The future of advertising has been around forever
Frankly speaking, there is way too much information out there about us for us to still get irrelevant advertisements. Right now, the business model for online publishers is at odds with those same publishers being able to keep their customers happy. Programmatic advertisements are slowing down users’ experiences on the Internet, particularly on the mobile web. Mobile demands quick and intimate experiences. The slow state of the mobile web isn’t great for companies like Facebook, Google, or Apple. For example, it’s in Facebook’s best interest to keep its users on its platform, so it can maintain its very-important-to-advertisers time on site metric. When a user gets frustrated and closes out Facebook after clicking a slow-to-load news story in their Newsfeed, Facebook loses its grip on that user’s attention. Apple, with its mission to make the best products possible, must resent these same programmatic ads, as they create a poorer experience for their users. Unwitting users might even think the poor performance of the mobile web is a fault of the iPhone itself. To combat these issues, Facebook created Instant Articles and Apple will allow ad blocking in iOS 9 mobile Safari.
So, what will be the the next generation of ads on mobile? The new crop of effective advertising will be akin to something we’re already used to — testimonials. A person (or persons) of influence to a particular group of people advocating for a product based on their personal use of that product. Testimonials have been around since the beginnings of advertising. With the dawn of social media and user generated content, testimonials no longer have to come from mainstream, generic, celebrities. Companies like Instagram can build and integrate their own advertisements into their own properties. These ads will be speedy, relevant, and won’t diminish the user’s experience. Having developed an interest graph based on ‘Following’ (rather than ‘Friending’), properties like Instagram or Twitter could create user profiles to deduce who their users’ current and potential influencers are. Subsequently, a user could be served an advertisement that means more (and converts more) because it comes from someone he/she explicitly values.
This new form of advertising is a great fit for micro publishers and macro publishers, which are really content-delivery platforms. The former because these organizations remain lean and specialize in a certain type of content— they don’t have the overhead costs of a mid-tier publisher. As such, these micro publishers, don’t need a lot of revenue to survive or make the endeavor profitable. Macro publishers, on the other hand, have the resources to create an ad experience that is high-margin, tailored, and scaled to be pushed to hundreds of millions of users.
An emerging example of the micro-publisher is the podcast medium. Podcasts can consist of just one or a few hosts. Advertisers sponsor podcasts based on their number of subscribers — a positive sign showing that listeners are explicitly interested in that content, so much so that they want to be informed when there is a new episode released. Many podcasts are also relatively cheap to create and, as such, require less to generate a positive return on investment. Lex Friedman, head of sales for Midroll (a company that sells ads for podcasts), told FiveThirtyEight that while his company is not satisfied with a podcast having 50%-60% sell-through, it is something that makes him and his company “happy”. A similar sell-through for a TV show wouldn’t please executives. However, given the leaner nature of podcasts, that sell-through is probably enough to maintain the show’s ROI. Many podcasts are geared towards specific (and perhaps, smaller) audiences with particular interests and wouldn’t be considered mainstream content. They’re not generic content designed to grab everyone. The hosts of podcasts are uniquely suited to reach their particular audience. Because of this, their ads can fit their medium thematically. See Bill Burr’s Valentine’s Day endorsement of Sharri’s Berries:
“Show her you thought of something unique and different this year, and get her the gift she is sure to love: Sharri’s Berries,” Burr says near the beginning of the ad on his Monday Morning Podcast. “Yeah, get her something unique. Get her something you and f**king four million other people are going to get.”
On the authenticity and success of the ad, Sharri’s Berries’ marketing director, Nick Fairbairn said:
“I mean, does that fall within our brand standards? Probably not,” he says. “Is it authentic to Bill Burr the comedian in a podcast space that’s not nationally regulated for language? Yeah, it’s right on brand for him. And gosh it was ROI positive, too.”
This particular ad might not play well broadly across the United States but it would play well to those who subscribe to Burr’s irreverent humor and in turn subscribe (literally) to his podcast. Those who would find the ad vulgar, likely do not even subscribe to Burr’s podcast. Subscribers, meanwhile, are drawn in by the comedian’s honesty and, somewhat paradoxically, are probably more inclined to give Sharri’s Berries mindshare. His ad was true to his persona and, in turn, true to his audience. The ad was also incredibly easy to integrate into the content, Burr was just reading (or improvising) copy. In the end, he was able to present listeners with an ad that didn’t denigrate their experience. In fact, the ad probably added to it.
