PageFair endorses the initial standard of the Coalition for Better Ads

PageFair has endorsed the Coalition for Better Ads’ initial standard for better advertising. PageFair CEO, Sean Blanchfield, said:

PageFair will align itself with your initial standard henceforth. I commit that PageFair shall serve only the most tolerable formats, per the Coalition rankings.
It is my hope that we will together improve the quality of advertising on the web, and thereby sustain the medium and the publishers that give it substance.

Click here to read his letter 

What ad formats are not permitted under the Coalition’s initial standard

The Coalition’s research determined that the following formats are below its standard of acceptability and increase the likelihood that a user will install adblock.[1]

Desktop

  • Pop-up Ad (with or without countdown)
  • Auto-playing Video Ad with Sound
  • Prestitial Ad with Countdown
  • Large Sticky Ad at the Bottom

Mobile

  • Pop-up Ad (with or without countdown)
  • Prestitial Ad (with or without Countdown)
  • Postitial Ad (with countdown)
  • Ad Density Higher Than 30% (30% single column; 35% multicolumn; and 50% multicolumn) Flashing Animated Ad
  • Auto-playing Video Ad with Sound Large Sticky Ad
  • Full Screen Scrollover Ad

 

Research  

The Coalition’s findings on which advertising formats prompt users to adopt adblocking echoes PageFair’s own work to understand adblock users’ tolerances for ad formats over several years.

The scale of the Coalition’s research is to be commended. However, while video formats were examined, the research did not investigate attitudes toward YouTube’s own pre-roll video format. This should be explored in supplemental studies.[2]

Work remains: ad experience is not the only reason people are installing adblock.

Only 25% of the experiences tested fell afoul of the standard, and these are thought to represent only 5% of page views.[3] This seems optimistic.[4] Advertising experience, upon which the Coalition has focussed its research, is not the only reason why people install adblock. Other reasons, such as security and privacy, are important too, though they may be beyond the Coalition’s present scope. As the Coalition notes, adblock rates are increasing.[5]

We will continue our mission to solve the root causes of adblocking. Although bad mobile and desktop experiences drive adblock adoption, so does bad video ad experience, ad security, privacy infringement, bandwidth cost and page speed. We all have more work to do to create a sustainable foundation from which we can continue to build our businesses, and ensure a healthy future for digital media the open web.

Notes

[1] Determining a Better Ads Standard Based on User Experience Data, Coalition for Better Ads (URL: https://www.betterads.org/research/standardpaper/), pp 12-13.

[2] ibid., p. 23

[3] ibid., p 25.

[4] It is reasonable to believe that the take up of adblock tools by 18% of the online US population is due to more than 5% of their online experiences being negative.

[5] ibid., p. 2.

Scott Cunningham, IAB TechLab founder, on advertising in crisis (interview podcast) 

In 2015 Scott Cunningham, the founder of IAB TechLab, told world “we messed up” on behalf of the advertising industry. His was the first major industry mea culpa that began a shift toward addressing user problems with advertising on the web.

When we spoke last week I challenged him about the IAB’s DEAL strategy on adblocking, which he devised, and which may lean too far toward recommending that all publishers restrict access to users. His response is worth reading, and makes clear that DEAL is not an all or nothing approach. Only a small number of publishers with very exclusive content may be able to sustain a strategy that blocks adblock users from visiting their content. Most can not.

Scott shared the background to the IAB’s LEAN principles for more respectful, subdued advertising formats. He focused on LEAN because of his own concern as an engineer about the decline in user experience as ad loads increased over the last decade, and in response to an off the record meeting he with adblock company Eyeo in late 2015.

We found common ground discussing Facebook’s strategy on adblocking: engaging with one’s visitors to find out what they dislike about ad formats, fixing those formats, and then using tamper-proof ad serving to show them in a way that adblock companies can not block.

We discussed the coming shake up as publishers benefit from new European privacy regulations that potentially empower them as intermediaries for their visitors data. Scott also spoke about how trade bodies will position themselves in this scenario. Having stepped down from the IAB in 2016 he can speak about this from a remove. He now operates Cunningham.Tech, a consultancy.

This podcast is a shortened version of a longer conversation. For an even shorter version you can read brief brief highlights here. The transcript of the podcast is at the bottom of this note, and the audio is here.

Highlights from the podcast

1. On Facebook’s strategy of showing ads with a better experience to adblock users.
Listen at 20:54
Scott Cunningham:

Facebook was able to reach out, get some data, first party information of those conversations with their consumers, that’s their customer service. “Let me modify my product for you based on your needs”. To me it’s not that complicated. I think for Facebook though to do it is different necessarily then possibly a metro daily news organisation or some other type of content and or social engagement that a product might have. So Facebook’s approach, while fantastic, and while it works around their model, the question becomes, well, can it be applied to others content structures and other organisations that may not enjoy that type of lock in with those end users. And I don’t know the answer for that, except that my feedback to the publishing community was, continue to experiment. Continue to have the conversation with your customer. Any you’ll find out what their, what I call “pricing elasticity of user tolerance” is like. You know?

2. On why only some publishers can deny adblock users access, and others should not.
Listen at 25:58

Scott Cunningham:

On the DEAL programme “limit and lift” is subjective based on the content that you own. So at USA Today – I can’t speak for them anymore, it’s been a long time there – but clearly the brilliance of USA Today as a brand, and USA.com, was really more about the rich media, visually storytelling package itself, versus the textual content. Except for some of the columns and these types of things. So if you think about that brand versus the larger newsroom of, like, The Wall St. Journal, which already has the subscription wall, these models and the content reflect who they are. And at the end of the day, when I say “limit or lift” on those restrictions, and with those working groups who put together that document, it was very much of a detect, explain to the consumer, understand what they are looking for, understand your own business, and you can choose to limit access, or lift the restrictions based on your comfort zone, the percentage of the blocking, and these types of things. So it’s not a – for me the DEAL wasn’t a “all or not”. It’s very much of a grey area based on how you want to engage your consumer. But again I go back to, if you’re not offering a good user experience, a good customer service, you’re not going to know how to actually play the DEAL. You’re really not. And if you’re not engaging your customer on these things, and having that understanding and that conversation with them, then you’re probably going to have a losing hand.

