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Facebook’s mobile app install ad business faces growing competition

Mobile Marketer

While Facebook’s mobile advertising business keeps growing – mobile represented a whopping 62 percent of ad revenue during the second quarter – the social network could become a victim of its own success, particularly on the application marketing front, as a growing number of competitors come out with their own, often compelling offerings.

The 62 percent of ad revenue delivered by mobile in the second quarter is up from 41 percent during the same period a year ago and from 59 percent in the first quarter of 2014. Facebook’s new mobile ad network and app install ads drive much of the mobile ad revenue but the company continues to look at ways to broaden its mobile ad business.

“When you think about our mobile ads, I do sometimes think that people think our mobile app install ads are all of the revenue or a great majority of the revenue, and they are not,” said Sheryl Sandberg, chief operating officer at Facebook, during a conference call with analyst to discuss the company’s second quarter financial results. “They are only a part of the mobile ads revenues.

“Our mobile ads revenue is broad based,” she said. “We have large brands advertisers, small, direct response advertisers as well as developers using our mobile ads.

“The mobile app install ads which are run not only by developers but also by large companies that want to get people to install apps are growing. They remain a good part of our mobile ads revenue and we are excited about the opportunities there. But we see our opportunities in mobile ads as much broader than just installing apps.”

Mobile growth
Facebook reported yesterday that its overall revenue grew 61 percent for a total of $2.91 billion during the second quarter of 2014. Of that, $2.68 billion came from advertising, a 67 percent jump from the same period a year ago.

Growth in mobile use on Facebook continues to outpace general use, with mobile daily active user increasing 39 percent for a total of 654 million while mobile monthly active users grew 31 percent for a total of 1.07 billion.

In comparison, overall daily active users grew 19 percent for a total of 829 million and monthly active users increased 14 percent for a total of 1.32 billion.

The company also posted a 138 percent increase in net income for a total of $791 million.

App install ads
Facebook launched mobile app install ads in late 2012 and the offering quickly took off because it meet an untapped need to help developers drive app downloads. In less than two years, Facebook has driven 350 million app installs, per Fiksu.

However, Twitter recently released its mobile app promotion product suite. Fiksu is a partner, helping clients such as Groupon, Dunkin Donuts and Barnes & Noble drive app downloads from Twitter.

“Over the past 12 months, Facebook has enjoyed a leadership position with respect to performance in the app marketing space,” Craig Palli, chief strategy officer at Fiksu.

“While costs of media were often up to ten times greater on Facebook than other channels, they could command this premium because their cost per purchasing user was 28 percent better than other traffic sources, based on the strength of their segmentation tools,” he said.

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The 5 biggest myths of modern advertising

Digiday

Industry sage Jeremy Bullmore’s recent takedown of big data, the latest craze to sweep the ad industry, provides exactly the sort of sensible commentary the industry has been lacking of late. As the industry adapts to digital, the scale of the hyperbole too often outweighs the profoundness of the changes in the marketplace.

Taking inspiration from Bullmore, here are five other hyperbolic statements about the future of advertising that need calling out.

1. TV is dead.
More people watch more TV now than ever before, both in the U.S. and U.K., and they watch it more often and for longer; as a result, TV advertising has never been more valuable. Audiences are more thinly scattered, true. People consume TV content on more devices. Despite the doom and gloom about ad-skipping, most are still viewed. TV is here to stay, but we’d be wise to migrate our way of thinking from TV to video. The notion of “television” generates false boundaries to what’s possible with video advertising when you now consume video in so many new ways.

2. Consumers want conversations with brands.
This is a soundbite so good it scatters the slides of presentations around the world, untainted by the inconvenience of not being based on any facts, or observed behavior. We can see a handful of inane comments that respond to a fabric softener’s question on Facebook if people like Fridays, but the conversations I most often see are those of disgruntled customers, given the microphone to complain that Twitter provides. It strikes me overwhelmingly, with remarkably few exceptions, that for most brands, people want an outcome or resolution, or perhaps information and not a conversation.

3. Brands must create great content
Content marketing is not the answer to all brands’ problems. I don’t look for a beer brand to do a better job of finding me a good bar to go to, or a coffee brand to entertain me. We live in an age with endless, incredible content, where our phones give us access to everything ever made, at any moment in time, normally for free. Brands must find a voice in a world where people are looking to reduce distractions, not seek even more entertainment.

