Winter is Here for Digital Media…
Here’s how Smart Publishers Can Survive the Cold
If you’re interested in separating the signal from the noise in the digital media echo-chamber then LUMA Partners’ recent 2016 State of Digital Media report is a great place to start.
Aside from a dash of hyperbolic Game of Thrones references about a violent shakeout here in digital media land, LUMA Partners’ CEO Terry Kawaja and team certainly deliver some refreshing clarity to the discussion.
The whole 100 page document is worth the read, so please check out the link at the bottom of the page if you want more.
The part that really stood out for me however, was Kawaja’s ranking of the 10 most critical issues facing the digital media industry today.
None of them should come as a surprise to industry insiders and every one of the ten items in the ranking deserves further discussion. I want to start though by providing a bit more color on one of the key themes that my team has spent the last few years working to solve; the poor quality user experience of digital ads.
The third most critical item ranked by LUMA Partners was ad-blocking and from the perspective of a publisher relying on ad revenue, the phenomenon can be terrifying and for some represents an existential threat.
But it’s important to recognize that ad-blocking did not happen in a vacuum. It is in fact a symptom of various other trends in digital advertising, to which publishers are often complicit.
The problem is not ad-blockers per se, it is an advertising technology industry that has tended to focus on efficiently delivering more ads while overlooking the user experience all those extra ads create.
This incessant “more is more” approach has unfortunately lead to downward price pressure for publishers at every level. This negative feedback loop has polluted the user experience to such an extent that disgruntled consumers are fighting back, and rightly so.
If we’re being honest, we can all agree that the user experience of most digital advertising falls somewhere along a spectrum from mildly annoying to abysmal. How many times have you had to wait 5, 10 or even 15 seconds for a video ad to load? Or accidentally clicked an expanding video unit bursting out between two lines of text like that chest-buster scene from the movie Alien? …No Parker! Don’t touch it!
So if publishers want to “fix” ad-blocking the answer is pretty simple: Improve the user experience of your digital ad inventory and you remove the motivation for people to block ads.
That sounds easy, but in practice it’s quite hard because every ad-tech vendor has some compelling line about how their solution is better for the users. So what does a smart solution actually look like?
The answer starts by simply asking users what they want.
We already know that they don’t want the stop-gap measures many publishers have enacted. Kawaja warns, and I strongly agree that, “forcing the consumer’s hand with draconian measures is not the way to go.”
Refusing all access to content for people with ad-blockers activated or trying to game the ad-blockers with URL masking just puts publishers in an arms race with savvy consumers. I’d say the safe money is on consumers winning out while publishers employing these tactics will find themselves on the wrong side of history.
If that is the case, then what can publishers do to remove the incentive for users to block ads without foregoing the benefits of steady ad revenue?
And lo, I say unto you again; ask thy users…
As it turns out, there are two very big issues that users who install ad-blockers say they want publishers to improve:
Fix the latency issue — Especially for video ads.
- According to one study by Akamai Technologies for every second users wait for a video ad to load, publishers are losing 5.8% of their users. At 5 seconds nearly 30% of users have bounced.
- Slow load speeds — both of the ads themselves and of pages weighed down with heavy ad stacks — have been listed in user surveys as a leading driver of ad-blocker adoption.
- Technologies like pre-caching on mobile already exist to drastically improve load speeds and all but eliminate this issue. Publishers owe it to themselves and to their users to understand and deploy these low or zero-latency technologies and to hold ad-tech vendors’ feet to the fire over their ability to deliver on promises of greater speed.
Be explicit about the value of your content and give users options on how to compensate you for it!
- Publishers wrongly assume that users understand the bargain of ad supported content, unfortunately experience has shown that this is often not the case as users dramatically under-value digital media content.
- A few savvy publishers are starting to use direct value-exchange formats that create one-to-one transactions with non-paying users to be more explicit about the value they bring to the table.
- Spotify’s “Watch a video to get 30 minutes of ad-free audio” is a great example of this, as are a number of forward thinking European press publishers who are now allowing non-subscribers to opt-in to watch video ads in exchange for additional free articles once they’ve reached their weekly limit.
- Not only are these ad formats whitelisted by ad-blockers, but a study published by Winterberry Group found that 84% of respondents actually liked having the option to watch a video ad in exchange for direct access to specific premium content.
What happens when premium publishers improve the user experience of digital ads?
By explicitly giving users the choice to either pay or engage with advertising for access to premium content on a transactional basis, publishers increase the perceived value of their content. Then, by ensuring that the ad experience doesn’t slow the user down, publishers can in one fell swoop remove the two biggest drivers for ad-blocker adoption.
The LUMA Partners report talks about all of this in broad terms in one of the later sections, but primarily in reference to mobile gaming where the industry has already wholeheartedly adopted such measures.
I am convinced however that the time is now for premium digital publishers to think differently about creating a higher quality and more nuanced ad experience for their users.
As Kawaja notes, digital publishers are losing value to ad-blockers, but it doesn’t have to be that way. We as an industry owe it to our users to provide a better, more acceptable digital ad experience in order to stem the tide of ad-blocker adoption.
LUMA Partners’ “Winter is Here” title was certainly attention grabbing but winter doesn’t have to mean the end for the digital media ecosystem as we know it.
Sure there will be consolidation, and we think that is a good thing for the industry. For forward thinking publishers it’s also an opportunity to get smart about surviving in a new world with more user friendly ad workflows.
Of course after winter comes spring and the publishers who take steps now to improve the user experience of their ad products will be in a much stronger position to benefit after the thaw.
Thanks for reading, and please check out the LUMA Partners 2016 State of Digital Media report.
If you would like to learn more about value-exchange video ads you can check out our insider’s guide here:
Grant Gudgel is a co-founder and COO of SMRTR.MEDIA by VIDCOIN, where our crack team of digital ad engineering ninjas are hacking the programmatic ecosystem to make zero-latency programmatic video the new standard for delivering quality video ad experiences to mobile users. Grant lives in New York and works with top digital publishers to improve the user experience of their digital video ad inventory across all devices, both in-stream and out.