3. On new European data regulations and the opportunity for publishers.
Listen at 33:53

Scott Cunningham:

If you’re a publisher, the hypothesis goes, that the EU policies and directives coming down could absolutely benefit the publisher in such a way that it allows — the traditional publisher, when I say traditional, maybe not some of your large social platforms Google and Facebook. And let me very explicit there. — the traditional publisher because it forces them to have a conversation with their customer on explicit ownership on transaction of what that data looks like. That helps the traditional publisher, news publisher or entertainment, own that conversation. And if I’m a trade body in representation of those publishers I’m not so opposed – possibly – to the regulations that are happening in Europe.

 

Transcript

Transcript of PageFair Insider podcast: Scott Cunningham, founder of IAB TechLab, and Dr Johnny Ryan of PageFair. 

Ryan
Welcome to a discussion at Page Fair. This is a series of conversations about the future of media and the Open Web. Let us know at PageFair.com.
Scott is a particularly interesting person to speak to about the crisis in media and advertising now. The position he recently departed from is that he was the founder of TechLab at the IAB. So Scott, thanks for taking the time.

Cunningham
Well thank you.

Ryan
You did a lot of interesting things at TechLab. I think the one that probably gained the most attention from people who weren’t looking at the day to day work at TechLab was your mea culpa. This was the post you wrote in October 2015 in which you said “we messed up”, and essentially owned up on behalf of a very large industry to the sins of the digital advertising industry over the last decade and a half. Will you take us back to that time, and what caused that. I think it might have been that you met up with Eyeo (the company that owns AdBlock Plus) and had a chat. Was that the thing that triggered this mea culpa.

Cunningham
I think the ultimate decision to write the piece and put it down on paper, yes, there was a meeting between me and Eyeo at DMexco in September 2015. But having said that, the creation of the TechLab and all the working groups, which I can get into as well, had an element of user experience built into it. And that was by design because one of the things in my observations over twenty years was that since I started building websites with banner ads without web servers – starting was back in 1994, 95 –

Ryan
I think they were called rectangles back then Scott

Cunningham
They were called rectangles! And I didn’t know what the pixel size was. Generally speaking – and I’ll share that story of my first banner – but generally speaking, all of those years, when I put the Tech Lab together, it was “make sure we’re threading user experience as we can into the creation of any technical protocol that has to do with advertising”.

The meeting with Eyeo, and met with those folks, was a behind the scenes meeting to understand where their points of view were coming from. And after a good 45 minutes to an hour discussion, the one thing that resonated with me that was in my control, that I could improve from that control, was to say “you know what, their argument around user experience was exceptionally valid”. I’m not going to say that any of their other arguments were. But that one was something that had resonated with me, and frankly had resonated with those of us on the tech side who had been looking at what was happening with our products in the B2C environments for years. Since fading to the recession really.

So I think what you saw when I wrote that piece was basically some people say “Scott you fell on the sword for a 400 billion dollar supply chain”. I didn’t necessarily look at it that way. I looked at it as, “you know what, we have an opportunity here to reset on some really critical areas. And some of that was the relationship between the sales group and the tech group in publishing. Some of that was the reset between adtech stacks and this notion of how we all got drunk off our reach and scale and retargeting. Some of it was to basically say, “you know what? If we are not in the business of practising good customer service then what are we in the business of?”

Ryan
You know, maybe this is an opportunity to go back to that first rectangle. You briefly diagnosed some of the ills, but how did we get to this place? What were the worst leaps that in retrospect were negative?

Cunningham
You know, what I think back, I think back to those renaissance years of really creative art work that we were doing. Those were a lot of fun years. A lot of learning that we were able to do. And you know the next thing that was right around the corner was adtech. And you know I go back to those days though when I – in 2014, I think it was Senator McCain was asking a lot about malvertising in US Congress and asking publishers who isn’t there an opt-in mechanism for consumers versus opting out in defence of the adchoices programme. And the response – and my response has always been – consumers have opted in. They’ve opted in to free content. And that was a good ten or fifteen year run up until that recession when there was very little issues with consumers opting in to free content and their user experience.

Next thing you know, we had this recession. And this was spelled out in the piece “We messed up”, that adtech was there, we were trying to maximise yield, our print revenues were declining, or our broadcast revenues were going to tank. And you know it became much easier to just add more ad units to the page because there was no subscription model. I like to tell the story of when I came back to the news world for a second tour one of my large metro dailies had thirty seven ad units on the front, and the sales team wanted to know why their Southwest Airlines airplane coming across the page was stuttering. And I said “OK, lets take all the thirty seven other add units off the page and find out if it’s still stuttering on your machine”. And sure enough the airplane flew pretty smooth on their rectangle ad.

And so you could tell at that time to maximise revenue we were destroying the processing units on many people’s machines during those days. And did the sales organisation understand? Absolutely not. They didn’t understand. Those of us on the tech division did. We saw what was going on. We tried to optimize the site designs as much as we could during those years. But we also had to make money. And in some cases during those years it shot us in the foot from user experience, so when you read that piece, when I was describing our work to “scrape dimes” it could have cost us dollars in consumer retention and consumer loyalty. I think that’s where you saw a little bit of consumers saying “hmm, there’s an adblocker here?”. That started the conversation more and more in that community.

Ryan
That is fascinating. That phrase “scrape dimes” or “count dimes” comes from John Paton, doesn’t it? Your old boss from Digital First Media? And there’s an interesting subtext to part of your story, which is that the engineers knew and the non-engineers did not. And in such an immature medium which is so engineering heavy, we’re maybe seeing a slow shift in the balance of influence where engineers’ voices are maybe getting a little bit louder. And by the way, by “engineers” one could say maybe “designers” as well.

Cunningham
I agree. I agree with that. For me, being an engineer and a developer way back in the day, actually in the last eight years I had to go the other way and speak business. And it was because there has always been this tension in publishing between sales divisions and the tech division. Event when I created the TechLab this manifested itself on the IAB Board to some extent, because that’s a sales division. And for me it was really important to find ways to partner with the sales division because quite frankly I like my job, I wanted revenue too. And for me to be able to translate and speak their language, as opposed to going the other way, I think those of us on the tech side who can actually speak the revenue language, that’s where solid partnerships have really manifested themselves. And I think some of the core digital products out there in some of these organisations, you can see it. You know, where there are relationships internally.

Ryan
So you finally climb the mountain. Through your various layers of experience you finally get to a place where you can influence industry wide. And you join the IAB, and your next project is you establish this thing called the TechLab. Will you talk about that?

