Back at the beginning of the millennium, the music industry was in a serious state. CDs were in decline as consumers digitised the way they consumed music: but they were doing it for free via Napster and other pirate websites.
And then, in 2001, the industry’s knight in shining armour appeared, in the shape of Steve Jobs. He announced the birth of iTunes at the Macworld Expo, heralding a music revolution. The era of MP3 music was here, and over the next six years Apple would sell more than 100 million units of the iconic iPod with which to listen to those MP3s. Apple was at the pinnacle of its success, having redefined what music ownership looked like: no longer physical records, tapes or CDs, but a world of songs in your pocket.
In the 18 years since its launch, iTunes has become a media behemoth, a one-stop shop for users to consume not just music, but movies and TV and, latterly, podcasts too. But over the last few years, downloading has been eclipsed by a new kind of access: digital streaming.
In 2008, just a year after the launch of the first iPhone and when iTunes was at the height of its powers, a small Swedish start-up called Spotify launched its music streaming service across eight European markets. Its two-tier model – free to the consumer ad-funded, and a premium subscription option – gave users on-demand access to stream millions of tracks. Music streaming was still in its infancy, accounting for just 1% of global music revenues in 2007, and Spotify’s initial growth was good but unremarkable. By 2013, they had 30 million active users and 8 million premium subscribers.
It is the six years since 2013 that have seen a seismic shift in how music is consumed. By March of this year, Spotify’s user base had skyrocketed, with 217 million active users and 100 million premium subscribers around the world, a number which looks set to continue growing. By opening up the streaming market and persuading users to give up ownership of their music, Spotify has arguably redefined the music industry, just as Apple did when it persuaded users to give up physical ownership.
iTunes’ download model was starting to look clunky and old-fashioned. In 2015, Apple launched Apple Music, its streaming service which it hoped would compete with Spotify and other broadcasters with its three distinct components – on-demand streaming, radio and Apple Connect, which allows artists to upload songs, videos and photos for followers. Since then, as streaming has increasingly become the norm, there have been rumours that iTunes would be wound down.
That finally came to pass this week, as Apple announced at its annual Worldwide Developers Conference in San Jose that it would replace iTunes with standalone music, television and podcast apps. This will align Apple’s media strategy across the board: iPhones and iPads already offer separate apps for Music, TV and Podcast, and Mac/Macbook users can expect the same.
However, the move is symbolic as well as practical. As Amy X Wang says in Rolling Stone, “by portioning out its music, television and podcast offerings into three separate platforms, Apple will pointedly draw attention to itself as a multifaceted entertainment services provider, no longer as a hardware company that happens to sell entertainment through one of its many apps” – and that’s increasingly important as iPhone sales have started to slow.
This move towards entertainment services is being seen across the technology and communications sector: we’ve seen the tech giants buy up rights to live sport, while AT&T acquired Time Warner for $85bn and Disney bought most of the 21st Century Fox empire, fending off an offer from Comcast. This trend is of course being driven by changing consumer behaviour as internet connections over 4G and now 5G accelerate – allowing for uninterrupted streaming of music, TV and films. We’re seeing the effects of technology on the media and communications industries, and lines between these sectors will continue to blur. This blurring of boundaries will then pose another issue on how they can all be monitored & assessed both separately and in totality.
Facebook is facing heavy scrutiny from people and governments across the world after a range of transgressions: the Cambridge Analytica scandal, the hiring of a PR firm to attack George Soros, the departure of 10 top executives and the livestreaming of the Christchurch terrorist attack among them. These and other issues have forced Zuckerberg and his senior management team to appear before governmental committees and the press to explain exactly how they are going to change. This was all reflected in Facebook’s share price, which peaked in July 2018 but had plummeted by 40% by the end of the year.
The conclusion? Facebook must focus on real, meaningful evolution in order to ensure a prosperous future – and that’s just what they appear to be doing.