Yes, content must provide value and it should be well made — but it’s not as simple as that. Successful content is likely to be highly personal, distributed well using social connections, and be time- and context-dependent. Branded content is not meritocratic — you can’t say any one piece of content is “better” than another. Perhaps the real test of content is when it’s served, how, who it reaches and what value that provides.

4. Advertising is about storytelling.
Advertising types are wonderful salespeople — so much so, that we’ve bought our own lies. It’s lovely to think of brands as storytellers, and for some brands in some markets this is possible. But let’s not delude ourselves that advertising is not about selling stuff.

5. Advertising spend should be correlated with consumers’ time spent with media.
As an industry, we are obsessed with reaching people wherever they are, but we’ve never used empathy to establish how appropriate that moment is. As the world evolves to spend more time on mobile and online, we’ve assumed the money must follow. Media spend projections for the future bear no resemblance to what seems to be working or not working, and how it’s even possible to spend this much money in these channels.

Things are changing, but we need nuance and wisdom. While nobody gets famous or a promotion saying things are complex or largely unchanged, it’s closer to the truth.

Companies Link for Success White Paper

 Companies Link for Success White Paper

Alliance marketing is becoming a critical component in successful technology companies. Often formed to promote a new device, unified solution or concept, alliances can give companies greater market presence in areas that, alone, they may face more competition. Given the growing importance of alliance marketing efforts, IDG Enterprise sponsored research across the B2B Technology Marketing Community on LinkedIn to help marketers benchmark their efforts against those of their peers. The results of that research, plus insights from leading alliance marketers, have been combined into a white paper designed to help elevate your alliance marketing efforts.

This white paper will provide insight into:

  • Key ingredients for strong alliance partnerships.
  • Common challenges faced within alliances.
  • Common tactics used and how are those executed.
  • How success is measured.

Please or in order to access this content.

Why digital publishers want to be in the magazine business

Digiday

There’s a lot of positive talk about magazines these days — but, interestingly, it’s coming from the digital likes of Yahoo, Say Media and Flipboard.

Backwards as it may sound, online “magazines” have become core to Yahoo’s strategy to make the site a regular destination for people. Along those lines, CEO Marissa Mayer has been introducing several verticals in topics including travel, food, beauty and health — all typically the domain of glossy magazines.

Yahoo is not alone. Say Media, parent of xojane and ReadWrite; First Look, the new media company created by Pierre Omidyar; and Flipboard all similarly describe their digital products as magazines. And it’s not just an exercise in semantics: They’ve been hiring journalists who have serious print bona fides. Yahoo’s spate of recent hires has included New York Times’ David Pogue, Bon Appétit’s Julie Bainbridge and Joe Zee from Elle.

Yahoo and Say Media have also been rolling out highly visual and elaborate (read: premium-priced) ads. By using the very term “magazines,” Say is trying to remind advertisers that these are high-quality, editor-driven products with real audiences, not just listicles, in the hopes that it will translate into revenue.

“The term magazine describes the value advertisers are getting,” said Joyce Bautista Ferrari, executive editorial director at Say Media (and, worth noting, a former longtime Condé Nast magazine journalist). “They’re getting storytelling, something that has a personality.”

It makes sense. Look at the rates of magazines compared to online ads. A single page in a glossy magazine could be discounted by more than half its open rate and still get an effective CPM of about $70. Online display ad CPMs average under $3, according to Nomura Securities via eMarketer, and even less for programmatic.

“Outside of those very premium spots, everything is highly negotiable,” said Steve Minichini, director of digital media and innovation at Assembly. “Especially with programmatic — all bets are off. It’s very different from the print space, where there’s legacy pricing.”

Print magazines, meanwhile, are everything online publishers want — they stand for something with their audiences, they have established rates based on a long tradition of buying and selling. The publisher can artificially limit supply by cutting pages.

And the magazine-reading experience is different. Magazines may be losing importance as more readers shift online, but they’re still the ultimate engagement vehicle. Research has shown that people are more focused when reading print than when listening to radio or watching TV.

Meanwhile, online publishing is heading for trouble. Desktop ad spending is flattening out and projected to decline as consumers shift to mobiles, but ad spending on mobile hasn’t kept up with the amount of time people spend on the devices. Yahoo’s ad business is struggling, as it revealed in its second-quarter earnings call, which is why it’s rolling out new premium products for its digital magazines.

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Google continues to play it close to the vest on mobile ads

VentureBeats

Before Google’s earnings announcement today, many investors and analysts were hoping for details on progress in building and monetizing the massive corporation’s mobile ad network.