Cunningham
So I off and went and had conversations about joining the IAB. And one of the first things that came to mind was: back in the years of first developing sites, especially around the recession and thereafter, those of us who were developing in our divisions, when it comes to the “P&L”, were usually the “L”. And we were obviously looking at expenses very carefully.

And when you have to develop responsive websites between desktop and mobile that’s one thing. When you have to develop responsive sites that respond to different ad display standards, that’s ludicrous. And at the time we in the publishing world kind of shot ourselves in the foot by having multiple standards, between the OPA, the IAB, and whatever else. So my feedback to them was, “I’m going to go do this. We’ll find out where it leads, but the first thing is that I need the commitment from the publishing community, the board members and my peers, to say ‘we can have our membership in other trades [bodies], but there has to be one technical standards group’”. Otherwise all we’re doing is we’re branching ourselves. And therefore spending more, money going out the door. That was the first hurdle I needed to clear those things.

The second was, as you recall, the ‘traffic of good intent’ initiative was happening at the IAB, and that was around anti-fraud initiatives. And having come from the publishing world, and having spent time in adtech, I was one of the few that had both experiences, and had cleaned up a fair share of non-human traffic over the years as well. So I was very attracted to the possibility of putting programmes in place. So when I joined the IAB I partnered up internally with Mike Zaneis, who is now the CEO of the Trustworthy Accountability Group. He being a lawyer in DC and me being an engineer, it was a perfect match. We put our brains together and started to formulate plans as to how to maximise the ability to generate programmes of anti fraud, anti malware, anti piracy, these types of things that ended up becoming TAG.

And at the same time I needed to figure out a way to centralise the technical standards. Up until that point the IAB centres of excellence had different technical standards, and I needed to make sure that the sandbox was intact and all the technical toys in one area. And I had some really great partnerships with executives within the IAB who saw the vision that I was trying to put in place and said “yep, move M right over here, move VAST over here, move openRTB over here, take these and put them over here”. Well what was interesting was, one day I got a call from the commerce minister of an Eastern European country who said, “we see this thing called OpenRTB. We would love to generate ‘programmatic’, I think is what you call it, in our back yard. We’re hoping to clone it and put OpenRTB in our country”. And I said, “well that’s interesting. It’s a specification, and if you clone it and you put it in your backyard then it doesn’t become a standard”. So I needed to find a way to make these technical programmes global. And the membership of IAB at the time is IAB US. We had all of these IABs around the world. So I needed the technical infrastructure that was a separate organisation, that was a pillar that all the IABs around the world could lean on for all the technical standards. And between that and the rise of TAG, and TAG needing a technical arm for its work, that’s how I came up with the idea to spin out the TechLab.

Randall and the board were very supportive of these types of things, and next thing you know we announce TAG and TechLab on the same day, two 501(c) nonprofits.

Ryan
Now we’re at the part of the story where TechLab is up and running, you’ve made your mea culpa, and back to adblocking: you’ve been looking at adblocking as an issue for several years at this point. It’s just one of the things on your radar. One of the initiatives you came up with was the LEAN initiative, which – when I read the LEAN initiative I think, that makes perfect sense, and these are things that should have happened fifteen years ago.

Cunningham
You know I think it was more about rallying around principles. And putting us on a path to better business practises, whether it was B2B or B2C. And let me explain. You know, one of the things I learned during my IAB years from a public policy perspective was that if you really want to move the needle on things as an organisation you start with a set of principles, as opposed to coming out with a set of principles. Because if you come out with standards or technical standards without the appropriate market rallying point you are basically chucking a document that sends a bunch of technical stuff in a pdf to the market, and we’ll see what happens. And so you know I think rallying around a set of principles that lends itself to future standards makes a lot of sense. You know, and I don’t think people connected the dots internally at trade associations in the past that starting with principles can equal technical standards. Maybe sometimes starting with principles equals other standards, but nobody ever tried to make it a technical equation I don’t think. But I – from the legal perspective and from the public policy perspective in my observations and working with different governments and lobbyists it was easy for me to do.

Now, where LEAN came from was – ironically before we had released the blog post or the mea culpa / “we messed up” – it was a few of us in the TechLab, a few of my staff. We got together. We started thinking in terms of user experience, user experience, user experience.

Ryan
Interesting. And the next acronym was DEAL. Again, focussing on the adblock issue.

Cunningham
So DEAL was one of those – we had a couple of different ways to describe it – but somebody initially asked me, before LEAN was announced, before “we messed up” was written, somebody said “Scott, we’ve got this adblocking and we’re seeing adblocking rates rise. What do we do?”. And I said “Well, describe it”. They said “Well, consumers have adblockers, and we’re seeing that there’s some larger discrepancies in the ad delivery. We don’t understand why consumers are installing adblockers”. And my first response was “Well, have you asked them?”. You know, if you’re in the business of —

Ryan
That’s a very smart response.

Cunningham
— Well I’m like “well, guys we’ve all been in the publishing business. It’s time you take your head out of your Google Analytics reports and actually say maybe we should email some of our subscribers, or people we know, or try to figure out how to message them to try to figure out what is the user experience that maybe they’re looking for”. So to me it really wasn’t that complicated.

Where it became complicated was the notion of “how do you ask them” who has an adblocker. And this was where the press conference I did before – and I think the market thought were was a mea culpa based on my press conference of there’s an engineering war between publishing engineers and the adblocking technical engineers. And a lot of people said “this is extortion”. And I got up and said “Yep, this is wrong”. The answer is, this is wrong. The adblocking and the extortion model of it is wrong. At the same time what was infuriating and still is is that the adblocking software doesn’t quote unquote declare itself. So detection of who actually has an adblocker installed became our biggest stumbling block in our conversation with the end user.

And over time we learned from some of the larger publishing members who were out there in public, experimenting, to give us feedback, to understand how it was to message those people, to explain to them the value proposition that they’ve opted in to to free content, ask them to make a decision. And this is where whether or not the business decision was to limit access or – because if you think about it, if you can’t monetize those users who have adblockers that’s just cost going out the door. And if you’re an entity whose a for profit entity, which almost every news publisher is, you have a public service good on certain things – severe weather alerts and these kinds of things – but generally speaking you have to be able to monetize those experiences, otherwise you can’t maintain your journalistic systems. We knew that. So that’s where the DEAL acronym came from.