After months of appearing before government committees and journalists around the world, in March this year Mark Zuckerberg seemed to finally kick off the evolution that his organisation so urgently needs. Having rejected demands for increased regulatory oversight of Facebook for years, in an editorial in the Washington Post Zuckerberg called for more cooperation with governments to deal with the problems posed by internet platforms and emergent internet technologies: “By updating the rules for the internet, we can preserve what’s best about it – the freedom for people to express themselves and for entrepreneurs to build new things – while also protecting society from broader harms”.
Zuckerberg argued that there were four areas that would require deeper cooperation between tech companies, governments and regulators: harmful content, election integrity, privacy and data portability. Measures he suggested included the creation of an independent body to review Facebook’s content moderation decisions and the formation of a set of standardised rules for harmful content; regulation for common standards for verifying political actors; a focus on creating laws that address advertising for divisive political issues; and GDPR-type regulations across the world. Nick Clegg, the head of Facebook’s global affairs and communications team, spoke about how “the way that the rules are drawn – or not drawn – will be quite different to how they are drawn in ten years’ time… and I think big tech companies have a choice: either they play ball and they try to play a responsible role in that debate, or they try to duck it all together.”
Facebook hasn’t stopped at promoting cooperation between tech firms and governments: the evolution strategy has also extended to a series of changes, announced in April, that ‘put privacy first’ because ‘the future is private’. These changes include encrypting Messenger messages and fully integrating the Messenger platform with WhatsApp; trialling a ‘private like counts’ feature; and ways of sharing content without a permanent record. Furthermore, the company is rolling out ‘FB5’, an aspirational redesign of the platform that puts the spotlight on what Facebook would like to be – thoughtful, meaningful and calm. The Groups functionality will be central, and there will be an increased focus on Marketplace as well.
The challenge facing those governments and regulators with whom Zuckerberg wants to work to create a new, brighter internet is massive. Siva Vaidhyanthan notes that “regulators are trying to address Facebook as if it’s like companies they have encountered before. But Facebook presents radically new challenges. It is unlike anything else in human history – with the possible exception of Google.” Governments are trying: the UK, for example, proposed a duty of care standard for platforms to ensure they filter harmful content, and the US government is expected to issue a $5bn fine for the violation of a 2011 order preventing the distribution of user data to companies such as Cambridge Analytica. But Vaidhyanthan compares this approach to dealing individual weather events rather than tackling climate change. Others have suggested more radical approaches: Facebook’s co-founder Chris Hughes called for Facebook to be broken up because “Mark’s influence is staggering, far beyond that of anyone else in the private sector or government. He controls three core communications platforms – Facebook. Instagram and WhatsApp – that billions of people use every day… The government must hold Mark accountable.” Meanwhile, US senator and presidential hopeful Elizabeth Warren proposed dramatic antitrust regulations, and a Bloomburg article suggested that, as social media has been proven to be addictive, it should be regulated in the same way as the tobacco, alcohol and gambling industries – and not the communications industry.
The issues that Facebook faces are dramatically different to, and more important than, those faced by any other company, and they require dramatically different solutions. The varied approaches announced by Facebook in recent months are collaborative, radical and positive, and we at ECI Media Management look forward to seeing them come to fruition.
With increased transparency in the Facebook marketplace, response from consumers is likely to be varied. Users, Governments and Corporations alike should clearly understand how their data is being used by Facebook to target Ads. Changes to transparency and the required investment into security, will no doubt impact the firm’s profits. As customers and co-operations learn more about the result of their time and investment into the platform, initially it is likely demand for the Ad space will see a minor drop, before companies become educated on how to utilise on this newfound transparency. At ECI Media Management, we recognise the value and immense scale of Facebook, which will be crucial to monitor as it moves into this new era.
There’s no denying that the tech giants are having a hard time of it at the moment. There have been the scandals that we’re all so familiar with: Facebook is still dealing with the fall-out from the Cambridge Analytica affair as well as accusations that it allows interference in national elections, while earlier this year Google once again had to face the wrath of angry advertisers whose ads had been run alongside inappropriate content on YouTube. They’re also facing numerous legal challenges from national and EU lawmakers in Europe over issues such as privacy, fake news, tax and competition – and of course there is GDPR to contend with.