It’s an area of Google’s business that continues to see a lack of sunlight, even though it may be the most promising sector that the company’s playing in today.

True to form, in its earnings announcement today, Google again reported mobile ad revenues in a bundle with other ad business lines. Paid clicks from ads served through Google’s AdSense for Search, AdSense for Content, and AdMob businesses (that’s the mobile part) increased approximately 9 percent over the second quarter of 2013 but decreased 5 percent over the first quarter of 2014.

But we really don’t know much about the volume, price, or profitably of Google’s mobile ad business.

“Google has tended to take a holistic approach to advertising,” IDC analyst Scott Strawn tells VentureBeat. They tend to talk about ad results in terms of many different devices, Strawn says, but he wishes the company would talk about mobile cost-per-click numbers specifically.

“They’ve been successful in search and display, but in fact, over time, monitization on mobile should be as good or better,” says IDC analyst Scott Strawn. “But we haven’t really seen more detail, and that’s what’s needed to give investors a greater level of comfort.”

And, of course, when a public company is vague on the results of a business line, the natural reaction is to wonder if it’s hiding an area of poor performance. That skepticism may be warranted. Strawn says he’s talked to Googlers who have said openly that Google was “caught off guard” by the rapid growth in demand for mobile ads.

And, Gartner analyst Andrew Frank says, the industry reasons to believe that Google is facing challenges in mobile.

“It’s an interesting place to watch, especially with the tradeoff about volumes going forward and pricing pressure on clicks, which have been fairly volatile,” Frank told VentureBeat.

Frank explains that the mobile ad market is ruled by a supply-and-demand dynamic: The number of mobile users is going up, but the amount of mobile ad inventory may be increasing even faster. When there’s more inventory than people to view or click, the price of the inventory goes down, and mobile ad profits decline.

Google CFO Pachette said during the earnings call that he “took issue” with a question from an analyst concerning specific results of the mobile ad business.

The research shows that consumers view content on multiple screens, Pachette said. “They might start something on a smartphone or tablet then watch the rest on a smart TV.”

“So it becomes a question of how much attribution to give to each of these elements in the chain of views moving toward a purchase,” Pachette said. “What really matters is that you have a footprint of all of these devices.”

Google doesn’t feel the strong sense of urgency that Facebook felt when it dove into the mobile ad business. Facebook has been successful in mobile ads, the numbers show. Two years ago, people were criticizing the social network for having “no mobile strategy.” Today, mobile ads contribute half of Facebook’s revenue.

Google, meanwhile, is taking its time in what it sees as a developing market. “There’s long runway going forward,” Pachette said today. “I don’t think we have to fear the saturation of smartphone penetration for a while.”

Technology journalists are facing extinction

Medium

One of the first ever online journalists for the BBC is a close colleague of mine. These days, you’d say he was the most experienced member of the team.

But back in the 90s, when the BBC was still finding itself online, it was decided that his job would be “internet correspondent”.

Internet correspondent! The very notion that one such role could encapsulate all that was going on in this brave new world now seems hideously naive — but I’m told at the time it was met with the odd scoff in the newsroom.

“Can you believe it?” they’d chatter, “they’ve got someone who’s just looking at the internet!”

Fast forward a few more years, to 2005, and another colleague of mine found himself in a similar situation. Tasked with chipping in with the BBC’s live election coverage, his role was to give a run-down on what chatter was taking place online.

It was given a fairly short shrift — it really was all meaningless waffle, back then. The hardened hacks shared the same opinion — who cared about what some idiots on the internet had to say?

Of course, the next general election had no such role (Edit 16/07/14: see update at the foot of this post). This time, diligent political hacks— spearheaded by the likes of Laura Kuenssberg —were all across the internet themselves.

Tweeting, blogging, Facebooking… politics wasn’t just talked about on the internet, it happened there.

Most of my day-to-day work is for the BBC News website, but in the past 12 months I’ve been lucky enough to get my shot at TV and radio.

Yet while my personal capacity to tell technology stories in the past year has diversified, I’ve noticed something: my beat is rapidly disappearing.

We don’t need someone “watching the internet” during elections anymore, that’s clear. But we’re also now approaching a point where the most pressing — and let’s face it, interesting — technology stories shouldn’t be thought of as technology stories at all.

Case in point: the Edward Snowden revelations. A story broken, not by a technology writer, but by a civil rights specialist with a background in law.