But, my argument was, it’s not in replace of LEAN. And if you’re not doing the DEAL – if you’re doing the DEAL right you should be offering up the alternative of a LEAN experience, a good user experience. Because if you’re just offering up the DEAL, you know – given the fact that the saturation of publishing on the public Internet is out there, the barrier of entry is really low to be able to produce – those users can find somewhere else to go. So you really should exercise your best customer service as you possibly can.

Ryan
We were in the measurement business for years and years. And we found this steady growth of blocking. And reasonably early on we started to message across hundreds of sites, or try and see what one could do to moderate an adblock user’s behaviour. Essentially what we found was that asking nicely does not work, because as it becomes mainstream I suspect they are viewing adblock software as a convenience – like a remote control. That, again, is not to say that one does not need to fix the experience. Let me ask you what you make of the Facebook approach. I’d say it was mildly controversial when it happened. Back in August last year Facebook announced that they had surveyed their users using IPSOS, a research consultancy, and found a range of problems with the ads that they had. The problems were not severe. It’s fair to say I think that people were not blocking Facebook ads, by and large, as their primary target. They were probably a collateral victim of blocking of far worse sites with far worse ads. But anyway, so Facebook’s approach was “Let’s listen to our users. Let’s fix the problems. And when we’ve fixed the problems we’re going to show the ads in a tamper-proof way”. And after about a week and a half, two weeks of engineering back and forth, that is actually what they managed to do, and the ads are still on the site. What do you make of that as an approach?

Cunningham
I think it’s fine. I mean it goes back to detect, and explain, and understand. It goes to detect, and explain, and understand. I mean you know it goes back to my first response, when somebody said “what do we do about adblocking?”. I said “well have you asked them?” Right? I mean, “well have you had this conversation with your customer?” And one of those is – Facebook was able to reach out, get some data, first party information of those conversations with their consumers, that’s their customer service. “Let me modify my product for you based on your needs”. To me it’s not that complicated. I think for Facebook though to do it is different necessarily then possibly a metro daily news organisation or some other type of content and or social engagement that a product might have. So Facebook’s approach, while fantastic, and while it works around their model, the question becomes, well, can it be applied to others content structures and other organisations that may not enjoy that type of lock in with those end users. And I don’t know the answer for that, except that my feedback to the publishing community was, continue to experiment. Continue to have the conversation with your customer. Any you’ll find out what their, what I call “pricing elasticity of user tolerance” is like. You know?

Ryan
Yeah yeah. I mean it’s something to experiment with. You know, as a vendor in this area we’re offering publishers a range of things. And on that menu essentially is an invitation to experiment. So a publisher comes to us looking for a solution, and they are handed – by the sales side – a list of things that they can move between over time. So there’s the simple stuff, like messaging, which is a first step for many publishers if they have not already done this – but the big people have. I mean that has been done now several years ago. Another option is run the risk of restricting access to content, which, which might work for some of our clients. Now I would limit that – maybe you’d agree – to the big TV players who have exclusive video content. I think if you were back at USA today and someone suggested that we’re going to restrict access to content for a paywall or any other paywall-style thing, you’d have to think long and hard.

And the third option is fix the offer – fix the ads. Keep it simple. We’ve run our own surveys, but a lot of these publishers have as well. And I think they’ve found the same thing as us: around about 77% of people – this is in our last report, and these are adblock users – say they’ll tolerate “rectangles”: pictures of products that don’t jump around the screen and essentially, the LEAN display standard. This format doesn’t seem to annoy people. And this is something I think that is very similar to the Facebook approach. And we’ve been doing this for well over a year, for longer than Facebook has been taking their approach, and there is no negative pushback, which is a remarkable result.

And what I fear is that there has been a dogma building around the denial of access. It reminds me of the defensiveness that you saw around the record industry and MP3s. It’s a comforting thing for the industry that they can claim that they can deny access, but so few publishers have actually been able to run a paywall strategy, it would be odd for them to imagine that they can run a denial of access strategy.

Cunningham
Absolutely. Yes, absolutely. At [inaudible] Group and Digital First Media – as you mentioned John Paton was the CEO – our strategy was to collect dimes, it was to stay in business. And we also did try thirty four paywalls —

Ryan
That’s a lot of paywalls.

Cunningham
–we did a lot. When you think of all the local news properties across the country, we tried thirty four of them. We tested these. And none of them worked.
One grew subscription revenue by 300%, which means I think we went from one to three subscribers. So you know we found this. So local news in some of these smaller towns was not – consumers there didn’t have the appetite to pay for these things. And I actually think from the hypothesis perspective, now we’re seeing it play out with how because our experiments have failed in these things that the editorial in these towns have dropped so much that this is where fake news has gone on the rise. It’s a separate topic, but it’s a fascinating discussion.

You know the, I think, on the DEAL programme “limit and lift” is subjective based on the content that you own. So at USA Today – I can’t speak for them anymore, it’s been a long time there – but clearly the brilliance of USA Today as a brand, and USA.com, was really more about the rich media, visually storytelling package itself, versus the textual content. Except for some of the columns and these types of things. So if you think about that brand versus the larger newsroom of, like, The Wall St. Journal, which already has the subscription wall, these models and the content reflect who they are. And at the end of the day, when I say “limit or lift” on those restrictions, and with those working groups who put together that document, it was very much of a detect, explain to the consumer, understand what they are looking for, understand your own business, and you can choose to limit access, or lift the restrictions based on your comfort zone, the percentage of the blocking, and these types of things. So it’s not a – for me the DEAL wasn’t a “all or not”. It’s very much of a grey area based on how you want to engage your consumer. But again I go back to, if you’re not offering a good user experience, a good customer service, you’re not going to know how to actually play the DEAL. You’re really not. And if you’re not engaging your customer on these things, and having that understanding and that conversation with them, then you’re probably going to have a losing hand.

Ryan
So when you say “limit or lift” you’re saying, essentially, restricting access for some publishers – which is exactly the same thing we say to our clients. So restrict access for some publishers, and don’t restrict access for others, just find the way to show ads but provided the ads aren’t annoying. Make sure that you are conforming to the LEAN standards.