Into this rather bleak landscape strode Elizabeth Warren, a Democratic candidate for the US presidential election in 2020. In a blog post Warren laid out a plan to break up the tech giants, namely Amazon, Facebook and Google, by forcing them to divest some of their biggest acquisitions and money-spinners.
So what are the reasons that Warren gives? There are two key ones: in her view, the big tech companies damage small businesses and innovation which stifle healthy competition. In effect, she believes that Facebook, Google and Amazon in particular have too much power over the economy, society and democracy. Facebook scored an own goal by promptly removing her ads around this issue from the platform. It later restored them, but they had neatly illustrated Warren’s point for her (!).
The implications of Warren’s proposals are huge. She would pass legislation designating platforms with more than $25bn in revenue as ‘platform utilities’, which would be banned from owning both the platform and the participants at the same time. This would mean that, for example, Google would need to spin off Search, with Amazon doing the same with Marketplace. Perhaps even more dramatically, Warren also claimed that she would appoint regulators to reverse mergers that had already been completed – including Facebook’s purchase of Instagram and WhatsApp, and Amazon’s acquisition of Whole Foods. This would lead to a world where Facebook would be competing with Instagram and Amazon’s power over sellers – and buyers – would be curbed significantly.
Warren wants to implement these measures to “restore the balance of power in our democracy, to promote competition, and to ensure that the next generation of technology innovation is as vibrant as the last”. She points to the antitrust case involving Microsoft in the 1990s which forced the ‘original’ tech giant to behave with increased restraint into the new millennium and, argues Warren, paved the way for the growth of the very giants she now wants to shrink.
Warren is not alone in wanting to address the huge power held by the tech giants, particularly as the public feels increasingly uncomfortable about the amount of power they wield, but she is the first to have crossed the threshold to an antitrust solution. Of course, the chances are that Warren will not be the next President of the United States (she’s up against many other Democratic candidates, not to mention the incumbent) and, even if she is, many believe that her measures will be extremely difficult to implement. However, what is undeniable is that the tech firms must evaluate how they operate in order to regain trust from users and from governments. A middle ground could be, as suggested by the Report of the Digital Competition Expert Panel, which was commissioned by the British Government and led by Barack Obama’s economic adviser Jason Furman. The report recommends a new regulator to force firms to ‘rewire’ themselves so that users have more control of their data and can switch between providers; it also suggests modernising antitrust rules.
As ever, Google, Facebook and Amazon have an uphill struggle on their hands, and they must examine their business models hard if they are to continue their success and deflect the scrutiny of governments across the world.
YouTube was recently beleaguered by yet another scandal involving brand safety. A Wired investigation revealed that many major advertisers, including Alfa Romeo, Grammerly and L’Oreal were featuring alongside videos that had widespread activity by paedophiles in the comments section. In response, brands such as AT&T, Disney, Nestle and Epic Games pulled their YouTube spend. This isn’t the first time that they’ve had to do this following a brand safety scandal: in early 2017, UK newspaper the Times revealed that brands were unwittingly funding terrorism by appearing next to extremist videos. Indeed, AT&T had only recently resumed its spend before pulling it again after this latest issue.
It appears that media vendors continue to sell very poor-quality content, and buyers continue to purchase it – will anything change? How?
With their ads appearing alongside some of the most unsavoury content imaginable, you’d be forgiven for assuming that brands would turn their backs on YouTube permanently, or at least until they could be assured that it wouldn’t happen again. You could also be forgiven for thinking that tackling this matter would be top of vendors’ list of priorities, given that their business model is so dependent on advertising. So what’s going on?