On the other end of the spectrum, you have properties like Facebook, Instagram, Google, Twitter, and Snapchat. These properties act as macro-publishers —corralling content and redistributing it to those in the users’ network. These properties deliver content to millions of users and as such, have millions of users to monetize. These users’ interests are varied and because of this, these users must be monetized programmatically, due to scalability concerns. However, this doesn’t mean that these millions of users need to be given a watered down advertising experience. On the contrary, these companies each have signals letting them know what or who users are interested in and who would influence their users. Facebook’s signals are friends and family. Instagram, Twitter, and Snapchat’s follower models let’s these companies see what brands, personalities, celebrities you’re interested in. As I mentioned in, “How Instagram creates demand,” Instagram’s true potential lies in its ability to quantify and leverage the demand it creates by having influencer and lifestyle accounts on its platform:
“What if Facebook decides to retarget some of these Instagram brand posts (which are in effect, advertisements) onto its much larger Facebook platform? If Facebook can deliver that vibrant ad experience to its 798 million (March 2015) mobile daily active users, things could get interesting.”
Another way to phrase this question is, What If Facebook enacts its own version of “Ad sense”? Facebook could implement these ads across the publishing valley, i.e. those mid-tier publishers now utilizing slow programmatic advertising. Macro publishers will be able to present and build influencer ads to user cohorts separated by interests. These ads would convert better because they are more relevant to those seeing them and because they are faster, as they would be built for the medium.
Snapchat has become a hotbed for sponsored content. Snapchat celebrity, Shaun ‘Shonduras’ McBride, attributes his “close bond” with his followers to his being able to snag sponsors. In the immersive story below, Shonduras’ grocery trip is cut short when he is transported to a Taco Bell brainstorming session. Now, I’ve been skeptical of Snapchat but I found this vignette to be pretty captivating.
In the next Story, Shonduras excitedly plays in the Taco Bell test kitchen and lets subscribers know that the Capn’ Crunch Balls would be available the following day, worldwide. The film quality was decent given the nature of phone cameras but nothing compared to the film quality of a typical TV commercial. That’s fine because it lets the story shine and contributes to the authenticity of the advertisement. It also probably cost A LOT less.
“I’m not going to do advertisements that I don’t believe in,” McBride says. “I legitimately like Taco Bell. I’ll work with them. I legitimately love cereal so I’ll work with Honey Nut Cheerios. I love Samsung phones over iPhones, so I’ll work with Samsung. I just try to keep it real.”
Snapchat has recently moved away from the Sponsored Story, no longer selling it as an advertising unit. However, Snapchat hasn’t regulated independent partnerships like the one between Shonduras and Taco Bell. Perhaps, Snapchat is working to refine the branded partnerships and might take cues from well done executions like the Shonduras’ Taco Bell ad.
Google and Facebook have divorced individual pages from their publications. People now visit articles, not the homepages of publishers. Ben Thompson discusses this phenomenon in his article, “Publishers and the Smiling Curve.” As a result, publishers have a take-all-you-can-get approach to monetizing their users. They can’t count on their users coming back consistently so that’s why users are bombarded with as many ads as possible. Macro publishers like Facebook and Snapchat, on the other hand, are already geared towards people coming back to their properties. People and personalities they are interested in are on the macro-publishing platforms and users will come back to check on them. Intermittently, these macro publishers will be able to place speedy and relevant advertisements to these same users.
Authenticity in advertising is coming. On last week’s episode of the Talk Show, John Gruber and Jason Snell had a great conversation about the state of the mobile web and issues with monetization. In it, they brought up Mary Meeker’s slide regarding the 25 billion dollar opportunity that is the mobile ads business. Right now, ad dollars have yet to match where the actual eyeballs are. When this shift comes, advertisers will need relevant and authentic endorsements from influencers, as defined by the user. These testimonial ads, whether implemented on a micro or macro scale, won’t cost a lot to produce. In addition, because implementing the ad will be so native to the medium and thought of as a part of the experience, users will have a more authentic experience. In turn, those ads will convert more. Mobile is an intimate medium given the smartphone’s omnipresence in our lives. It’s too easy for any ad to feel like an intrusion on mobile. Generic ads without any personalization simply won’t do.