Cunningham
In the LEAN principles, you know, there’s some real binary principles there, like, make sure it’s AdChoices supported, make sure that you can do your best with encryption, take care of the user, know what parties you’re working with programmatically speaking, and the ad payloads that come down. I mean, set your business rules in programmatic. For example, if you basically are working with an SSP exchange, and you say, “you know what, here’s my fill, and by the way our business rule is no in banner video, no audio on”, make sure you’re following up with your SSP exchange on those business rules, because that destroys the customer satisfaction as the same time. So there’s a lot that can be done —

Ryan
Let me ask you then about a big picture of the future. So we’re obsessed with the adblocking issue and where it’s going. And where I think we see this ending up is that more people than not will probably, ultimately, have an adblocker of some form. It might be that it’s built into their browser automatically, as is the case for browsers that aren’t big in the west but are big in Asia-Pacific. So this doesn’t need to be about desktop versus mobile, we think it will apply generally. So I think probably the online population, or at least the blocked web, will become bigger than the web, and the web may actually in that sense go away. It will still be the web, but people will be blocking ads.

But I don’t think that there will be no ads. At the bottom of the market you probably have the equivalent of spam. There’s the arbitrage sites, maybe they are run by bots, maybe they are not. And they are still pumping out the worst of the worst, which is why people still use adblockers – to protect them from that stuff.

And then there will be a tier of premium sites, who will be showing ads – however they do it, whichever vendor they use, or whether they make it in house, is immaterial – but there will be a tier of premium websites who’ll be using tamper-proof blocking.

For the user, I think what this will do is it will bring them back to your early days. It will bring them back to a point where they are protected against the worst stuff – the kind of stuff that would have won you a Cannes Lions Award ten years ago or five years ago for innovation – and yet they are seeing respectful, reasonably subtle boxes with pictures of products in them.

Does that make sense to you? Can you see that happening?

Cunningham
Yes, I can see that happening. And isn’t that market dynamics to a certain extent?

You know, at the end of the day net neutrality opened up a lot of doors in the US, and frankly around the world to a larger extent of creating an open, independent Internet. And when you say that and when you say that there is money involved, I mean where there is money there’s crime. And so what we’re finding here is that TAG and these other structures were never meant to go hunt down criminals. They were meant to create a safety layer of trusted parties. So as consumers adopt new technologies for block — I wouldn’t call it block, I’d call it filtration technologies — over time, you know, what’s going to happen here is that they’re going to have their utility for trust, the industry’s going to have its utilities for trust, and those things end up, you know, organically meeting in the middle. To a large extent.

And you know the frictional barrier for entry – I used to say this – is that the IAB TechLab and the creation of it in the bigger picture of things was meant to reduce friction, to unlock dollars in a digital way across screens. The TAG programme was meant to introduce healthy friction in a way that good transparent parties were exposed, and business transactions could flow in an environment that was safe. And you know I think those parties that go through that and are also offering up good quality user experiences – I would hope in time – to consumers that the trust is manufactured in such a way that the consumers with that type of tools are accessing that content in a way that, frankly, other markets have enjoyed too. I mean if you think about you know television and DVRs and Tivos and these types of things over the years, in the early days it was “Oh my gosh how can we let these things happen”. Now think about it. DVR and timeshifting, you know we have to slow them down on television and we’ll see that this is mobile and other distribution avenues as well.

Ryan
Let me ask you as maybe a final question about trade bodies. You spent a chunk of your career inside one of the big ones. We are in the middle of a terrific set of crises in media and advertising. Brands are deeply unhappy. These are the people who put the money into the system that supports content on the open web. And they are not happy. Publishers are not just unhappy, they are suffering. So those are two big parties that aren’t happy. And I suspect when the realities of GDPR hit, a big chunk of adtech, possibly all of it, won’t be happy either. So there’s an awful lot of work to be done by trade bodies. Are they well shaped to do so?

Cunningham
I think it’s very interesting that if you’re a publisher, the hypothesis goes, that the EU policies and directives coming down could absolutely benefit the publisher in such a way that it allows — the traditional publisher, when I say traditional, maybe not some of your large social platforms Google and Facebook. And let me very explicit there. — the traditional publisher because it forces them to have a conversation with their customer on explicit ownership on transaction of what that data looks like. That helps the traditional publisher, news publisher or entertainment, own that conversation. And if I’m a trade body in representation of those publishers I’m not so opposed – possibly – to the regulations that are happening in Europe.

If I’m a platform like Google or Facebook? Or Adtech? If I’m Google or Facebook I already own that conversation to a large extent of users and their explicit [inaudible]. And I may not want to see these directives go through because then that means all these other publishers are going to own that data too. And so that could be a very interesting dynamic to see.

Then you have all of adtech and martech, and the fight over who owns all the anonymised data and these types of things. If you are a publisher and you own that conversation and you are explaining to them “hey if you want access to this, here are all my suppliers, and then all the parties that will have access to you”. Well guess what? Well then obviously if you’re telling that consumer that its 100 beacons they are going to get versus maybe 10 preferred, that the publisher now enjoys that conversation and that conduit, well then guess what? There’s going to be probably a fight and consolidation that’s going to occur.

And does that mean that it’ll transfix itself over here in the US? It’ll manifest in very unique ways because if I’m USAtoday.com I’m still not really sure do I have to message a European citizen who’s hitting my website. And how do I detect and filter them? So I think there still a lot here to be determined and decided here over the course of time.

But again those trade bodies, if you take a look at some of their membership, whether it’s the agencies or the marketers, clearly I come from the IAB for very specific reasons, but I had [inaudible] membership in my organisations in years passed. Each one of them is going to take a slightly nuanced approach based on what their memberships look like, and how they lobby on behalf of their membership. And quite frankly, as a company in the industry, you’re paying the membership. Your engagement, your dollars, that’s how you’re voting, and you should use your influence in those types of forums to make sure that they are acting on your behalf.

I think your second question was there’s a lot of them. You know the market’s growing. I think we’ll probably see some synergies and partnerships and probably some consolidation in the trade world eventually in time.

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Facebook’s Q4 earnings prove how to respond to adblock

Facebook’s Q4 earnings now prove what its Q3 earnings had indicated: the unblocked web – when used appropriately – is an opportunity for marketers. 