The answer is, as it so often is, money. For vendors, the temptation to sell huge bundles of automated or semi-automated impressions can be too strong to pass up, while the sheer reach of those impressions is hard for advertisers to resist. The issue here is a lack of motivation on both sides to police content: brands could be doing more to monitor their campaigns, while vendors certainly have work to do around the content that appears on their platforms, and what advertising appears next to that content. The algorithm always goes where eyeballs go, which can lead to errors: for example, children’s videos often have high viewing figures, and children don’t tend to skip ads. The algorithm thinks this is fertile ground for an advertiser and promptly serves… an alcohol ad. This is especially likely if the child is looking at mum’s iPad and the brand is using demographic targeting. To be fair, Google has gone to significant effort to build tech that can track consumers across all devices, but that hasn’t stopped its targeting capabilities falling short, as the example above illustrates.
In short, these scandals are happening because of an industry that continues to reward quantity rather than quality.
This is a difficult battle but it’s certainly one worth fighting as digital advertising becomes ever more prevalent and important. Responsibility lies with the platforms, of course – they must try much harder to make their content safer (not just for advertisers), and to prevent ads being served alongside potentially damaging content. But brands have work to do as well.
Advertisers must be more careful about where their ads are being served, and what bundles they buy. There will always be a conflict between reach and relevance: while vendors and tech firms sell a dream of the automated purchasing of millions of hyper relevant, this is completely unrealistic, particularly in the short and medium terms.
One avenue that some savvy brands are pursuing in order to mitigate the risk of ads being served alongside ‘unsafe’ content is premium marketplaces, such as Google’s Preferred programme, private marketplaces and programmatic direct deals. These platforms give brands access to – at a premium price – inventory that is higher quality, brand safe and more relevant, in theory at least. However, these platforms are becoming increasingly crowded by concerned advertisers, and the packages often leave out high quality content. Alarmingly, there have even been instances where the packages have included content that has caused the brand safety scandals that brands are desperately seeking to avoid.
Of course, there are other options to the ‘traditional’ video ad: native advertising is not only safer, but also easier to target at the right audiences, so you get relevance and reach.
Of course, it goes without saying that the platforms themselves must really focus on weeding out inappropriate content, and on being stricter about which content can be monetised through ads. This might be controversial amongst content producers who rely on ad dollars for their income, but it will be critical to the success of the video platforms and avoidance of the scandals that have beset them in recent years.
This is a complex issue which will take a lot of work from both brands and vendors to overcome; there’s no silver bullet. Google’s EMEA president even admitted that the tech giant may well never be able to guarantee 100% safety for brands. Advertisers will need to accept that they can’t have both huge reach and hyper relevance: greater relevance will come at a cost through programmes such as Google Preferred or private programmatic exchanges. Meanwhile, vendors must of course invest in tools and technology to make their content safe – for advertisers and viewers.
The last decade has seen a huge focus on digital and visual innovation in the advertising industry; but marketers and practitioners have always known the value of non-intrusive, highly accessible and limit-free advertising, which is why we are seeing a recent re-incarnation of audio for this generation.
The audio marketplace has seen a divergence and then evolution from the standard radio format towards the podcast and music platforms, although radio still remains crucial. The beauty of these mediums for the advertiser is the ad: no blocking and no ‘peak-time’ engagement driving up prices.
On-demand audio streams surpassed 400bn in 2017, compared to 252bn in 2016. Commuting times are rising as people seek more peaceful lives outside of cities, and rail commutes are on average 2 hours and 11 minutes: it’s no wonder that the demand for podcasts and other on-demand audio has risen so dramatically. Furthermore, smart speaker streaming helped to drive an 8% increase in the number of hours spent listening to digital broadcasts in 2018 versus 2017. The resurgence of audio should not go unnoticed.
Whilst the marketplace re-aligns with its audio roots, it is inevitable that there will be challenges for media planners, advertisers and auditors alike. The proliferation of streaming, smart devices and wifi has given consumers greater autonomy over their time and their method of consumption. Whilst this provides excellent opportunities for reach and brand awareness for advertisers, it begs the question: does the marketplace have the tools and devices ready to provide accountable and accurate tracking and analytics? Until these tools are standardised and harnessed across the market, it is likely the adoption of digital audio into media planning will remain consistent, but slow. Investment into this medium will be a lower priority until it can be demonstrated that digital audio outputs add strong, measurable value.