Which makes a lot of sense. Snowden is a story about democracy, a political crisis, a threat to our human rights. It’s a debate about civil liberties, what it means to be “safe” from terrorism, and the ethics of whistleblowing.

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Events can help media companies balance uneven revenue streams

INMA

When we discuss the direction of the news media industry revenue streams on either a macro or micro level, two predominant revenue streams head to the top of the charts. Traditional print still is king at most news media companies, with online/mobile building momentum in most corners of the globe.

While both of those are and will remain critical to our long-term survival, let me offer a potential third leg of that three-legged revenue stool we all seek: events.

News media companies have dabbled in the events arena for quite some time, but with limited success because they often focus on events not destined to create any significant financial windfall. Cooking shows, for example. Or community events such as runs, concerts, and so forth, which are great for local support and exposure, but offer little in the way of significant financial return.

The return on investment falls far short of what the industry has grown to expect from print and even online ventures. And so the full value and revenue potential of event sponsorship for media companies has become clouded and jaded.

But there is money to be made from events, when handled the right way.

Most event experts say two of the largest expenses are the cost of a venue, and event marketing — two areas media companies excel in. They are well-positioned to pull off their own events and eliminate much of the traditional cost associated with these events, due to their expertise in the above key areas.

Marathons and half-marathons as well as triathlons have been known to make tens of thousands of dollars in profits. Concerts and motivational speakers can do the same. Home shows, garden shows, outdoor shows, fishing or golf tournaments — all still can rake in dollars in a big way.

Bear in mind, every one of these events that enters your market without your involvement does, in fact, impact your bottom line. They can extract valuable dollars from potential advertisers, customers, etc. All of those dollars will no longer be circulating throughout your community.

Factor in the compounding value of a dollar either entering or leaving your community and the impact is significant. For every dollar that leaves your community, you can compound that into five or six dollars subtracted from the community.

You can bet some of those are out of your revenue streams.

Much like a stool that needs three or four legs upon which to stand in a balanced fashion, media companies need more than two revenue legs on which to balance their long-term survival.

Embracing events can add a third leg to the revenue mix (or stool) with little risk and a great upside. You don’t need to hire all new staff; you can dabble in the event arena with the employees you currently have and see how the operation goes.

The key with events, just as with print and/or online and mobile, is to have someone passionate about growing that segment of the balance sheet. It won’t happen by itself. It doesn’t take a whole team of passionate employees. All you need is one employee who is motivated financially and the magic begins.

You won’t be alone. Other media companies are starting to find the magic of events — and turning it into significant revenues in short order.

One in ten digital ads is fake

Warc

More than one in ten ad impressions is fraudulent, but fraud rates vary widely between verticals and reflect their media buying preferences, according to a new report.

The Q2 2014 Media Quality Report from Integral Ad Science, the digital advertising intelligence business, was based on information from the ad tech companies, exchanges and agencies it works with. It found that, overall, 11.5% of ad impressions were fraudulent.

Technology and retail companies suffered from the largest amount of fraud, 17% and 14% respectively, while consumer packaged goods (6%) and telecoms (6%) were least affected. The report suggested the difference was attributable to the ways in which the various verticals bought media.

Those with lower fraud rates were more likely to buy directly from publishers, where just 3.5% of impressions were fake. Higher fraud rates were evident on exchanges (16.5%) and ad networks (10.5%).

“Certainly the direct-response-type advertisers or verticals will look to leverage as much scale as they can,” David Hahn, Integral’s SVP of product, told Ad Exchanger. “That introduces some of the additional risks you might not find if you’re doing smaller scale campaigns purely on publisher direct.”

Other verticals afflicted with higher rates of fraud included automotive (12%), fashion (12%) and education (11.5%).

A mid-range group was comprised of entertainment (8%), pharmaceuticals (9%), insurance (10%), travel 11% and finance (11%). Others at the lower end included quick-service restaurants (6.5%) and energy (7.5%).

As well as fraud, Integral looked at related issues such as viewability and brand safety. Once again buying direct from publishers yielded the best results: more than half (55.5%) of inventory purchased this way was regarded as viewable, while ad networks (45.9%) and exchanges (45.3%) performed less well.

Similarly, buying direct was more likely to produce brand-safe inventory. Just 6.2% of inventory here was classified with a moderate to very high risk, far less than exchanges (9.6%) and ad networks (10.1%).

The report had found no significant change in brand safety levels, but said risky impressions most often landed on adult content (41.8%), reflecting the sheer volume of such material on the web and the traffic it receives.