From August 2016 onward Facebook deployed tamper-proof ad serving to show ads to users who have adblock installed on their machines. Before doing this it listened to users to identify and fix problems that adblock users had with its ad formats.[1]

Last week Facebook’s CFO, David Wehner, told investors and analysts on an earnings call for Q4 that “desktop ad revenue grew 22%, despite a decline in desktop usage, helped by our efforts to limit the impact of ad blockers on advertisements served on personal computers.[2]

This builds on Facebook’s Q3 earnings, when Wehner revealed 18% growth in desktop ad revenue. This was roughly twice the year-over-year growth of previous quarters.[3] He told investors “that acceleration in desktop revenue growth is largely due to our efforts on reducing the impact of ad blocking”.[4] In other words, the additional 9% of growth year-over-year was due to serving tamper proof ads to users that had installed adblock.

The scale of this uplift is remarkable because Facebook began to serve tamper-proof ads only half way through the quarter.[5] The uplift over a full quarter is 18%, which is also the percentage of adblock usage in the United States.[6]

Facebook’s lesson for publishers 

Facebook warned investors in 2015 that adblock has “had an adverse effect on our financial results” and cautioned that “if such technologies continue to proliferate, in particular with respect to mobile platforms, our future financial results may be harmed”.[7] Its response is a model for all media owners. Facebook took three steps:

  1. Listen to users’ grievances.
  2. Fix privacy, user experience, security, and bandwidth – for example using IAB LEAN standard display formats.
  3. Serve ads using tamper-proof ad serving technologies.

Listen, Fix, Serve gives visitors the same ultimate power over publishers that they have always had. The power to leave any website that does not live up to their expectations has always been in visitors’ hands.

What this means for Facebook’s future earnings 

For a conservative estimate we will continue to use the run-rate from Q3 rather than the better Q4 figures, and maintain what now appears to be a conservative prediction that Facebook will make three quarters of a billion dollars by showing tamper-proof advertising.[8]


Notes

[1] See note from Facebook’s chief advertising executive, Andrew Bosworth, “A New Way to Control the Ads You See on Facebook, and an Update on Ad Blocking”, Facebook statement, 9 August 2016 (URL: http://newsroom.fb.com/news/2016/08/a-new-way-to-control-the-ads-you-see-on-facebook-and-an-update-on-ad-blocking/)

[2] Facebook Q4 earnings call, 1 February 2017.  See transcript.

[3] Facebook Q3 earnings call, 2 November 2016.  See transcript.

[4] ibid.

[5] Facebook deployed tamper-proof ads to desktop users on August 9th, but between August 11th and August 18th fought – and won – an engineering war with AdBlock Plus.

[6] The state of the blocked web: 2017 global adblock report, PageFair, https://pagefair.com/blog/2017/adblockreport/

[7] Facebook Q4 and Full Year 2015 Earnings, 27 January 2016 (URL: https://s21.q4cdn.com/399680738/files/doc_presentations/FB_Q4_15_Earnings_Slides.pdf)

[8] In Q2 Facebook reported advertising revenue of $6.2 billion, before it began tamper-proof ad serving. This translates to roughly $25 billion a year (ignoring quarterly variation). Desktop, which accounted for 16% of Facebook’s advertising revenue, is therefore approximately $4 billion. If Facebook enjoys a similar 18% uplift from tamper-proof ads through 2017 then its desktop advertising revenue will grow from $4 billion to $4.72 billion.

2017 Adblock Report

PageFair is pleased to release our 2017 adblock report. The state of the blocked web presents a combined picture of desktop and mobile adblock usage for the first time.

Mobile adblock usage is growing explosively in Asia and is set to spread to North America and Europe as well. This report also includes the results of our latest survey of adblock users, which used improved screening questions to specifically identify adblock users.

Read more

Ten Key Things That Happened in Q4

Amid the blizzard of press releases and conference tidbits concerning media, advertising, and adblocking, only some really matter.
Here are the ten key things that happened in Q4.

OCTOBER

1. US Department of Justice examines possible agency shenanigans. 

It transpired that the US Department of Justice had launched an investigation into rigged bids that unfairly favored advertising agencies’ in-house services over others, at clients’ expense. The Association of National Advertisers’ report into agency kickbacks, released in June, exposed agency practises that shortchanged clients, and several big brand CMOs launched audits of their agencies. But the DOJ investigation now raises the stakes for agency executives: previous investigations in 2002 resulted in prison sentences.

2. Media consolidation

AT&T agreed a deal to purchase Time Warner for $85.4 Billion. Meanwhile, Verizon’s acquisition of Yahoo! was troubled by the news that half a billion Yahoo! user accounts had been compromised by hackers.

NOVEMBER

3. Fake news, boycotts, and trustworthy media 

The US election upset prompted a focus on “fake news”, and the advertising that supports it. One episode stood out amid the wider media turmoil: Kellogg’s, a large food brand, removed its advertising from Breitbart, a website associated with the “alt-right”. In a singularly bizarre countermove Breitbart called for a boycott of the brand while at the same time soliciting advertising from other brands. The episode confirmed yet again the utmost value of trustworthy media in a changing information economy. 
screen_shot_2016-12-09_at_07-49-09

Image: Breitbart advertisement.

4. Facebook revealed upside to its stance on adblocking

Facebook released earnings figures for Q3 (read earnings call transcript here) that showed that its decision to deploy ads that could not be tampered with by adblockers had increased its desktop ad revenue by 9% in the second half of Q3. Facebook is likely to make an additional three quarters of a billion dollars by showing tamper-proof advertising in 2017.

5. Google and Facebook dominated advertising revenue growth 

Jason Kint, the influential CEO of publisher trade group Digital Content Next, parsed PwC revenue figures and concluded that although spending on digital advertising had increased by 19% year-over-year in the first half of 2016, this was entirely accounted for by Google and Facebook’s growing revenues. Established media had actually declined.

6. Further consolidation 

Adtech & martech companies consolidated. Krux, a data warehouse, was acquired by SalesForce for $700 million. TubeMogul, a system that advertisers use to buy video ads, was acquired by Adobe for $540 million. Criteo also completed its acquisition of e-commerce advertising firm HookLogic for $250 million.

7. Facebook closes its ad server 

Meanwhile, Facebook announced that it would close its ad server, Atlas, which was used by advertisers to understand who was seeing their advertising campaigns. Instead, Facebook will support other ad servers to apply Facebook’s 1st party understanding of its users to measure the efficacy of advertisers’ campaigns.

