchat’s daily active user (DAV) base reached 229 million.

Direct-response advertising accounts for more than half of the company’s revenue and clients in sectors like gaming, e-commerce, and consumer packaged goods continue to spend even during the crisis.

Twitter: Work in progress over AdTech concerns 

Twitter’s user growth jumped in March as people rushed to check the latest news updates related to the coronavirus. Despite a 9% growth in daily users, revenue was up only 2.6% to $807.6 million and reported a loss of 8.4 million in Q1 results. 

In comparison to its competitors, Twitter doesn’t have a direct-response advertising business. Therefore, the company is improving its mobile application promotion products and rebuilding its ad server which is expected to be up and running by Q2.

Advertisers Look For Greater Transparency In Programmatic Ad Buying

Time and again, “Transparency’ has been a cause of concern for advertisers in the programmatic ad buying. This has been a long time pending issue which still remains unresolved as advertisers try to uncover what happens to money spent on programmatic ads.

Ad spend is falling and advertisers are again seeking greater transparency into the ad-buying supply chain. Hidden fees, fraud, viewability, and brand safety are the growing concerns that need immediate attention.

Trade body ISBA studies reveal that nearly half (49%) of ad buys disappear before reaching publishers and 34% of this money is the disclosed fees agencies and ad tech vendors take for trading impressions. However, 15% cannot be attributed to what the report called an ‘unknown delta’ on the supply chain. The amount of money that reaches publishers is lower, as the report did not consider ad fraud and ad viewability.

As reported earlier, a noticeable amount of programmatic dollars doesn’t reach the publishers and it is getting increasingly harder to keep a track of where it goes.  The trade body struggled for nine months to gather data from the ad tech vendors to make a report on this and when it received data is was unusable.

PwC collected information for the study was data on 267 million impressions traded between 15 advertisers, eight agencies, five demand-side platforms, six supply-side platforms, and 12 publishers from the Association of Online Publishers from Jan. 1 to 20. March. Of those impressions, only 31 million (12%) were actually analyzed by matching log-level and aggregated data across 290 different supply chains.

PwC reported that it was highly cumbersome and hard to collect data on each impression. Ad tech vendors were conservative in sharing data due non-disclosure agreements and data collected was in different formats making it difficult to trace an advertiser’s money to so many different publishers. The advertisers involved in the study were non-premium 40,525 sites on an average.

Generally, an advertiser or agency decides to buy impressions and pay for them on DSP  while publishers use SSP to sell their inventory at advertisers. Data on impressions from these two platforms are matched up and PwC did the same. However, data could not give financial transparency for the advertisers and publishers There were still costs in the ‘unknown delta’ that remains unidentified on the report. For instance, hidden fees can be a combination of additional ad tech vendor fees, post-auction bid shading, trading deals, and other unknown factors.

As quoted Sam Tomlinson, marketing assurance partner at PwC in DigiDay,

“This is more because the programmatic ecosystem is built on legacy processes that are a mess.”

Graeme Adams, head of media at BT Group  said,

“We desperately need to see a common set of standards adopted and more openness in this market, so that every penny spent is accounted for. If this happens, we’ll invest more in the channel; if not, we will cut back and reshape our trading approaches.”

To conduct such high and intense study is a big expense. For instance, It costs more than £1 million ($1.2 million) to collect and process the data from different sources in ISBA’s study. A lot of emphasis is given to attain log file data by marketers. If the ISBA report proves anything that the log file data can reveal everything about transparency and nothing at the same time.

Ruben Schreurs, managing partner at digital media consulting firm Digital Decisions responds to log file data and said,

“Using the overly sophisticated approach of trying to match log-file data in real-time is like buying the IBM Watson supercomputer to calculate 1+1.”

He added that advertisers should have a sensible and valuable approach by running a periodic review of their net spend on publishers and match it with publisher data cumulatively. This will help to get the right and required output to make value-driven decisions on how to optimize the value chain and avoid complicating technologies.

Nevertheless, the report findings can help the adtech industry and give the insight to enhance financial and data transparency as regulators on impressions as regulators dominate.

Steve Chester, director of media and advertising at ISBA said,

“If the ad industry can be seen to be demonstrating that we can create a more open and transparent market then it could avoid the necessity of being regulated.”

After Instagram, TikTok Targets Snapchat With Its New Augmented Reality Ad Format

After attempting to take over Instagram with its new “Shop Now” button, TikTok is getting prepared to launch its new augmented reality ad format which is similar to popular app Snapchat and Instagram. 

The upcoming ad format will allow users to place dynamic visual effects that interact with their physical surroundings to TikTok videos. For instance, a car could zoom the length of the kitchen table or the user can interact with the advertiser’s mascot as it jumps around the room.