Alongside this tracking and analytics issue, the industry will need to work out how to harness the increased quantity of data in order to drive further engagement with consumers. While digital audio attracts investment with an environment that is free of ad-blocking, it does create a transparency issue for the consumer-agency-platform owner relationship.
The future of digital audio is an exciting one. The integration of programmatic audio is set to propel audio back onto the main stage of advertising channels. Programmatic advances will increase campaign ROI, augment automation and decrease audio costs. The combination of these factors, alongside the accessibility and increase in the number of platforms will see marketers, advertisers and auditors being forced to become more innovative and dynamic in a format once seen to be traditional and static.
All hail the return of audio: finally, our eyes will be given a rest from mobile screens!
In advertising, personalisation is king. As the mantra goes, right message, right time, right place – if you can tick all three of those boxes, your ad will be much more relevant to the consumer and therefore so much more powerful. In the rapidly approaching age of artificial intelligence, it will be easier than ever to personalise your advertising: when machine learning is applied to the vast quantities of data, advertisers can understand the motivations of almost every consumer on the planet. That promise holds a great deal of power and potential wealth, but as they say – with great power comes great responsibility, and advertisers must consider carefully how they will use and handle customer data.
Advertisers are understandably excited about the prospect of artificial intelligence; just twenty years ago, it was almost inconceivable that brands would be able to directly target individual consumers based on their unique behaviours and motivations, with messages that were relevant to them. To an extent it is possible now, but it will become increasingly easy as artificial intelligence becomes more widespread, particularly as it is harnessed by programmatic platforms for real-time optimisation, for example.
Some research indicates that consumers actively want advertising that is relevant to them; indeed, they’re even willing to give away their personal data for more personalised advertising. But there’s a fine line between advertising which is more powerful because of its relevance, and advertising which is annoying or just plain creepy. That’s down to a number of factors: bad targeting, use of sensitive personal data, placement, frequency or a lack of relevancy. You can understand why. If, for example, a consumer has recently purchased a pair of blue shoes online and is stalked around the internet by ads for blue shoes, it’s annoying and the ad simply serves to remind him or her that their activity is being tracked – they no longer need blue shoes. Ads for a blue handbag, for example, or for nice socks, might be more relevant – but that is when the mighty GDPR starts making its presence felt. The EU data regulations, which any advertiser with a European target audience will be all too aware of, make the transfer of consumer data between one company and another very difficult.
Of course, this example assumes that there are two companies involved, and that the brands themselves are doing the selling. The inability to share data will give more power to the platforms where consumers can buy from a large selection of brands: they will be able to harness their first-party data to build a more complete offering for their consumers, and more targeted marketing. The brands themselves could begin to lose the battle to understand and successfully reach audiences.
Brands shouldn’t just be concerned about not annoying consumers. The amount of data at their disposal – and the tools available to process and understand it – means that they can have an astonishingly complete understanding of their consumer – and that means marketing which is too effective and too persuasive. The art of persuasive marketing could be elevated into the science of behaviour control. Layer that with the ability to exploit people’s inherent prejudices and insecurities and we’re into some seriously apocalyptic territory. Need we mention Cambridge Analytica?
In order to avoid annoying consumers and indeed to avoid straying into unethical territory, the answer is to always remember one golden rule: a consumer’s data belongs to that consumer, and must be handled with the care and respect that would be afforded to their other possessions. When collecting data, be transparent: explain how you will use it and ask for the consumer’s consent. Like any relationship, trust is critical and transparency is the way to earn that trust. Personalisation must be voluntary, overt and transparent.
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In a fully mobile world, where the average person spends hours a day on their smartphone and targeted ads are standard, out of home (OOH) can seem a little out of date. Don’t write it off yet though – it appears to be enjoying something of a resurgence. Many brands including, perhaps ironically, the big tech brands such are investing a huge amount in this medium; Apple, Netflix, Amazon and Google are four of the 10 largest spenders on billboards. The figures back this up: outdoor ads were the only ‘traditional’ media category to show growth in the US in 2018, with an estimated $33.5bn in revenue, with digital out of home (DOOH) being the main driver with growth of 16%.