Sites about drugs (17%), hate speech (13.9%) and illegal downloads (13.4%) were also flagged as high-risk locations.

Pinterest’s interest-following feature could be advertising gold mine

Digiday

Pinterest today made it that much easier for consumers to explore specific interests, and agency execs are already looking toward its potential advertising uses.

Previously, Pinterest curated pins around broad categories such as “outdoors.” Now, when users click on “Outdoors,” they’ll be able to find pins curated to interests as narrow as “ultralight backpacking” and “saltwater fishing.”

Pinterest is in the midst of introducing ads to its platform, but a Pinterest spokesperson said there are no immediate plans to allow advertisers to target users based upon the interest pages they chose to follow. But this being a platform whose only revenue source is advertising, it’s fair to assume that, if interest pages catch on with users, ads will be sold against them.

At least agency execs, always looking to target consumers based upon their interests, hope so.

“All we’re trying to do is go deeper based upon targeting people on interest. The ability to hit them in that context makes a lot of sense,” Jordan Bitterman, chief strategy officer at media agency Mindshare, said.

Pinterest’s 32 categories — such “travel,” “animals” and “kids” — were too broad to serve finely tuned ads, according to Jill Sherman, group director of social and content strategy at Digitas. Agency execs routinely describe Pinterest image as a visual search engine. Adding interest collections — essentially more-nuanced tags – can only enrich that database.

“It was basically a collection of boards. Now it’s much more: a very deep directory of interest,” Chris Bowler, Razorfish’s global vice president of social media, said.

Interest pages are also a way for Pinterest to broaden its appeal, or at the very least, prevent it from losing users. Pinterest’s user-base still skews female despite its incredible popularity, Providing more pinpointed collections could attract even more users.

“This is where the entire social world is going; niche communities that have much higher receptivity than your broad-based Facebook and Twitter platforms,” Chris Bowler, Razorfish’s global vice president of social media, said. “This is Pinterest’s way of serving a community of rock climbers versus someone creating another online community around rock climbing.”

Bitterman added that the tool would also likely increase the amount of time Pinterest users stay on the platform in a given session, another selling point for Pinterest as it ramps up ad selling efforts. The prediction speaks to the power of catering to people’s interests: it makes Pinterest more appealing to consumers, and more alluring to ad buyers.

Coming soon to Facebook: Video ads that follow you from device to device

VentureBeat

Advertisers on Facebook see the emerging method of sequential mobile advertising as a way to better control their branding message with consumers on social media.

Sequential video advertising allows marketers to place targeted video ads in front of a user when they click an ad on their mobile device. Based on what the person clicks, and what the product or message is, marketers are then able to follow up with similar video ads as they hop from one device to another.

By creating a sequence of targeted ads, marketers can build up a pitch from one video to the next — starting with a “pitch” video and ending with a “sell” video intended to close the sale.

VentureBeat spoke to two sources who requested their names not be used because the information they were describing was based in conversations with Facebook executives.

“Video is where its going,” an advertising executive who works with Facebook told VentureBeat. “With unique profile IDs, you have the ability to better sequentially target content for users as they embark on their journey through the social media funnel.”

The same executive added: “Sequential video advertisers gives marketers the ability to place different messages that can build upon each other. This gives you greater control over the delivery of your message.”

Another mobile executive who works with Facebook told VentureBeat that advertisers want to better control, and deploy, product messages. But they are content, for now, in permitting Facebook and others obtain user data to target their ads.

For its part, Facebook uses a combination of its own in-house analytics and partners for the task of ad targeting.

Facebook is able to amass tremendous amounts of user data based on information contained in in its users’ profiles as well as their activity. That includes information on who you interact with and where you like to shop, for example. That data is gold to advertisers, keen to take advantage of Facebook’s 1.2 billion users.

“The writing is on the wall. Sequentially targeted ads are hugely efficient and ultimately cost effective. They have greater relevance for advertisers and better targeting,” said the second source, who has knowledge of Facebook’s mobile ad strategy.

“Anecdotally, it’s very promising. Facebook is putting a lot of effort into it,” the same source added.

Indeed, Facebook bought the video advertising outfit Liverail for an undisclosed sum earlier this month. Liverail’s technology optimizes video ad deliveries for mobile devices utilizing bidding and proprietary data. Liverail was considering an IPO this year but threw in its lot with Facebook instead, media reports said.

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