The product is expected to launch later this year with unknown pricing. The AR ads will be clickable and will have music while the user shoots video. As reported by DigiDay,  a TikTok spokesperson said,

“We’re always exploring new ways to bring creativity and joy to our community. Creative effects are a fun way for our users to express themselves and for brands to bring an interactive element to their campaigns with branded creative effects.” 

He further added that they will share details soon and are still experimenting with various ways to make it a valuable experience for brands. This new ad product will be in direct competition with Sponsored Lens and Word Lenses augmented reality formats and Instagram’s AR filters, though the latter is not an ad product but a filter.

TikTok already offers a product ‘Branded Effect’ which allows users to add 2 D  animated lenses to their videos through their hand and face movements. These effects were produced by an in-house team costing $100,000 whereas Snapchat helped pioneer augmented reality advertising but launched Sponsored Lens costing $500,000 minimum for brands. However, over time, Snapchat introduced its lenses to ad auction, bringing the price down and billed on a CPM basis. In its Q1,2020 result, Snapchat reported that 85% more over the last year are playing with the lenses and self serve ad platform is a predominant way to buy AR products.

Meanwhile, the popularity and growth of the video app are soaring. The measurement firm Sensor tower s reveals, TikTok app and its Chinese version, Douyin, crosses 2 billion downloads on the Apple App Store and Google Play Store in March. 

TikTok is quick in following the roadmap laid out by competitor social media platforms in rolling new ad products and the pace at which they are moving forward is frightening. As quoted by Digiday, Paul Kasamias, managing partner of performance at media agency Starcom said,

” If they get it right they’re going to be a huge player in the next six months to a year.”

News of the AR effect ads follows just in a month after the development  of TikTok testing a new ad format call-to-action button ‘Shop Now’ for Influencer videos

Publishers at risk by relying on transactional subscription technology

Transactional technology that enables transactional customer relationship is the base of the digital publishing ecosystem for the past two decades. This is how it works- attracting a reader, showing them a headline or a few words or an article, then coming up with a paywall to buy a short subscription package and moving on.

Every potential subscriber is treated as any other e-commerce customer with the same conversion funnel. We have built complex tech- stacks to support this approach and the ad-focused tools and subscription products remain unchanged and operational at certain levels in the digital customer journey. Till now, the flexibility in the customer experience was never a question. The journey was straight, simple, and direct with a single focus -deliver content, monetize on it, and maintain engagement. However, this transactional approach no longer caters to commercial or customer needs.

Lately, people are accustomed to making their own choices- which product is suitable for them, opt for premium or family packages depending on their needs and likes. The growing subscription economy has altered the way a customer perceives their product and services.

A successful recurring relationship is built on personalization when a customer can choose the product or package right for them and leave the rest. Jim Barksdale rightly said, “There are only two ways to make money in business. One is to bundle, the other is to unbundle.”

Businesses should be able to answer important questions like which one to pick, where, and how.

Presently, to answer the questions, publishers are enforced to hack the existing transactional tools and development teams are still investing their efforts on the complex system instead of building new products to grow revenue. Marketing teams want to explore with fine-tune new customers but are hindered by the same old inflexible technology.

Ultimately, publishers suffer badly due to lack of innovation, low ad -yields, complex technology, high costs, and no personalization for consumers. In simple words, the industry’s technology is unfit and outdated and it is worrisome considering the future is about dynamic products and personalization and automation. By relying on transactional technology with all limitations, publishers are at risk, and growth is restricted in this new economy.

Coronavirus led digital publishing growth

With COVID-19, the subscription economy has changed in six weeks which could have taken longer otherwise. The UK’s largest subscription site, iSubscribe witnessed its digital magazine subscription jump 400 % jump in volume. The traffic to the Financial Times website saw a jump of 250% Y-o-Y in the past month. There is an all-time high in the industry conversion rate.

But the question now is, will this continue post coronavirus crisis when the audiences find themselves with subscriptions that are not required?

So what next to sustain this?

Commercial teams need to set up a highly personalized customer journey without reaching to their technical team for help each time. They should independently learn, test, and change a range of products, packages, and revenue models.

This implies publishers should not rely on years of coding experience to handle but need integration of tools across the customer journey- offering personalized outcomes to every potential subscriber. Publishers need tools that don’t require coding to ensure that every client, prospect, and visitor is handled by the organization and the power to build change is in the hands of the specialists who know the market.

The world’s largest publications are using this platform to get ahead of the curve and be ready to steal the thunder once the markets settle -which might not take too long.