What’s behind the renaissance of outdoor advertising? There are three key drivers: it’s impactful, innovative and effective.
In a world of palm-sized screens, the sheer size of a billboard and its large, uncluttered layout give it impact that a mobile ad would find it very difficult to deliver. What’s more, while consumers can – and do – ad block on their mobiles and desktops, you can’t block real life. So it seems that the rise of OOH is partly a response to digital fatigue amongst consumers and the advertiser’s quest to reach them in a fresh way that will have the desired effect. However, the rise of this medium is also partly because of the overall shift to digital advertising: many OOH companies are harnessing the power of technology that are increasing impact and relevance.
Over the last few years, OOH has had to become rapidly more tech savvy to stave off irrelevance. Innovations abound, largely to make the medium more responsive, interactive and, critically, targeted, so that it can compete with digital advertising in terms of relevance. Location and contextual data are crucial to the success of the OOH format as they can be used for increased targeting. Many companies working in this space are creating technological innovations that have brought OOH right into the 21st century. Clear Channel’s Radar programme uses global positioning data from mobile apps to understand who is passing by its signage, whilst startup AdQuick has developed a range of new targeting and measuring tools, including integrating digital voice assistants so passers-by can ask for more information – and therefore provide more data for advertisers to use. Google is, of course, putting its targeting and programmatic expertise to good use in the space, grabbing extensive demographic data from Android owners passing by, and even started to test its DoubleClick ad technology in London, allowing advertisers to purchase ad space on screens across the city programmatically. This opens up the opportunity to respond in real-time to events such as beer ads for the Friday commute home.
Of course, geo-targeting is a key feature in today’s digital OOH. It allows fixed screens to surface information that people want or need in that place, at that time, therefore adding value to the consumer’s day, while OOH in situations like taxis can respond to changing points of interest as the vehicle passes. All this leads to dynamic, interesting and valuable content.
Even more futuristically, artificial intelligence (AI) is helping marketers to personalise OOH content and make it more engaging. One such innovation is technology that detects the facial features and expressions of a passer-by and determine whether they are happy, surprised, sad or angry as well as their gender and approximate age, all with remarkable accuracy. This of course allows advertisers to deliver in real time the ad which will resonate best with the consumer.
It used to be that OOH’s key purpose was to drive traffic to bricks-and-mortar shops, but with so much innovation going on in the space, the medium can now drive a specific action and interact in a personalised and targeted way – and that makes it so much more effective than it used to be.
Technological advances and, conversely, digital fatigue amongst consumers has brought about a renaissance for OOH and have made it a highly effective medium. Being able to understand the geographic and demographic context of a billboard’s surroundings – and change content accordingly in real time make it a valuable weapon in the advertiser’s arsenal. Furthermore, rather than replacing other media, it works well in conjunction with other channels and can even amplify them. Mobile click-through rates increase 15% when supported by OOH ads, according to WARC, and 46% of US consumers have used a search engine after seeing an OOH ad. It even intersects with social media: research by Nielsen revealed that one in four American adults has posted a photo of an outdoor ad on Instagram – that’s much higher than TV, radio, print or digital banners. When Spotfiy turned a New York subway into an art installation, it reached 50 million people on social channels, with no paid amplification.
All this means that the ROI for OOH in the US is remarkably high: each dollar spent on OOH advertising drives an average $5.97 in sales – that’s 40% higher than digital search.
Gone are the days when a billboard was a passive brand-building format. It’s now a dynamic, innovative medium that has the ability to engage with, entertain and add value to consumers, pushing them towards a purchase in a way that can seem less intrusive than a mobile ad. In an age where consumers are being targeted by advertising from all angles, an effective, innovative and impactful out of home campaign might just be the way to rise above the clutter.
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