DECEMBER

8. Amazon strengthens its advertising business 

Amazon strengthened its advertising business by launching two new services for publishers: “Transparent Ad Marketplace” and “Shopping Insights Service”. The marketplace handles header bidding in the cloud and allows publishers to take bids from more parties for their visitors’ attention without slowing page load. The insights service lets publishers use some of Amazon’s own extensive 1st party user data to better understand who is visiting their own websites.

9. EU privacy reforms hint at global shift 

Privacy reforms in the European Union continued to create more protections for users on the one hand, and existential challenges for the Lumascape on the other. eustomp800Three developments are worth highlighting.

  • First, the WFA’s CEO signalled that that the big brands are likely to apply the privacy standards due to be introduced in the EU’s General Data Protection Regulation across the globe.
  • Second, the Article 29 Working Party of data protection regulators published guidance on the new data protection officers that businesses providing services in the EU are required to appoint: these officers must have tenure and report to the highest levels.
  • Third, a draft text of the new ePrivacy Directive was leaked to Politico. A finalised proposal is only due from the European Commission next week, and will then be subject to a three-way negotiation between Commission officials, European Parliament representatives, and the Council of Member State Ministers. Nonetheless, the leaked draft indicates the Commission’s strong stance on consumer privacy: among its many reforms are measures that will essentially kill 3rd party cookies.

10. WhiteOps revealed a colossal new ad fraud 

WhiteOps released details of a colossal ad fraud operation in late December: “Methbot” generates $3-$5 million every day by defrauding brands that spend on video ads. The fraud is two sided. Counterfeit websites mimic thousands of genuine premium sites and request ads from networks. In parallel, hundreds of servers operate automated web browser sessions (complete with with fake mouse movements and fake social network logins) to simulate the viewing of 200-300 million video ads every day. This release will give pause to any who assume that ad fraud is not a enormous problem. 
Q4 2016 in one sentence…
Agencies faced scrutiny not only from wary CMOs but also from the DOJ, ad fraud graduated to a new level, new privacy standards threaten 3rd party tracking, Facebook revealed an immediate financial upside of its stance on adblocking, and Google and Facebook dominated advertising revenue growth.

You may be interested in our roundup of the previous quarter >

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Eight Things From Q3 Worth Knowing

Now, ten days into October, we have had time to digest on the events of the last quarter. As is ever the case with history, only some of the headlines of the last three months will have any lingering impact. But of all the events in the past three months the following eight are worth knowing about. This post is a quick digest of the ones that will shape the environment.
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Publishers – your only weapon is trust

This post was first published on Digital Content Next.
Adblocking—and publisher responses to it—sit at the nexus of two trends: the increasing value of trust in the publisher-consumer relationship, and the emerging conditions of the new information market.
I wrote some years ago that the information market had been turned on its head. The Internet turns many types of information that were once scarce and expensive into overabundant—and therefore cheap—commodities. By corollary, trust and attention have become increasingly valuable.
In short: As information becomes cheap, trust becomes precious.
Ryans-loose-theory-of-TMI-1200px
This generation suffers from the crushing pressure of information overload. Consumers trust premium publishers to help them cut through the white noise and present information and media that are worth spending their limited attention on. As the information deluge continues to swell over time this trust will become even more valuable.
We are witnessing the erosion of this trust and of the fair deal between users and content creators as millions of consumers install adblockers. Publishers must choose between two conflicting options at this historic moment: to reinforce trust by addressing consumer grievances; or to ignore those grievances and restrict consumer choice.
This is a human question rather than a technological one. Adblocking will soon be technologically irrelevant. PageFair has the technology to serve ads in a manner that adblockers cannot circumvent, and some of our competitors claim similar abilities. Indeed, publishers can defeat adblocking by serving ads from their own editorial content systems. But the ability to serve ads should not prevent publishers from addressing the genuine consumer grievances that caused the rise of adblocking.
These consumer grievances that caused adblocking are now widely understood and can be summarized thus: aggressive ads obscure content, infringe on user privacy, hoover up bandwidth and thereby add expense to users’ data plans, slow page load times, and expose users’ devices to easily avoidable security hazards.
Ignoring these grievances and erecting an ‘adblock wall’ that prevents visitors from entering one’s web site until they switch off their adblockers is a lost opportunity to rebuild trust with the user. In the longer term this tactic restricts user choice on the open web and harms publishers—with few exceptions—by causing large numbers of users to go to other sites.
The ultimate power to leave any website that does not live up to their expectations has always been in consumers’ hands. It is a mistake to think of an adblock wall as a mechanism to give the consumer choice rather than restrict their access.
The ‘blocked web’, the portion of the web where users block ads, is steadily growing. This is creating a new, premium space that brand marketers (and therefore publishers) can ill afford to ignore—particularly since it is uncluttered and unaffected by ad fraud. But simply reinserting ads on the blocked web without addressing the consumers’ grievances is a mistake that will undermine the trust between publisher and user.
two-webs-1200px
Publishers must make sure that the technological solutions they employ to serve ads on the blocked web also solve the speed, privacy, and UX issues that caused adblocking in the first place.
It is worth describing the approach that we have taken. Whether or not a publisher opts for PageFair or some other solution, the following are requisite elements in a sustainable response on the blocked web, irrespective of whatever one is doing on the normal web.
First, we decided to take a strong consumer-friendly approach on privacy. For example, our analytics respect the Do Not Track standard. Advertising can be relevant and at the same time be respectful of user’s data.
Second, we adopted a robust approach to security. “Malvertising” incidents are only possible because hackers can programmatically book ads to deliver their malicious JavaScript into the user’s browser. In programmatic and elsewhere we nullify this problem by executing active JavaScript in a safe sandbox on our servers, not in the user’s browser.
Third, we learned how to limit the file size of ads to guarantee better page load times and protect the user from undue charges from their bandwidth provider. We also committed not to work with any ad formats that unexpectedly interrupt the main content of websites.
This is an approach built on the trust that users have the choice of what site to visit, and that publishers have the responsibility to protect users’ data, bandwidth, security and experience.
This is not re-insertion, it is reinvention. Showing respectful ads in a way that protects consumers from hacking, data snooping, and unwanted data plan fees will start to re-establish trust on the blocked web.