Facebook Post Strong Earnings in Q1’20, Exceeds Analysts Projections

Its earnings season and Facebook has some relatively good news on that for the investors. It has impressively beaten Wall Street expectations on revenue and earning per share (EPS). Facebook ad revenue grew by 17% Y-o-Y despite the instability in the digital ad market due to COVID-19.

Image Credit: Facebook

Why does it matter?

Interestingly, Facebook was able to beat top and bottom-line revenue expectations amid the coronavirus crisis showing how its business is strong and growing. However, the company didn’t provide specific revenue guidance for Q2 due to the ongoing uncertainty but offered a snapshot on the revenues of upcoming quarters.

• Meanwhile, Facebook said that the current rise in engagement will continue but the usage will come down once the stay-at-home orders are lifted. 
• The digital advertising industry has taken a hard hit due to shelter-at-home orders globally. Facebook said in a  statement, “We experienced a significant reduction in the demand for advertising, as well as a related decline in the pricing of our ads, over the last three weeks of the first quarter of 2020.”

Let’s talk numbers

• Earning per share (EPS): $1.71 vs. $1.75 per share forecast by Refinitiv
• Revenue: $17.74 billion vs. $17.41 billion forecast by Refinitiv
• Daily active users (DAUs): 1.73 billion

Image Credit: Facebook

• Monthly active users (MAUs): 2.6 billion
• Family Monthly Active people (MAP): 2.99 billion monthly users across its family of apps. This metric helps to measure Facebook’s total user base across its main app, Instagram, Messenger, and WhatsApp.
• The average revenue per user (ARPU): $6.95
• Other revenue: $297 million which is driven by sales of VR headset ‘Oculus.’
• Cash and cash equivalents: $60.29 billion

What lies ahead?

• Facebook is the third internet company that posted strong Q1 results after Snapchat and Google despite the hindrances in the digital ad market. This shows big internet companies will keep dominating the advertising ecosystem due to the pandemic.  
• CCS Insight chief operating officer Martin Garner believes the impact of the virus will lead companies to use digital services from advertising to collaboration. 

“………..Although Google and Facebook will take a hit from Covid-19, we expect them to be leading indicators of recovery, as digital advertising and other services show early growth in economies getting back to normal.”

Google Cuts Marketing Budgets by 50%, Freezes Hiring.

Key Points

• Budget cuts and hiring freezes across marketing and across Google.

• An internal document reveals Google is cutting its marketing budgets by as much as 50 % for the second half of 2020.

• The marketing budget cuts may be a way to combat reduced advertising earnings in the wake of coronavirus.

• The development comes in less than a week from where Google is scheduled to discuss Q1 2020 results on 28th April.

Google is doing what other big tech companies are or will be doing soon to mitigate the coronavirus impact – cutting marketing budgets. An email viewed by CNBC, sent to the marketing employees this week was about budget cuts and a new hiring freeze for full-time and contract employees.

The e-mail stated:

There are budget cuts and hiring freezes happening across marketing and across Google…We, along with the rest of marketing, have been asked to cut our budget by about half for H2.

In 2019, Google spent $18.46 bn which includes employee compensation. One important area that required advertising was Cloud, as it competes with Amazon and Microsoft by hiring more sales representatives.it is unclear how such areas will be affected that need wide consumer reach.

However, Google confirmed that some areas’ budgets are being cut but not every area will be impacted as it adjusts plans.

A company spokesperson said in an emailed statement to CNBC,

As we outlined last week, we are re-evaluating the pace of our investment plans for the remainder of 2020 and will focus on a select number of important marketing efforts….We continue to have a robust marketing budget, particularly in digital, in many business areas.

Sundar Pichai, CEO in his memo last week stated, 

The clear lesson from 2008 is that preparing early is key to weathering the storm and emerging in a position to continue long-term growth…We are reevaluating the pace of our investment plans for the remainder of 2020. That starts with taking a more critical look at the pace of hiring for the rest of the year.

…we continue to invest, but will be recalibrating the focus and pace of our investments in areas like data centers and machines, and non-business essential marketing and travel.

Sundar’s announcement emphasized that the company will not cut back in areas where consumers needed Google’s support for their growth and success. It will also continue with digital advertising which is in line with the stay at home audience.

Travel advertising  earnings plummets:

Recently, a search marketer who knows travel advertising well tweeted the collapse of travel-related advertising and one of the contributing factors to a negative impact on the earnings.

When nearly 10% of your business is as a performance marketing supplier to Expedia and Priceline, and they stop advertising, the knock on effects are strong: https://t.co/TKNFl3YgOs

— Martin MacDonald 🏴󠁧󠁢󠁳󠁣󠁴󠁿🇪🇸🇺🇸🇧🇧 (@searchmartin) April 23, 2020

Following the news, Google shares had dropped nearly 2%.