The Hidden Ad Tech Gold Rush for Your Personal Data

What happens to all of the data generated by people as they use the web? Who is interested in the minutiae of our lives as we browse Facebook profiles, read the news or shop for new socks?
Read more

Global stakeholders discuss new approach to the Blocked Web

From late 2015 onward PageFair drew together global consumer groups, advertisers, agencies, publishers and browsers for senior level roundtable discussions on adblocking. These were held at The Financial Times, at Mozilla, and at MEC Global. The most recent roundtable was organised by both PageFair and Digital Content Next.
Participants at the PageFair roundtables included the World Federation of Advertisers, the 4A’s, DCN, the World Association of Newspapers, the National Newspaper Association, International Federation of Periodical Publishers, Havas, Google, Mozilla, the Centre for Democracy and Technology, the EFF, the Open Rights Group, the European Commission, the UK Government, the World Economic Forum, and many others including the global advertising holding companies.
Read more

Four big ideas emerge from PageFair global stakeholder roundtable

A growing segment of Web users sees few or no ads. Publishers are suffering mounting revenue losses as a result. But even as blocking of advertising harms publishers it also undoes the mistakes of the first 20 years of advertising on the Web.
Several vendors including PageFair have the technology to display ads in a way that is not affected by blocking. In the future it is likely that major industry incumbents (such as SSPs and CDNs) will also gain this ability.
We believe that the ability to defeat blockers should not simply enable a return to the situation before adblocking. Hundreds of millions of users have rebelled against the status quo in advertising. We must listen to them.
Advertising can be better. Earlier this month PageFair drew together the first summit of global stakeholders including consumer groups, advertisers, publishers, and browsers to consider the form that advertising on the blocked Web should take. You can read AdAge coverage here.
The roundtable, which PageFair convened at Mozilla’s London office, included the World Federation of Advertisers, the European Commission, the World Economic Forum, Mozilla, IAB Europe, ISBA, the Worldwide Magazine Media Association (FIPP), the World Association of Newspapers and News Publishers, Digital Content Next (DCN), the Electronic Frontier Foundation (EFF), and others.[1. The meeting was held under the Chatham House Rule. The participants mentioned here are a selection of those who have waived their right to anonymity.] The discussion focused on how to better respect users, support publishers, and provide value to advertisers.

The Four Points.

The following is a synthesis of points that emerged (as a majority view):

  • The user must have immediate tools to reject and to complain about advertising. This puts the consumer at the core of reform.
  • There should be a more sustainable balance between ‘above the line’ and ‘below the line’ advertising on the Web. Rather than restore all ads we should display only a limited number of premium advertising slots. This will make a better impact for brands and clean up the Web.
  • Use of contextual targeting to establish ad relevance can be increased. This will end what some view as an over-reliance on behavioral tracking of users.
  • Better metrics of advertising success are needed to reform the economics and quality of online advertising. This will end the race to the bottom. 

Note: revised on 15 April 2016 following participant feedback.
These Four Points amount to a basis for a tentative concord among four key communities – consumer groups, advertisers, agencies, and publishers – about a responsible approach to advertising beyond blocking.

Agencies can have their cake and eat it.

The Four Points, though radical, do not mark a painful departure for the advertising industry. It is true that large quantities of capital and other resources are being invested by agencies into the further development of personalized and captivating advertising. That is likely to continue.
But in parallel the Four Points provide agencies with a new and separate opportunity to respond to blockers with contextual targeting that does not track users, and with simple, respectful formats in an uncluttered part of the Web.
It is this parallelism – the ability of agencies to leverage the new opportunity of advertising beyond blocking without cannibalizing their status quo business – that will give publishers an opportunity to sustain themselves beyond adblocking.
And fundamental to this approach is an understanding that adblockers are a new and valuable segment.
adblock user

What the Four Points mean

Point 1. The user must have immediate tools to reject and to complain about advertising. This puts the consumer at the core of reform.

Point 1 makes consumer choice paramount. The user should, literally, have an immediately obvious mechanism, such as a large X, and a simple thumb up and thumb down button that he or she can tap to kill the ad or give immediate feedback.
This will also give the advertiser useful insight on which ads are positively and negatively received.

Point 2. There should be a more sustainable balance between ‘above the line’ and ‘below the line’ advertising on the Web. Rather than restore all ads we should display only a limited number of premium advertising slots. This will make a better impact for brands and clean up the Web.

Rather than use technology to simply put all the ads back what is proposed here is to limit the quantity of ads. And rather than imposing a prescriptive standard of what a “quality” ad is, this approach exploits the market conditions that arise when a limited number of ads has the benefit of abundant audience attention. The scarcity of this inventory will incentivize advertisers and agencies to invest in quality creative.
We know that the formats that blocking users are most willing to tolerate are text, image, and skippable video pre-roll.

Chart: survey of adblock users who were asked what types of advertisement they would be most willing to tolerate. 

formatsthatwork
Combining these formats with scarce inventory establishes a premium form of advertising that better serves brands and improves the user experience.
In other words the ads that are displayed will be not only fewer but better too.

Point 3. Use of contextual targeting to establish ad relevance should be increased. This will end the over-reliance on behavioral tracking of users.

Blockers are largely cookie-less users, because the majority have blocked tracking cookies. They can not be tracked across the Web. This means that the ‘below the line’ marketing activities that focus on the bottom of the marketing funnel become unworkable.
normalfunnel
funnel

But this creates a new opportunity: appeal to these users in the same way as the glossy advertisements do in premium magazines. Ads can be shown to relevant consumers simply by using the context of the content alongside which they appear. For example, an ad for golf equipment is likely to be relevant to a person who visits a site to read a piece of content about a golf event. Using contextual relevance is how offline media have always placed advertising, and it works for the Web too. 
Taken together, points 2 and 3 dramatically expand the role that the Web can play in the marketers toolkit. This new type of premium ad can help marketers use the Web as an ‘above the line’ medium similar to TV, radio and magazine and newspaper advertising, which focus on the top of the marketing funnel.
The PageFair Funnel

Point 4. Better metrics of advertising success are needed to reform the economics and quality of online advertising. This will end the race to the bottom.

More realistic metrics, perhaps akin to those used off line to measure important results like purchase intent, could incentivise procurement departments within brands to focus on value over price. Rather than spend their budgets on lots of cheap inventory that appears in inferior places (the audience might be bots) advertisers equipped with better metrics are likely to invest inventory that can cut through the clutter.


 
Note: